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Doing business in China ...

March 2, 2017

 

You just decided to come and do business in China, for example to leverage the huge manufacturing capacity in the mainland, to import some products to your country or even to establish a joint venture to sell your products and services in this huge market.

 

You have heard that the business culture in China is very different from the Western countries, and also that besides the visible success stories, there are many far less successful ventures.

 

So what exactly is expecting you? Based on my experience and discussions with both Chinese and Western business people, let me try to summarize the most important differences you should be aware of.

 

 

You are the foreigner!

 

Everyone in life has to decide whether he or she wants to trust other humans and see what happens, or not to trust the other until proof of the contrary. You have to know that the second attitude is the norm in China - Chinese people basically only give trust to their own circles. While they show almost unlimited solidarity within their in-group (I learnt this word a couple of weeks ago ;-)), they can be very egoistic and sometimes even word-breaking business partners with people coming from elsewhere - aka foreigners.

 

Therefore, be on the watch, there may be gamble tricks! Even if it is painful: nail down every detail in the contract to secure what you want to be the transaction! Don’t agree too rapidly on terms, as this may be make think your counter-part that he/she did not negotiate hard enough - which brings you back to case 1 of the game. 

 

 

Flat hierarchies are something for Europeans - not for the Chinese!

 

Like in Japan, business decisions within a company are taken from the top to down, with very few people really making decisions. Delegated negotiators often only have limited powers - they mainly execute orders from their superiors.

 

So make sure that you have negotiation partners with sufficient decision power. If you doubt, don’t give away too many eggs immediately - the same people may come back with a new negotiation round once they’ve spoken to their superiors. If you made too many concessions, you may be screwed ...  

 

 

Business Relationship? Friendship!

 

Western business relations tend to be factual and objective - one partner has something to sell which brings the other some kind of benefit, or vice versa.  It may happen that business partners become friends, which is beneficial to business, but that’s not a prerequisite. In China, things are different. Without a personal friendship between business partners, doing business in China is very difficult.

 

Therefore, take the time to get to know the Humans behind the faces of your business partners, especially if you plan to establish a long-term venture. You will discover many charming persons and may even be part, one day, of their in-group, too ;-).

 

Last, but not least: don’t forget that a present is always welcome when meeting business partners - but chose your present with care, according to the status and the expectations of the other side. 

 

 

Be social - but prudent!

 

If you try to establish a long-term relationship with a Chinese business partner, be prepared to give and receive abundant invitations to events, lunches and dinners. Frequently, this also involves massive consumption of alcohol, which is not always innocent: it happened more than once that a Western delegation with a huge hangover re-started negotiations with a different, well-rested and sober new delegation from their Chinese business partner the day after the party...

 

Therefore, if you are not bringing with you a natural resistance to the gift of Bacchus, learn how to drink or invent strategies to dispose of alcohol without anyone noticing (some may also know the trick to drink a glass of edible oil before the lunch in order to soften the effects of alcohol).

 

 

Taking your time is essential!

 

In China, time is a very elastic concept. On one side, we build new high-speed railways, cities and streets much quicker than Western countries. On the other side, in business, it can take much more time to establish a relationship with your business partners than in Europe or in the USA. And giving the impression of being in a rush may considerably weaken your position in negotiations - China has been here for 5000 years, and Chinese people know how to wait until things turn into their advantage ...

 

Consequently, come to China with enough time for your business ventures. And if you are short in time, never show it!

 

 

 

 

 

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