CHINA: Understanding & Dealing With the Chinese Way of Doing Business!

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American come somewhat the other way around.

Let's Eat!

If I am strictly logical and persuasive, then Americans will accept my argument and start to trust me. It is important in Chinese negotiation for the two parties to trust one another and not embarrass each other. Americans like to start negotiation at unreachable point and then bargain from there. In Chinese eyes, Americans these levels are often embarrassing and humiliating and makes them not want to negotiate.

One financial analyst told the Washington Post, "Return on capital and profitability are not in the Chinese vocabulary. Market share is the only game they know. They pump in a lot of money when its not clear or its justifiable.

Chinese are known as risk takers. Their thinking sometimes goes that opportunities are rare and they must be pursued aggressively when they occur. Whole families will sometimes invest great sums of money on the chances of one member to get ahead. And, there is often an emphasis on getting rich while you can.

Chinese businesses have been criticized for going after quick profits rather than looking out of the long term interest of their companies.

He know I do the same for him one day. Many Chinese business owners like to run their companies on instinct and with total central control. With a firm, centered hierarchy many Chinese feel that workers spend more time talking than working. Those that have become hugely successful have often done so by controlling supply chains in their business.

Reputations can rise and fall without much base in reality. Newspaper coverage favors those who have government connections or pay for it. John Howkins, The Australian July 28, ]. On working in China, the film producer Ismail Merchant said. Many businesses have traditionally sought out customers by going from street to street shouting or making some noise to advertise their products. In the old days melon-seed vendors walked around banging brass gongs, chanting "Easily opened! Oh so easily opened. Even today people spend a lot of time at home doing their chores and the noise made by vendors lets homeowners know they are coming.

Today watermelon and eggs sellers use the same methods, only they travel around in small pick trucks and hand carts using speakers connected to a tape player that repeat the same message over and over. Customers used to slip their hands up the long sleeves of merchants and bargain with squeezes to the wrist so onlookers would not know how much they were paying. This contrasts with Western corporation which generally rely on professional managers.

Let's Drink!

One Chinese businessman told the Washington Post, "We mostly hire people because he family knows them, or because they're introduced by a family member. That way you can find someone you can trust. Chinese find it not so easy to trust other people. Many Chinese companies are run by old patriarchs backed up by Western-educated sons and daughters.

The Chinese family system is much more effective in simple organizations like shipping, real estate and the production of low-market goods such as shoes and electronic but is not as effective in sophisticated organization that spend a lot on research and development and design high-tech products. Confucian thought adapts itself very well to the hierarchical management style.

One of the key components of a Chinese family-run business is trust. The Chinese have a reputation of distrusting people outside their clan or circle. The advantages of the Chinese family system of business are that it keeps management size down and allows quick decisions to be made without lengthy meetings, which in turn allows companies to move quickly into profitable markets. The disadvantages of the Chinese family system of business are that favoritism keeps talent out and family feuds can bitterly divide a company especially after a patriarch dies.

Modest Chinese businesses like noodle restaurants and small shops. Women often play an important role in organizing the finances. Explaining how such a business gets started one Asian businessman told Stanley Karnow in Smithsonian magazine: At first I keep old job while wife and friend take care of store; later I quit to run business full time. Until last year we are here seven days a week, sometimes until 2 in the morning.

Now we are doing OK, so we take Sunday off. There are critics of the the Chinese family business model. But Jewish people want to be the best and make a huge company.

CHINESE BUSINESS CUSTOMS--ETIQUETTE, NEGOTIATIONS AND FAMILIES

Tang Shuangning, president of Everbright Bank, a fast-growing lender, told the Washington Post that managing a bank in China is no more complicated than executing a fine work of calligraphy. And it all depends on how you make use of your potential power. A number of elite Chinese financier have a passion for the arts. Xiang Junbo, president of the Agricultural Bank of China, has written screenplays. Wang Yi, vice-president of the China Development Bank, which owns 3 percent of Barclays, has received praise for music compositions.

Tang, the calligrapher mentione above has penned poetry, written a short biography of Zhou Enlai, Mao Zedong's faithful premier, and made pilgrimages to the towns of ancient poets Li Bai and Su Dongpo. Yet for every calligrapher-cum-banker such as Tang, there are dozens more entrepreneurs whose highest art form is karaoke. Many business people in China grew up during the chaotic height of the Cultural Revolution in the late s, when traditions were overturned and education was interrupted.

