I wrote this piece for an American publication during my three years in China (2003-2006). China is an incredible country, however, doing business is a complex and sometimes dangerous affair.
Many books have been written on this subject, but concise analysis can provide an understanding as well. Here’s an article that captures my feelings and experiences back in 2006. Not a word of this feature has been changed.
If you value the indirect approach over the direct, the complicated over the simple and slow painstaking routines over the pragmatic, then you will feel very comfortable doing business in China.
Cross-cultural communication is always difficult, but doing commerce here will either require the ability to speak amazing Mandarin, or more likely the use of an interpreter.
(Cantonese is spoken in Hong Kong and Guangdong province in the south, but Mandarin is the common language all over China.)
It should be remembered that the level of English here is extremely low, and while a foreigner might think the listener understands, and while the Chinese might say they understand, the reality is that they probably don’t understand.
The Chinese don’t wish to lose face in front of you, and they also don’t want you to lose face. Therefore they will profess comprehension to preserve everybody’s honour.
Lost in Translation
An excellent interpreter is hard to find, and amongst Chinese interpreters there is a strong tendency to translate your direct mode of speech into indirect and excessively polite sentences, so your message can become lost in translation, or sometimes just reconfigured into something completely different.
This might sound a trifle bizarre, but the Chinese like to give the answer you want to hear.
For example, you may ask to arrange a meeting on Friday at 2pm or enquire if they can provide delivery of a certain product within two weeks. They will smile and readily agree, as they know this is the response you would prefer.
Some of you might be reading this and are now jumping up and down shouting “LIARS!” – but to them it’s not lies, just a form of making you happy, showing consideration and saving face.
Fortunately, they will realise later what they’ve just said and probably contact you with a half-baked excuse as to why the meeting has to be moved or the product can’t be delivered. This will happen at very short notice, so always be flexible regard timeframes.
Some Card Tricks
In business and diplomacy around the world, it’s common knowledge that a direct answer is hard to come by. People won’t say “yes” or “no” so you’ll just have to resign yourself to hearing lots of “maybes” and “perhaps”. Eventually, you’ll start using them yourself, as it’s the only way to succeed.
An essential and simple aspect to note is that business cards are handed over and received with two hands, and on receipt are read carefully and with appropriate levels of respect. If a card is tossed over and then placed in the back pocket, then clearly it’s a bad way to start. Ideally, one side of the card should be printed in Mandarin, the other in English.
When an actual meeting begins, then the circular route is always favoured and frankness is not appreciated, and viewed as slightly crass and ineffective. In the West, it might be seen as dynamic and helpful to get down to matters quickly, but here is very different.
Begin with small talk and slowly work your way up to the main topic. Allow lengthy pauses in conversation to allow the Chinese time to think and to show your respect to them. Try to smile, not continually as this will make you look insane or stupid, but they do like to see a happy face. Though your facial muscles may be exhausted and you might develop lockjaw, this enforced jollity will be worth it if you secure a favourable deal.
Just a Minute
In negotiation, it’s not seen as a form of compromise or agreement but a means to get one over the “opposition”. Many English teachers work in China and attempt an improved salary after their contract is up for renewal. The resulting offer is an increased wage but with increased hours. A Canadian friend was left scratching his head as he calculated that if he accepted the “new and improved” contract, then he would earn less money per hour than before.
A common ploy is for a deal to appear to be finalised. After extensive negotiation an agreement is made and perhaps even hands shaken as a sign of good faith. However, another meeting is called later and reveals that the conclusion was an illusion, and there are just a few small matters that need to be resolved. It’s possible that this is designed to induce exasperation or to drag it out to the last minute, and thus weaken the opponents’ resolve.
The Big Bamboozle
The experiences in the UK of the car-making firm MG Rover found that in their “late-night meetings” in April 2005 with a possible buyout by the Shanghai Automotive Industry Corp (SAIC) – that old tricks of “getting them drunk while pretending to drink” are still used. It’s not astounding that the SAIC used such a basic stratagem, but that MG Rover personnel could fall for the oldest one in the book.
After time an individual or company in China will need to develop “Guanxi”. This is the Chinese method of networking; it’s extremely important and is technically defined as any type of “relationship”.
The business mentality is “You scratch my back, I’ll scratch yours”. Therefore you need to build a network of Chinese “friends” with whom you can swap favours on a regular and voluntary basis.
One needs to identify the right people who will be most beneficial to you, and then set about becoming “friends” with them. The Chinese will only be “friends” with you, if they can see some advantage in such an association.
Later it enables contact with new acquaintances, and so the sphere of influence expands. Clearly, it takes time to build up, but once you have gained trust, then you will get preferential treatment.
It also helps to maintain “Guanxi” with government officials, as you may need to arrange licenses or visas.
An extremely bad school I once worked for gives free English lessons to the officers of the local PSB (Public Security Bureau), thus ensuring excellent relations with this “police force” and a comfortable existence. “Guanxi” is not illegal in China; it’s simply part of the culture. Adapt or fail.
Made in China
Of course, enough foreigners do succeed here to make it worthwhile, and the determined and shrewd operator will be fine, as the Chinese have embraced capitalism with joy and vigour. The demand for foreign goods is fairly high, exporting and importing is lucrative, and ultimately everybody here wants to do business.
Good luck. You’ll need it.
Profound, insightful, written first-hand witnessed, credible.
Many thanks for the comment John.