nazir5481's Blog

Category Business,China,Importance,Relationships

December 24, 2007

Doing Business in China - Importance of Relationships

Business practices and relationships in China are very different from those commonly encountered in the US, and attorneys relocating to Asia should familiarise themselves with local customs. Here are some tips and tricks to minimize the risk of causing offence.

Importance of relationships

Rather than allow a relationship to develop while a transaction proceeds, the Chinese will establish the relationship first and foremost and, if a trusting personal relationship is cultivated, business transactions may follow. This is in part because of the concept of gwanxi – perhaps best thought of as a network of relationships whereby you favor your friends and they favor you. This can work both ways and the Chinese will be careful not to become obligated to business partners until they have carefully researched the personalities involved. You will be well advised to spend time building your own network of contacts, but you should be aware of all the favors you have received and be prepared to respond in kind.

One consequence of the need to establish a personal relationship is that Chinese will ask personal questions that would seem impertinent and/or irrelevant to most westerners. It is best to politely respond with the answers (your age, income or whatever) rather than take offence or try to inject humor into the situation. Another consequence is the Chinese attitude to contracts. It can be seen to demonstrate a lack of personal trust if a written contract is produced too early in a transaction. A negotiated contract may mean little more to a Chinese negotiator than a checklist of points or a sign of a developing relationship and it is common for clauses that appeared to be agreed to be re-opened.

“Face”

The concept of “face” is important. It is essentially a mark of status and dignity and it is important to respect the Chinese desire to maintain and gain face during negotiations. The same is true for dealing with subordinates in the office. Causing someone to lose face by belittling them or criticizing them in front of others can ruin a working relationship. Make sure you do not ask anyone to do a task that they may consider beneath them – if in doubt ask a subordinate in the office to arrange for something to be done rather than asking them to do the job directly. Also, be aware that you can give someone face by praising them in front of others (so long as the praise is not so effusive that it sounds insincere). This can assist in ensuring harmonious office relations and, ultimately, may lead to more wins in a negotiation than taking clever points.

Greeting

A light handshake is the standard greeting at business meetings. Greet the most senior person present first and remain standing for the introductions. It is common for the Chinese to slightly lower their eyes as a sign of respect. Then it is time to hand out the business cards. These are very important to the Chinese. You should offer your card with two hands with the writing facing the person to whom you are presenting it and accept their card with two hands. You should take time to study the business card you have been handed and look impressed by the person’s job title. Never put it straight into your pocket or bag. Instead, you should arrange the business cards on the table in front of you, taking care to give due prominence to the senior delegates’ cards when arranging them.

At the meeting

Seating is usually dictated by the most senior person present and the Chinese love of hierarchy will be obvious in all aspects of the arrangement of the meeting. Meetings are often conducted in Chinese. If you don’t speak Chinese, this can be off-putting. Be prepared for the length of the translations to be vastly different from the length of the Chinese. It may be helpful to follow up any advice in writing to ensure all points were understood and accurately represented. Don’t be put off by silence – it is common to take time to consider the points that have been made.

Entertaining and Gift Giving

Exchange of gifts at the end of a business meeting is common, either one small gift for everyone present or a larger gift for the group (but not so large as to make reciprocation difficult or this can lead to a loss of face). You should note that the Chinese generally decline a gift a couple of times before accepting. Gifts are not opened in front of the giver.

Business dinners and after dinner entertainment are an expected part of building a guanxi relationship. These can be lengthy affairs. Be flexible on the menu and be willing to try Asian delicacies (with chopsticks). Always leave some food on your plate though – finishing everything will cause your host to assume you are still hungry. Drinking and toasting at a meal is common. You should wait for your host to make a toast before drinking.