Top 10 Cultural Tips For Doing Business in China For Entrepreneurs And Investors

Creating connections is probably one of the most important rules that you must remember when doing business in China. In most Chinese business practices, unspoken rules and subtle actions set the pace towards the success or failure of a deal. People in the west may find some logic behind Chinese business practices incomprehensible. However, with enough patience and understanding, you can learn, practice, and put to action these practices to help you meet your objectives when dealing with Chinese business people.

The following piece includes a collection of insights that you can use for reference when you’re planning to close a deal with Chinese investors, strategically team up with Chinese partners, and land other winning points. You can achieve all these by understanding the Chinese culture and identifying pain points that you can correct as a decision-maker.

The guidelines don't only apply for tech startups, but also for any business type, regardless of their size and industry as long as they work in China, with and for Chinese entities.

Introduction

In China, connections are everything, especially when it comes to business. 

This phenomenon is commonly known as guanxi (关系), which roughly translates to “relationship” or “connection”. it's a central idea in Chinese culture that focuses on the power of social networks on personal, familial, social, business, and political levels.

Guanxi serves as the foundation of everything, making it a heavy indicator of how successful or unsuccessful the outcome of an endeavor is. Not only that, but guanxi can also help you gain the respect of others. When that happens, they will get to vouch for you in any situation, therefore giving you more opportunities to build good connections with more people.

You can consider the development of guanxi as your foundational fieldwork as you need social networks to support you and share testimonies about your brand. You can’t exactly go to China and instantly start reaping rewards. Remember that everything is a process and you need to learn and make mistakes before you achieve your own definition of success.

Top 10 cultural tips when doing business in China

Here are the top 10 cultural tips when it comes to doing business in China.

Greet “the Chinese way”

A good business meeting starts with a good greeting. When meeting Chinese business people, you can impress them by saying nǐ hǎo (你好) or “hello” or hěn gāoxìng rènshí nǐ (很高兴认识你) or “nice to meet you”. Greeting them in their native language shows that you respect them and their culture.

Chinese businesspeople also usually initiate a handshake, so make sure to accept it to avoid setting a bad impression if you do not. Do not forget to appropriately nod and smile throughout your meeting with them.     

Learn the art of indirect disagreement

While it's perfectly normal in other cultures to directly say “yes” and “no”, but the opposite is true in China. The Chinese tend to communicate their thoughts and decisions indirectly. For example, instead of disagreeing in an argument, the Chinese would prefer to say that they would consider the other party’s ideas before adding their comments on it. When you also offer them food or drinks, they would likely say that they have already eaten elsewhere or that they do not feel hungry at the moment.

The reason for this bashfulness is that the Chinese believe it’s rude or embarrassing for the other party to directly say “no”. Similarly, if you’re dealing with a Chinese person, it would be better to indirectly express your disagreement with them first. It’s also considered disrespectful if you interrupt or cut short someone while talking to them. Additionally, it’s a capital sin if the person you interrupted has a prominent position. Most Europeans or expatriates tend to cut conversations short to get straight to the point, but in China, patience is a virtue to follow.

“Sinofy” meetings and presentations

Prior to meeting with Chinese investors and potential business partners, you need to brush up on your communication skills. The Chinese prefer to do some small talk before a meeting, so prepare some casual topics that you can talk about anytime.

The Chinese also pay a lot of attention to details. When it comes to your pitching materials, you must bring at least 20 organized and well-produced copies of your proposal that you can easily hand out to everyone in the meeting. Your presentation materials must be printed in black and white as colors have different meanings in China. To create a good impression, you can produce your presentation materials in Chinese. You must also research their company or team members so that you can show them that you know what you’re doing and who you’re dealing with.

In the west, most presenters focus on a few keywords/graphics and narrative. However, in China, it’s the opposite. Chinese businesspeople prefer to see more text and details in each slide. You also must be able to present everything within 10 to 20 minutes, otherwise, your Chinese counterpart might get bored and end up using their phone to exchange WeChat (Wexin) messages if the presentation goes on for too long.

Lastly, maintain your composure during meetings. Creating unnecessary or unpleasant hand gestures, body language, or noises can greatly affect your guanxi.

Enter and exit the meeting room in hierarchical order

When entering the meeting room, make sure to do it in hierarchical order. Meaning, the person with the highest level of seniority in your organization should enter first then consecutively followed by the next highest-ranking individuals. Failure to do so will set a confusing or bad impression on the Chinese stakeholders you’re meeting with.

After a meeting, make sure to leave in hierarchical order as well as the Chinese might think that you’re breaking your rank if you let the inferiors in your team leave the room first.

