China is one of the key players in today’s global economy, but international organizations are often unaware of the unique challenges of conducting business there.
While the Chinese have adopted some Western practices, their business style retains many native cultural influences, impacting everything from establishing a business presence to exchanging business cards. In order to build a successful commercial partnership with the Chinese, it’s necessary to understand and respect these nuances. This paper will educate international executives and their employees about China’s unique business practices as well as its history, geography, and economy.
History and Geography
Chinese professionals are often impressed when foreign contacts are informed about their history and geography. China’s past stretches back 4,000 years and is full of literary, scientific, and cultural achievements. The country was governed by a long line of emperors until 1911, and after various wars and internal conflicts, the People’s Republic of China was formed in 1949. Geographically, China is roughly the size of the United States. There are two major rivers that have been vital to the development of the country: the Yellow River and the Yangtze River. China’s sizable population of 1.3 billion is 91% Han Chinese, while the remaining 9% includes 55 ethnic minorities.
Key Industries and Cities
A discussion of Chinese business would be incomplete without a solid economic picture of the country itself. China’s major industries include steel, electronics, automobiles, consumer products and various agricultural exports. Key cities for international business include the capital city of Beijing, as well as Hong Kong and Shanghai. China also maintains “Special Economic Centers” where governmental policies are particularly business-friendly.
Government’s Role in Business
As a “socialist market economy,” business interaction with China means interaction with its government. Although government involvement is less prevalent in the coastal regions, there is still a high level of supervision in industries vital to the country, like energy. China’s current political stance regarding commerce is more open to international markets than in the past, but it is still quite possible that you will frequently deal with government officials.
Negotiations and Interpersonal Relationships
Being aware of the intricacies of the Chinese style of negotiation will increase your chances of successful agreements. Firstly, negotiating from a position of strength requires embracing the concept of relationships. Americans in particular are often described as too impersonal in their approach to business, so taking time to build trust and rapport with Chinese colleagues and clients is crucial to success - though it may take longer than you are used to. This style of interaction evolved from Confucianism, where relationships and hierarchy are invaluable to the order of life.
Also take the time to monitor your Chinese counterpart’s body language during negotiations. Communication in general tends to be indirect, and nonverbal cues will indicate what’s not being said aloud.
Documents and Contracts
Along with Confucianism, Taoism also plays a part in shaping Chinese business culture. The principles of flexibility associated with this philosophy are sometimes a source of misunderstanding when negotiating contracts. Legal and contractual documents are not always viewed as strictly binding in China. Life must be flexible to meet changes and challenges that arise, and contracts are no exception.
As might be expected, relying on American methods of management may lead to frustration, especially when dealing with Chinese employees. The organizational structure of Chinese companies is exceedingly hierarchical, and most people adhere strictly to the chain of command. As a result, communication from subordinate to superior is generally limited. Managers are expected to be a shining example for their employees, and employees are expected to closely follow directions. Therefore, if you are taking on a managerial position, be certain to be clear and detailed when giving directions or instructions.
Reputation and Appearances
Another important concept associated with relationships in China is “Miānzi” or “face,” which refers to the image of a person and his or her company; an English synonym might be “reputation.” Usually, the best way to avoid embarrassing others is to appreciate that they are trying to maintain face. This means addressing errors on a private, one-to-one basis and remembering that if something goes wrong, subordinates might not be comfortable explaining failure.
Becoming informed about the nuances of doing business in China will give you access to one of the fastest growing economies on the international stage. If you are interested in learning more, contact Echo International at 412-261-1101 or visit our website at www.echointernational.com. For additional perspective, an online course titled Intercultural Awareness: China is available at www.echoinsight.com.