Guanxi, or personal relationships are of vital importance when doing business in China. Do not underestimate the importance of the relationship building process.
People are comfortable building relationships with honourable people who show respect to those to whom respect is due.
As all relationships are unequal it is important, if you wish to appear honourable, to show respect to age, seniority and educational background.
Managers tend to be directive, which reflects basic Confucian concepts of the hierarchical nature of society.
In return for loyalty, the boss is expected to show consideration and interest in all aspects of a subordinates life.
There are often close relationships between senior management of a company and local party officials.
It is important that you do not make people lose face in front of their group. Always respect seniority and do not openly disagree with people.
Do as many favours for people as possible – debts must always be repaid.
Business cards should be formally exchanged at the beginning of meetings. Treat the business card with great respect, as the card is the man.
Meetings are often long and seemingly without clear objectives. Very often the meeting is an exercise in relationship-building and the aim of the meeting is to move the relationship, rather than any specific business task, forward.
It can take several, very long meetings before any tangible progress is made. Patience is essential if you wish to capitalise on the situation.
The Chinese are very interested in long-term commitment. Build long-term goals and objectives into your proposals.
Do not be too direct. Strive for diplomacy, consensus and harmony. Remember that this takes time to achieve.
Do not assume comprehension. It is often useful to go over the same point several times from different angles in order to aid comprehension.
It is difficult for the Chinese to say no directly. Anything other than a direct yes could mean no. Be circumspect and reflect on seeming agreements reached. Has an agreement actually been reached?
It is difficult to read body language as, by western standards, it is somewhat muted in China. Be very alive to any changes of posture, animation etc.
Gift giving is an everyday part of Chinese business culture. Giving and receiving gifts helps to cement relationships. Take gifts with you when visiting and put some thought and effort into the gift selection process.
Always wrap gifts before giving them. Gifts are rarely opened in front of the giver.
The Chinese are an intensely patriotic race. Do not make disparaging remarks about China, the political situation, human rights etc.
Entertaining is very important in the relationship building process. If entertaining, do it well. If being entertained at a banquet, take you lead from your hosts – they will enjoy taking you through the process.
Written and Produced by Keith Warburton
China seems to grow more confident by the day. Is it too strong a statement to say that China is starting to regain its historical position as the pre-eminent global economy? The Chinese government is steadfastly following a policy of internal economic consolidation and international engagement. Wherever you are in the world you can start to feel the impact of Chinese investment and influence. China can no longer be classified as an emerging market. China has emerged and is taking on the world – much as America did in the early twentieth century and Japan in the 1970’s.
How the traditionally pre-eminent global economies such as the USA, Germany and Japan react to the growing strength of China will be fascinating to watch over the coming decades but one thing is sure – China is a force to be reckoned with and cannot be ignored. If you are not currently doing business in (or with) China, you probably should be.
However, China is not easy – somebody once said ‘in China everything is possible – but nothing is easy.’ Before starting to do business in China it is essential that you try to get an understanding of the cultural drivers and expectations of your Chinese contacts. Do you really understand the importance of ‘face’ in China and do you feel confident you can navigate the complexities of Chinese corporate hierarchy? How are you going to develop those all-important relationships and what impact will Chinese long-termism potentially have on your cash-flow forecasts?
China is a land of opportunities but it is also a land of potential bear traps. Do your homework – don’t fail through lack of research and planning.
This country profile provides an overview of some of the key aspects of Chinese business culture in a concise, easy to follow-format. The document includes information on: