Doing Business in China: Culture, Etiquette, and Protocol
Beginning in the early 1980s The People’s Republic of China reformed and opened its doors to the global market marking the beginning of its economic expansion. As a result, China has created a new position for itself as one of the world’s leading economic powerhouses. According to the U.S. Trade representative, in 2016 China became our largest trading partner with two-way trade totaling 578.6 billion dollars. In addition to trade, investment from both firms in China investing in the U.S. and vice versa totaled just over 100 billion.
The take away from China’s economic expansion is that there is a massive amount of money flowing between the U.S. and China, and this lends itself to any number of opportunities for firms that do business internationally. However, those who wish to pursue business opportunities in China should take into account the cultural differences between the United States and China and how those differences impacts doing business. Whether you find yourself going to China to meet new potential partners or brining Chinese clients to visit the States, recognizing and appreciating the differences in the way the Chinese do business will go along way to foster a healthy and beneficial business relationship.
Relationships and Reputation
Two concepts that are important to understand for doing business in China are relationships (Guānxi 关系) and outward appearances (Miànzi 面子), sometimes also translated as ‘face.’ The first of these, relationships is similar to networking in the United States, though can take a more social tone. For example, many Chinese might take their business partners on social outings before discussing any business prospects. Business topics should not be discussed on these outings. Culturally it is important for many people from China to build friendly relationships with the people they do business with as they are often kept long term and used as a way of exchanging favors or gaining connections for future professional arrangements. So when doing business in China be prepared to enjoy dinner or drinks with your new partners before getting down to business.
An equally important concept is what is known as Miànzi 面子, this translates in English into face or appearances, but the concept is more complex than that. It refers to a person’s reputation or prestige. Gaining face is to give your best outward appetence and giving face might involve helping someone else maintain his or her best outward appearance. For example, complimenting or praising someone’s performance gives them face. Losing or taking away someone’s face is to be avoided. Some examples might include being confrontational in public or disagreeing with someone. Face does not just mean individuals, it can also include groups, companies, and countries.
Seniority, title, and rank
Seniority, titles, and rank are vastly more important in China than they are in the U.S. Seniority is expected to be recognized and respected. For example senior group members should be seated first or introduced first. Titles are to be used when referring to people. Use Director Li rather than Mr. Li if he is introduced as such. It is generally a good idea to use proper names and titles until a stronger relationship is established or you are invited to use given names by your new partners. It is also important to note that family name comes first and their given name comes second. In the name Zhai Jing, Zhai is the family name and Jing is the given name, so Ms. Zhai would be the proper way to refer to her.
Business Card Exchange
Exchanging business cards is a more formal affair in China than in the United States. Always give and receive a business card with two hands. When you receive a business card you should read it. It is considered disrespectful to take a business card and put it in ones’ pocket or bag right away. Rather hold on to it with both hands until the exchange is complete. If the exchange takes place in while seated, neatly place any cards you receive on the table in front of you and collect them after the meeting is over.
Giving And Receiving Gifts
It is common to give gifts to new business partner in China. These are usually small and inexpensive objects. Giving an overly expensive gift may cause someone to lose face. Gifts should be wrapped in simple paper. When giving a gift it would not be unusual for a person to refuse at first and then accept when offered the second time. When receiving a gift it is proper to not unwrap the gift until after the meeting. When giving gifts be sure to have something for the entire group if the meeting is with a group of people. When giving gifts, give them in the order of seniority with the most senior person receiving the gift first. Group gifts are also acceptable. These are gifts given from your company to the other company. Be sure your company’s most senior person from your group gives the gift to the most senior person of the Chinese delegation. Some gifts to avoid are watches/clock or knives and letter openers as these objects have bad connotations in Chinese culture.
More detailed information on Chinese culture and educate can be found on the link below
Global Chamber Denver