Someone I know wrote this as part of their study and klindly agreed to let me pubish this here.
China has a unique business culture. Understanding the appropriate etiquette can be the key to getting things done and to be successful in business in China.
Finding business contacts
In China, business relationships are often formed through recommendations and personal relationships. This can make it hard for Westerners to get in contact with appropriate business contacts, unless they represent a very big company that everyone wants to do business with.
However, it is being more common for people to approach businesses directly, via the Internet, trade fairs, catalogues and brochures, advertisements, etc.
Guanxi – Business relationships in China
Business relationships in China are often based on personal or social relationships. If you form a business relationship with people you don’t know, expect the relationship to become social. You’ll eat with them, drink with them and sing with them!
The more you share about your personal life, the closer your business relationship will be. The decision to do, or continue doing business, with you is often based on the other party’s personal view of you rather than the numbers in a business case.
This is in contrast to Western business relationships which often remain professional and slightly detached, even after a long time.
An extension of this is the concept of Guanxi, which is the cornerstone of doing business in China. It can be hard to describe all the elements of Guanxi, but it is essentially to do with having good connections and getting things done through these relationships. For example, Person A needs something, so they get one of their connections, Person B, to call in a favour with Person C, who can actually influence the outcome.
The Chinese normally greet each other with a nod. They do usually shake hands with Westerners, but remember this is not their normal way of greeting people. Don’t judge someone if their handshake is not firm or they don’t make eye contact.
Names are very important to the Chinese and you need to establish how to address someone during your first meeting.
Chinese surnames come before the given name, eg surname firstnames. However, at first you are likely to address your Chinese business partners using their surname, followed by their title or designation, such as in the following examples:
- Liu Xiansheng (Mr Liu)
- Zhang Xiaojie (Miss Zhang)
- Wang Zong (Director Wang)
- Li Jingli (Manager Li)
Paying respect to senior leaders is very important, so addressing people by their designation, as in the last two examples above, is common and often important.
Face is an important concept in China. Giving face means to show the proper respect to someone. Loss of face occurs when someone is not shown the appropriate respect or when they are embarrassed.
It’s very important to avoid embarrassing someone. If they have made a mistake or if their negotiating position becomes untenable, make sure that they have an option they can take which lets them ‘save face’ or avoid embarrassment. Do not make them admit to their mistake or to back down from their position.
The ‘rules’ around the appropriate level of respect required can be quite complicated. For example, how expensive should a gift be for a prospective business partner? This may be different in different circumstances.
It’s easier to understand face from a comparative point of view: giving the most respect to the most senior person. For example, if giving gifts, make sure that senior managers receive better gifts than those less senior to them.
Although paying respect occurs in the West, there is far more emphasis placed on this in China. For example, on meeting the CEO of a Western company, it would often be acceptable to address them by their given name. This would result in a loss of face for a Chinese CEO, who would expect to be addressed by his surname and designation, as outlined above, as a mark of respect.
Exchanging business cards has become a ritual in China.
Business cards are normally exchanged at the beginning of business meetings.
Two hands are used when exchanging cards, both when giving and receiving. The card should be facing the person receiving it. When you receive a card, you should take some time to examine it, as this shows respect for the giver.
Seniority is very important in China, so you must give your name card to the most senior person first, then hand them out in order of seniority. Failure to do this will cause a loss of face for any senior people who are bypassed in their normal order.
Have a plentiful supply of cards as you’ll probably give out many more than you expect.
Giving gifts is often a part of doing business in China and is an important part of building relationships. However, it can be tricky to buy appropriate gifts.
Gifts are often measured by their value. The more expensive the gift, the more face given to the receiver and the greater the benefits to the business relationship. Cheaper gifts, even those with novelty value, are not likely to be well received, although the receiver is unlikely to give any indication when receiving it.
However, there is increasing focus on corruption and bribery in China, so the value of gifts should not be unreasonably high, in case it causes questions around the motives for the gift.
Also note that as mentioned above, senior managers should be given better gifts than those less senior to them. As with business cards, gifts should be exchanged using two hands.
There are some things to avoid when giving gifts:
- plain black or white wrapping paper, as these are the colours of mourning
- clocks, a handkerchiefs, umbrellas, white flowers, as these can signify death
- sharp objects, such as knives, which signifies the cutting of a relationship
You should follow normal conventions for common courtesy:
- Don’t be late for meetings, especially if you’re the host
- Don’t interrupt people when they are speaking
- Don’t put people on the spot
Most Chinese businessmen know some English, but they are unlikely to be fluent, so speak slowly, use simple language and short sentences if possible.
