Doing Business the Chinese Way

By 07/05/2013 Uncategorized No Comments

By Ludmila (Mila) Rusakova Golovine 

China is the second economy in the world with the largest global population at 1.3 billion people. As the recent Great Recession has impacted other countries’ economies, China’s economy is still growing by leaps and bounds. As its prosperity rises, so does the consumer power in the country itself. All of these factors are making China an attractive place to invest in and market goods and services. Nevertheless, boasting more than 5,000 years of history the Chinese have a distinct and distinguished culture. It is only by being cognizant of and paying deference to this culture that one can successfully operate in business cooperation with the Chinese.

Having a basic understanding of Confucianism is crucial to anyone wishing to do business with the Chinese. Confucianism is an ethical and philosophical system, which has served as the Chinese societal structure for about 2,500 years. Put quite simply, this philosophy professes that relationships and hierarchy are important. In this doctrine, everyone is supposed to know his or her place, show mutual respect, and exist in harmony. Avoiding conflict and maintaining a correct outward demeanor maintain this dynamic. Therefore, it is important to always keep calm and avoid any argument.

In connection with Confucianism is the concept of “face.” The closest equivalent of face in Western culture would be honor; however, it does have some characteristics that are different. While honor can be lost in Western culture it is difficult to give honor to someone. In Chinese culture, this is done quite regularly. It is important to know the manifestations of face and how they are used. Firstly, diu-mian-zi occurs when your actions have been exposed to other people resulting in the loss of face. This should be avoided at all costs. Once you have lost face, you have lost all credibility in Chinese eyes. Secondly, gei-main-zi is giving face to others by showing respect and having others give face to you.

Showing proper etiquette, demeanor, and respect does this. Giving face to your Chinese counterparts will greatly endear you to them and they will feel more comfortable about the prospect of doing business together. Finally, there is liu-mian-zi, the concept of saving face. This occurs when mistakes are avoided and wisdom in action is displayed. Saving face demonstrates to the Chinese that you truly understand their mentality and expresses your experience and maturity. Once this is done, your impression on your Chinese counterpart should improve dramatically. Any businessperson wishing to collaborate with the Chinese should understand and be proficient in all manifestations of face. Otherwise, failure will surely follow.

When meeting with the Chinese, please bear in mind that Chinese culture is very reserved and calm, especially in physicality. It is considered rude to pat someone on the back or place your arm around the person. In addition, do not demonstrate with large movements as they are considered aggressive. Maintaining self-control is a highly regarded value among the Chinese. If you can demonstrate this value, then you will be well received by your counterparts. Upon the initial meeting, it is customary to shake hands and give a slight bow. The handshake should be brief and not too firm, lest your Chinese counterpart deem you aggressive.

Gift giving is an expected aspect of Chinese business. Very often in the West, this practice is sometimes badly viewed but in Chinese culture it is quite common. Nevertheless, it is imperative that the gift giving be done in front of a third party. Otherwise, your Chinese counterpart may misjudge the situation and believe that the gift has some strings attached. Also, it is important that the gift reflect the Chinese counterpart’s status and title. Therefore, proper research must be done before the gift is selected.

In terms of actual negotiations, a Westerner must be very patient and be prepared for long-term negotiations. The Chinese are shrewd negotiators. They prefer to take their time. In addition, they like to negotiate with multiple companies in order to achieve the best deal possible. Consequently, a Westerner’s patience can sometimes be put to its limits. It is crucial to be as expressionless as possible for it is at this point where all of the aforementioned values of face, self-control, and respect come into play. Any deviation from them will be noticed by the Chinese counterpart and could have a negative effect on the business at hand. It is further advisable that the Westerner be prepared to make concessions on a deal. The Chinese like the feeling of gaining concessions. Therefore, begin your negotiations asking for more than you can settle for. This action will allow you to make those necessary concessions. In this way, everyone will be left with a sense of accomplishment.

While it is true that the Chinese business culture can be somewhat intimidating to a Westerner, it is important to realize that by engaging in cultural sensitivity and keeping a calm demeanor, one can achieve success. Through willingness to research, openness to accept difference and ability to adapt one can definitely do business the Chinese way.