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Doing Business in China

Author(s):

RaeAnn Slaybaugh

January/February 2009, eSide Supply Management Vol. 2, No. 1

Thanks to quick turnarounds, a quality infrastructure and competitive speed-to-market, China endures as a vital sourcing destination. Before you go, make sure to brush up on the country's basic business etiquette, including:

Why punctuality is so highly valued

The importance of heeding hierarchy, during meetings and beyond

What (and what not) to wear to business meetings

How to exchange business cards the right way

The extreme value of "face" among Chinese businesspeople

Key Mandarin phrases

Dining do's and don'ts

Gift-giving guidelines

What to know before you negotiate

Today, China endures as a vital sourcing destination. Its vast choice of products and suppliers — fueled by quick turnarounds, a quality infrastructure and competitive speed-to-market — mean business trips to the country are a fact of life for many supply management professionals.

Much of China's business etiquette is based on its key cultural values: respect for age and position, intolerance of overly emotional or loud behavior, and the necessity to save, show and give "face."

Meeting Preparation

Windows of opportunity. When scheduling your meeting, aim for April, May, June, September and October because these are nonholiday months. Keep in mind that most Chinese workers take a break from noon to 2 p.m. every workday.

Be on time. Punctuality is highly valued in China. Being late conveys disrespect.

Welcome topics of conversation. Expect to engage in some premeeting small talk. Chinese scenery or landmarks, the weather, your positive traveling experiences and Chinese art are safe topics.

Show up with an agenda. Begin with the big issues first and work your way to the smaller ones, even if it seems contrary to the way you typically run meetings.

Ask your highest-ranking colleague to lead the meeting. Your Chinese counterparts will expect your most important representative to take the lead. They will also assume the first foreigner to enter the room is the head of your delegation.

Business Attire

For men: Wear a conservative suit in a subtle color.

For women: Avoid high heels, short-sleeved blouses or any item of clothing that could be perceived as revealing. Opt for subtle, neutral colors.

Introductions, Farewells and Everything in Between

Bowing and nodding are common greeting. However, you might be offered a handshake instead. If so, accompany it with a slight nod of the head.

Exchange business cards — the right way. Have one side of your business card translated to Chinese and printed in gold ink. When receiving your Chinese counterpart's card, study it for a minute and place it in a business card case or on the table. Putting it in a wallet or pocket is considered disrespectful.

Use formal titles when addressing your Chinese counterparts. Also, they might adopt English first names to assist you.

Heed the importance of hierarchy. Chinese businesspeople place great value on age and position. Let your host seat you at the meeting; it probably has been prearranged.

Beyond the handshake, avoid physical contact. It is especially inappropriate for men to touch women in public.

Stay calm, cool and collected. Don't laugh too loudly or use large hand movements, which can be distracting. Don't point when speaking. Use an open palm instead.

Understand the extreme value of "face." To Chinese businesspeople, losing "face" — respect or honor — means losing business. Giving face, saving face and showing face are all critical. This requires distributing face equally among your Chinese counterparts. It is also wise to increase their face by complimenting them to third parties.

Language Preferences

Seriously consider hiring an interpreter. Many experts recommend hiring an interpreter from mainland China. If you bring your own, make sure he or she speaks standard Mandarin.

Learn a few key Mandarin phrases. This will be interpreted as a fondness for China. A few simple greetings go a long way:

Nin hao ("Nin-how") = How do you do?
Wo hen gaoxing ren shi nin ("Wa HEN GaoSHING RENshur Nin") = Nice to meet you.
Xie xie ("SHI'EH-shi'eh") = Thank you.
Qing zuo (Qing DZO'AH) = Sit down, please.
Zai Jian (Dzy JEE'EN) = Goodbye.

Social Etiquette

Business lunches and dinners are extremely common. Plan to attend at least one banquet. If possible, return the favor while you're in China. If not, arrange a similar (but no more extravagant) outing when your Chinese counterparts visit your country.

Dining dos and don'ts. Do arrive early or on time. Do wait for the host to make the first toast before drinking. Do use both hands when offering or receiving anything, especially a drink. Do wait until the host starts eating to begin. Do sample all the meals offered to you. When eating rice, do hold the bowl close to your mouth, like the Chinese do.

Don't discuss business at meals unless your host brings it up first. Don't drop your chopsticks (if possible) or place them parallel on top of your bowl — both are considered bad luck. Don't eat everything on your plate — it signifies you didn't get enough to eat.

Expect alcohol to be part of every meal. In fact, some experts warn that the Chinese enjoy testing foreigners' ability to handle their alcohol, so it's a good idea to eat something beforehand. If you'd rather not drink, prepare a medical excuse. You can still participate in the toasts with a glass of juice or water.

Tipping is (mostly) considered insulting. Accepting tips in public is prohibited in most government-operated hotels and restaurants. In some of the bigger hotels and among younger service workers, however, it is becoming more common.

Gift-Giving Guidelines

Gift-giving is encouraged. A valuable gift should be presented to the entire group versus an individual, and only after negotiations are concluded. Your gift will likely be refused three times to avoid the appearance of greediness. Continue to insist. Mirror this routine if you receive a gift in return.

Appropriate gift ideas. Quality foods, fine liquors and pens or other items with your corporate logo imprinted on them are good options. Photo books of your region or the United States are also appreciated.

Wrapping guidelines. Acceptable gift-wrap colors are red, pink, gold and silver. Again, however, many colors have negative meanings in China. Entrust gift-wrapping to a store or hotel that offers this service.

Gifts to avoid. Never give money — business gifts are often reciprocated, and this could be seen as a debt to repay. Avoid gifts associated with death: clocks, straw sandals, items bearing storks or cranes, handkerchiefs and anything white, blue or black. Do not give gifts in fours; the Cantonese word for "four" sounds similar, in the same language, to "death."

If the gift is not immediately opened, let it go. Many Chinese businesspeople prefer to open gifts in private.

A Done Deal

You probably won't hear "no" — but that doesn't mean "yes." Ambivalent responses such as "Perhaps," "I'm not sure," "I'll think about it" and "We'll see" often mean the deal has been rejected. Likewise, your Chinese counterparts don't like the word "no." Say, "I'll think about it" or, "We'll see" and discuss the details later.

Decision-making is slow. Don't expect to conclude your business swiftly. In fact, it might take several trips to China before a contract is signed. Negotiations often continue even after a contract has been signed. If so, stay calm and avoid mentioning deadlines.