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Blog 10 tips from the pros on doing business in China

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10 tips from the pros on doing business in China

by Bobby Lee | 07 March 2016

10_tips_for_doing_business_in_China.jpgLessons from the author of China in Motion

Today, China has become a place that business people from all over the world have recognized as one that they simply have to figure out how to do business in. It is a vast land of opportunity that is continuing to shape the entire world's hold on business.

In the face of increasing pressure of a slowing economy, its ongoing dedication to experimenting with new free trade zones such as Shenzhen's Qianhai New DistrictGuangzhou's Nansha, and Zhuhai's Hengqin shows China's willingness to try new things.

The government and its continued relaxing of corporate policies and the signing of massive trade deals with key countries is helping to foster international relations and lay the foundation for greater business cooperation and promote greater foreign investment.

This being said, doing business in China is definitely not as black and white as one would expect from doing business in other parts of the world. The opening up of China has made navigating cross-cultural relationships more important than ever before, and that's why there are so many China experts writing about the subject. 

One such person is Mia Doucet, a sales strategy consultant and author of award-winning China in Motion. In this blog we will take a look at 10 tips that she shared about doing business in China and I'll leave you with my thoughts on each one.

The publication is based on 1,000 hours of candid interviews with Asians, exploring the hidden cross-cultural and communication factors that cost Western businesses untold millions with Asian customers and suppliers. Join me as we dive a little deeper into the advice, and see how relevant it is today!

Tip #1:

Never underestimate the importance of existing connections. You need to be dealing with a Chinese person of influence. If that person feels you are trustworthy enough, and if they can get their network of contacts to trust you, there is a chance you will succeed. Asians want to do business with people they trust. But there is no real trust unless a person is in their circle. At first, they don’t know if you will be a good partner. Show respect by keeping some distance. Focus on building the relationship before talking business. Do not go for big profit on your first contract.

My thoughts: A few things to discuss here. I firmly believe that the success of a lot of foreign companies/individuals looking to expand in China is dependent on finding (and convincing) the decision maker of a local company of their value, and this is especially true for startups. When it comes to leveraging ones existing contacts on the ground, it is definitely a good idea to befriend people of influence in your industry. These type of people are your way in for reaching a much larger, much more useful network that will bring better business opportunities your way. The trust issue is a real thing, and it will have to be earned if you want to establish strong relationships with people that actually matter. The Chinese are not as direct as many foreign business people I have met, so it pays to focus on really getting to know your counterpart to help establish a rapport before getting to the 'business' at hand.

 

Tip #2:

To protect your intellectual property, use the same due diligence you would in the West.

My thoughts: I can not stress enough how important this is in today's world. IPR issues and misappropriation is something that China is now famously infamous for. Company’s should take the utmost caution when first starting operations on this side by registering their trademarks. 

Read our blog on protecting your IP by registering trademarks in China here! <

 

Tip #3:

Never pressure your Asian colleagues for a decision. To speed up the decision process, slow down. Start from the beginning and work through to a solution in a logical, step-by-step fashion. Then stand your ground.

My thoughts: I think that the key thing here is to understand that nobody likes to be pressured into making a decision, not just Asian people. If you want to work in harmony with your colleagues/potential clients, its important to take some time to solve problems as it will also reflect on your ability to cooperate with them. Rather than add fuel to a fire, take a step back and work on a solution (even its only temporary) to help save you time. Address your concerns afterwards and do what is necessary then to ensure the same problem doesn't occur again.   

 

Tip #4:

The negotiation process will be anything but smooth. Your best strategy is a walk away mentality. You have to go in trying not to make the deal. Explain your position in clear, concise words. State your terms clearly. Respectfully. Then be prepared to walk away if your terms are not met.

My thoughts: I’d say that maintaining this type of approach when negotiating is clearly a good way at implementing a ‘my way, or the highway’  strategy, but I’d argue that going into a meeting like this may lead to one missing great opportunities to cooperate. Obviously everyone has a limit as to how much they are willing to bend, but sometimes it does help to meet your counterpart halfway. This can be achieved by making up for certain ‘giveaways’ in other parts of your business all for the sake of fostering a better business relationship at the end of the day.

 

Tip #5:

Respect face. Never argue or voice a difference of opinion with anyone—even a member of your own team. Never make the other person wrong. Never say “no” directly, as that is considered rude and arrogant.

