Doing Business in China
One of the world’s largest economies, the People’s Republic brims with history and opportunity. Economics may be a global language, but Western expats doing business in China often find integrating into Chinese culture a big adjustment and many invest in cross-cultural training to ease the process.
Doing business in China is not always easy. A government that is uncomfortably imposing for many Westerners and a sometimes debilitating language barrier are too much for some to cope with and many expats leave before their contracts expire. A complicated visa process and the high cost of starting a business in China add to the challenges.
These factors contribute to the country's overall ranking of 84 out of 189 countries in the World Bank’s Ease of Doing Business Survey for 2016, marking a slight change from its 2015 ranking of 83. Factors for which China scored badly include dealing with construction permits (176th), starting a business (136th), and protecting minority investors (134th). China did, however, perform well for enforcing contracts, for which it ranked seventh.
Despite the downsides, the number of foreign workers in the country has been steadily increasing over the past two decades as more expats arrive to chase success in China.
Doing business in China: Fast facts
Mandarin is the official language of business in China. It's considered polite for foreigners to supply their own interpreter at meetings if they don't understand Mandarin.
Usually from 8am to 5pm, Monday to Friday, with a break from 12pm to 2pm.
Business attire in China needs to be formal and subtle. Bright colours are 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.
Use titles and family names when greeting Chinese businesspeople (this can be confusing as names are traditionally reversed from the Western order). Contrary to popular belief, bowing isn't normally done outside of certain ceremonies and a nod will often suffice. It's also a good idea to wait for the other person to initiate a handshake.
Gift-giving is common practice 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's presented to the most senior person available. Very expensive gifts are best avoided, as they create the obligation to reciprocate.
Women aren't always treated equally. They are less likely to be hired and often the first to be laid off.
Business culture in China
In a country where personal relationships are essential for professional advancement, one of the best ways to get ahead is to have an understanding of the business culture in China. Expats wanting to do this will have to become familiar with guanxi, a concept at the centre of commerce in the country.
Functioning both as a noun and a verb, guanxi refers to the relationships that businesspeople form with one another and the process of forming and maintaining those relationships.
A significant portion of preliminary business dealings will often be devoted to building meaningful connections. A central feature of these relationships is that both parties should be able to call upon one another for support or favours. If one does a favour for the other, it’s expected that they'll return the favour at some point.
Guanxi is largely about building trust and, without a meaningful relationship, expats are unlikely to succeed. Guanxi can be maintained through the exchange of gifts, making allowances in negotiations or simply inviting business associates out to dinner.
Expats should also be patient, and avoid rushing decisions and negotiations. This is a vital part of doing business in China, and the long-term benefits usually greatly outweigh any short-term frustrations.
“Saving face” is closely associated with guanxi. In Chinese culture, the idea of “face” is divided into two concepts that function together. On the one hand is mien-tzu, which relates to reputation and success, while on the other is lien, which speaks to a person’s integrity and moral character.
Expats should take every precaution not to publicly embarrass anyone. They should also conduct themselves in a dignified manner that's in accordance with what Chinese society would expect of their position. Losing face or causing anyone else to lose face will negatively affect business relations.
Expats will have to try and strike a careful balance between guanxi and saving face, not least for legal reasons. It is easy for close relationships and reciprocity to become unethical, and there's a fine line between giving gifts and bribery.
Hierarchy and seniority are also key elements of Chinese business culture. Elders and senior associates should always be given respect, which is done by avoiding eye contact and showing deference at meetings.
Attitudes toward foreigners in China
Chinese companies are often eager to work with Western businesses. Unfortunately, there is sometimes a degree of distrust, at least partially because of the country’s troubled history with the West and political differences. But foreign businesspeople that make an effort to respect and understand Chinese culture are better regarded than those who expect to be accommodated.
Dos and don’ts of business in China
- Do acknowledge senior associates first
- Do make every effort to avoid offending or publically embarrassing Chinese associates
- 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 or discuss Chinese politics
- Don't gesture with your hands when talking
- Do exchange business cards at every introduction. Ensure cards include business title, as well as a Chinese translation on one side of the card.