If you can, learn a few words of Chinese. As well as being a good ice-breaker, it shows the Chinese party that you respect them and their culture. They are likely to appreciate the effort.
It’s a good idea to have an interpreter if you can. Ideally this should be someone you can trust, who understands what you are trying to achieve and who can also help you negotiate cultural differences and the subtleties of doing business in China. However, you should talk directly to the host rather than the interpreter.
There are cultural differences. The Chinese representative may pause to consider things properly before speaking, resulting in gaps in the conversation. They may also not give an immediate reaction to what you are saying, but rather consolidate their thoughts before responding. Be patient.
Modesty and compliments
Modesty is considered a virtue in China. People don’t like others who show off or boast about things – this is considered to be rude. Conversely, putting yourself down actually increases your standing in Chinese people’s eyes.
Expect Chinese people to pay you compliments, but be modest and deny them. Make sure you pay plenty of compliments in return.
You should never say “no” to a request directly. To do so would result in a loss of face for the other party. Instead, try to find an indirect way to say it, or to defer the decision to another time, such as “I will have to look into that” or “we can probably do that sometime soon”. Avoidance is a key technique in negotiations involving the Chinese.
Keep in mind that if the other party is telling you they need to look into something or are vague on when something may happen, they may actually be saying no to you. There are many stories of Western companies being told something will happen soon, without it ever materialising. This may have been the Chinese party trying to spare their feelings by redirecting the topic rather than give them a straight “no”.
Of course, if they say they need to look into something or that something will happen soon, they may actually mean that – there is no way to tell!
Similarly, the Chinese representatives may say “yes” when they don’t mean it. It may be they are showing that they are listening or that they understand what you are saying. It may even be that they don’t want you to lose face by disagreeing with you publicly. Just because they are saying yes does not mean that they are agreeing to your terms.
You will find that people don’t want to rush straight into negotiations. They will want to get to know you first. You will need to make small talk with them.
It’s best not to discuss politics or religion, as you may offend someone. Similarly, it is best to avoid telling jokes as humour doesn’t translate well and you are likely to just confuse people.
It’s better to discuss neutral topics such as what you should see while you are in China, what you should eat, or sport – the NBA and soccer are popular.
You may also find that people have questions for you. Don’t be surprised if they are very direct and ask your relationship status, if you have children, etc.
As mentioned above, business is often more about relationships than it is about numbers in a business case.
As a result, doing business in China almost always involves lunch and/or dinner at a restaurant. It is said that more business is done over the dining table than over than over the boardroom table.
The restaurant will normally be on the expensive end of the scale (for China) and you will often eat in a private room. Seating arrangements are important, so defer to the Chinese party when deciding where to sit.
There will normally be many dishes, which are shared by all. It is polite to try every dish. You should always leave something on your plate at the end, to indicate that you have eaten your fill. Sometimes your host may serve food into your bowl and it can be a good move to do the same for your host if you can do so comfortably.
The host (whoever arranged the dinner, which may be you) normally pays, although it can be good to make a token attempt to pay. Fighting to pay shows your generosity.
Inevitably, dinner will involve drinking with your hosts.
There will almost certainly be alcohol at a business lunch or dinner.
This is often baijiu, Chinese wine, which is stronger than Western spirits. It can have an alcohol concentration level of up to 80%! Beer is relatively common and you sometimes encounter red wine, but toasting will normally be done using baijiu.
Drinking is done through toasts, where the host say ganbei. This literally means ‘dry glass’ and you are expected to finish the glass, which is normally the size of 3 to 4 shot glasses. Be careful! It is easy to be ‘toasted’ into submission.
It is often seen as rude to not drink with your hosts. However, it is better to not drink at all, than to drink only a little then stop.
If you say you can only drink a little, this will be taken as modesty, and they will assume that you really can drink a lot. If you start drinking, then stop after a few drinks, this will be considered to be very rude. Reasons which would be valid in the West, such as having to work tomorrow, are not acceptable.
The best solution is to say that you cannot drink (wo bu hui he). Alternatively, you can bring a partner who can drink on your behalf.
Smoking is very common in China and it is a ritual for men to share a smoke after a meal. You should let them smoke if they want to. Refusing to participate is less rude than refusing a drink, just say wo bu hui chou (I can’t smoke).