Top 10 tips for doing business in China
With so many books, websites and guides on how an individual can manage themselves when conducting business activities in China, it can be a daunting process for a person interested in doing business with China who is not familiar with the country and its business ethics. It goes without saying that doing business in China is not easy for any foreign company or person irrespective of how long they have lived, worked or had some sort of connection with China. It may be just that little bit smoother if you have a Chinese business partner (person or company), however if you are going to go and try to set up a base for your company all by yourself, then you are, I am sorry to say, going to drown yourself into deep waters. Having been there, and done that myself, here are some tips I would like to share. To the seasoned China business minded person, these tips may seem like all "sold out" stuff. However, they do, of course, take into account that I have had experience of working for a Chinese company in China, as well as working for a foreign company in China. Two very different corporate cultures operating within an embedded common Chinese environment- it sounds like an experiment at a large scale but in actual fact the beauty of it all is that it does work (IF good corporate advice is followed).:
1. DO BACKGROUND CHECKS: If you are going to employ foreign individuals into your company in China, especially if they are senior executives who would be responsible for making day to day decisions, then I would strongly recommend that detailed background checks are carried out. This would, of course, apply also to Chinese nationals being employed. There are many companies specialising in these services. You can contact your local Chamber of Commerce or search on the internet.
2. KNOW THE CORPORATE LAW IN CHINA: Be very careful when treading your shoes into issues such as Import and Export Tax Laws. Select a reliable and known law firm that can guide you in the correct way. Corporate laws are different in China. With common sense any company will investigate this first before making their moves. I have come across some expats who believe that because they are foreigners, so they will get some special VIP treatment and can “get away” with some laws (such as import/export Tax). Well, this is not true at all; in fact the corporate laws in China are stricter than most other countries.
3. PROTECT YOUR IP: In China, you would be amazed at the number of fake and copied goods that are openly available on the consumer and corporate market. Ranging from your “Iron Bru drink” to even manufactured Chicken Eggs, ANYTHING can be produced by those who wrongly believe they can outclass the Chinese law. Unsurprisingly, Intellectual Property is the most sought after advice topic by foreigners thinking of investing in China’s booming economy. Sincere advice would be to use the same due diligence you would outside of China.
4. AVOID ARGUEING: It would not be a nice idea if you decide to argue or force your Chinese counterparts to come to agreements with you. Negotiation is not a smooth process in China. If the two sides do not agree, then it’s common for Chinese business officials to just go quiet and maybe not even respond to questions at all. Your best approach is to go in the meeting with not aiming to make a deal- otherwise you will become frustrated easily. Explain your position in clear, concise words. Be Respectful and state your points by the book. Then be prepared to walk off if your conditions are not met.
5. AVOID REJECTING THE CULTURE: Many foreign business people ask me what are the wrongs and right of business etiquette in China. The most important thing I would say is to respect face. Never quarrel or voice a difference of opinion with anyone- even a member of your own team. Never make the other person wrong. It is common for people to answer the phone or talk amongst themselves loudly in a meeting. Never say "no" directly, as that is considered impolite and superior. It makes sense to educate individuals the cross-cultural factors that have a direct impact on your Return on Investment (ROI).
6. BE ACCURATE: Avoid making assumptions or hoping that YOUR personal judgements will make you stand out amongst others in meetings or presentations. Logistics and facts are the core ingredients of any successful business in China. Not taking this into account can be very dangerous because if your facts are not validated then you will end up losing your credibility, and your audience will lose trust in you. In the west mistakes are somewhat accepted to a certain extent, but in China a single mistake is enough to kill trust. Once trust is lost, it’s very difficult to get it back in China.
7. AVOID SARCASM: When you are having a business meal or in a break between meetings, then sharing a light joke is perfectly acceptable, provided you don’t start talking about anything political or anything which may involve sarcasm. People will not understand western humour (especially British Humour!), and your intended sarcastic joke may be taken as offensive or completely misunderstood. In some circumstances, the consequence of this may lead to the difference between wining and losing a negotiation.
8. NETWORKING: We all know that globally in the business culture keeping rapport with like minded individuals can make the difference between a win-win and a loss situation. In China this networking goes just that extra mile. Networking is a lifestyle in China that extends beyond the boardroom. Making your client feel special and treating them to dinner or any other entertainment, such as, say for example, a day at the Golf Club, even before setting up a formal meeting would be a very good idea. Concentrate on building the relationship before talking business. Most certainly never undervalue the significance of existing connections.
9. SENSE & SIMPLICITY: When making presentations to Chinese clients or colleagues, speak slowly, clearly and concisely. Make your presentations simple and easy to follow, almost like an “Idiot’s guide to so and so” but without making the audience feel as if they are idiots. Avoid telling jokes and avoid making the Chinese audience look as if they do not know anything. People may be quiet or may not pay much attention to a presentation, but they do understand and are willing to take part if given the chance.
10. RESEARCH: Before heading to your new market, do as much detailed research as possible. There is a whole range of advice provided by Chamber of Commerce’s, Embassies, your country’s Trade & Industry organisation (UK, USA etc), expatriate website blogs as well as sound advice from other corporate professionals who have lived and worked in China.
A crude example may be taken into account, such as, if a person who has lived in, say, Canada, for 25 years and managed his business the Canadian way. Then one day as he comes to open a new branch in China- apart from the normal culture shock in all aspects of life, you can imagine the immediate corporate culture shock he will also experience. Above all else, common sense should prevail and more importantly the above ten tips may be applied anywhere in the world, however, in China they have a special significance because the culture (both outside and inside the corporate world), language and laws are different.
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