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Do Business in China


As the saying goes, "Do in Rome as Rome does", when you go to China to do business, you should learn something about the business etiquette and culture in China. This column will provide you up-to-date and relevant information that will help you learn the way the Chinese approach negotiations, discover how you can respond to them, and learn how to negotiate a successful conclusion. You will also find out how to socialize for success, how to cope with specific problems of living and working in China, and the best way to treat Chinese visitors to your organization. You are given practical advice throughout on business etiquette, and on how to fit into Chinese cultural expectations in order to achieve your goals. The column covers numerous aspects of business protocol, including gift-giving, negotiating tactics, appointments, business entertaining, cross-cultural communication and more.

When doing business in China, a familiarity of some of Chinese business culture will no doubt help you get a better result than you do otherwise. The followings are some advice from those foreign business managers doing business in China. Although some of them are overstated, they overall are helpful to those who are on their first business trip to China.

In general, managers coming to China should ratchet up their sense of formality without becoming stiff--the key concepts are respect and professionalism, not ceremony. These simple ideas will help in guiding an executive through any strange situations, advises Frank Luijckx, director of IS for Europe and Asia-Pacific for the global polyethylene and hydrocarbons product lines at Dow Europe SA in Horgen, Switzerland.

Decision Making

The biggest specific difference between Western and Chinese business culture is in decision making. Quick decisions are alien to the Chinese. Rapid decision making, incorporating quickly gathered and processed information, is a sign of an aggressive, highly competent manager in the West. But to the Chinese, haste is the sign of an idiot.

The Chinese prefer to deliberate longer, even on decisions that might take Western managers five minutes, says George Koo, who has facilitated joint ventures between Chinese and Western companies since 1978 and is currently a senior consultant at Meridian Resources Associates Inc. in San Francisco. Discuss the issue, ask for feedback and explain your decision's rationale, he advises. This way, the staff will be more accepting and respectful of the decision.

The Chinese want to be included in the decision-making process at a degree of collaboration that to a Western manager may seem unnecessary for relatively simple points but is nevertheless important in this culture. "A snap decision to them is an insult," adds Richard Loi, a Singaporean who is managing director of the UPS Parcel Delivery Co. in Beijing, United Parcel Service of America Inc.'s China joint venture. "They want to feel honored that you bring issues to them and ask what they would do. Even if you think it's a simple decision, mull it over and talk to them about it." The results-buy-in, compliance, good feeling--will be worth the extra effort.

When "Yes" Means "No"

It's practically a cliché that Chinese people do not like to say no in a business setting nor admit that they don't understand something. Unlike in the United States, where we've been told since grade school that there are no dumb questions, the Chinese have not been encouraged to express puzzlement. Misinterpretation of these cultural norms by a Western manager can undermine the effectiveness of an IT department.

Winferd Tsai, DuPont Co.'s IT manager for Greater China and a veteran of Hewlett-Packard Co.'s well-regarded operations in Taiwan, understands the nuances of the Chinese affirmative response. Often when a manager explains and assigns a task to a staffer, the person will respond, "No problem," Tsai says. Sounds reassuring, but that answer may be a product of the cultural tendency toward politeness and reluctance to disappoint. A "No problem" usually means "I'll try." Tsai warns, "You will still need to do a lot of follow-up with them. They also may not tell you if things start going wrong."

The Chinese people's desire not to disappoint also manifests itself in a technical perfectionism that may mire an IT project. Trying to make everything technically perfect, the IT staff will come up with a thousand reasons to delay a project, regardless of the deadline, Tsai says. "You have to balance that and try to get them to focus not just on technical perfection but to think from the customer's perspective and the realities of business."

Because they have not been exposed to the Western business culture that allows for risk taking and mistakes, "We have to work with them side by side, give them encouragement and show them that mistakes are acceptable," Loi says.

