How to do business in China

How to do business in China

If you are travelling to China to do business, either for the short or the long term, you will need to prepare yourself for the cultural differences between here and the west. Here we present some simple tips that will help you on your way to succeeding when you go to work in China.

Make strong connections

Business all over the globe is about making connections though, in China, this is particularly true. Trust is everything and, until you've gained the trust of the people with whom you want to do business, you won't get anywhere. Once you show that you are reliable, however, a Chinese business person will happily let you into their circle of connections. Often a single, strong influential connection will be all you need to make open the door to a successful business career. The best way to do this? Don't jump straight into business. Chinese business people like to make friends before talking about money. This will show them you are a long term operator and not just after a quick buck.

This is not a hard sell environment

While you might be used to high pressure business deals and meetings, that kind of thing does not wash in China. Here, influential business people will not respect you pressuring them for a quick decision but will prefer you to state your position honestly, openly and logically. That does not mean you have to be weak – in fact, you should make it clear at all times that you can walk away from the table. Yet trying to coerce them into giving you what you want as quickly as possible will not get you anywhere. Patience is essential.

Show respect to people on your side

In China there is a code of honour attached to how you do business. Key to this is treating all colleagues with the utmost respect. Therefore, publically questioning or criticising a member of your workforce or team is considered both rude and unprofessional. Tact and delicacy is very much the order of the day.

No is not always an option

The Chinese do not say no very easily. This does not mean, however, that they will say yes to everything. What passes for a positive answer in the west could, actually, be an indirect no in China. Learn the difference.

The Chinese do not say no very easily. This does not mean, however, that they will say yes to everything. What passes for a positive answer in the west could, actually, be an indirect no in China. Learn the difference.

When speaking in English, use short sentences

When you are dealing with a Chinese person who understands English, it is often easy to fall into the trap of thinking they will understand everything. Don't forget that they are speaking a foreign language and accommodating your inability to speak their language.

Credibility is everything

The Chinese will not respect you for ‘winging it'. They will expect you to be well prepared and to have studied the matter at hand in detail before your meeting. Presenting half-baked thoughts or just spitballing ideas will not go down well, so don't do it. Think hard before you open your mouth.

Document everything

When it comes to business, the Chinese like things mapped out clearly and concisely. Charts, diagrams and sketches will all be welcome as will plenty of plain text and straightforward wording. And, in line with the previous tip, do not ever present partial data, only hard facts.

Re-wire your western mind

Re-wire your western mind

Want to succeed in Chinese business? Then re-wire your western mind

One of the main roadblocks to people from a western business background who are looking to expand into the Chinese market is that, in many ways, the Chinese business person and the western business person will see things entirely differently. It is not a question of one side being right and one side being wrong. It is simply the case that people from different cultures are raised to see things differently and, in the case of China and, say America or the UK, they are raised to see things very differently.

It can take years of exposure to Chinese culture for a western business person to fully appreciate all the nuances and particularities that differentiate their thinking from that of their Chinese colleagues, partners or clients. This guide, however, can at least prepare you for what you are likely to find, with the key perceptive variances.

Example: Logic

In western society, logic is generally seen as a linear process. We accept A, therefore we accept B and that leads to C. One thing happens it causes another thing to happen from this we can deduce a conclusion. In other words, it's all about working out how one thing causes another thing. In Chinese thinking, things are quite different. Here, logic works in a spiral fashion. The thinking is more subtle and the connections between things are looser and less rigid or provable.

How does this affect business?

This reliance on a more fluid, less structured form of logical reasoning and critical thinking means a lot more time tends to be taken over decisions. Also, a powerful Chinese business partner or potential business partner may need the benefits of a deal explained several different ways, each at great length before being prepared to shake hands.

Example: Disagreements

In western culture, people are generally quite willing to disagree and express their disagreement in the surest and most certain terms. In fact, in many business environments, somebody who is prepared to speak up with a dissenting voice will actually be commended for their honesty, bravery and critical intelligence. In China, openly disagreeing is seen as an almost entirely negative action. If A Chinese person does not agree with you, they will express it in less straightforward terms, often in non-verbal communication.

How does this affect business?

Don't ever expect a straight no when you've made an offer. If the answer is negative, you will probably get a very roundabout, open-to-interpretation explanation that hints towards potential flaws in a proposal, yet never directly touches upon them. In fact, anything other than a very hearty ‘yes' is most probably a ‘no.'

Example: The individual Vs. the Group

In the west, there is a huge premium placed upon the rights, ideas and importance of the individual. If you live in the US, Canada, the UK or central Europe, chances are you have been raised with a keen sense of entitlement regarding your rights and ambitions as a person. In China, a greater focus is put upon what an individual can contribute to the group of which they are a member, often at the expense of individual freedom or short term happiness.

How does this affect business?

Personal autonomy and independence are not respected or granted easily in the Chinese corporate culture. Far more important is to be part of the group and carry out your job to the best of your ability in order to contribute to the group's goal. This can be tough when you have risen through western business, with its romanticism of the maverick attitude and out-of-the-box thinker, but it is crucial to how the Chinese get business done.

