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6 Cultural Differences in Business Between the West and China

China is no longer just the world’s factory. Chinese have a greater purchasing power than before, therefore, a growing number of foreign companies do business with China and its enterprises. However, there are a lot of cultural differences between the west and China in the way business is conducted. Therefore, it is valuable to develop insights into China’s business culture and etiquette to avoid misunderstandings that could scuttle deals and harm business relationships.

Cultural Differences

Here are six aspects of business cultural differences you must know when doing business in China.

1. The Importance of Mianzi (face)

Face is an essential component of the Chinese culture. Face is considered to be a mix of public perception, social role and self-esteem. It is very visible in the Chinese business environment, and has the potential to either destroy or help build relationships. Having face means having a high status in the eyes of one’s peers, and is a mark of personal dignity.

Causing someone to lose face could ruin business prospects. The easiest way to cause someone to lose face is to insult, criticize or shout at him/her in front of others. Just as face can be lost, it can also be given by praising someone in front of others. Giving face earns respect and loyalty. The Chinese are acutely sensitive to gaining and maintaining face in all aspects of social and business life. Losing face should be avoided during all times.

2. The Importance of Guanxi (Relationships)

Building relationships is the best way to overcome many of the obstacles to doing business in China. In a highly competitive business environment, it is more important than ever for you to understand the business relationships of your target markets. Building a strong relationship is just as important as writing a good contract. In business, relationships are two-way, and must be maintained through regular contact. The more you share your personal life, including family, hobbies, political views, aspirations, the closer you are in your business relationships which are essentially based on mutual interests and benefits. The things Chinese often do in life and business, such as eating, drinking or entertainment with others, are actually building relationships with others. So after a while, Chinese business relationships inevitably become social relationships.

Among all the business culture, the above two points are placed great importance on. And all the points listed below are based on and rotate around them.

3. Greetings with Chinese

Instead of addressing people by Mr. or Mrs. plus their family names in foreign countries, Chinese are usually addressed by their title in an organization plus their family name, for example, Director Li. But remember that traditional Chinese family names are placed first with the given names (which has one or two syllables) coming last (family name: Wang; given: Gang), which is opposite to foreign names. If a person does not have a professional title, use Mr, Madame or Miss, plus the family name. For people meeting for the first time, shaking hands is common, but wait for your Chinese counterpart to initiate the gesture.

Another point requiring your attention is that hierarchy is important to Chinese. So no matter greeting or shaking hands, make sure greet and shake hands with the most powerful person before others. When giving out your name card, please start with the most senior person before moving down the line. It is better to have your name card translated into Chinese on one side. And use your both hands when giving out and receiving name cards.

If you don’t know who is the most senior person in the room, it is a good idea to discover this by asking about the relative roles of those present in the organization, and then address that person.

4. Conversation with Chinese

Starting a conversation before a meeting could break awkward and help build your relationships with your newly met business partner. The small talk before a conference will influence the first impression of you, so try to avoid the awkward topics, and start with an easy question that doesn’t have too much significance or sensitivity, such as hobbies, weather, your hometown, the Chinese landscape and Chinese culture. Sometimes Chinese may ask apparently embarrassed questions, such as your age, income or marital status. These questions are not meant to offend. If you don’t want to answer, remain polite and give an unspecific response, but do not lose your temper which will cause both you and your Chinese counterpart losing face.

5. Business meeting with Chinese

Confirm with your Chinese counterpart the date and time of the meeting. Don’t be late. And it is safe to dress formally. If possible, get a list of attendees and their ranks so that you will know who is the senior person. Prepare detailed materials of your product or service to capture the attention of the senior person who is often the decision maker. To accelerate your deals with Chinese, an interpreter and materials written in Chinese language are helpful in case the Chinese side, particularly the decision maker has little English capability. Don’t be impatient about the contract signing. Chinese often need time to build up relationships or trust prior to business decisions.

6. After-work Activities of Chinese

Unlike the belief in the West that one should not mix business with personal life, in China, business relationships have a much more intimate and personal meaning. Therefore, after-work activities are considered necessary and important to build and strengthen a sincere business relationship. Usually, the common after-work activity is banquet. Sometimes, a trip is made to the restaurant even before any business discussion takes place! There are many things to be noticed when dining with Chinese.

Dinning etiquette: The seating arrangement is one of the most important parts of Chinese dining etiquette. Usually Chinese are seated according to seniority, and your host will also assign a seat to you. It is often to his left-hand side (the number 2 position in the hierarchy). This is a very important aspect of a formal dinner and it is important that you follow the rules accordingly. In addition, don’t forget to compliment your host on foods he or she arranged, for it will give him/her face and it shows you appreciate local Chinese food.

Drinking etiquette: Indeed, the more you can drink, the more respect or face you will receive in China. And remember: don’t refuse a drink that is offered to you unless you have a valid reason. If you do not want to drink anymore, you can simply swap the drink with a non-alcoholic liquid or quietly dispose of its content. But not accepting a drink (without a proper excuse) is considered to be rude. And it will make your host lose face which should be avoided.

China is becoming one of the biggest markets in the world, so knowing these business cultural differences will definitely help when dealing with Chinese customers or distributors! Don’t hesitate to contact Jingle Office if you need any further information or assistance.

Related reading: Top 6 Secrets of Making A Successful Business Negotiation with Chinese