Business Practices In Chinese Culture – China is one of the fastest growing economies in the world. Entrepreneurs around the world are trying to explore Chinese markets for business opportunities. However, entrepreneurs must keep in mind that doing business in china is very different from doing business in West or any other country for that matter. There is altogether a different business culture that is practices in China, and one needs to be very familiar and adaptive towards that culture in order to ensure success in their business.
Guanxi- The Key To Business Relations
Referrals are the keyword for the building contacts in China. The basis of the most business relationships fostered is recommendation of business associates. Thus, it is essential for overseas companies planning to set up business in China, to go ahead for a joint venture with a Chinese organization. Along with many benefits, the most paramount advantage of such an approach is easy establishment of relationships into a complex network of Chinese relationships. This is essential because personal relationships, also called Guanxi are the most valuable instrument in Chinese business.
Chinese believe in transforming business relationships into personal relationships. Trust is the foundation of their business relationships. It is important for them to share their personal lives with business associates in order to create a feeling of mutual trust. They discuss many things outside their business, and the business deals are often decided as per the status of personal relationships.
Communism
The political culture of China is communist. Under Communism, being associated with one’s work group (also called dan wei) is of immense importance. According to Chinese, dan wei guarantees security to its members till death. Moreover, membership to a work group guarantees certain rights and privileges (could be basic necessities such as medical assistance, accommodation etc.), which are forfeited once the member leaves. Some people often end up taking two jobs with the view of ensuring double security with two dan wei.
Confucian Philosophy
China believes in Confucianism, and thus Humanity and Righteousness form its fundamental values. As a result, operational structures, management style etc. tend to be hierarchical. According to Confucianism, all relationships are unequal, and these inequalities must be respected. This becomes the basis of all business relations. Notions of empowerment, freedom of speech etc. are not welcome by a Confucius business culture.
Subordinates should not question the decisions of the seniors. The Manager is a fatherly figure whose prime job is welfare of his colleagues and must be abided by. Thus, Seniority is very important in Chinese business culture. Higher level persons must be addressed by their designation followed by their family name. The first name must be used only when the person is known for a long time. Formality is a sign of respect, and thus informality must be avoided.
Ethics Of A Business Meeting
For Chinese, punctuality is of great essence. Arriving late for a meeting is considered to be disrespectful. The seating arrangement in a meeting room or a dining table is in accordance with importance and seniority. The first meetings usually begin with talks unrelated to business. Otherwise also, jumping directly to business talks is not taken in the right spirit. A meeting is more about fostering relationships rather than taking decisions. The main goal would be to exchange information. Decision making process is slow and takes place in consensus style discussions involving all the concerned people.
Chinese are tough negotiations, with main focus on ‘concessions’. You must show your compromising nature to them and ensure that they feel satisfied with whatever concession they get. Chinese are meticulous planners, and will have in depth knowledge about their business partners. They have a tendency to begin negotiating with humility, showing them as vulnerable and weak because of which they deserve concessions from the opposite party. However, one should maintain calm and patience.
Usually, the first person to enter the meeting room is the senior most. It is a must to exchange business cards during first meeting. Cards must be exchanged one-on-one. There is a proper etiquette for exchanging business card. The card must be held in both the hands while exchanging. The written part of the card must face the recipient. It is impolite to straight away place the card in the pocket without scrutinizing it. The card represents the man, and thus must be treated with great honor.
Communication
One must be familiar with Chinese language, Mandarin to carry out trade in China without a translator. People are not well conversant with English language and there is a very thin layer of fluent English speakers. Thus, communication can be a very cumbersome process as translations always involve misunderstandings and misinterpretations. Comprehension should not be assumed without several times of confirmation.
Chinese find it difficult to say ‘no’ directly. Thus, any response other than an affirmative ‘yes’ should not be considered a ‘yes’. Chinese also find it very difficult to deliver bad news. Bad news is often delivered through an intermediary with aim of reducing the shock element, and try to eliminate any adverse effects on the relationship. The Chinese have a very conservative body language which is interpreted by Westerners as a lack of responsiveness and emotion.
Exchange Of Gifts
Exchanging gifts is a very old and popular tradition in China. This is because relations are of more importance than business in China. A gift represents your interest in creating a healthy relationship. ‘Thank You’ is not sufficient in return for a favour extended. Gifts must also be given keeping in mind the position, rank and seniority of the person.
However, expensive gifts must be avoided, as it could be considered as bribery. A senior person must be given a better gift, or a gift perceived to be of higher value. Chinese usually gift Chinese art products. Gifts should be graciously accepted. Refusal is considered to be impolite.
Conclusion
Given China’s joining of WTO and the Olympics in 2008, we witness opening of Chinese economy. As a result, Chinese business practices are moving towards the conventional methods, though significant differences still persist. It is quintessential to follow these cultural practices (though Chinese do not expect foreigners to know every cultural norm) for a successful business.