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Red letter day

China is well and truly open for business. That is, provided you can understand and adopt the eastern ways of business etiquette. But which are truly the winning skills to help seal the deal? By Eleni Chalkidou


At the start of the century, China finds itself in the centre of a socio-economic transition, with entrepreneurs all over the world trying to discover its vast market for business opportunities. But those hoping to pick the juiciest fruits of the world’s fastest-growing economy must bear in mind that conducting business in China is altogether rather different. The Chinese business culture is worlds apart from the West. It therefore comes as no surprise that methods used to land deals elsewhere need to be fully reassessed before approaching a Chinese business partner.

But China has been changing. The old iron fist methods under Mao Tse-tung have long been substituted with the more liberal strategies of his transforming successor, Deng Xiaoping and the leaders who followed. Luckily for the progress of the nation, the quest for profitability is no longer considered to be counter-revolutionary. Yet, in a country where commerce was outlawed for over three decades it is difficult to determine which kind of business rules pertain for the new China.

In order to deal with this effectively the Chinese have reverted to their customary cultural rules which are firmly rooted in time-honoured Confucian values. The conventional Chinese world views are then softened by incorporating contemporary business structures and methods into the Confucian way of life and business etiquette.

Confucian philosophy in business
The lives and business dealings of the Chinese are steered by the philosophical and ethical teachings of Confucius. This philosophy places relationships at its centre and reminds people that specific duties arise in transactions with others. Contrary to teachings in the west, in Confucianism all relationships are judged to be unequal. Attaining and preserving social harmony is the ultimate goal and knowing one’s place in the social order is an essential principle in Chinese business etiquette. In fact, many Chinese believe that lack of adherence to hierarchical morals is the source of all evil befalling the west. Hierarchy steers commerce in Chinese relations, and those seeking to establish closer business links with Chinese trade partners should be fully aware of the important role it plays.

Social structure and relationships, or guanxi, are key to good business relations and one of the most prevailing forces in Chinese culture. Those conducting business in China need to comprehend the mutual nature of guanxi as it will make the relationship-building process easier to appreciate. The significance of this should not be underestimated as Chinese will not enter into business with somebody unless they have established a guanxi with them first. Once it is firmly in place both parties know they can implicitly rely on each other for help and favours as they are then in each other’s debt.

For those striving to function within a state that bases its principles on a history established thousands of years ago it is essential to develop insight into its business culture and social etiquette. This will help to circumvent misinterpretations that could potentially ruin the prospect of establishing long-lasting business relationships.

The etiquette of business meetings
But how can a westerner utilise Confucius’ teachings to benefit his or her ambitious search for a productive business partnership with a Chinese national? Well, to have any chance of success there is of course the prerequisite of being familiar with the Chinese language, Mandarin, as it would be unfeasible to commence any form of trade without the prior knowledge of the language. In any case a fluent translator is required.

Before setting off to a business meeting it is of paramount importance to be aware that in China business people often base the entire deal on their personal relationship with their counterpart. Hence, the more personal information, such as hobbies, family life, and other social interests are shared, the more likely the deal will be a success. Peculiar as this may sound, this is because in China business relations have a more personal character and often turn into social relationships.

In many cases the actual business will become secondary as the various parties spend time getting to know each other. It would be even perfectly tolerable to delay a contract if it meant more social time to get to know the other side. To the Chinese a meeting would be more about fostering the relationship rather than taking crucial business decisions. If anything, the decision-making progression is leisurely at best. This may be contrary to the way business is conducted elsewhere in the world, but patience with the Chinese method will earn a westerner a lot of esteem.

Showing respect and maintaining ones reputation and ‘face’, or mianzi, is another fundamental of the Confucian teachings.  It is worth pondering over this aspect as the Chinese will do anything to ‘save face’ and to preserve their standing in society, even if it means sacrificing their job. This means choosing words carefully to describe the other party, especially in public, is very important.

Timekeeping in China is considered a virtue. It is therefore vital to be aware that a late arrival to a meeting is unacceptable and will be perceived as a serious insult to the Chinese. Such disrespect could potentially lead to the failure of the entire business proposal, especially if the company in question is a more traditional one and believes in Feng Shui. That being the case, it is not unheard of for a Chinese company to consult the stars for the most appropriate time and day to have the meeting. Should that meeting not take place at the scheduled time it could well be that the late comers will have to wait until the stars are right again. And that time may never come again. Even though this will only apply to the most extreme cases it is not unheard of. Ironically though, it should not come as a surprise that the Chinese business people themselves may » often choose to start a meeting late or end it at a different time to the one originally agreed on.

During the meeting
To greet business partners, a handshake is usually the norm in China. However, it tends to be a rather slight, limp and drawn-out version of the western equivalent. The Chinese consider direct eye contact ill-mannered and it is customary to look down as a mark of reverence when shaking hands.