Personal Style

The Western mode of teaching, which encourages students to question and challenge the instructor, is unknown to the Chinese. In China teachers lecture and students dutifully take notes--no exchange is heard. For a Western manager attempting to instruct IT troops or train users, this silence can be unnerving. The Chinese must be urged to ask questions and interrupt, says Meimei Fox, a Meridian Resources consultant. Providing material in advance gives staff a chance to review a topic and think of questions. It will also help put as much of the information into visual form as possible. This not only helps overcome language barriers, it plays to the Chinese tradition of pictorial representation. Fox also advises her clients to emphasize hands-on training to encourage the Chinese, who are strong theorists, to connect theories to applications in the real world of business. Above all, don't feel that it's condescending to repeatedly explain a new concept, direction or process. It's the best way to ensure understanding and compliance, according to several Western managers and consultants in China. "The people are intelligent and proud, and they will adapt to processes if they understand why they are being done," says Ian Shiers, president of Polaroid Asia Pacific International Inc.

If a hard-boiled Western manager publicly chastises his Chinese employee, he may as well write his ticket home. It is an unforgivable offense to cause a person to "lose face." A public slight, such as passing someone over for an anticipated assignment, can be a relationship killer.

IT innovation in China is still very much technology driven, as opposed to business-process driven as it is in the West. A new-style CIO from the West, with a strong business background and only a working knowledge of technology, will not fare well in China. The people are eager to learn leading-edge technology once they are persuaded of its value; therefore, they expect their managers to be technologically adept. That's the reason many Western companies view the Taiwanese as a good choice among expatriates to take technology management positions in China. "The young generation here knows and respects Taiwan's ability in technology," says Elwood Chen, the Taiwanese corporate systems project manager for Aetna Life Insurance Co. of America's new venture on the mainland. "IT managers from Taiwan are mostly technical people, and they have been successful here and win a lot of respect." (See "Betting on Expatriates")

Fraternizing after business hours may be becoming increasingly uncommon in the don't-do-or-say-anything-that-can-get-you-sued environment of the West. In China, gaining staff loyalty and peer support depends on breaking through the professional formality to form friendships. The Chinese expect a boss to be a leader both inside and outside the organization, says Meridian Resources' Koo. That means organizing social events for office personnel. Favorite activities include

Dining (formal banquets, lunch or dinner at outstanding restaurants)
Bowling Karaoke nightclubs
Picnic outings
Soccer matches (But leave your golf clubs at home. Koo says golf is still tainted by bourgeois connotations because of its waste of valuable land.)


The business culture's high regard for relationships applies to people outside the company as well as inside. In fact, the very viability of a business depends on relationships with vendors, distributors and, most important, the municipal, regional and central government ministers whose disfavor can cripple a company. Entire books are written on this art of the relationship, known as guanxi (gwan-zhee), or connections. Guanxi can take the form of a night of karaoke with the local fire department regulator in order to get a new computer room plan approved. Or it could mean hosting a banquet with a customs official to make sure precious hardware shipments arrive at some point in the 20th century. At the highest levels, it could mean bringing your CEO to China to shake hands with the minister of a key industry sector that represents lucrative potential business.

Although it is vital for a Western manager to understand the necessity of external relationships and the role of guanxi in China, the actual act of relationship building is best left to the ethnic Chinese on the staff. For one thing, they will more quickly understand the expectations of Chinese power brokers; for another, they have a lifetime of cultural habits that will enable them to handle delicate situations with more aplomb than a Western manager ever could. "A white face can throw off the dynamics," says one American IT manager. "There is a barrier there, and you can only go so deep in terms of a relationship."

If it sounds as though there are many cultural land mines in China for the Western manager, take heart. In a couple of areas, Westerners, particularly Americans, have an advantage over their Chinese counterparts. One is directness. Although the Chinese can be notoriously indirect--they struggle to read the subtle signals in their bosses' manner and body language to interpret their desires--"they appreciate the Westerner's straightforward approach and ability to break the ice," Fox says. So don't worry if you feel the need to come right to the point. It will be appreciated.

The second advantage Americans enjoy is that the Chinese expect them to goof up. The staff will cut an American more slack and be more forgiving of cultural miscues than they will a Chinese manager or expatriates from Hong Kong and Taiwan. But that's not license to be cavalier; it just means you get a little more rope before you might hang yourself.


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