Chinese business practices are vastly different from the way many of us may be used to in the Western world. Of course, with the Chinese economy opening up, China's joining of the WTO and the Olympics, Chinese business practices are now beginning to align with more the generally accepted methods. 

However, China will always have her own unique business culture and etiquette, given their unique history and background.

To highlight this difference, consider this account of a friend:  

"I was recently involved in a business meeting that went sour and threatened to scuttle a good deal. What happened was that the Chinese party responsible for receiving their American business partner was late in reaching his hotel. The American was furious, as he had a tight schedule, and threatened to withdraw his purchase.  The Chinese party was late because they were given a vague address of a lake-side hotel.  What happened was that the American gave his hotel as Lakeside Hotel. Unfortunately, there were numerous hotels along this particular lake, but the Chinese were too shy to enquire which lake-side hotel it was, because they were afraid the American would 'lose face' for having given a vague address. Instead, they spent the morning hopping from one lakeside hotel to another looking for this American gentleman."

A simple cultural difference threatened to scuttle a perfectly good working relationship. To avoid similar cultural disasters, here are some tips on how you can conduct your business more successfully in China.

The Initial Approach

Chinese business contacts are mostly referrals; a business relationship is essentially struck based on another business associate’s recommendation. The best prices and deals often rest on how strong of a recommendation you are able to receive from a mutual colleague.

It is common today, however, for cold calls and direct contacts, given the availability of the internet and the competitive nature of Chinese businesses. You may source from the internet, trade fairs, catalogues and brochures, advertisements and approach the Chinese companies directly through a call or email.

Alternatively, if you are seeking to invest in a factory in China, you can approach an investment committee or a business advisory directly. They will be able to advise you on your best location based on your industry, raw material and manpower needs.

Business Relationships in China

Chinese business relationships inevitably become social relationships after a while. Unlike Western business relationships which remain, by and large, professional even after a while, Chinese business relationships will invariably become social.

The more you share about your personal life, including family, hobbies, political views, aspirations, the closer you will become.  Sometimes, a lot of time is spent discussing matters outside of business, but it is during these times that your Chinese partner is also making up his mind about the business at hand based on how much he values the potential personal relationship he sees in you.

Seniority Is Important in China

Seniority is very important to the Chinese, especially if you are dealing with a State-owned or government body. Instead of addressing the other party as Mr. or Mrs. So-and-so, it is always appropriate to address the other party by his/her designation, i.e. Chairman So-and-so, Director So-and-so or Manager So-and-so.

When giving out business cards or brochures, make sure you start with the most senior person before moving down the line. When giving out or receiving a card, make sure that you are using both hands. Remember to face the card you are giving out in a manner such that the recipient gets it facing him correctly.

Giving Face or Gei MianZi

Giving face (aka giving due respect) is a very important concept in China. You must give the appropriate respect according to the rank and seniority. For example, if you are buying gifts for an initial contact, make sure you buy better gifts for the senior managers instead of buying similar gifts across the board.

Accordingly, seating positions in a meeting room or a dining table is based on rank, importance and seniority. It is good to seek advice before embarking on your first meeting with your Chinese business contacts, to avoid making the wrong move.

Gifts and Presents

Unlike the earlier days when China was very poor, gifts, especially of Western origin, were especially appreciated. Today, since China produces and imports almost everything imaginable, gifts are no longer the novelty they once were.  However, they are still appreciated, and in the smaller cities or towns, gifts will continue to play an important part in your business relationship. Do note that if you are giving gifts, make sure the senior members receive gifts which are perceived to have higher value than their junior members’.

Similarly, expect to receive gifts from the Chinese—usually of artistic and/or cultural origin.  It should be noted that it is certainly not polite to refuse here.

Lunch/Dinner in China

There is no business talk in China without at least one trip to a restaurant. Sometimes, a trip is made to a restaurant before any business discussion even takes place!  Almost certainly, such meals will take place in a private room at an upscale restaurant.

To say the least, the seating arrangement for a Chinese business meal can be quite elaborate. There are fixed seating positions for the host and the guest, and then it proceeds according to seniority. This is a very important aspect of a formal dinner, and it is important that you follow such rules.  It should be noted, however, that the Northern Chinese are sticklers when it comes to these formal seating arrangement, while the Southern Chinese have loosened the formalities somewhat.

Drinking with the Chinese

The Chinese are big drinkers, especially in Northern and Western China. It does not matter if it is lunch or dinner; as long as a meal is being hosted, there will be alcohol.

Chinese liquor is the favorite, followed by red wine and beer. Chinese liquor is more like fuel than alcohol, having an alcohol content as high as 60 percent! No matter how good of a drinker you are or however informal the situation, never challenge a Chinese to a drinking contest. They will win, hands down.

It is often seen as rude not to accept a drink in a formal dinner with the Chinese. To maintain your sanity, the only acceptable excuses not to drink will have its grounds somewhere in religious and/or medical reasons. This will let you off the hook with little to no drinking, however, it is probably best to simply bring along a partner who can drink on your behalf.

After-Dinner Entertainment in China

A formal business dinner normally drags on for quite sometime, as there will be much social talk and, possibly, some form of karaoke.  If you are new to the relationship, merry-making will not extend beyond the meal; you will unlikely be invited to engage in further entertainment beyond dinner.

However, once you’ve struck more familiar ties, you may be invited to a night club, an actual karaoke bar, or a sauna.  Do note that if they are the host for the night, all expenses will be picked up by them, including all entertainment.  It is impolite to fight for the bill or, worse, split the bill.  Conversely, if you are the host for the night, you are expected to pick up all bills.

Controversial Topics in China

There are some taboo areas in social conversation with the Chinese. Try to avoid these controversial topics as much as possible.  Many nasty arguments have risen as a result of these topics:

1. You must NEVER mention that Taiwan is an independent state or a country.
2. You must NEVER praise the Japanese or be seen as being friendly with them.
3. You can condemn Mao Tse Tung but avoid criticizing Deng XiaoPing.
4. You must not praise Shanghai in front of natives of Beijing and vice versa.

Other than that, you are safe to converse with the Chinese about pretty much anything under the sun!

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Ken Zhong has worked, lived and traveled in China for the last seven years.