Fastest growing business sectors

Fastest growing business sectors

As more and more western companies and investors look east for investment opportunities, it is the perfect time to take a closer look at China's most rapidly expanding industries. China's dynamic economy and increasingly influential financial market may well dictate the future of global business. Here is a brief guide to where most of its money is being generated.

Food and beverage

With a population of more than 1 billion people, it should come as no surprise that there is plenty of money in food production and provision in China. As the economy soars and the middle class grows, demand for speciality foodstuffs, foreign cuisine and imported food brands is rising. This has been helped along by a number of food scares related to many of China's home-grown foods. So, if you work in the food industry, then China represents a massive potential area for growth and investment, yet it is not an easy market to enter. Given the sheer size of the country, brand recognition can take time and supermarket shelf space is priced very high.

Healthcare

Again, given the sheer number of people in the country and the populations increased wealth, it is obvious why healthcare is such a growing industry. With much government support promised in the current five year plan, private hospitals, prescription medicines and medical equipment are all growing sectors. Though foreign investment will play a big part in this, it won't be a clear and easy path for even recognised foreign companies looking to make their mark in China. Foreign medical devices are generally considered more expensive than their Chinese equivalents and this perception may become more vivid as the government makes high quality healthcare more affordable for its citizens. Whatever happens, it is 100% that this sector will keep growing, mainly because it has to. There are now 185 million senior citizens in the country and that figure will only rise higher in the near future. Caring for all those people as they go through their elderly years will mean big business for somebody.

Education

Once again, we find the increasingly large middle class dictating what industries grow and decrease in China. As families find themselves with more disposable income, the availability of private education becomes more important. Whether fair or unfair, there is a perception amongst certain elements in Chinese society that the standard system is not doing enough to educate children to western standards. This has led to a call for more high quality fee-paying schools for the children of people who can afford them. The sector has responded by ballooning in size, with private education set to reach a market size of $102 billion this year. This includes after school tutors, private third level academies and adult education, a pretty hefty proportion of which is based in the English language. That last little fact means western companies have the upper hand in his market.

Green technology

It is not secret that there is an issue in some Chinese cities with pollution. Once again, as the citizens become more affluent they become more vocal about their rights to clean air and food or, at least, their vocalism becomes harder to ignore. In response, the government has dedicated a vast chunk of its most recent five year plan to greener technology and industrial practices. With investment in clean energy up 20% from last year and much more cash pouring in, any company that can help provide clean water, solar energy or decreased waste may find a bountiful market in China.

China - biggest brands

China - biggest brands

If you really want to figure out what makes the Chinese economy tick, then learning about its biggest brand names is a good place to begin. Here we list some of the major players in China's rapidly growing economy.

China Mobile

A telecoms brand, China Mobile is one of the world's largest providers of wireless services. As the middle class grows, goods such as phones and broadband services become more and more in demand and China Mobile is spearheading that trend.

ICBC

Since 1984 the Industrial and Commercial Bank of China has been a powerful force in the Chinese financial market. Its recent growth has been spurred on by a determined expansion into foreign markets. Thanks to its state funding (it is one of the four major government run banks), its financial clout is pretty intimidating. It owns 13% of all Chinese loan products and 15% of all Chinese deposits and, with more than 16,000 branches across the nation, it is not getting smaller anytime soon.

China Construction Bank

Another state run banking enterprise, CCS is the go-to supporter for any form of infrastructure project in the country. With 12% of the nation's loans, it is one of China's most trusted creditors.

Baidu 

Think of Google. Now think of Google in a world where no other search engine is allowed to exist. That's about the best way of understanding Baidu, who claim 79% of the search engine market in China. The world's 3rd fastest growing company, Baidu dominates the technology scene in its home country despite being virtually unknown outside its borders.

Tencent

Tencent is China's most prominent digital communication enterprise, offering customers a plethora of online tools and services. Its catalogue includes web portals, games, chat applications and much, much more. Plus it is only getting bigger, as evidenced by its recent partnership with Disney, which will allow Tencent to distribute animated Disney content through its social networks.

Agricultural Bank of China

The third state-owned bank on our list, the ABC is mainly responsible for funding small and mid-sized companies in rural China. Though it does not have the creditor power of the above mentioned banks, it is hugely influential in the agricultural sector for obvious reasons.

China Life Insurance

Again we see China's growing middle class' influence over what market sector's become more powerful. More income means more people investing in things like life insurance. With the advertising power of spokesperson Yao Ming (China's most famous ex-NBA star), China Life is considered the most recognised life insurance company, just edging ahead of Ping An.

Bank of China

Yes, Bank of China is the fourth of the big four state owned banks to get on our list. Considering they are funded heavily by the government, it should come as no surprise that these massive financial powerhouses are so influential in the Chinese economy.

Moutai

Though not traditionally a nation of heavy drinkers, China has recently begun a love affair with alcohol that shows no signs of dissipating. Though wine is the tipple of choice for many, baijiu, a high volume, clear liquid little known outside of the country, is also very popular. Moutai is its most famous producer.

Sinopec

Finally, we have Sinopec, an Oil and Gas provider based in Beijing. With more foreign partnerships expected in the next few years, Sinopec will only grow more, despite the government occasionally reducing its income by forcing down the energy prices.