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Chinese Business Culture: What You Need to Know

Posted by: Fabia Meinhold
Category: Business in China

Are you about to do business in China or with Chinese counterparts? Then you should be aware of the Chinese business culture and etiquette. Your knowledge on the topic can have a substantial impact on the failure or success of your project.

Take a look at one of our previous articles: Singles Day – a Chinese shopping day bigger than Black Friday

What is guanxi and why are hierarchy and “keeping the face” so important in Chinese business? How to conduct a successful business meeting in China? Keep reading to get answers to these questions and much more.

Local Business Culture: How to Get in Touch with Chinese Companies

Traditionally, Chinese networking is done through word-of-mouth and recommendations coming from a trusted partner. Relationships play an important role in doing business in China. Therefore, as foreign companies are often outside the Chinese business networks, it may be difficult for them to meet and interact with Chinese counterparts.

However, there are easy ways to tackle this issue. Attending networking events is arguably the best way to meet new people, especially if you are looking to build contacts within a specific industry. Chambers of Commerce in major Chinese cities host monthly and even weekly events that can help you expand your network. Cold emailing can be another alternative, although Chinese business people increasingly prefer to use WeChat as their main communication tool. You could try to follow the company’s official account and send a direct message to the administrator. If this still doesn’t work, you can get in touch with business consultants who will help you establish a China-specific strategy and guide you through the whole process.

Guanxi: The Importance of Building a Strong Relationship

In China, the Confucian concept of guanxi is crucial for any business relation. It refers to a solid relationship and may imply private and business favors based on reciprocity. So, once you are in touch with a potential Chinese partner or client, you should start working on your guanxi. People do business with people. If you want to close a deal, you need to progressively build trust with your Chinese partner. It may require you to be patient and to regularly attend corporate dinners, events and business meetings. Attending those events is a must. However, you also want to make sure that you leave a great first impression and avoid committing any cultural faux pas. That’s when business etiquette comes into play.

How to Successfully Conduct a Business Meeting in China

For foreigners, organizing and attending business meetings with Chinese counterparts may be quite challenging, especially if you don’t know the corresponding business etiquette.

Mark E. Buchman, an instructor at UCLA Extension, explains that there are 5 principles to follow – called the 5Ps – when it comes to doing business in China:

  • Planning
  • Perseverance
  • Patience
  • Personal relationships
  • Perfection

And this is only a brief overview. Here are a few more tips that you can apply when conducting business meetings with Chinese counterparts.

Preparation

First of all, your meeting has to be planned very thoroughly.

  • Pick the right date: When choosing a date, make sure to avoid public holidays in China. Have a look at the website of the Chinese government for more details.
  • Anticipate: Learn as much as you can about the company and find out who you are dealing with. This may help you better understand your counterpart and prepare for contingencies. If there are language barriers, you should for example arrange interpretation services.
  • Invitation and confirmation: Plan ahead and be patient. First, make sure to share in advance precise information about the topics to be discussed. Then, try not to rush your Chinese counterpart, and don’t be surprised if he/she gives you a last minute confirmation.

First encounter

This part is essential for you to make a positive first impression. The dress code should be formal, and you should be on time – if not early.

  • Arriving: If you are the one hosting the meeting, make sure to send a representative to receive the guests outside and escort them into the meeting room. Also keep in mind that entering the room happens in hierarchical order – even though this is slowly becoming less critical in the Chinese business culture. Then, the host will greet everyone individually and in descending order of rank.
  • Greeting: Usually, slight nodding or bowing is appreciated, but sometimes you may also softly shake hands if your Chinese counterpart initiates it. When addressing someone, you should always follow the following rule: Family name + Title. Of course, also having a Chinese name would be a plus.
  • Business cards: This is a very important element of the Chinese business culture. First, ensure that your business card is of good quality and preferably bilingual. When handing it over – or receiving one – use both hands, and make sure the Chinese version is on the top, with the writing facing the person receiving it. After receiving a business card, take some time to read it and then make sure to either keep it in front of you on the table or to put it in a pocket close to your heart. Besides, never write on a business card!

During the meeting

Seating:

It is always organized by rank. Generally, the seat on the right of the inviting person is the place of honor.

Starting:

Before starting with business-talk, there should always be a short period of small-talk. Then follows a welcoming speech, and finally the business-oriented discussion. When introducing your company, don’t forget to mention special features of your company like the size, establishment date, reputation, etc. This can be a great asset for your business, as it is particularly well considered in China.

Having a meal:
  • Don’t refuse a dish, this may be impolite.
  • Try to eat with chopsticks if you know how to use them. This will make a great impression.
  • Even though burping and slurping are part of Chinese business etiquette, blowing your nose while eating is a no-go in China.
  • Praise the food – but not excessively, you don’t want you counterpart to think you are dishonest.
  • Don’t finish your meal too quickly, otherwise they may think you are still hungry.
  • Beware: In China, there is a real drinking culture based mainly on “bai jiu” alcohol. Thus, you may have to accept all the drinks your Chinese partner offers you, unless you have good reasons not to, like medical ones.
Communication:
Indirectness and distance
  • Chinese people generally communicate very indirectly, so you may have to interpret a lot of what is said and what is omitted. As a consequence, it is also better to avoid giving strong negative answers.
  • Emotions are usually hidden in the name of harmony and in order to “keep the face”. This directly affects the reputation and dignity of a person in China. It also shows that most Chinese people are not very prone to risks. Therefore, the decision-making process may be relatively slow.
  • Avoid physical contact, and don’t point. Only show something with an open hand if necessary.
Conversing
  • According to Chinese business etiquette, subordinate members should avoid talking without being asked to do so by a senior person. Knowing who is in charge is easier this way.
  • Make sure to give your conversation partner opportunities to speak, as he won’t interrupt you (and you should not either).
  • Avoid controversial topics like politics, the environment and human rights. Instead, try to share your positive thoughts of China.
  • Remember that if someone nods, it only means that he is listening, not necessarily agreeing.
Interpersonal negotiating:

Negotiation is very common in China. This process aims at converging to a mutual benefit, a state of harmony and long-term relationship.

The bill:

It is paid by the host, even though the counterpart may offer 2-3 times to pay, followed by light protest, but without arguing.

Other Essential Specificities of the Chinese Business Culture

  • Gifts: You have to be very careful about gifting. On the one hand, they may wrongly be interpreted as bribery and raise suspicion. On the other hand, they are still essential in Chinese business culture to build and maintain guanxi. Thus, the best option is to bring only small, relatively inexpensive gifts, like tea, spirits or anything with a cultural meaning. No-go’s include clocks, umbrellas and sharp items. Gifts should always be wrapped – but not in black or white paper – and given and received with both hands. Generally, the gifts are not being unpacked in front of the person who offered them. Doing otherwise would be considered impolite.
  • Numbers, colors and dates: Lucky numbers in China are 6 and 8, whereas 4, 73 and 84 should be avoided. Regarding colors, gold is always a good option, as it stands for wealth. Although red is often used for packaging purposes, you should also keep in mind that writing in red is an absolute no-go. When it comes to writing dates, note that the Chinese order is the following: year/month/day.

Interested in other useful tips for your business in China? Get in touch with our team for a consultation and follow us on social media to receive the latest news.

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Author: Fabia Meinhold

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