The Insider’s Guide to Doing Business in China

In this article on cross-cultural learning and China, Michael Keller takes us through some important considerations when working with Chinese partners, suppliers or customers.

No single article could offer the information needed to prepare the intrepid business traveler for his or her first interactions with Chinese counterparts. But there are at least three major aspects to the culture that, once known, will provide a lens through which understanding can begin. Here they are, in no particular order:

Honor, also called face, is an active two-way street in China, with interpersonal relationships focused around getting, giving and keeping it. Respectability is maintained and enhanced through strong business and personal social networks. The take-away: If you’re trying to work with someone, do not challenge that person in front of others. Chinese, like all the rest of us, react very negatively to losing face, while saving or gaining face is a powerful positive motivator.

Guanxi is a complicated concept that means relationship, partnership, social network and all the power that these connections can leverage. It also entails a social structure upon which Chinese society has developed to operate in the vacuum left without a strong legal system. People wield guanxi to obtain goods and services through their connections. Developing guanxi takes time. This video offers a good insight into the concept.

China is an ancient culture and one that is reawakening to the social constructs put into place long ago. If you want to get a good foundation for the tenets the modern corporate leader holds dear, skip Mao and read Confucius, whose ideas decode Chinese society’s fixation on harmony, stability and security. His teachings gave rise to the hierarchical nature of Chinese society, with prescribed roles which dictate that children honor and respect parents the same way that employees do to bosses and citizens do to the authorities.

There are a number of basic things you can do to gain respect and increase the comfort level when doing business.

First, when you first meet someone have your business card at the ready. Business cards are very important as part of the introduction process. Offer it name side up with both hands, almost giving a little bow when presenting it. Your interlocutor will offer hers the same way; take her card with both hands, pointer finger and thumb of each hand grabbing each of the two corners nearest to you. Do not immediately slip the card into your pocket. Turn it so you can read it and study it. Repeat the person’s name and title.

Be aware that signs of good and bad luck are taken more seriously in China. White means death while red means good fortune and happiness; the number four sounds like the word for death while eight sounds like the word for wealth—the former is best avoided in business transactions while the latter is sought after; don’t leave your chopsticks crossed or sticking them standing up in a bowl of rice-that’s a practice done for the recently departed.

Saving Face
Michael Tkach, a senior HR executive with business ties to China that go back to 1995, offered more specifics in business dealings. He said negotiating with Chinese counterparts is always a “tricky venture.” As they are generally averse to openly reject or refute an idea or proposal as a matter of saving face, the trick is not to ask questions whose answers are either yes or no.

“Better idea is to lay out a couple of options and ask which they prefer,” the Shanghai-based Tkach said. “It is always best to identify the true decision-makers in these situations because if you don’t it will later come back that the person who answered your question wasn’t in a position to give a decision.

“Similarly when asking for a decision or agreement, it is best to limit the audience. That way if there is a conflict, the person posing the disagreement won’t lose face in front of people who work for them.”

He also recommends documenting all discussions and agreements, then asking the person with authority in negotiations to sign off on it. He said that process is critical to producing dividends with Chinese counterparts.