How to do Business with Chinese People

By amassing some art, they feel they may fill some of that void. That businessmen want to prove their artistic bona fides is part of a deeper trend of Confucian beliefs reasserting themselves in China. In doing this he made profit-seeking business appear crass and undesirable to Chinese through the centuries. Like a lion opening its bloody mouth is Chinese proverb for voracious greed. The distaste for money talk also filters into business relations between Chinese and foreigners, a potentially uncomfortable point for Westerners who are used to talking through deals in detail.

Gervais Lavoie, a Canadian businessman who has run companies in China for more than two decades, told Reuters meeting face-to-face with his Chinese counterparts is essential but that they are more likely to debate philosophical issues than negotiate contracts. It's like, why do you want to lose your time talking about business? Elaine Kurtenbach of Associated Press wrote: But such lending has ballooned because the reluctance of China's state-run banks to lend to small and medium-sized businesses has been compounded by government curbs on credit to cool inflation.

Interest charged by private lenders can be as high as 90 percent, inviting comparisons with dodgy investment schemes. Elaine Kurtenbach, Associated Press, October 18, ]. There is little immediate impact on China's massive state-run banks from some of these loans turning bad. A bigger risk is Wenzhou's credit squeeze spreading to other parts of the world's No. This site contains copyrighted material the use of which has not always been authorized by the copyright owner. Always be mindful of maintaining face and harmony with Chinese people through sincere compliments, showing respect, or other actions that tend to raise the self-esteem of others.

You should particularly show respect to older people and to those in more senior positions than you. Building good business relationships and trust are very important in China, so expect to spend plenty of time at meetings and banquets with your potential business partners.

Often these will be done out of business hours with karaoke KTV being a favourite medium for developing relationships or at business dinners. Chinese business people prefer to establish a strong relationship before closing a deal and never start a discussion or meeting by getting straight to the point about business.

Like other East Asian cultures, the Chinese like to develop a personal connection first.

So expect to be asked, and to ask questions, about family. Try to find a connection with your Chinese counterpart and make a note to remember it. For example, if they have a son, remember his name and ask each time you see them how he is. A handshake is becoming the standard way to greet men and women in a business setting, whatever their age or seniority.

Note that the Chinese respect their elders and an extra display of courtesy in the presence of an older person will go down well. Often people will slightly nod or bow their heads when shaking hands, particular with senior people. Business cards are then generally exchanged before seating. When meeting Chinese business people, it is also useful to know some Mandarin. Simple phrases such as: When doing business in China, then, it pays to think back to former days in the west when gentlemanliness and gallantry were to the fore, when ritual was favored over personal initiative, when it meant far more who you went to school with and your father's status in society than who you, yourself, actually were.

You're not excluded from this; far from it. As a foreigner doing business in China you're a guanxi-catch and your favor will be eagerly sought. You still reside outside the core interests of friends and family. You're useful, but you may find that amicable claims have been exaggerated when you get down to business proper.

Business etiquette tips

Meanwhile, younger Chinese people are finding these outmoded ways increasingly frustrating, particularly given that most who may have ability find themselves excluded for having no guanxi and, without that, you're not considered worthy of much in the way of mianzi. Changes are coming , but change is slow. For now, it pays to study up on the old rituals and traditions of guanxi and mianzi if you want to do business in China.

If you're planning on arranging your own business dinner in China, check out our lists of restaurants in China's largest cities. You may find it best to play on your status as a foreigner. Just be sure it's suited to the people with whom you're doing business and, before you go, visit it yourself. If you're lucky, you may get a seat at a table near an ongoing business dinner and you can observe the rituals for yourself. China Highlights can't provide you with guanxi and mianzi, but we are experienced in business in China and experts at making travel arrangements for foreign visitors.

How to Do Business Chinese Style — Using Connections and Honor

We can help with hotels and restaurant bookings, flights , and private transport in the cities you are doing business in. Contact us with your requirements, and let us take the hassle out of the logistics so you can concentrate on what you are in China to achieve. Top Places to Visit in June in China.

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