In this section, we are going to address some very essential business guidelines, and the fine points of finalizing business deals in China. These 2 areas are vital for your business to “blossom” in China.
U.S. intelligence consultation firm, Kroll Associates offers crucial guidelines for your business relations in China.
- Investigate local executives in charge of company matters.
- Ensure more than one individual has total control over company matters.
- Establish regular and detailed auditing systems.
- Be aware of political standing of Chinese business partners and government agents.
- DO NOT get caught up in Chinese power struggles
- Consult Chinese sources to demonstrate your unwillingness to do corrupt deals.
Finalizing Business Deals
Another major difference between western culture and Chinese culture is the way deals are finalized. In western business culture deals are finalized in the form of a contract, a written contract. Pretty standard stuff…right? We in the west take a more rule-based approach. This approach follows formal rules and regulations. Chinese business culture is intrinsically tied to relationships via trust and mutual dependence. It is also true in china that businesspeople do not experience direct personal results from business relations. In some cases to have a contract accepted, an add-on might need to be offered along with the general business agreement. Think of add-ons or incentives as an expense paid trip to visit your company headquarters, products or services that you sell given at marginal cost, or offer training by your company experts.
Close and personal relationships are an aspect of Chinese business society that should be understood and utilized by you – the Westerner. Your Chinese counterparts wish to know your history, motives, personality, and especially the interaction with those in which they are dealing. As I pointed out previously, friendship with implications of a continual exchange of favors is defined as guanxi. Guanxi has many dynamics. Before you will be able to do business in China it is imperative that you first develop relationships with your Chinese associates. These relationships may take months to develop. It is true that particularly in the early stages Chinese people will keep a certain “psychic” distance from you. This defense mechanism can have a negative effect on guanxi. That is why trust and loyalty are highly valued in Chinese society. Becoming acquainted with a businessperson’s family will personalize, as well as strengthen the relationship. Be aware that even after relationships are established, in Chinese culture formality is still maintained. You will notice that after dealing with Chinese associates for many months that the obligation to use the title “Mr.” and “Mrs.” Will still be present. The use of formal titles is interpreted as a form of respect.
Negotiations in Chinese business tend to proceed slowly because there are more people involved in decision making. In China, business is conducted on a collaborative basis. This is juxtaposed to Americans who make decisions on their own. Oh, you don’t do that do you? In China it has been said that at times it is difficult to identify the executive who will move the deal forward. The right person may not be the decision maker. The right person may be the person who influences the decision maker.
Chinese tend to be excellent negotiators because they leave out many details of contracts. In Chinese business culture it is believed business dealings go beyond the “letter of the law.” As far as your Chinese counterparts are concerned it boils down to business transactions being mutually beneficial. Chinese will tend to reject business deals that are too rigid and legal. Many western businesspeople feel obligated to offer extras because of the warm and gracious hospitality they receive. Try to prepare yourself, okay?
Dinners or banquets in China are closely tied to business discussions and decision making. You will often find your Chinese hosts offering tea and/or a meal as part of a business visit. The conversation may touch on business matters, but the main focus is relaxation. You will find that the main subject under discussion is the country, the customs, the food, and family. Don’t be surprised if your host wants to see family pictures. You will find this particularly true in your first meal together. Oh, and another thing, discussion of politics or religion is taboo – so pick your subjects wisely!
I hope you find this information useful…indispensable even. In a nutshell, my main suggestion is extensively research the cultural differences between east and west and practice, practice, practice.
For the final installment, social nuances…
- Dining Standards
- Body Language
- Gender Issues