Understanding Chinese Business Culture: What you need to know when dealing with Chinese businesses
With a lot of emphasis being placed on the relationship between South Africa and the Peoples Republic of China, there is an opportunity for many companies to develop long-term and highly lucrative business relationships. In order to properly develop relationships, it is important to understand Chinese business etiquette and how to work together with your potential future partners.
To start off, there are five main pillars that are highly valued in Chinese business culture and therefore should be considered at all times:
Appearances and reputation
Respect for both position and ranking
In addition to the pillars of business culture, it is important to know a few more terms and ideals that you will encounter in your dealings.
- Guanxi – Guanxi refers to the connections and network of a person. This can be something as simple as a basic personal connection or can refer to an organised business network.
- Gan Bei – Literally this means bottoms up. Gan Bei is a traditional Chinese toast and is almost exclusively reserved for alcoholic drinks.
- Mianzi – Mianzi refers to your face, again not in the physical sense but rather your reputation and dignity. Think of the embarrassment that we all feel when our failures are publically exposed. Your Mianzi refers to your public reputation.
- In the Chinese culture businessmen will not typically say no outright when it comes to business dealings. In order to facilitate a successful deal you need to find and emphasise the win-win situation that ensures both parties a worthwhile deal.
- Western business conduct is often to the point and matter of fact. When doing business with the Chinese however, subtlety and relationships are far more important. To start with, you need to respect the culture and work on forming a lasting relationship with your future partner. You need to engage and work together to form a relationship. In the event that you’re asked a seemingly unrelated question make sure to answer in full and not rush onto the subject of business.
- The Chinese have great respect for rank and authority. Even if your own management style is more relaxed, having the most senior person speak is a sign of authority and will be respected. No one else on your team should speak unless directed by you to do so.
The Culture of Meetings
Meetings are highly valued in the Chinese culture. It is important that you realise that this is the foundation of a relationship and not merely a working agreement. That being said, the relationship is formal and you will need to adhere to a protocol. To begin with you need to plan your meeting, the following should be observed and noted before any meeting takes place:
- Date – Check the Chinese calendar. If you schedule the meeting make sure to avoid all national holidays – especially Chinese New Year, May 1st and October 1st.
- Preparation – Be well prepared for all meetings and inform the host regarding any potential requirements that you may have. These include personnel, members participating, technical requirements (i.e. a projector or audio visual set up), dietary requirements etc. Even if this seems excessive it shows that you are a professional and conveys your Mianzi, your reputation.
- Language and Interpretation – Find out about the language capabilities of your hosts before the meeting. If in doubt it is advisable to hire your own interpreter. For any materials and brochures that you require, make sure to have them written in the language of your hosts. This is another way to signify your respect of their culture. If possible find out about the dialect that your hosts speak and utilise this for any written materials. There are a total of 8 major dialects Putonghua (Mandarin), Yue (Cantonese), Wu (Shanghainese), Minbei (Fuzhou), Minnan (Taiwanese), Xiang, Gan and Hakka.
- Dress Code – When dealing with high-level officials you should adopt formal dress. In the event that your hosts suggest a casual dress wear a button up shirt, long pants and formal shoes. If in doubt, dress formally.
- Seating Arrangements – The host will have designated spaces for you and your team to sit. Sit once directed to do so and only after the most senior member in the room.
- Meeting Structure – The Chinese will typically have a formal meeting structure. The most senior people in the room will introduce themselves first and will be followed by their colleagues. Less senior members will not introduce themselves unless directed to do so and your team should follow the same procedure.
- Addressing Others – Remember that seniority is valued in China. Greet your counterparts by their title and always address the most senior person first. You should then follow down the hierarchy and greet all the members of your host’s team.
- Introducing Yourself – Say your name clearly and also introduce your company and position. The Chinese will typically state their company, then their position and finally their own names. You do not need to follow the same standard so long as you cover all of the required information.
