1) Understanding and respecting the concept of “face”

Chinese and some other Asian cultures pay great importance to the concept of “face”. Essentially, this relates to the fact that Chinese value having, and maintaining at all times, a high status level in the eyes of their peers, as this is crucial to their sense of worth and self-dignity.

Retaining face is as important in social life as it is in the business sphere. Thus, causing a Chinese business counterpart to lose face, would spell ruin for any business prospects you may harbour.

** TipNever criticise anyone in front of other people. Always exercise care when making “harmless” jokes, which are perfectly acceptable in western society. Also, never treat someone as a subordinate, as they could rank highly in their own company.

** – Tip – Give face by praising someone for their great work in front of their colleagues. However, use this tactic sparingly to avoid appearing insincere.

2) Always seek to cultivate guanxi (pronounced “Gwan shee”) This concept relates to the fact that it is essential to initially build close relationships, as this will in turn lead to successful commercial transactions. In contrast, westerners seek to firstly conduct commercial transactions, which if successful, will subsequently lead to closer relationships.

As China remains a highly bureaucratic State, trying to accomplish simple tasks can be burdensome and extremely time consuming unless you call on some favours from your personal contacts.

** Tip – Always exercise care in respect to who you call on for a favour as it may need to be reciprocated, and there are many unsuitable people who will demand some form of return for such favours.

3) Take your time and don’t rush The Chinese know that western businessmen need to meet deadlines, and so they may purposely slow down the pace of negotiations.

On other occasions, they may move extremely quickly, so prepare yourself for both strategies.

4) Understanding Chinese tactics and utilizing your own tricks of the trade Chinese negotiators are extremely clever, and adopt many bargaining tactics to gain advantages over their western counterparts.

Some of these strategies are listed below:

(i) Using friendships in order to secure concessions The Chinese negotiators will typically raise the fact that real friends reach agreements which are mutually beneficial. However, care must be exercised to ensure that such benefits extracted are indeed mutual.

(ii) Threaten to do business with competitors Chinese negotiators may seek to extract concessions from their foreign counterparts by threatening to conduct business with their competitors if they fail to agree to their demands.

(iii) Shows of anger to pressure foreign businessmen Chinese negotiators may purposely show their anger to pressure their foreign counterparts, who may be afraid of losing the contract/business and returning home empty handed.

(iv) War of attrition Chinese negotiators can be extremely patient, and therefore, they may purposely draw out discussions for many days in order to wear down their foreign counterparts.

Another tactic which may be used is to extend excessive hospitality the evening before discussions are due to be held, which usually involves consuming copious amounts of food and “mao tai jiu” (rice wine with high amounts of alcohol). 5) How western businessmen can reciprocate with their own tricks of the trade Foreign negotiators who need to deal with their Chinese counterparts could consider the following strategies:

(i) Be prepared to take business to competitors Consider informing the Chinese negotiators that you are fully prepared to take your business to their competitors, if negotiations become tough and protracted. This is a particularly effective tactic as competition between Chinese producers is increasing.

(ii) Be prepared The foreign negotiators must understand all aspects of the business deal they are seeking to close. Therefore, be prepared to give lengthy talks and in-depth presentations. However, do not release any unnecessary sensitive information until a full agreement has been reached.

(iii) Willingness to go home empty handed Express clearly to the Chinese negotiators that you are willing to pull out of the deal completely, and that you will not commit to a bad deal simply to seal the contract or to retain their business. Try to do this firmly, but politely.

6) Exercise care over contracts Each aspect of a contract must be discussed in order to ensure that all parties concerned fully understand the terms and obligations. Chinese negotiators know that western businessmen are deadline-driven, and therefore they may try to rush them to sign agreements before they have exercised sufficient time to conduct a complete and thorough review.

** – Tip – Although the influence of, and adherence to, commercial law is increasing in China, it still remains far from meeting the standards expected in developed western countries. Commercial obligations may still stem from relationships (guanxi – please see above)) rather than a signed piece of paper.

So prepare yourself for further negotiations or concession requests, even after the contract has been signed.

7) Importance of speaking Chinese (mandarin) Although being able to utter general greetings (Ni Hao – How are you?; Wo hen hao… ni hao ma? – I’m very well and how are you?) is always important as an ice breaker, it is rare that even foreigners who speak fluent mandarin will be accepted as equals by their Chinese counterparts.

Therefore it is essential to have a Chinese colleague/ally who can support you during meetings and who fully understands the inner workings of conducting business in China. The presence of a foreigner is also important, as it shows the sincerity of the foreign company and gives face (again, see above) to their Chinese counterparts.

8) Understand and accept hierarchical structures Chinese society and companies are organized in a fixed hierarchical structure. This partially explains why Chinese people are often not willing to take responsibility, as providing an opinion ahead of their peers may cause loss of face.

Understanding cultural differences and respecting them is very important in China. UKProedits have expert native Chinese translators and business experts who have worked extensively in China, who can help you to avoid any misunderstandings.

For more details, please see our website www.ukproedits.com or contact Alan Low at: alan.low@ukproedits.com or jimmy.byrne@ukproedits.com.