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Blog 5 Surprising Facts About Doing Business In China

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5 Surprising Facts About Doing Business In China

by Bobby Lee | 16 November 2015

5 surprising facts about doing business in China

Doing business in China can be a daunting and confusing time for foreigners!

Despite being a rapidly modernising country, and very important globally in the world of business, China has its own very strongly unique culture that is very far from Western cultures that you may be accustomed to.

Whilst you may never need to be a 'China Expert,' it will most certainly help you to have better business relationships with local Chinese contacts if you're aware of some of the cultural idiosyncrasies surrounding doing business there.

By being more comfortable with some of the situations and behaviours which you may encounter, you can head to China with confidence that you're ready for anything that doing business there can throw at you!

Hongda Business Services round up our top 5 surprising facts about business in China here...

Be Ready For Anything When Doing Business In China!

In China it pays to be ready for anything, and in business this couldn't be more true.

As a foreigner either visiting China on a business trip, or living and working here, you'll benefit by understanding why the things that happen do, and how you should or should not react and behave in order to make a good impression.

We know that Chinese companies want to do business with their foreign counterparts, however with such a different culture it's a little much to expect local people to do business 'how you do it at home.'

This is why we're collecting 5 of the surprising business facts that you may not have been aware of.

So, as they say: When in Rome...

 

1. Exchanging Cards In China Is A Big Deal

business card exchange in china

You know when you meet business contacts and hurriedly exchange cards, stuffing them into your jacket pocket after perhaps the most cursory of glances?

Not in China.

The exchanging of cards is quite the traditional process, where cards are held out in both hands perhaps accompanies by a slight bow. Take the card with 2 hands and take a moment to study it, thanking the person.

Don't stuff it in your pocket. Place it on the table in front of you, only later placing it in your card holder, wallet, or pocket (not shirt front though) when the meeting ends.

Not following this procedure won't end in a massive faux-pas, but of course it's better to win your contacts' respect by being polite in the way that is recognised in their country.

 

2. Building Personal Relationships Is Important

personal business relationship in china

It may be possible in the West to have a long-term business relationship with someone without ever getting to know them very well personally.

After all, business is business, right?

But in China gaining trust before doing business is very important.

Personal connections trump any other in China, where the phrase: "It's not what you know, but who you know." Rings true much of the time.

So be prepared for your Chinese contacts to want to get to know you better, perhaps asking you questions totally unrelated to the business you plan to do.

They may ask about:

  • Family
  • Hobbies
  • Habits
  • Your home

Whilst discussing these topics with a stranger may seem a little awkward and unnecessary, if you think about it, they allow you to build up a closer bond with your counterpart which, in the long term, will help smooth your business negotiations a great deal.

 

3. Foreign Intellectual Property Is Not Automatically Protected In China

trademark registration in China

It is incredibly important for foreign companies to register trademarks in China.

Imagine you're importing products into China, and all of your IP is protected in your country. You're then told that someone has already registered your trademark in China.

What do you do?

You can fight them in court which could take many months or even years and guarantees nothing, or you could purchase the rights from them.

Both of these solutions promises to be time-consuming and expensive and can be avoided when you know that you must register any trademarks and similar IP in China separately.

China's system is that the first organisation to register IP rights is the 'owner,' even if they're registering a trademark which belongs to another company abroad.

This is why clever foreigners importing to, or manufacturing in, China will always make registering their trademarks etc one of the first tasks they do in China.


 

China Trademark Registration


 

4. Yes Does Not Always Mean Yes

miscommunication when doing business in China

Chinese communication tends to be rather indirect.

Rather than coming straight to the point, especially in an awkward situation such as in a tricky business negotiation or when things are going wrong for some reason, local people will be reticent to take the bull by the horns and come straight out with their true feelings.

All of this has to do with being polite.

Usually local people do not want to disrespect their foreign business contacts, and so instead of saying 'no,' 'I disagree,' 'we cannot,' or 'it isn't finished,' you'll often find that the opposite is said in order to make sure that you retain face.

Saying the negative to you is thought, at times, to show a lack of respect for your feelings and hard work, and so by saying yes (even if this is wrong), local people aim to keep you happy.

In group meetings especially, local people may not be keen to say that things are not going to plan, as they do not like to show this in public. So in order to get to the bottom of things, it would also be advisable to quietly talk to people in private away from their peers (such as in an office with the door closed) so that they can feel comfortable enough to discuss problems with you.

Understanding when this is happening comes with experience, and if you are unsure it is important to gently push for the information that you truly need, but without being too direct. 

 

5. Business Dinners Are Often Where The Real Action Happens

chinese business dinner

In the West business meetings are usually where the real thing occurs, but when doing business in China it is often the business lunch or dinner where you'll truly make inroads into your negotiations.

As mentioned earlier, personal relationships are important, so were better to relax and build these than when eating (the favourite pastime of most Chinese people)?

Food plays a very important role in Chinese society and life. One of the first things that family, friends, and colleagues will ask each other is: "Have you eaten?" So don't be surprised if you're invited to eat by local contacts.

It's both a badge of honour, and polite of them to wish to treat you to a nice meal.

You may be asked to try local 'delicacies.' These will usually be tasty, but can sometimes include the weird and wonderful, such as:

  • Snake
  • Starfish
  • Various offal
  • Worms

Don't misunderstand and think that all Chinese food is odd and scary, it's not. In fact in general it is delicious and tasty, despite perhaps being a little difficult to eat if you're not used to chopsticks. But by being a gracious guest and trying these dishes you'll gain acceptance and respect.

Drinking is also very common indeed.

No one will force you to drink alcohol, but it's likely you'll be offered it in the form of toasts. Politely sipping some of the drinks will delight your hosts, and as the drinks flow you're likely to be able to get a really good rapport going which will only help when discussing business.

Perhaps you can reverse the role and invite your local contacts to dinner? They'd feel very flattered indeed to receive this invitation, and this would help strengthen your business relationship.

 

Conclusion

We must go into doing business in China with an open mind.

Things are usually not done the same way in China as they would be in the West, however one thing that is consistent is that people there want to have succesful business partnerships with you.

So by understanding, being ready for, and respecting common business traditions in China, you stand a better chance of getting ahead than those who do not.

 

Do you have any surprising business facts to add to these 5?

Which tips would you pass on to fellow readers in order to help them do business in China?

Please share them as a comment below this blog post!


 

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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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