Doing business in China - a few culture tips

Want success in China?
Find an experienced Chinese partner

In China, unless you have deep resources, it is difficult to come and do everything yourself. The market is fragmented, distribution is complex and language is complicated. It’s wise to navigate those differences with an experienced Chinese partner. The easiest approach is to partner with a company that already has experience in the market you wish to enter, thus leveraging their success. If you are doing software, iPhone Apps or software-as-a-service, find a company that is already in your space and partner with them.

Although partnerships in China may take the same 9 to 12 months from the point of introduction to the point at which a deal is signed, the path is more challenging and more winding then in Armenia. As a whole, Chinese businesses are risk averse, looking more favorably at products already in world markets than new development. So keep that in mind when starting your search for a partner.

Meetings and Negotiations

Meetings must be made in advance. Preferably some literature regarding your company should be forwarded to introduce the company. Try and book meetings between April - June and September - October. Avoid all national holidays especially Chinese New Year.

Punctuality is vital when doing business in China. Ensure you are early as late arrivals are seen as an insult. Meetings should begin with some brief small talk. If this is your first meeting then talk of your experiences in China so far. Keep it positive and avoid anything political. Prior to any meeting always send an agenda. This will allow you to have some control of the flow of the meeting. The Chinese approach meetings differently, so rather than beginning with minor or side issues and working your way up to the core issue, reverse this.

The Chinese are renowned for being tough negotiators. Their primary aim in negotiations is ‘concessions’. Always bear this in mind when formulating your own strategy. You must be willing to show compromise and ensure their negotiators feel they have gained major concessions.

Make sure you have done your homework before going and doing business in China. The Chinese plan meticulously and will know your business and possibly you inside out.  One known strategy for Chinese negotiators is to begin negotiations showing humility and deference. This is designed to present themselves as vulnerable and weak. You, the stronger, will be expected to help them through concessions.

Above all, be patient and never show anger or frustration. Practice your best ‘poker face’ before negotiating with the Chinese. Once they see you are uncomfortable they will exploit the weakness. Decisions will take a long time either because there is a lack of urgency, simultaneous negotiations are taking place with competitors or because the decision makers are not confident enough.

Business Relationships in China are Personal

Chinese business relationship inevitably becomes a social relationship after a while. Unlike Western/American business relationship which remains professional and perhaps, aloof, even after a long time, Chinese business relationship becomes a social one. This should benefit Armenian business, because it more similar to the “Armenian” business culture.

The more you share your personal life, including family, hobbies, views, aspirations, the closer you are in your business relationship. Sometimes, a lot of time is spent discussing matters outside of business, but then a lot of time, the other party is also making up his mind about your deal based on how much he sees your personal relationship with him.

Lunch/Dinner and Drinking in China

There is no business talk in China without at least one trip to a restaurant. Sometimes, a trip is made to the restaurant even before any business discussion takes place! Inevitably, the restaurant will always be a grand one and you are likely to be hosted in a private room.

There is an elaborate seating arrangement for a Chinese business meal. There are fixed seating positions for the host and the guest and then they are seated again according to seniority. This is a very important aspect of a formal dinner and it is important that you follow the rules accordingly. However, it seems that the Northern Chinese are very particular to this formal seating arrangement while the Southern Chinese has loosened the formalities somewhat.

Agreement signing ceremonies are always followed by consuming alcoholic beverages. Some might mistake and think that Chinese people are strange, because some only choose to work with business partners who can drink a lot. According to Han, they have their own reasons: “A famous joke says 酒品决定人品 (Jiǔ pǐn jué dìng rén pǐn): The way one is, is the way one drinks. It is true to a large extent.” As many Chinese businesses are in fact managed by individual decision-makers rather than by procedures, choosing the right person with whom to do business is more important than choosing a company that has a good-looking balance sheet.

Giving Gift Etiquette

Unlike many countries, the giving of gifts does not carry any negative connotations when doing business in China. Gifts should always be exchanged for celebrations, as thanks for assistance and even as a sweetener for future favors. However, it is important not to give gifts in the absence of a good reason or a witness. When the Chinese want to buy gifts it is not uncommon for them to ask what you would like. Do not be shy to specify something you desire. However, it would be wise to demonstrate an appreciation of Chinese culture by asking for items such as ink paintings or tea.

Business gifts are always reciprocated. They are seen as debts that must be repaid. When giving gifts do not give cash. They need to be items of worth or beauty. Do not be too frugal with your choice of gift otherwise you will be seen as an ‘iron rooster’, i.e. getting a good gift out of you is like getting a feather out of an iron rooster.

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