Business Culture in China

Chinese business culture and etiquette

The Chinese business practice is vastly different from the Western method that most of us may be used to. Of course, with the Chinese economy opening up, China's joining of WTO and the Olympics in 2008, many Chinese business practice are now beginning to align with more conventional methods.However, China will always have their own unique business culture and etiquette, given their unique history and background.
"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 receiving the American purchaser was late in reaching his hotel. The American was furious as he had a tight schedule and that they were late and threatened to withdraw his purchase.
The Chinese party was late because they were given a vague address of a lake-side hotel. You see, what happened was that the American gave his hotel as Lakeside hotel. Unfortunately, there were numerous hotels along the lake but the Chinese were too shy to enquire which lakeside hotel earlier 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 a more successful business in China.
The initial approach
Chinese business are mostly referrals; essentially a business relationship is struck based on another business associate recommendation. The best prices and deals often comes from a strong recommendation.
However, it is common today 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 a 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. Please contact us directly if you have such a need and we'll be glad to advise accordingly.
Relationship
Chinese business relationship inevitably becomes a social relationship after a while. Unlike Western business relationship which remains professional and perhaps, aloof, even after a long time, Chinese business relationship becomes a social one.
The more you share your personal life, including family, hobbies, political views, aspirations, the closer you are in your business relationship. Sometimes, a lot of time is spent discussing matters outside of business, but then a lot of time, the other party is also making up his mind about your deal based on how much he sees your personal relationship with him.
Seniority
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 designation ie Chairman So and So, Director So and So or Manager So and So.
When giving out namecards or brochures, make sure you start with the most senior person before moving down the line. When giving out a namecard or receiving one, ensure that you are stretching out with both hands with the card. Remember to face the card you are giving out in a manner such that the receiving party gets it facing him correctly.
Giving Face
Giving face (aka giving due respect) is a very important concept in China. You must give the appropriate respect according to 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.
Similarly, sitting positions in a meeting room or a dining table is accorded accordingly to rank, importance and seniority. It is good to seek advice before embarking on your first meeting with Chinese business contacts to avoid making the wrong move.
Gifts and Presents
Unlike earlier days when China was very poor, gifts, especially of Western origin was especially appreciated. Today, China produces and imports almost anything imaginable and gifts are no longer a novelty.
However, gifts are always appreciated and especially in the smaller cities or towns, will continue to play an important part in your business relationship. Do note that if you are indeed giving gifts, make sure the senior people get a better gift or at least gifts perceived to have a higher value than their junior staff.
Similarly, expect to receive gifts from the Chinese, especially Chinese art products. It is polite not to refuse, especially if it is not of too high a monetary value.
Lunch/Dinner
There is no business talk in China without at least one trip to a restaurant. Sometimes, a trip is made to the restaurant even before any business discussion take place! Inevitably, the restaurant will always be a grand one and you are likely to be hosted in a private room.
There is an elaborate seating arrangement for a Chinese business meal. There are fixed seating positions for the host and the guest and then they are seated again according to seniority. This is a very important aspect of a formal dinner and it is important that you follow the rules accordingly. However, it seems that the Northern Chinese are very particular to this formal seating arrangement while the Southern Chinese has loosen the formalities somewhat.
You may like to find out more this interesting China Book.
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 wine is the favourite, followed by red wine and beer. Chinese wine is more like fuel than liquor, having a alcohol concentration as high as 60%! No matter how good a drinker you may think of yourself, never, ever challenge a Chinese into a drinking contest. They will win, hands down!
It is often seen as rude not to drink with the Chinese in a formal dinner. To maintain your sanity, either claim to be a non alcoholic or plead medical grounds as an excuse. This will let you off the hook with little or minimal drinks. Better yet, bring a partner who can drink on your behalf!
After Dinner Entertainment
Formal business dinner normally drags for quite sometime as there will be much social talk, some karoake, and drinking contests. Most of the time, everyone is too drunk to indulge in further entertainment after a dinner. In addition, if you are just new to this partnership, you are unlikely to be invited to further after dinner entertainment.
However, once you are familiar with them, you may be invited to a Karaoke, or a Night Club, or a Suana. Do note that if they are the host for the night, all bills will be picked up by them for the night, including all entertainment. It is impolite to fight for the bill or worst, split the bills.
Similarly, if you are the host for the night, you are expected to pick up all bills for the night.
Controversial Issues
There are some taboo areas in social conversations with the Chinese. Try to avoid these conversational topics as much as possible. I have seen many nasty arguments as a result of these topics:
1. You must not mention that Taiwan is an independent state or a country.
2. You must NEVER praise the Japanese or be seen to be good buddies with them
3. You can condemn Mao Tse Tung but avoid critising Deng Hsiao Ping
4. You must not praise Shanghai in front of natives of Beijing and similarly vice versa
Other than that, you are pretty safe to converse with the Chinese anything under the sun!

