I have just returned from an eye-opening business tour of Guangzhou, Beijing and Shanghai. The aim of the trip was to analyse issues and find solutions in managing business across global borders.
It was fascinating to learn how Chinese people conduct business, which is quite different to the style in Australia and the Western world.
After visiting 12 companies with 22 peers, I came away with the following 5 key lessons of how to effectively do business in China:
The term guanxi stands for the relationship built over time, which is imperative to doing business in China.
Guanxi is the element of nurturing a relationship and establishing trust with prospective business partners, which is achieved through conducting small favours, giving gifts or inviting/hosting dinners for them.
It can open doors that might not have been possible before. A note to remember is that the Chinese are most likely to only conduct business with friends or those whom they know rather well, so maintaining guanxi is paramount.
Mianzi is a principle that encapsulates maintaining ‘face.’ The concept of ‘face’ is not so much about physical appearance as it is regarding self-respect, dignity and the sum of one’s behaviour in society.
Three rules to maintaining ‘face’ are:
- i) Always give face – by praising someone in front of others, complimenting or going out of your way to help another when a favour is asked of you;
- ii) Never take face – you take face from someone when you openly criticise them in public and as a consequence, disgracing yourself and your company;
- iii) Never lose face – which comes from a slip in manners, conduct or etiquette in front of another person and can lead to a permanent loss of face or ‘diu lian.’
This principle of Li is the art of knowing how to address superiors and their titles. Based on Confucianism, it states that every person needs to know their proper place and responsibilities in society.
Li is the concept of a proper code of conduct amongst peers and colleagues, which ensures that boundaries are respected when interacting with others in business.
4. Chinese Negotiation Style
The word ‘no’ does not exist in the Chinese language. Therefore, a ‘yes’ can mean a ‘no.’
Having superior negotiation skills can help to overcome this hurdle. This is achieved through exercising patience and taking care to not push boundaries.
One lesson I learned from a personal experience in China, which assists in negotiating, is to listen to the gaps and silences in between discussions. Listening to things unsaid is imperative, as it can say as much as, or more, than what is being verbally said.
5. Drinking Rituals of Business Meetings
In Chinese culture, it is believed that drinking together is a way that prospective partners or clients can ascertain whether one is trustworthy in business or not.
Therefore, drinking a lot of alcohol is not outside social norm in establishing trust and solidifying a prospective business relationship.
However, it will be respected if you don’t consume alcohol or choose not to drink.
A point to remember is that doing business in China is personal, so expect questions about your private life to be asked as small talk is not part of Chinese culture.
“If you want one year of prosperity, grow grain. If you want 10 years of prosperity, grow trees. If you want 100 years of prosperity, grow people,” Chinese proverb.
Xie xie [thank you].
These lessons have been my own experiences and study on doing business abroad. For any comments or questions, let us know on the space below.