Although the Chinese like to stand in close proximity to others the use of hand gestures in comparison to other cultures is very low-scale. This tranquil body language is often wrongly misinterpreted for indifference and lack of responsiveness. Despite the proximity, any form of touching is generally seen as a major faux pas, especially contact with anybody’s head.

Never has there been a nation which takes the exchange of business cards so seriously. It is so formal in fact, that there is a proper etiquette for exchanging them. Business cards should be double sided with one side in English and the other in Chinese. They will be exchanged at the start of the meeting and must be held with both hands with the Chinese part of the card facing the recipient. It is enormously impolite to place the card straight into a bag or a pocket without fully scrutinising it first.

Meanwhile, the exchange of gifts is an extremely old tradition and is endemic to Chinese culture. A mere ‘thank you’ for an act of kindness, which would be perfectly acceptable in the West, would be seen as bad-mannered in China. Chinese perceive the giving and receiving of offerings as an essential part of the ceremony of business relationship progress. Giving and receiving presents when creating relations is hence a tremendously vital business tool. However, westerners should pay attention to steer clear of pricey gifts as they could be misinterpreted as bribery, which in China is a severely punishable criminal offence. One must be sure to always wrap the gift and pay attention to the colour of the wrapping paper as light colours are normally associated with funerals. Red is the safest colour as it represents good luck.

If it is a company that is being called upon it is usually acceptable to take one present and hand to the entire group, but if it is for an individual within a group ensure the most senior one receives it. If unsure who that would be, remember that usually the first person to enter the meeting room will be the most respected and the one to please. It is also good to know that it is likely that the gift will be refused two or three times before being accepted and, if wrapped, hardly ever opened in front of the person who brought it.

All the way through the assembly it will become noticeable that the Chinese like to put an emphasis on concessions during business dialogues. While westerners are used to placing all terms clear on the table from the start, their eastern counterparts have a tendency to commence negotiations with modesty. This is a tactic that is applied to make them appear frailer and more vulnerable, which they believe allows for more dispensations from the other side. Direct confrontation over outstanding issues is frowned upon. This is because in the Chinese culture it is irrelevant whether truth needs to be spoken as it will never be more significant than the honour and respect that is due to the person one does business with.

Yet, the Chinese are perceived to be quite hard-hitting negotiators. In gatherings with potential partners they expect the other side to prove that they can compromise to find a middle ground. This is made even harder as the Chinese find it rather difficult to say “no” because to them this implies embarrassment. Therefore anything other than an unambiguous “yes” is likely to mean “no.” Signals that they are uncertain could include statements such as “yes, perhaps” and “yes, but it could be difficult”. Therefore, one should be prepared for long meetings and extremely lengthy negotiations with delays. At all costs it is advised for westerners to remain calm and show resilience to the eastern methods, yet again.

Regulation changes for foreign visitors
Meanwhile, in addition to the cultural and moral differences the international community travelling into China will soon have to face new visa rules as the country announced in December that it will introduce fingerprinting of foreign nationals who want to work or study in China.

Chinese legislators published the draft law on entry and exit procedures for visiting business people at the end of last year and are hoping to implement in due course. China’s National People’s Congress usually meets in spring to approve new legislation. That is where laws are amended but it is almost unheard-of for them to reject any legislation. The law will aid the ministry of foreign affairs and the ministry of public security to collect biological identification data on foreigners.

According to the vice minister of public security, Yang Huanming, said that fingerprinting and additional biometric information would be highly effective measures that can be used to accelerate arrivals and departures through immigration and customs. Yang believes the new law will become part of a reorganisation in integrating the momentarily disconnected ID rules for nationals and foreigners. According to the public security minister this method will facilitate exchanges while ensuring that “those who should not enter are kept out.”

Collective versus self
In summary what needs to be remembered above all is that in all dealings with Chinese business people the collectivist culture takes priority, with the greater good being placed before their own personal gain. In meetings there will be a huge emphasis on the whole company, the team and the entire group effort. Humility is seen as a virtue and boasting of one’s own, individual success will be frowned upon.

While western cultures are known to push for individualism, the Chinese are more prone to consider how their actions will affect the entire social structure, those around them including colleagues and the entity of the company rather than how they will be personally affected.

Being aware of the social and cultural differences and showing respect for them can take a western business person a long way in China. The same applies to paying attention to the little differences that really matter such as learning a few sentences of Mandarin in spite of the translator being ever-present.

One last piece of advice would be to think twice about using humour as an ice breaker as it may either result in some awkward silences, or loud hearty laughter because the translator informed the host that a joke has just been told.

Visiting business people should do their research on the country and the company and refrain from confusing Japanese food and culture with that of the Chinese. But above all, and regardless of what you have been told above, don’t ever assume that all Chinese do business the same way.

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