Another Key for Your Effectiveness

Have you ever tried to get "buy-in" from others or have others tried to get it from you? The other day I was coaching a client I'll call Larry. Larry was telling me how he had gotten his co-worker Patrick to "buy-in" to his plan for handling a sales event. Patrick said he'd go along with Larry's plan, but after the meeting, Larry said that his "win" felt hollow; he had this nagging feeling that it wasn't genuine. Sure enough, as the weeks passed, Patrick didn't do what he had agreed to and Larry ended up spending several more meetings with Patrick. Eventually Larry learned that Patrick had concerns about the plan. Larry also learned something important about getting "buy-in".

Getting Buy-In and Losing Commitment. What Larry learned is that by getting buy-in he often lost what he really wanted: commitment. When you're trying to get others to "buy-in", you've already developed a solution to sell them. Your goal becomes getting others to agree with what you've already decided is the best solution for you and them, rather than engaging in a conversation in which you jointly develop a solution with them. If you're seeking buy-in you can't afford to be curious; you might learn that others have information or needs that don't match the solution you're selling - then you're stuck. If you're like Larry, you may have experienced the failure of success; you may be able to persuade others to buy-in to your solution even when they still have unaddressed concerns.

Crafting Solutions to Create Commitment. Internal Commitment is a core value of the Skilled Facilitator approach. It is a state of mind in which you feel personally responsible for the choice you make. You are committed to the choice because it is intrinsically compelling or satisfying, not because you are rewarded for making the choice or penalized for not making it. Internal commitment is so valuable because it reflects a sense of ownership and a strong motivation to make something happen.

I first learned this at camp as a teenager. As I "supervised" a group of campers, the camp director, who was a social worker, told me, "Roger, people support what they help to create." Years later I learned why this is true. It's not because people are participating that leads them to support a group decision; it's that when they participate productively, the solution the group agrees to meets peoples' needs. To generate commitment in a group, I believe you need to ensure that everyone has the same relevant pool of information, that everyone has expressed their interests, and that the solution incorporates the relevant information and meets people's interests.

This means shifting your mindset from selling to crafting a solution with others. Rather than going into a conversation with a pre-packaged solution you will try to sell to others, it means going into a conversation being clear about your interests and being as curious about others' interests as you are passionate about your own. Then together you can identify your interests and craft a solution that addresses them.

It Doesn't Have to Be Their Idea; It Simply has to Meet their Needs. Have you ever thought that the way to get people committed to your solution is to have them think it was their idea? If so, you've probably asked them some questions that, if they answered "correctly", would lead them to suggest the very solution you had already thought of. Many people use this manipulative strategy (which they can't be transparent about with the client) because they mistakenly believe that others have to come up with the solution to be committed to it. They don't; the solution simply has to meet their needs.

My clients who are facilitators often make this mistake; you may too. For example, a facilitator wants to use a set of ground rules to help a group work together. She has a set of ground rules that she would like the group to use and mistakenly believes that the group will find the ground rules more desirable if they come up with them on their own. As a result, the facilitator asks the group, "What ground rules would you like to have for working effectively together?" privately hoping that the group will identify ground rules that the facilitator uses. If the group doesn't identify the facilitator's ground rules, the facilitator subtly tries to get her own ground rules in place, either by asking more leading questions (like "would it be good to have a ground rule about sharing your reasoning?), rephrasing the group member's suggestions, or finally, if all else fails, suggesting some of her own.

I believe that group members don't have to develop their own ground rules to be committed to using them; they simply need to make an informed free choice to use them and believe that the ground rules meet their needs. As a group process expert, I have a clear idea of what kinds of ground rules lead to more effective group behavior (it's our "Ground Rules for Effective Groups"). Part of being accountable to the group means sharing my ground rules with them and explaining my reasoning for using them. Then I ask whether people have any concerns about using these ground rules and whether there are other ground rules that they would like to suggest using. In this way, I am transparent about and accountable for my thinking, I'm curious about their thinking, and together we can commit to a set of ground rules that meets all of our needs.

What are your thoughts about creating internal commitment? Please share them with us and others at the Mutual Learning Action Group.

