It is no secret that the economic and geopolitical clout of China is growing by the day. The rising power is increasingly displacing the United States as the number one trade partner to numerous countries and is the greatest source of growth for top multinational corporations.
As such, a growing number of people do business with China and its enterprises. Yet, one must navigate a myriad of cultural and social expectations in order to succeed in the Middle Kingdom.
Read on and check out our list of 8 things you must know before doing business in China.
1. The Importance of Guanxi
Guanxi literally means ‘relationship’, and is a system of social networks and influential relationships that facilitate business and other dealings. When one has successfully built guanxi with another, he will be quick to do a favor and act on another’s behalf. Crucially, this is arrangement is a two-way street, meaning that both parties can expect such favors.
This often-misunderstood concept is crucial in Chinese business culture, and naturally it takes time for the parties build guanxi. Not surprisingly, the process for Chinese business people to trust a foreigner and develop guanxi can often take up to 1-2 years.
2. The Importance of Mianzi (face)
In Chinese business culture, it is extremely important to never make a Chinese person “lose face” by criticizing, ignoring, or making fun of them in public. For the Chinese businessperson, maintaining a sense of dignity is often paramount, meaning that foreigners must be mindful of mianzi as it can affect business dealings during meetings or negotiations.
Should a Chinese be placed in an uncomfortable situation where if he or she feels insulted by “losing face”, business relationships can be severely and often irreparably damaged.
3. Everything Should be in Writing
When dealing with Chinese businesspeople, it is essential that everything is written down in an email or document. From instructions to blueprints to agreements, everything must be put in writing in a clear and detailed manner.
This is to ensure that associates fully comprehend and understand the subject at hand, as the Chinese dislike making unnecessary errors.
4. Understanding Business Card Etiquette
Exchanging business cards is considered an honorable act in Chinese business culture, as business cards contain one’s name and rank, both of which are heavily meaningful in Chinese society. That is why it is customary that the card is given and received using 2 hands.
When doing so, cards should be held firmly so that the person receiving it must tug it to receive it. If people are sitting before exchanging business cards, it is polite to stand up slightly when the exchange is being made.
5. Realizing the Value of After-Work Activities
Because of the importance of Guanxi, business relationships in China have a much more intimate and personal meaning than often found in Western countries. As such, it is customary for after-work activities such as dinner, karaoke, and massages to be a part of work or business dealings.
While in the West it is commonly believed that one should not mix business and personal lives, in China such activities are considered necessary to strengthen and build a sincere business relationship.
6. Observing Rank and Hierarchy
While it is less strictly observed than in other East Asian countries, rank and hierarchy are still an important aspect that one must understand to do business in China. Culturally, social hierarchy is largely determined by seniority and job position, meaning that respect must be allotted according to how high the person is on the ladder.
For instance, toasts must always be made first by the highest ranking person, and it is also expected that in business meetings, companies must send a delegation with an equal rank during meetings and negotiations. Therefore, if a Vice President of a Chinese company were present at a meeting, it would be expected that a Vice President or an equivalent person from the opposite company to attend. Should this be forgone, the Chinese will take great offense and the relationship will almost certainly be terminated.
7. Importance of Business Attire
Typically, one must be dressed in formal attire for business meetings. In China, as in many other countries, a prim and proper physical appearance is to be expected in business settings. It is interpreted as a sign of respect and seriousness when one is dressed sharply.
In contrast, during after-work activities with business associates, Chinese businessmen often remove their ties as a sign of being fun and laid back.
8. Understanding the Culture of Hospitality
When Chinese businesspeople conduct business over a meal, it is customary that the drink glass be filled up at all times. In this case, the host will make sure that the glass is full by pouring the drink because traditionally, this is an expression of the host’s hospitality.
In Chinese culture, the host is thought to ‘lose face’ if his guest has to ask for anything, meaning that he will go out of his way to make sure that every need of the guest is preemptively met. This also means that as a guest, you should always have a drink when sitting with your host.