Business in China
Every year, China attracts new international companies. Even though, business in this country can make huge profits, it can also lead to considerable losses, depending on how much business partners are prepared to conduct business in China. Chinese people living poorly for a long time, have developed a number of distinctive features of the national character. On the one hand, they have high diligence and discipline. On the other hand, they learned to avoid the imperfection of the business environment, the Chinese are highly entrepreneurial and competitive.
For many Americans and Europeans, China is not just another country. It is a completely different world. People, who came in China for the first time, are not only faced with differences in language, geography and politics, but often experience a real culture shock. “China’s business environment is unique, brutal and full of unexpected surprises” (Chee and West 29). Chinese norms and practices are rooted in the ancient past of the country, and many of them from the point of view of Americans seem deprived of the common sense. However, people cannot work in China without knowing the local regulations.
Chinese people are extremely suspicious, especially in matters of business even more so. “Every new business proposal especially coming from American people is subject to careful examination” (Ip 212). Therefore, it is very difficult to find a partner in China. Chinese people are famous for their patience, self-control, punctuality and formality. If a person is not familiar with the word “self-control”, he/she needs to think whether to deal with the Chinese at all, because the whole process of negotiations with them requires much patience. This process is a series of digressions, attacks, distracting and roundabout maneuvers, deceptive movements, demarches, and even bluffing and threats. A tactic of “empty talks”, deliberate indifference to the results of the meeting, a demonstration of anger (to check the nerves of the opposite side), overpricing or underpricing to an absurd level, direct threats to do business with someone else, the use of “stool pigeons” (a few supposedly independent groups of Chinese people negotiate and promise great prospects in the future, in order to obtain a disadvantageous contract for the American side) are commonly used. To succeed, people should try to use their own practices against the Chinese people. Partners should push down the interests. In China, there is a tough competition and on any product there is always an alternative buyer or seller. People should let them know that they do not need the result at any cost. They should bargain and carefully check all the details.
To avoid embarrassing situations, people should learn the basics of the Chinese business etiquette in advance. For example, most Chinese have successfully adapted the Western habit of handshakes. “However, hugs and kisses as a way of greetings or farewells are not acceptable” (Zinzius 51). Being in China, a person should be careful about the gestures. It is considered indecent to show on anything with the finger or snap with the fingers. Only close friends may call Chinese people by name. During the conversation, business partners should use the name or official position.
An indispensable component of the negotiations is gift giving. In China, it is accepted to make presents from the country, where the guest is from. This must be some kind of unique or practical thing that Chinese partners will never be able to buy in China. Usually gifts are given at the end of the negotiations. The more the deal, the more valuable are the presents. Gifts to people should be relatively inexpensive - less than $10-15. If a person gives them simultaneously to several people, he/ she should be sure that presents have the equal cost. In China, it is accepted to refuse from the gift two or three times before accepting it. Foreigners must not give the Chinese alcohol beverages even very expensive and high-end, foreign currency and coins.
An important business meeting must be agreed in advance - for two or three months and preferably in writing. Before coming to China, people should send materials written in Chinese, which will include a description of the company, its history, and general information about the products and services (brochures, flyers and booklets). The order of the day should be agreed with the host of the meeting beforehand for the Chinese colleagues had the opportunity to discuss the technical aspects at an internal meeting. A person must arrive at the meeting on time or a little earlier. In China, punctuality is a symbol of virtue. Arriving very late, people can offend business partners. Therefore, the outcome of the negotiations will not be of benefit.
Preparing for the negotiations, people must know all aspects of business, including technical details of the transaction. They should be prepared for the fact that they have to give a long and detailed explanation for the mechanism of the work. Businessmen should be careful not to give any important commercial or technical information until the complete signing of the contract. Chinese people are inclined to prolong or delay the process of negotiations, during which the advance in addressing the issues and a return to the decided decisions will alternate. Businessmen have to think in advance what concessions they are ready to make. A huge bureaucratic apparatus of China takes much time and effort in reconciling different issues.
Long-term liabilities will significantly increase the chances of success. The Chinese side quickly makes concessions on certain issues. In return, it expects to receive the broad prospects for further activities. Chinese people often resort to flattery strongly praising the advantages and positive aspects of a potential partner. Businessmen should not follow their tastes and make concessions. The basic rule of doing business with the Chinese is not to make enemies. Chinese people are very vindictive and vengeful. In the Chinese language, there is the phrase “lose face”. It is actually the synonym to the word ‘shame’. Chinese people are concerned about the attitude to them of other people. They do not want to get in an awkward situation and shameful situation.
Chinese corporate culture is mainly based on ethics. Residents of China believe that moral actions of a person determine his/ her fate. Chinese people are more interested in means and the purpose and the process than the result. The best compromise is achieved only through the ritual of bargaining. The compromise allows two parties to hold strong positions equally. Americans believe that the truth is worth discussing. Chinese people believe that the search for the truth is a very heavy way, and, therefore, they rely on bargaining. This process cannot be short. It should not be rudely cut. It should be emphasized on the caution of Chinese people towards foreigners. It was formed as a result of the long history of the country replete with wars. “It can be said that Chinese people have upright obligations towards two things: the bank account and family” (Alon 9).
All of the above is the cornerstone of the Chinese mentality. Chinese culture of doing business and, in particular, peculiarities of conducting the negotiation process are derived. Most American businessmen find these features mysterious, incomprehensible and throw into confusion. Very often, Americans evaluate Chinese entrepreneurs like ineffective, evasive and even dishonest, while Chinese people consider Americans aggressive, impersonal and easily excitable. Such differences have deep cultural roots. If Americans ignore them at any stage of the negotiation process, transactions can easily be broken.
Chinese people are famous for their work ethic. They are famous for their endurance. Americans consider personal abilities and talent the key to success in life. Chinese people revere physical endurance of a person in circumstances where the working day can be up to 16 hours a day. Hard work, even in the worst conditions, is ideal for Chinese, which is understandable, given the large population of the country and high unemployment rates. One of the peculiarities of the Chinese negotiating style is the threat to do business with someone else. It contains a hidden subtext of the already started negotiations with competitors. This tactic is perceived by Western partners as impolite. Most American businessmen feel offended. However, Chinese people believe that they only state the obvious. It is just a part of their culture of bargaining, which allows to put pressure on negotiating partners.
Unpleasant situations in the negotiations and even the failure of the negotiation process because of the differences in cultural values are a major challenge not only in American but Chinese business. Chinese businessmen, for their part, are aware of other serious problems that hinder the development of the economy. First of all, it is the discrepancy of the legal system existing in the country to international practices. Liberalization of thinking that began with the economic reforms in China led the country on the road of institutionalization and forced legal modernization (Dahles and Wels 22).
“As the Chinese market continues to grow and is subject to constant change, careful preparation for market entry is essential” (Hofer and Ebel 167). Over the past years, China has greatly strengthened its position in the global economy. Socio-economic progress of the country makes all the global business community study more closely the Asian market and especially the Eastern business etiquette. Due to the growth of China’s economy, people of this country try to adapt to the generally accepted rules of business. Nevertheless, Chinese people still persist and widely use the features in these matters, which come out of the Asian culture.