June 12, 2023

Business Culture in China: A Short Guide

International business is difficult enough, with entrepreneurs and managers having to navigate different regulatory landscapes or deal with foreign suppliers and contractors. Most companies also have to face the language barrier issue when branching out to new territories. Finally, dealing with companies from another continent with wildly different cultures exposes you to a wide plethora of various blunders and mistakes that wouldn’t even be considered as such in Western countries.

With so many Western companies doing business in China nowadays, understanding the Middle Kingdom’s business culture is a crucial step for any organization that’s serious about venturing into that country in any capacity. Whether you want to work with Chinese manufacturing sites, try to open a branch in China, or partner up with a Shenzhen-based startup, brushing up on your knowledge of the Chinese business culture can go a long way in terms of achieving your goals in the PRC.

For those who prefer video content, here’s a video summary of what you’re about to read below.

Making Conversation

Before diving into the business-specific aspects of Chinese culture, it’s important to note that even the simple task of making small talk and exchanging pleasantries in China can be much different from what you’re used to.

For example, your Chinese counterparts may start your conversation with questions like “Have you eaten,” or “Where have you been?” Coming from the West, these may strike you as quite odd and maybe a little personal, but they’re actually incredibly common pleasantries you’ll hear in China all the time. Think of them as the equivalents of “How are you” or “What’s up.” When asked if you’ve eaten, reply that yes, you have, and add a “thank you.” You’re expected to say that, even if you’re actually hungry, just as you’re expected to respond that you’re “doing fine, thanks” in Europe or the US.

Even a basic understanding of common Chinese words and phrases can help you establish a friendly rapport with Chinese businessmen. They’ll appreciate you warming up to the culture, so don’t hesitate to use simple Mandarin phrases in conversation, provided that you fully understand their meaning and the appropriate context.

Another important thing to note is Chinese people’s usage of negative language or lack thereof. Explicitly saying “no” is considered rude, so you might want to come up with some alternative phrases, such as “maybe” or “we’ll consider it,” instead of a straight-out refusal. The same goes the other way. If you hear phrases such as the ones we’ve just mentioned, don’t get your hopes up too high — in most scenarios, your counterparts are just being polite but actually mean “no.”

Pro Tip: a common way to highlight a problem in China is to say that something’s “not a big issue.” When you hear that during a business meeting or negotiation, interpret it as”this is a big issue.”

Business Mentality

The basics of small talk in China are also incredibly important in business settings. Having a polite conversation before getting down to business is actually an important part of any business meetings in the PRC. When entering a meeting, keep in mind all of the pointers we provided you with above, and use them to effectively and respectfully engage your co-workers and counterparts, ensuring that all of you get off on the right foot.

Punctuality is extremely important in Chinese business culture and anywhere else in East Asia, for that matter. In the West, we’ve learned to tolerate a little tardiness, and not many people will think any less of you if you’re a few minutes late to a meeting. This is not the case in China, where being late is interpreted as a sign of disrespect and poor business etiquette.

In China, even the way your delegation enters a conference room is treated as a way of business communication. Chinese people enter the room in hierarchical order, with the most senior person present being the first one to come in. It’s a good idea for you and your team to adhere to this rule, as well, in order to avoid any potential confusion.

Let’s get down to brass tacks. Chinese business people expect everyone to be very well prepared for any meeting. Whether you’re meeting to discuss a proposal of yours, enter negotiations, or settle a dispute, have a few dozen copies of memos or briefs ready to be handed out prior to the start of the meeting. During the actual talks, refrain from showing emotion and remain composed throughout the entire meeting. Behaving too erratically, laid back, or otherwise “unserious” can negatively impact your business relationship.

Don’t be surprised if your negotiations will last for much longer than initially expected. Dragging the negotiation process for as long as possible to gain an advantage is a vital strategy in Chinese business culture. Accepting their delays, agreeing to follow-up meetings, and not emphasizing the deadlines will help you keep a level playing field.

Pro tip: Chinese companies tend to like to establish strong business relations with other firms before closing business deals. The longer you’re in talks with them, the higher the chance you’ll gain their trust. Propose some extra meetings of your own and extend the business trip out of your own volition to show your Chinese counterpart that you care about relationship building, too.

How to Go About Afterwork Meetings and Dinners

In many Western countries, shared meals are a vital part of many corporate processes, as they allow all parties to wind down, relax, and discuss business in a casual, impromptu manner. Don’t take up this approach in China. Your Chinese colleagues are more than likely to treat a business dinner as a mere extension of the conference room meetings, except that you shouldn’t actually discuss business at the table. If you want your meal to go down as a success, here are some tips you should follow:

  • Dress code: Formal. Wear a black, grey, or navy suit.
  • Bring plenty of business cards to give out to your Chinese colleagues. Use two hands when you hand it over to them as a sign of respect.
  • No gift giving. In a business setting in China, gifts are considered to be bribes, and trying to give one to your Chinese counterparts at dinner is a major faux pas.
  • Eat strategically. At most formal dinners, you’ll be served dozens of courses, so it’s important not to fill up too much on any single dish. You should also know how much to eat, too. Cleaning up your plate implies that you’ve been served too little, whereas barely touching a dish at all signalizes disrespect.
  • Declining an invitation for post-dinner drinks is yet another sign of disrespect. Unless you have a valid reason, you’ll have to buckle down and hit the bars. Drinking together is a big part of forming a close business relationship.

Final Thoughts

In order to fully understand Chinese business etiquette, you need to familiarize yourself with one crucial idea: the concept of “face.” This refers to one’s understanding of cultural norms, social standards, and honor. In the business context, you can lose face easily by behaving disrespectfully, erratically, or directly refusing someone’s proposal, whether it be a business offer or an invitation for drinks. It’s a foreign concept in most Western countries but crucial when it comes to interacting with potential business partners in China. If you take another look at our article, you can see that a lot of the tips and business practices we’ve outlined relate closely to striking the fine balance between having face and losing it.

Hopefully, our short guide has helped you understand the Chinese business culture better. If you’re looking for a reliable manufacturer in China, reach out to us! At MorphoMFG, we’ll provide you with the most cutting-edge facilities and suppliers in the country, even if you’re not particularly well-versed in China’s complex business etiquette!

About the author

Josh Fairbairn

CEO of MorphoMFG, fluent in Mandarin, Blogger, and Youtuber. Josh loves interesting materials and the craftsmanship that goes into creating innovative products - watches, tech, games, whisky, leather, wood, blockchain & electronics. Josh and his team in Guangzhou, China are striving to create (& consume) the world’s highest quality products. Partnering with entrepreneurs globally to help solve the world's problems - whether small or large.

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