So Many Small Things

We rarely see stories or articles about productivity in the newspaper or on TV. When we do, it's usually just another story on the economy that defies understanding.
Which is too bad. Our prosperous standard of living arrived, in large part, because of the ability of companies and organizations everywhere, and for the past several hundred years, to increase productivity.
Productivity simply refers to how much labor or money it takes to create a product or service. If a carpenter can build one house in one month, then the carpenter's productivity is one house per month. If the carpenter gets new tools or new ideas and does the job more quickly, his productivity goes up.
Every time productivity goes up, the carpenter's standard of living goes up, too (generally speaking). Here's another example of how productivity works:
Suppose a British company discovers how to make steel products just a tiny, tiny bit harder. Then a company in the U.S.A. uses this process to make ball bearings that last an average of 423 days rather than 420 days, when they're used in truck axles.
A trucking company that hauls washing machines from Mexico City to Montreal, Canada buys trucks with these better bearings. That means it can haul a load for a few dollars less. In turn, this means the cost of each washer goes down by a few cents.
But, what's a few cents less when you're paying hundreds of dollars for a new washer? What's more, you'd probably observe that you only need a new washing machine once every fifteen or twenty years.
That's true, but this productivity improvement is just one of the many millions of small improvements we've seen since the Industrial Revolution (and some improvements even predate that period).
We also need to remember a couple of other points. First, productivity improvements have a cumulative effect, which is to say they build on each other to multiply the gains. Second, productivity has increased at an unprecedented rate for the past half century.
The most obvious example sits on your desk: a personal computer. Not too many years ago, we prepared letters on a typewriter, one letter at a time. Now, using a computer and word processor, we can select a stock letter from a collection that covers most common issues, add a name and address using mail merge, send the document to the printer, and in seconds a completed letter lands on our desk.
The personal computer, though, is simply the tip of an iceberg. Almost everything mechanical or electrical works better or works faster than its counterpart of 50 years ago. We haven't heard about most of those improvements on the news, for obvious reasons. Individually, they meant little except to people who were directly affected; but collectively they've revolutionized the way we work and live.

Overlooked Principle To Raising Your Prices

Finding customers isn't usually the hard part of selling.
It's "closing" that can drive you crazy. You know the
excuses. They want to shop around a bit longer, they're not
sure they can afford the price, they need to get approval
from a superior. The list goes on and on. Your challenge is
to find ways to close prospects at a higher rate, and
thereby speed growth and increase revenues.
One sure fired way to increase revenues without damaging
your reputation, is to educate your customers into your
price increase first before doing it. You don't want to be
worried about raising your prices. Most people are afraid
to raise their prices.
For example, one of my original companies operated at a
marginal price just under the standard for the industry. We
got a lot of business and kept the customers coming
however, we didn't get much more business than the next guy
whose prices were higher. We were always afraid to raise
our prices and lose customers.
Finally, we did. We got just as many customers and
increased our bottom line by 35%. We then decided to raise
our prices again. Still - same amount of customers.
We ended up raising them even higher to almost double what
we had originally started at. We did lose customers at that
point. However, we had increased our fees so high that our
margin was still much higher than it was before and we
doubled our business. All by simply raising our prices.
We had already delivered quality work and were confident in
our products and services. All we did was raise our prices.
To overcome people just looking for price, educate them.
What we did was let them know about some of our follow-up
services, our customer service plan, things that we
naturally included in our service that other marketing
companies didn't. By educating them and showing them what
they were getting, they were more than happy to pay our
pnces.
Why would anyone pay more for the exact same thing? Once
they found out what we were offering, they didn't perceive
us as offering the same thing as the other marketing
companies. When you don't educate them, they perceive you
the same as the next business.
If all things are equal, they will choose the cheapest
price. Once you convince them and educate them, you no
longer have to worry about it. Price is simply what you pay
for something. Value is what you get. The customer wants to
know what he's going to get. Every customer wants to think
they're going to get good value.
Your customers don't really care about the low price,
especially if they're going to get bad workmanship and poor
products or services. They want value. If you give them
value, you might as well charge them for it.
Don't wait for them to tell you you're expensive or they
can't afford it. If they're telling you this, it's too
late. You haven't educated them on the value they will
receive from your products and services. You need to
educate them right from the beginning from the time they
request your no cost book or report. Your customers are not
automatically inclined to buy the cheapest thing they can
get.
Raise your prices. Get paid. You're worth it. If you've
built in a great guarantee, which should be one of your
strategies, then you are on your way to deliver quality
products and services to your customers at all times. You
do great work, give them great quality, educate them,
you're better than your competitors you should get paid for
it. If you believe you're worth it, then your prospects and
clients will believe it also.