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Tactics and Strategies for Success in China – Part 1

The following tactics and strategies are presented as general guideposts for Western executives who are entering or expanding their business and aiming for business success in China. They should be considered as they move along the track to develop their long term and comprehensive strategies throughout the country. We are presenting these in alphabetical order for ease of reference.

 

Aesthetics

Aesthetics is often a factor that Western businesspeople overlook. You should be mindful of this factor and color itself is quite significant. Consider the recent experience of a Canadian firm in Calgary offering a Chinese visitor a green Stetson hat. The Canadian firm was totally unaware that wearing a green hat in China signifies that the individual’s partner has been unfaithful. You need to be mindful of the significance of color in dealing with Chinese businesspeople. Certain colors have significance for example white, which signifies death, not unlike how in Canada we think of black for mourning and funerals.

 

Business 24/7

In the Western world, we value our own personal time. However, this may be quite different in China where the adage that life is business can be true. People talk about business 24 hours a day. A person’s social life may revolve around business continuously whether as an employee or business owner. The Chinese enjoy business banquets and personal dinners and lunches. Even karaoke, a favorite pursuit, is usually related to business. In fact, many of these activities are done outside of normal business hours, occupying a person’s evenings and weekends.

Sometimes it looks as though Chinese employees enjoy hanging out with the boss and colleagues after “work hours”. However, this may be an unspoken obligation and it is part and parcel of the job, regardless of what kind of work. Things are changing to some degree, but you can expect that business activities will encroach upon your leisure time, and you should plan for it.

 

Business Culture in China

Communications and Language

In China, Western executives can earn respect and attract attention by showing that they are learning Mandarin. It creates smiles and a bond that is helpful to the relationship and will be referred to again and again by your Chinese counterparts.

On the other hand, failing to do one’s homework on the language file can result in big mistakes which can be costly, time consuming and embarrassing as even multinationals have experienced. Kentucky Fried Chicken’s first attempt at the “Finger licking good” slogan came out as “Eat your fingers off “in China.

Many Western firms now understand the need to do “back- to- back” translations in Mandarin to get things right. Language can be hugely important on packaging, in promotional campaigns, on product assembly instructions and in presentations and requires a careful approach drawing on a variety of sources.

Unless you speak Chinese, (Mandarin being the most common as well as the official dialect), it can be difficult to do business in many parts of China without the aid of a translator/interpreter (simultaneous interpretation is required which necessitates a high skill level, higher cost but best money spent)

English language levels in China are patchy and although a layer of fluent English speakers exists, the layer is quite thin, and levels fall away very quickly. Communicating in China can, therefore, be a slow, laborious activity and fraught with constant dangers in terms of misunderstanding and mistranslation. Westerners should not assume comprehension. Cover the same ground several times and constantly check for understanding.

One of the reasons that communication can be such a problem in China is that along with many other Asians, the Chinese find it extremely difficult to say ‘no’. Saying ‘no’ causes both embarrassment and loss of face and it is therefore better to agree with things in a less than direct manner. Thus, anything other than an unequivocal yes probably means no.

Be very wary of phrases such as ‘Yes but it might be difficult’ and ‘Yes, probably’. Also, pay attention to the use of silence – it doesn’t necessarily mean agreement. It often signifies something else, or noix.

The Chinese have a reputation for being impassive and this is largely based on Western misinterpretation of Chinese body language. As with the Japanese, the Chinese display limited body language and Westerners interpret this rigidity as a lack of responsiveness and emotion. Chinese culture frowns on overt displays of positive or negative emotion and especially losing one’s cool in front of a crowd.

Contracts

Westerners should not assume that their Chinese business partner will strictly adhere to the signed contract. In fact, many Chinese businesspeople consider the contract to be a stage in the negotiations and will continue to make requests for changes including for goods or services not identified earlier. In general, many Chinese businesspeople consider a signed contract to be less important than the overall relationship. Westerners need to be mindful of this and continually reinforce the contractual obligations that have been agreed. During my EDC career, I recall seeing numerous Chinese counterparts making additional demands for equipment and services (not mentioned in the contract) as the final payment milestone approached. If the Canadian company conceded to the request, it would often eliminate their profit margin on the contract.

 

Business-Communications-in-China

Decisions

It is common to be involved in a series of meetings rather than one big meeting at which all major issues are disclosed and assessed. Meetings are about building relationships and exchanging information – it is quite rare for significant decisions to be made within the meeting. Decisions will be made elsewhere in consensus-style discussions, which involve all the relevant people (including possibly the Communist Party.)

