Doing business in China
Expats anticipating doing business in China will almost certainly need to invest in some cross-cultural training. The culture associated with this economic powerhouse will most likely be unfamiliar and, initially, challenging to adapt do.
China has one of the fastest-growing business spheres in the world, and opportunities for expats are increasing in number as this Eastern nation looks to expand its channels and undertake more ventures.
That said, the path to starting or doing business in China is not an easy one. A heavy-handed government and a sizeable language barrier are, in many cases, too much for foreigners to cope with. The expat ‘failure rate’ has been estimated as high as 70 percent, and many expats leave before their contract expires.
The World Bank ranks China in 79th place out of 183 countries for "Ease of Doing Business", a position well-behind many of its Asian neighbours, as well as nearly all North American and European nations.
Business culture in China is dominated by the creation and loss of connections (Guanxi).
The Chinese prefer to do business with people they trust, and if you don't have a relationship, you don't have a leg to stand on. It follows that a great deal of preliminary business dealings may be devoted to cultivating a meaningful connection. Try and be patient, don't rush decisions and negotiations; this is a vital part of doing business in China.
Hierarchy and seniority are also key elements of Chinese business culture. Respect should always be shown to elders and senior associates, a feat accomplished by avoiding eye contact and showing deference at meetings.
'Saving face’, or preserving a person's reputation and dignity, is another important concept. Expats should take every precaution not to embarrass a person publicly, as this will certainly affect business dealings negatively.
Business attire in China needs to be both formal and simple; bright colours are considered inappropriate, and modesty is key. Flat shoes are the standard for women, and are generally a good idea for expat women who are taller than their associates to begin with.
When greeting Chinese businesspeople, use their title and family name. This can be confusing as names are traditionally reversed from the western order (Adam Smith would be referred to as Smith Adam).
Contrary to popular opinion, bowing is not a normal greeting in China, unless within certain ceremonies. Often a nod will suffice, but it is also a good idea to wait for the other person to initiate a handshake.
Business cards should be exchanged at every introduction, and expats should be sure to include their business title, as well as a Chinese translation on one side of the card. It is considered polite to supply your own interpreter at meetings if you do not understand Mandarin.
Gift-giving is common practise in China, but traditions are changing. Official policy forbids bribery, so gifts may be declined. A good policy is presenting a symbolic gift to the company, in which case, it is presented to the most senior person present. Very expensive gifts are to be avoided, as they create the obligation to reciprocate.
Chinese businesses are increasingly eager to do business with the West; however, a troubled past and political differences have created some measure of distrust. Foreign businesspeople who make an effort to respect and understand Chinese culture are better regarded than those who expect to be accommodated.
Starting a business in China is a complicated and time-consuming process fraught with bureaucratic hang-ups. Even the registration process includes no less than 14 procedures that take an average of 38 days to complete. These procedures range from simple (making a company seal and having the company name approved) to lengthy and complex (registering for state and local tax and applying for authorisation to print receipts and invoices).
Business language: Mandarin
Hours of Business: Monday to Friday 8am to 5pm, with a break from 12pm to 2pm
Dress: conservative, formal and muted, no bright colours
Gifts: common practise, but done in private
Gender equality: women are not treated equally; they are less likely to be hired and often the first laid off
China has one of the fastest-growing business spheres in the world, and opportunities for expats are increasing in number as this Eastern nation looks to expand its channels and undertake more ventures.That said, the path to starting or doing business in China is not an easy one. A heavy-handed government and a sizeable language barrier are, in many cases, too much for foreigners to cope with. The expat ‘failure rate’ has been estimated as high as 70 percent, and many expats leave before their contract expires.
The World Bank ranks China in 79th place out of 183 countries for "Ease of Doing Business", a position well-behind many of its Asian neighbours, as well as nearly all North American and European nations.
Business culture in China
Business culture in China is dominated by the creation and loss of connections (Guanxi).
The Chinese prefer to do business with people they trust, and if you don't have a relationship, you don't have a leg to stand on. It follows that a great deal of preliminary business dealings may be devoted to cultivating a meaningful connection. Try and be patient, don't rush decisions and negotiations; this is a vital part of doing business in China.
Hierarchy and seniority are also key elements of Chinese business culture. Respect should always be shown to elders and senior associates, a feat accomplished by avoiding eye contact and showing deference at meetings.
'Saving face’, or preserving a person's reputation and dignity, is another important concept. Expats should take every precaution not to embarrass a person publicly, as this will certainly affect business dealings negatively.
Business attire in China needs to be both formal and simple; bright colours are considered inappropriate, and modesty is key. Flat shoes are the standard for women, and are generally a good idea for expat women who are taller than their associates to begin with.
When greeting Chinese businesspeople, use their title and family name. This can be confusing as names are traditionally reversed from the western order (Adam Smith would be referred to as Smith Adam).
Contrary to popular opinion, bowing is not a normal greeting in China, unless within certain ceremonies. Often a nod will suffice, but it is also a good idea to wait for the other person to initiate a handshake.
Business cards should be exchanged at every introduction, and expats should be sure to include their business title, as well as a Chinese translation on one side of the card. It is considered polite to supply your own interpreter at meetings if you do not understand Mandarin.
Gift-giving is common practise in China, but traditions are changing. Official policy forbids bribery, so gifts may be declined. A good policy is presenting a symbolic gift to the company, in which case, it is presented to the most senior person present. Very expensive gifts are to be avoided, as they create the obligation to reciprocate.
Attitude toward foreigners in China
Chinese businesses are increasingly eager to do business with the West; however, a troubled past and political differences have created some measure of distrust. Foreign businesspeople who make an effort to respect and understand Chinese culture are better regarded than those who expect to be accommodated.
Starting a business in China
Starting a business in China is a complicated and time-consuming process fraught with bureaucratic hang-ups. Even the registration process includes no less than 14 procedures that take an average of 38 days to complete. These procedures range from simple (making a company seal and having the company name approved) to lengthy and complex (registering for state and local tax and applying for authorisation to print receipts and invoices).
Doing Business in China: Fact Facts
Business language: Mandarin
Hours of Business: Monday to Friday 8am to 5pm, with a break from 12pm to 2pm
Dress: conservative, formal and muted, no bright colours
Gifts: common practise, but done in private
Gender equality: women are not treated equally; they are less likely to be hired and often the first laid off
Do’s and don’ts of business in China
- DO acknowledge senior associates first.
- DON’T be offended by personal questions.
- DO say ‘maybe’ or ‘Let me think about it’ rather than a flat ‘no’.
- DON’T make remarks about communism.
- DO be ten minutes early for meetings.
- DON’T gesture with your hands when you talk.
