Article by Marcus Lim
Many companies have already discovered the benefits of knowing how to do business in China, and as more and more companies are outsourcing, it’s more important than ever to know the ins and out of how to work effectively with Chinese businessmen. Understanding the Eastern culture and business methods will give you an advantage in dealing with a new cultural norm for your business.
The Eastern culture is traditionally a slower paced society that is based on early philosophers. Unlike our deadline driven American culture, Chinese businessmen work in a strange conglomeration of slow negotiations and snap decisions sometimes. Many times these are conscientious moves that help dictate the outcome as they see long and short term cost/benefits.
The Western culture demands clear alternatives, while understanding how to do business with China demands that you understand how to blend alternatives to come up with a new solution. To the traditional Western businessman, this may be frustrating, while the Chinese businessmen will feel the solutions are straightforward.
In order to do business in China, the mindset of successful transaction = a relationship needs to be reworked in the Western mind. The Chinese often want to have a relationship formed before business ensues. This concept has actually grown in business organizations, with companies such as Business Network International that embrace business from relationship.
Fostering a culture of trust helps generate a long lasting relationship, which is known as the concept of guanxi. Unlike our legal system that relies on contracts, in China, the guanxi obligations are taken serious. It obliges those who made the agreement, and when doing business in China, Westerners have to become comfortable with these traditional agreements within the Chinese culture.
CONTRACTS
Understanding how to do business in China includes understanding differences in contracts between the Eastern and Western culture. The Chinese businessmen may be offended if a drafted contract is offered with changes only made to suit the specific situation. While there may be a contract signed, it often doesn’t happen until after the previous conditions of relationship and guanxi have been met. This may take hiring a Chinese colleague to help determine contractual agreements. He or she can help you by deciphering body language and cultural norms.
The Chinese businessman relies on saving face, so make sure to never do anything to disrespect your colleagues. This can be anything from teasing your Chinese counterparts in what you perceive as a good natured way to treating them as lesser. When working with the Chinese culture, don’t lay on the praise too thick (this will equal insincerity), but rather approach them delicately and politely. Making simple comments can grow your business on the Chinese front – or leave it dangling.
Just like any business, having negotiating tricks up your sleeve will help you to do business with the Chinese effectively. Keep in mind that Chinese businessmen may threaten to take their business to another company to hold leverage. Don’t take this pressure. Be prepared to for negotiations to be held out until it is time to leave per the schedule. This will create a feeling or urgency within the Eastern businessperson to seal the deal before leaving. Don’t feel rushed into a contract due to leaving – keep your schedule flexible.
Chinese businessmen will sometimes use calculated anger to get the results they want. An effective contract should be mutually beneficial. Don’t get taken for a ride and let the Chinese get their way.
How do you counteract these tactics when you do business with the Chinese? Most importantly, make sure the you are prepared. Do not reveal any sensitive information until you are fully secure that you have an agreement that is workable.
Know who competitors are and be able to use leverage from the computers. There are other sources for what you want within your industry, and having multiple offers or negotiations puts you in a position of power.
When you do reach an agreement, make sure with a good interpreter that all the terms are agreeable. Each side must know what their obligations are within the contract.
Patience will often pay off when dealing with the Chinese businessmen. They assume that Westerners are in too much of a hurry to review details. This means that you might not be aware of all the details.
The most important thing to keep In mind is that you may have to walk away. Be prepared to walk away and just cut your losses before making a deal that isn’t acceptable.
With our ever changing economy, it is so much more important than ever to learn effectively how to do business with China to grow your company.
About the Author
Find out how to do business with china, chinese business guide, and china business.