Create a good impression through gifts

It's customary in China to prepare and give gifts for official business meetings, holidays, and special events. When giving gifts to Chinese business people and other important stakeholders, it's considered rude to offer only a gift to one person. But in the event that you only prepared one, you must give it to the highest-ranking executive in the room. If you brought numerous gifts, you must give the most expensive one to the highest-ranking individual, then distribute the other gifts to the remaining people in their party.

Remember that colors play a big part in gifts as well. Yellow and pink symbolize happiness, red for luck, and gold for wealth. Avoid the colors white, black, and blue; white is commonly associated with funerals, while black and blue symbolize death. You must also not give clocks, watches, green hats, chrysanthemums, or candles as gifts as they represent negative metaphors in Chinese culture.

On another hand, when you’re the one receiving gifts, you must accept them with both hands. Wait for the giver’s go signal to open the gift as well.

In most cases, especially in Chinese-led business parties, your Chinese counterpart may offer you a cigarette or other small gift. Even if you don’t smoke and have strict principles, be sure to accept it respectfully to show that you care and respect them and you are willing to build a relationship between you two.

Master the art of dining

Be ready to receive banquet invitations from Chinese businesspeople. When dining with them, food is always shared within a round table. It's highly recommended to wait to be told where to sit as there is an unspoken rule where seniors and juniors should be placed.

When eating, don’t stick your chopsticks straight into your bowl as this action is usually done for funerals. You must also not tap your bowl with your chopsticks as it's associated with begging.

Once you feel full after eating, make sure to leave some food on your plate. If your Chinese hosts see that your plate is clear, they will think that you’re still hungry and that they did not feed you well enough. Therefore, they will put more food on your plate. 

The Chinese usually initiate several toasts. They don’t drink because they necessarily appreciate the quality of beverage; rather toasting is a social element that is practiced to engage with their party, whether it includes employees, employers, partners, guests, and so on. It's also an important aspect among Chinese businesspeople to clink glasses with their leader or boss. If you’ll do this as well, make sure that the top of your glass 'clinks' below the top of the other person’s glass as this means that you’re respecting them.

Additionally, before meeting with Chinese hosts, make sure to inform them in advance if you or anyone from your party don’t drink. Otherwise, they would consider it rude if you refuse to drink with them without reason. 

Gain and give face (mian zi)

In relation to guanxi, there is mian zi (面子), which roughly translates to “face” or “reputation”. it's imperative to “gain face”, especially in business, in China so as to imply that you’re trustworthy and credible. For example, you’re able to gain face when you compliment the CEO and his company. The both of you’ll give face when he invites you over for dinner and you accept his invitation. However, if you refuse him, he will lose face as he will believe he is unimportant in your eyes.

You can also give face when you address business people and other stakeholders in the order of seniority in their organization.

Make patience a virtue

The Chinese need more time to build relationships and close deals. They usually do not give a final decision after just one meeting. They also prefer to negotiate on the terms of a business deal. Chinese people enjoy negotiations and tend to throw you into the field for the sake of it and get back to the initial agreement that was offered to them. In other words, any activities that occur prior to signing a contract is brainstorming and flirtation. Once Chinese businesspeople agree to finally sign a contract, it shows that they are ready to consider you more seriously.

The signing of a contract is the beginning of everything in a literal sense, so it's important to have an open mind way beyond your initial logical mindset. The real contract is a mutual alignment of interests between two parties. The agreements must be well-communicated and described extensively by the clauses in the contract. Otherwise, you’ll lose 99% of the game.

All of these steps may prolong the process so it would be better to remain patient with them, especially if their organization is important to your business.

Respect someone’s persona through business cards 

In China, business cards are considered an extension of a person. Therefore, the Chinese treat business cards carefully and with respect. When receiving a business card from a Chinese business person, make sure to take it with both hands and look at it politely before keeping them in a professional storage container like a briefcase or proper cardholder, not a purse or wallet. 

During the meeting, it's a good practice to place someone’s business card on the table, look at it from time to time, and nod at the person you’re meeting with. This shows respect and acknowledgment of their persona and status.

Meanwhile, when giving your business card, make sure to approach the highest-ranking executive first. To further impress your Chinese counterparts, you can make a Chinese version of your business card and present it with the Chinese side up.

Secure the future with long-term goals

Business people are frequently wary of the people they deal with, especially those who hail from other countries. To gain the trust of Chinese investors and business people, make sure to strategically create long-term goals to assure them that your business will find a strong foundation in their country. This will also help them further understand what you really want to do and foresee your potential success.

Additionally, creating long-term goals will show them that you see China as a hub of many successful businesses and beneficial partnerships, instead of just another country where you can increase profit and reduce costs.

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