The Chinese economy has been growing at an amazingly fast pace. Some experts predict that China is going to become the largest economy in the world in a few years. Doing business with Chinese partners can bring considerable profits but you might run into some unexpected problems in the process. Below we discuss three aspects that you should take into account to make your business cooperation with Chinese partners successful.
- Cultural differences: China has a unique culture that is different from the western culture in many respects. Understanding and appreciating the differences can be the key factor for achieving business success in China.
- Language barrier: Few people speak good English in China and Chinese is a very difficult language to learn. Therefore, you would have to find a translator if you are to be able to communicate with your Chinese partners.
- Bureaucratic barriers: Bureaucracy is heavy in China and you have to be ready to go through several stages if you would like to register a company or a trademark or if you want to obtain a permit.
Let us dwell on each aspect in some detail.
Cultural differences and their effect on business partnership
Chinese culture affects the ways of doing business very much. You have to keep this fact in mind and show respect for the Chinese traditions if you are to succeed in doing business with the Chinese.
Respect for hierarchy
Chinese culture takes hierarchy and respect for the elderly (or bosses) seriously. As far as business is concerned, the boss expects to be respected and obeyed by the subordinates. The boss is the one who makes decisions and the subordinates expect to be given clear instructions.
Personal relationships
Personal relationships mean a lot in China. Establishing close relationships and maintaining a good tone in communication with partners and customers is a key aspect of successful business in China. Business decisions are often made on the basis of personal relationships rather than commercial factors in the country.
Keeping face
The notion of ‘face’ plays an important role in Chinese culture. Keeping face means keeping a good reputation. In business, this means that your Chinese partners will try to avoid open conflicts and criticism. This is their way of saving face.
Long-term perspective
The Chinese see things from a long-term perspective. Chinese companies are prepared to make long-term investments and patiently wait for returns. The Chinese are also inclined to build long-lasting partnerships and relationships with clients.
Gifts and bribes
There is a long-standing tradition of giving gifts and bribes in China. This aspect is important for doing business in the country. If you would like to open a bank account, for example, in China, you are supposed to thank the bank officer with a gift. Please do so after the bank account has been opened for you: if you do it beforehand, it will be a bribe and bribes are illegal in China.
Respect for national traditions and customs
The Chinese respect their customs and traditions and so should you when doing business with them. Many business decisions are made at tea rather than at the working desk and you should follow the etiquette rules when having tea with your Chinese partners.
National culture means a lot for the Chinese people and you should respect it and adapt to it if you want to be successful in doing business in China.
Language barrier
The language barrier can be a serious obstacle for a foreigner trying to do business in China. Below we discuss several aspects related to the language barrier that you should take into account.
The Chinese language is one of the most difficult languages in the world. It has a unique writing system based on hieroglyphics, which makes it very different from European languages. Mastering Chinese can take a lot of time and effort. In addition to the hieroglyphics, there are several spoken dialects of the Chinese language.
If you work with Chinese partners from different provinces, you should expect that they would speak different dialects of the Chinese language. You may think that English is the international business language but the Chinese believe that they are in the center of the world. They sincerely don’t understand why people who visit China do not speak their language. You will score quite a few points if you learn several everyday phrases in Chinese: your prospective Chinese partners are going to be much friendlier to you.
How can you solve the language barrier problem if you don’t speak Chinese? You can use one of the following solutions:
- Hire a translator. This is what most foreign entrepreneurs do when they establish business ventures in China. This means paying at least one more salary but it solves the language problem.
- Hire local people who speak your language. This can be more problematic to do because people who hold a degree in business and speak a foreign language are hard to find among the Chinese. On the other hand, they will know the local ways perfectly well, which is very useful. .
- Use modern technologies. Electronic translators may help you overcome the language barrier. You should bear in mind, however, that they can be imprecise sometimes especially when it comes to translating into/ from the Chinese language.
Bureaucracy as a filter
If you believe that there are too many bureaucrats in your home country, you are wrong: there are many more of them in China. At the same time, the Chinese bureaucracy has practical purposes.
First, government officials and civil servants make up a large part of the middle class in China and the middle class is the basis of the economy. The state apparatus simply creates a lot of jobs in the country. This is why many stages of setting up a business company in China, for example, require obtaining signatures from several government officials.
Second, you should hear the parable of the thousand boxes. It goes as follows:
In ancient China, all documents were processed for a very long time. When the application or petition reached the Chancery Office, it went to the first box. If the petitioner showed concern about the fate of the document (was constantly asking when he could expect an answer), the paper went to the second box. If he kept asking ‘When can I hear a reply?’, the paper went to the third box, and so on. Only when it reached the thousandth box, would the Governor of the province consider the petition.
The parable shows that the Chinese bureaucracy is benevolent only to those people who are highly enthusiastic about their projects. Thus, the bureaucratic machine serves as a filter: if you are not persistent enough, you won’t get things done in China. The Chinese believe that only the most active and strong business companies should enter the market. This philosophy is smart, in our opinion.