8 Tips for Conducting Business in China

February 3, 2015

8:00 am

China is a new market of opportunities that’s attracting lots of global entrepreneurs and investors. However, it’s becoming increasingly difficult to have a significant breakthrough and to make it big there, as the influx of firms is widening, and the local businesses are also stepping up their game. In order to put all the odds on your side, it’s better to learn a few tips beforehand on how to conduct business in China and how to do business there, seeing as it’s completely different from how it’s done in Europe or in the U.S.

1. Learn Chinese

For many, international business often translates to speaking in English. However, in order to conduct business China, it’s better to know the local language in order to conduct business; not everyone speaks English there, and even if they did, people often appreciate foreigners knowing how to speak Chinese. Learning the language, and embracing the culture would be a great starting point. A usual issue for entrepreneurs willing to enter China market is this issue about company naming in China. In these cases, working with a local partner with deep knowledge on the Chinese language and different dialects can be crucial in pinpointing the right name that fits in with the culture.

2. Without “Guanxi”, You Won’t Make It Far

“Guanxi” is the Chinese word for acquaintance circle; in China, everything business-related is done with guanxi. If you know someone from the targeted company, then your problem will be solved. If you don’t, you can expect many complications that can make life increasingly difficult. When conducting business in China, it’s important to develop a network, to make guanxi, and to sustain your relationships with them.

3 Guanxi are Often Maintained in an Extra-Professional Setting

In China, the frontier between private life and professional life is very thin: important decisions and contract signings are more often than not taken during dinners or trips. In order to sustain your guanxis, it’s important to understand and embrace Chinese culture so that your guanxi will trust you and want to do business with you: invite them to expensive restaurants, buy them and their family expensive gifts (from your original country – they often prefer something occidental to made-in-China goods), and essentially do everything to strengthen the link between you and your relation.

4. Lying Can Be Considered Polite

Understanding Chinese culture is essential if you want to do business in China. One point that’s fundamentally different and hard to grasp in Chinese culture is their approach of other people: always strive to be polite and to not impose yourself upon the people with whom you’re conducting business. Therefore, truth is often distorted and distilled so as to not offend but retain a firm understanding of a certain point. The problem here is that it concept is naturally understood by Chinese people, but more difficult for foreigners: traditionally more straightforward, Chinese often mistake speaking the truth as a direct insult to them. In order not to threaten your guanxi, be sure to soften your words, and remember that lying out of politeness is better than being truthful and hurting.

5. “Mianzi” is Something You Can’t Ever Lose

Mianzi is a typically-Chinese concept: it literally translates as “face”, and it’s used to express one’s credibility and honor. If you lose your face, it’s your mianzi that’s being trampled on, and in China that’s the most humiliating thing ever; losing mianzi is like being slapped in front of your rival. While communicating in China, you’ll have to make sure not to bruise your interlocutor’s mianzi, and that can only be prevented through a better understanding of the Chinese culture and of its language.

6. Have Patience

It’s important to take your time when you’re conducting business in China: never be frustrated because things are evolving slowly – because that’s the way it will always be! Indeed, before, during, and after a contract signing, negotiations will change – and it’s something that’s needed for the Chinese. They do this in order to make sure everything is right. Additionally, extensive, oral communication with guanxi is as important as any written contracts or laws in China, so having multiple dinners and drinks in order to sign one contract is a regular thing.

7. Beware of Written Contracts!

A lot of important things won’t be written in the contract and will still be done by the person with whom you’re going into business: that’s why it’s essential to always listen and understand what people are saying during business dinners or trips. Don’t be shocked or feel betrayed if your guanxi decides to do something that you didn’t agree upon: most likely, the actions they commit or decisions they make were already implied.

8. Pay Special Attention to People’s Needs

What makes someone want to sign a contract with you rather than with your rival? Of course, it’s because he or she finds more personal interest in your proposition than in your rival’s. In order to make sure he or she decides to go with you, it’s important to read between the lines in order to define their needs and their expectations. Once you know what they want, you’ll be able to offer a proposition that’s a lot more appealing to them than your rival’s, and the negotiations will be far easier. However, you’ll have to make sure to know the rules of the game; hiring a lawyer in this case would be a great decision, in order to guarantee everything you’re doing sticks to the laws.

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Thibaud Andre is a French consultant working at Chinese market research firm Daxue Consulting. He is passionate about Chinese culture and likes to share insights about the many emerging markets of the Middle Kingdom.

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