- Handshakes – As with any business interaction, you will typically begin with a handshake. Do not be overly aggressive, but at the same time a handshake will change with your relationship so in the same light do not be surprised should you have a prolonged handshake. As always the handshake is an important sign of respect.
- Business Cards – As with the introduction, business cards should be given to the most senior official first. Use both hands when giving and receiving business cards, as this is a sign of respect and that you value the card that is being exchanged.
- Your Name – Whilst you are within your rights to use your normal name, having your name translated into Chinese is a sign of respect to your host. Introducing yourself by a Chinese name is not necessary but is highly advisable. Make sure to hire an accredited translator to work on your Chinese name. Keep in mind that in the Chinese culture it is typical to introduce yourself by your family name and then your given name.
It is normal for business to be conducted over meals. These events will follow the same protocol as traditional meetings but there are some etiquette and further considerations that should be taken into account:
- Procedure – Follow the cues from your host and only start eating when the host begins or when invited to do so.
- Keeping Pace – At formal banquets and high-end restaurants, the serving staff will constantly rotate dishes. In order to have a sense of what is coming next, know that the meal will proceed with meats of various varieties and peak with a fish course, followed by a staple (rice, dumplings, noodles) and wind down with a sweet or dessert.
- Refusing Food – It is acceptable to refuse any food that you cannot eat due to dietary or allergic restrictions (especially since you should notify your host of these pre-meeting). It is a sign of politeness to accept a little bit of everything, but do not feel obligated to finish everything on your plate as this is a sign that you want more. A nod to the serving staff will enable you to rotate to the next course should a particular offering be unpalatable.
- Drinking – During the banquet you will be exposed to a taste of the local wine as well as a toast drink, namely a baijiu or maotai (these are strong distilled alcoholic drinks and should be consumed only after some food – maotai is typically reserved for very special events). It is customary for the host to propose a toast to your new dealing and there may be more toasts during the meal. You are also free and encouraged to suggest a toast later in the meal or when prompted to do so. The toast should be followed by a Gan Bei, a formal cue to drink.
- Conversation – The banquet is a social gathering where your host can learn more about you. Do not discuss business unless prompted to do so, but the general conversation will follow around pleasantries and background information about the company and region that you are from. Remember this is not a time for negotiation but usually for relationship building.
- Paying the Bill – The host pays the bill. In the event that you are hosting do not show any money in front of your guests and simply step out to settle the bill quietly.
- Concluding – There is little lingering at banquets. Formal dinners often end suddenly, when the senior member of the hosting party stands up (quickly followed by staff and subordinates), briefly thanks the guests for attending and proceeds to leave the room. This may appear abrupt the first few times you witness it but it is simply a decisive and useful way to bring the occasion to a close. If there is a dessert / fruit course, you can expect this to follow fairly shortly before the senior member of the hosting party departs. Gifts (see below) are usually offered at the conclusion of the banquet, prior to departure.
The act of gift giving is a common Chinese custom. Learn as much as possible about your host and prepare a local gift that would be desirable but not too over the top.
- Who – The large group gift will be presented to the highest ranked person from the Chinese delegation and vice versa. Should you wish to follow this up with a personal gift, you may do so.
- What – The gift should not be overly expensive. The gift you present represents you, as a business person of your country and should be something of meaning and a matter of pride. You should wrap your gift in red and gold, the red signifies good fortune and the gold is for prosperity and wealth.
- When – Typically gifts will follow the conclusion of the introductory meeting or banquet. Keep in mind that should a Chinese delegation come to visit you, there would also be an expected exchange of gifts.
- How – Always give and exchange anything of value with two hands. Should your gift not be accepted at first, persist in giving your gift as it is a common practice for the Chinese to refuse a gift.
- What not to give – You should avoid giving clocks, scissors or any other sharp items. Here’s a fantastic list regarding giving gifts on Chinese New Year; even though the occasion is different the same rules apply.