As a result of this approach to meetings and their serial nature, patience is very definitely a virtue. Impatience will often achieve nothing other than delaying things even more. Note as well that most in the meeting will not ask questions or otherwise challenge the status quo. There is a pecking order that often trumps personal expression. Be prepared for a decision-making process that is difficult to map out and impossible to apply a timeline to because of its opaque nature.

In traditional Chinese organizations, the management style tends towards the directive, with the senior manager giving instructions to direct reports who in turn pass on the instructions down the line. It is not expected that subordinates will question the decisions of superiors – that would be to show disrespect and be the direct cause of loss of face for all concerned.

The manager is generally seen as a type of father figure who expects and receives loyalty and obedience from colleagues. In return, the manager is expected to take a holistic interest in the well-being of those colleagues. It is a mutually beneficial two-way relationship.

You should keep in mind that senior managers will often have close relations to the Communist Party and many business decisions are likely to be scrutinized by the Party which can be the unseen force behind many situations.

It is often said that China has a lack of good-quality, experienced managers — this is typical of a rapidly growing and modernizing economy — and that the good managers who are available are expensive (even by Western standards.) This places enormous emphasis on any company’s recruitment and retention policies.

Dress

One of the most visible changes to the human landscape of China over the past few decades has been the change in dress code. Gone is the standard unisex Mao jacket and trousers in blue or green and these have been replaced by a much more Western style of dress – especially in the commercial and urban areas.

Appearance is important within Chinese business circles. Successful people are expected to look successful. Wealth is admired, so wear good quality clothes, watches etc. if you want to impress without being overly ostentatious. Do not be surprised if a Chinese counterpart asks you how much something that you are wearing or carrying costs. It is quite common to ask about costs and brands and where you may have bought something.

 

Chinese-EntertainmentEntertaining

Entertaining is very important in the relationship building process. If entertaining, do it well. If being entertained at a banquet, take your lead from your hosts – they will enjoy talking you through the process. Pay attention to who invites, as they are expected to pay for the dinner, karaoke, or whatever. Similarly, if you invite, you are expected to pay the whole bill.

Also, you may be expected to return the favor of ‘treating’ if you accept their invitation. If you want to give a message about business, saying no to an invite is better than accepting the so called ‘free’ dinner…nothing in China is ever free…there are strings attached and social/unspoken obligations.

 

Gift Giving

Gift giving is an everyday part of Chinese business culture. Giving and receiving gifts helps to cement relationships. Take gifts with you when visiting and put some thought and effort into the gift selection process. The advice of a Chinese friend or colleague is invaluable in doing this properly.

Always wrap gifts before presenting them. Gifts are rarely opened in front of the giver. The Chinese are fond of dark red, gold, or blue, which are all appropriate colors for gift wrapping. Avoid clocks and scissors or other sharp items such as knives or letter openers, all of which have negative associations in China. Avoid wrapping gifts in white or black, which are colors associated with funerals.

Although there is a large amount of well-documented corruption which takes place within the Chinese business environment, the giving of gifts is endemic to Chinese culture and has been for thousands of years.

If you are receiving something that looks too good to be true and is considered a huge gift, then know that it might have major strings attached and could be venturing into bribery.

 

Author

This guide has been produced by Marvin Hough, a Canadian business executive and university professor with extensive experience in international markets. During his career, he has facilitated Canadian exports and investments to global markets while working for 30 years with Canada’s official export agency, Export Development Canada (EDC). His career included overseas assignments in India, China, and Mexico where he faced and observed business culture issues on a day-to-day basis.

Since completing his EDC career, Mr. Hough has continued to be actively involved in international business through teaching at the University of Ottawa’s Telfer School of Management where he has led MBA consulting trips to markets such as China, Brazil, South Africa, and Vietnam.

Mr. Hough also runs his own firm, Marvin Hough International Research and Analysis Limited (MIRA) (www.miraservices.ca) which supports Canadian and international companies, educational institutions, and governments in entering and operating in diverse international markets.

Throughout his career, Mr. Hough has felt that Western firms should place more attention on understanding and adapting to business culture as they conduct business in global markets. He is pleased to collaborate with Global Business Culture to support greater understanding on the business culture file by producing these guides.