My thoughts: This is one of the things that almost everyone writes about when discussing business in China, and for good reason. The concept of ‘face’ is deeply embedded within Chinese culture and is something they attach a huge amount of importance to. Once again here it is a thing of taking a step back and discussing your views in a way that is a little less direct. This will go a long way to ensure that you help your counterparts or colleagues to save ‘face’, and it will to create a more favorable working environment. If there is something on your mind that truly needs to be addressed, it is wise to take it up with the person in question behind closed doors. Business in China does come down to trust and perhaps more importantly, respect. 

 

Tip #6:

Account for the fact that most Asians understand less spoken English than we think they do. The easiest thing in the world is for a Chinese to say yes. Their smiles and nods have more to do with saving face than getting your meaning. Talk in short sentences. Listen more than you speak. Pause between sentences. Find four or five easy ways to say the same thing. Never ask a question that can be answered with a simple yes. Avoid all slang. Skip humour altogether.

My thoughts: It is important for you to read each individual situation as the people you are dealing with will all be different, their level of understanding will be different, and you may find that meetings can be conducted in English without any difficulty. However, to avoid problems that may arise from miscommunication, its advisable to ask as many questions as possible and clarify every bit of important information in written form. Following on with the next tip below, it is also a good idea to present any questions you may have in written form, and make amendments to ensure that everything is clear in contracts you sign with each other.  

 

Tip #7:

Manage the way you present written information. Document everything in writing and in precise detail. Present your ideas in stages. Write clearly, using plain English text. In order to appeal to Asian visual bias, use sketches, charts and diagrams.

My thoughts: Everyone can relate to visuals. Obviously it will help to make sure that the visuals are accompanied by clear, plain English text that helps drive home the point you are trying to make.

 

Tip #8:

Prepare for every interaction. Do not count on your ability to wing it. A lack of preparedness can cause loss of face and trust. Do not give or expect to receive partial answers from your Chinese colleagues, as that is considered offensive.

My thoughts: I'd honestly say from my own experience that winging it is almost certainly not the best way of showcasing your capabilities when it comes to closing a deal. No matter how experienced or 'good' one thinks they may be, anyone that you want to be doing business with will probably have done their homework on you and your company, so do them the same courtesy. Always be prepared no matter what. It is a reflection of your business ethic, and it will help to show your counterparts how committed and thorough you are.

 

Tip #9:

Make sure your facts are 100% accurate in every detail, or you will lose credibility. Do not present an idea or theory that has not been fully researched, proven, or studied beforehand. If you make a mistake, you are not to be trusted.

My thoughts: Trust seems to be a recurring theme in this list of tips, and I'd have to say that it is pretty much the same all around the world. However, it is perhaps more pertinent in China due to the bad rap that Chinese goods and services receive in the eyes of foreigners, and actually trust works both ways. For the tip above, I think that one should always prepare as if you are pitching to a multi-million dollar company. Leave no holes or weaknesses for your counterparts to expose. It is exactly the same if Chinese companies pitch to foreign clients. Trust is something that needs to be mutual at the end of the day. 

 

Tip #10:

Everyone on your team needs to know how to avoid costly gaffes. Most of us are not by nature sensitive to the differences in culture—we have to be taught. Time-honoured passive resistance could bring your company to its knees. It makes sense to teach people the cross-cultural factors that have a direct impact on your profits.

My thoughts: This is definitely one of the things that has to be negotiated with the utmost care. There are many cultural subtleties that foreigners are unaware of that may make the difference between an okay meeting and a successful meeting. Just as you'd appreciate your counterparts taking the time to understand you, your effort is appreciated and understood as respect.

 

Conclusion

That's it for the breakdown of these great tips for doing business in China. There are certainly a lot of things to be said on this subject, but really, I do feel that China is on the fast track to accommodating even more foreign business and investment, and as this continues to happen the Chinese themselves will begin to slowly adapt to the 'foreign' way of doing business, and become even more accommodating. It is only a matter of time...

What's YOUR opinion on doing business in China? Do you agree with my thoughts, or do you have a different take on these 10 tips?
Please share your experiences with our community and ask any questions that you may have by leaving a comment below.


 

10 step guide to Chinese Business Culture & Etiquette

Topics: Running a business in China

Bobby Lee

Bobby Lee

Helping make China companies easy since 2007 as a Senior Consultant

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