Overview of Business Culture in China
For much of the world, business culture in China remains widely misunderstood, unstudied, or completely mysterious. Like any other country, China has its distinct expectations, customs, and etiquette for how business should be conducted. Chinese corporations are very proud of their traditions and therefore take them very seriously. Adherence to business etiquette in China is necessary to run meetings, interviews, and presentations successfully.
Failure to conform to Chinese business etiquette can prove detrimental to companies that hope to break into the country’s markets. One can even fail to expand in China without a proper Chinese brand name. The unique expectations for Chinese business practices are often a stumbling block for poorly informed companies. Without the proper understanding of business culture in China before engaging Chinese firms, organizations find themselves with a poor foundation and are often unable to accomplish what they set out to achieve.
Because business practices in China are so misunderstood throughout the globe – or not learned about altogether – it can be challenging for corporations to adequately prepare for how to conduct business affairs in the Chinese market, resulting in a weaker foundation for their expansion into the region and insubstantial professional relationships.
Business etiquette in China requires expert knowledge of the behavior and expectations associated with it. Familiarizing oneself with these norms is essential to any company that wishes to succeed in the Chinese market.
Philosophy and Business in China
China is renowned for its rich culture and history. This national identity seeps into nearly every facet of Chinese society; business is no exception. Confucianism, named for the prolific Chinese philosopher and his teachings are a central concept in Chinese cultural makeup.
One of the essential tenets of Confucianism is the implementation of a clearly defined hierarchy. An individual’s rank corresponds with the amount of respect that they should receive from others. In this regard, disrespect or irreverence for leadership is rarely tolerated and often offensive. In his book, Chinese Business, and Culture, Kevin Bucknall emphasizes the importance of understanding this hierarchy structure and how it manifests in Chinese business culture. As he notes and individual’s ranking may be subject to change depending on their contributions or usefulness, but the orders themselves – along with the expectations for behavior associated with them – never change.
Another critical component of doing business in China is Guanxi. Guanxi is an abstract concept that represents a person’s network and connections. More profoundly, it refers to an individual’s relationship with different people and how those relationships can be leveraged into favors that are ultimately reciprocated. When trying to create new connections, it is commonplace to have an intermediary who is already well connected with Chinese enterprises to facilitate the meeting and future communications.
Overview of Business Expectations in China
Xinergy’s analysts have determined that for enterprises looking to break into Chinese markets, it is of the utmost importance that their employees also work to understand the basic tenets of Confucianism and translate them into their interactions with Chinese corporations.
The Confucian value of hierarchy has created a mostly vertical communication system and behavior in the Chinese business culture. Because of this hierarchy, meetings are often held between individuals who share relatively equivalent positions of power, as they are considered socially equals.
Chinese professionals are very conscientious of their reputation, so firms are cautious when taking risks and are incredibly wary of opportunities that they consider uncertain. It might take several meetings for them to choose what action to take with new ventures, and only high-ranking executives are allowed to make such decisions; it is expected that subordinates will not share their opinions on such matters.
There is a common misconception associated with Guanxi. While developing professional networks is essential, Xingergy’s local analysts have found that Guanxi’s importance is becoming less critical as Chinese business transitions from labor and manufacturing to technology. Simply knowing someone is not enough anymore. You must be able to bring something to the table. A prominent businessperson will not work with someone only because they know each other. They would not compromise their reputation unless they feel that the potential partner is capable and will protect their interests.
Understanding Business Etiquette in China
- Introduce yourself. Before engaging in business negotiations, it is customary to exchange pleasantries. Make sure to be kind and courteous. Keep things light. Respectful small talk before the meeting is expected and encouraged. You may be asked if you have eaten or if you are hungry. Such a question is typical in Chinese business etiquette. Even if you have not eaten, it is common to respond that you are fine. Such communication is considered a routine part of exchanging pleasantries.
- Nod your head or even bow when meeting somebody new. Handshakes are also common but wait for the Chinese individual to extend their hand before engaging them physically.
- Exchange business cards when they meet others for professional matters. Like many other countries, Business etiquette in China dictates that one should share their personal information with the people they meet. However, unlike other countries, in China, hold the card with both hands while presenting it to an individual as this gesture is a sign of respect and reverence.
- Preparation is key. Bring high-end materials to meetings. There should be enough documents for everyone in the room to have a copy. Printing extras on quality paper is always a good idea.
- Be punctual. Showing up late may be considered a sign of disrespect. Make sure to research the company you intend to meet with and be prepared to discuss your own business.
- Invest in a translator or intermediary who can communicate clearly with both sides. The language barrier can be tricky. Many Chinese firms have English-speaking officials, but much of what either party may say can be lost without an adept interpreter.
- Pay attention to rank. More powerful officials will usually dress in formal attire while mid-tier workers generally wear a more casual dress. Use proper titles when addressing potential business partners.
- Enter the room in order of rank. The highest-ranking official should lead the line. Similarly, the person who is considered the most powerful in the place should be the first to sit down.
- Allow the Chinese to leave the room first. Wait till the host finishes the meeting and stands. Letting the Chinese exit the room first is considered as a sign of respect on your part. It is highly probable that the Chinese will exit the meeting place in hierarchical order, so make sure that you and your team also leave the room in right order.
- Remember to be polite. Even if you disagree with something, make sure not to turn down offers outright or contradict others. Instead, say things like, “I may need some time to go over that,” or “let me think about it.”
Business in China during the COVID era.
A global pandemic has taken a toll on business culture in China. With more affairs being run over the internet than ever before, it is crucial to understand how to successfully navigate the Chinese market digitally. China has stringent internet restrictions, so using international services like WebEx or Skype may not be as efficient as using Chinese services like WeChat or Tencent Meeting (Also known as VooV). If you cannot produce quality audio and video, the Chinese may take this as a sign of disrespect or poor management. To make sure you meet the digital business etiquette in China, it is necessary to have alternatives prepared in case cameras, microphones, or videoconferencing software fail.
Because not many firms are holding in-person meetings during this time, physical contact is not a significant concern. That said, if you do find yourself meeting someone in person, avoid touching and wear a mask until the pandemic has cleared. Trying to initiate physical contact, though usually unwise, is especially taboo at the present moment and can halt business relations in their tracks.
There are many other aspects of business practices in China that companies should familiarize themselves with before trying to enter the market. Xinergy’s blog provides insight into many of these customs. For example:
Women in Chinese Business
Women’s roles in Chinese society have been expanding since the twentieth century. The promotion of civil rights and opportunities for women is still somewhat recent, but has taken a strong hold in Chinese business culture. In recent decades, several women have emerged as leaders in industry and trade. To read more about this, read our blog post on Women in China.
The emergence of GuoChao
GuoChao refers to a recent development in Chinese marketing and branding. Companies are now using tactics that employ ideals of Chinese culture and nationalism in the creation of products and services. To read more about this, read our blog post on GuoChao.
Doing business in China may not be as hard as it seems. The key is understanding the intricacies of business culture and etiquette in China. The rich historical traditions of China play a meaningful role in how they conduct business. Firms trying to enter the Chinese market will do themselves an excellent service by coming prepared to meetings with an intimate knowledge of these customs. By doing this, a company is likely to garner a positive reaction from Chinese corporations.
This Blog was Co-written by Niv Schwartz & Jacob (Coby) Levit.