Chinese Business Culture and Etiquette

Chinese Business Culture and Etiquette
By Kathy Keyi Jia-Jones M.A., Cross-Cultural Biz

Over the past twenty years China has surged to become a world economic power. Having raised millions of Chinese from poverty, China is playing a key role in the world’s economy. The Chinese people have achieved miracles, against all odds.

Despite great change, the fundamentals of culture and the ways in which Chinese conduct business remain essentially the same. The biggest challenge that Western companies face is gaining familiarity with Chinese business culture. Research shows that a lack of understanding of Chinese market culture and the inability to adapt to different ways of doing business are the main reasons for guan xi (relationship) problems, missed opportunities, and business failures.

This article discusses three of the most important factors affecting doing business with the Chinese: Guan Xi, (relationships/connections), direct and indirect communication styles, and negotiation.

Guan Xi (relationships/connections)

One of the common difficulties that my Canadian clients encounter in China is Guan Xi. Relationships are important for business everywhere. The difference is China went through many lawless years in the past; relationships were essential for survival. Today though the legal system has been much improved, Guan Xi still has a powerful impact on daily life and business. For Canadian business people, the following three pointers can help:

– Keep in mind that trust and long term relationships/partnerships are important to Chinese

– Use an intermediary–this can be an organization or a reputable person able to make a connection or introduction for you

– And most importantly, develop a different perspective and different set of skills of conducing business.

Direct and Indirect Business Communications

North Americans generally express themselves directly, employing a “cut to the chase” mind-set. Clarity and transparency are important. In contrast, harmony is important to Chinese. When they disagree, they express this with subtlety. Chinese do not want to cause someone else to lose face. Sometimes, they even go out of their way to “give” face or “save” face. Instead of saying “no”, the Chinese may use ambiguous terms such as “perhaps” or “I will see” to avoid embarrassment.

Negotiation

Business negotiations can be difficult even when conducted within your own culture. The level of complexity increases dramatically when conducted cross-culturally. Cross-cultural negotiations may be affected by different perceptions, processes, motivations, and strategies. One of my clients made the mistake of assuming that since he and his Chinese counterparts agreed in principle on the important items under discussion, it was time to finalize the agreement for the joint venture. Next day when he came back to the meeting table, he was shocked to learn that the Chinese wanted to change some of the terms. The problem was caused by different perceptions and expectations at this stage of the negotiating processes. It is important to be clear about the objectives of each meeting and which stage you are at. To increase the chance of success in the competitive Chinese marketplace, it is essential for Canadian companies to prepare themselves before going into the market. While there are commonalities among cultures, it is crucial to know the primary differences and how to manage them.