Business Culture of China
Monday March 18th, 2019
Monday March 18th, 2019
Chinese culture is fascinating. The People’s Republic of China has 1.4 billion inhabitants these days and counting. So many people obviously need a lot of space. And there is a lot of space, as with 9.6 million square kilometers of land China is the 3rd largest country in the world. The 2nd largest economy globally since 2010, and according to some measures even the largest today. Hence the increasing tension with economy superpower the US.
Already since I started doing business negotiations on behalf of my former employer, I’ve been fascinated by China. Initially, I often visited Hong Kong and looked at the mountainous backdrop of the city where the mysterious ‘mainland’ started. When I visited the mainland for the first time, this was an adventure, crossing the border in Guangzhou and traveling to the main Chinese cities for 3 weeks. I have been there more than 20 times ever since and came to love the Chinese culture, the country and certainly the people.
From a Western perspective, we tend to oversimplify the cultural differences in Asia. A few characteristics of these cultures (collectivist, conflict-avoidant, hierarchical) are easily attributed to all Asian cultures. But the differences within Asia are huge, not even speaking about the enormous differences within a country like China. If we can speak of a Chinese culture, this in itself is a wild generalization, not giving credit to the enormous differences between western Tibet, downtown Shanghai, the vast stretches of land north of the Chinese wall influenced by Mongolian history and culture, and the rapidly growing cities such as Hefei, Yangzhou and Nantong.
And although it is fair to refer to China as ’typical Asian’, there are several characteristics of the Chinese culture that sets it apart from many other cultures in Asia. I shortly mention 3 here:
The Chinese are incredibly pragmatic, compared to many other Asian cultures. When problems arise while doing business in China, these problems can be real show-stoppers. Top-management does not back-up the deal, the specification of the Chinese customer changes and you cannot meet the new requirements, or quality standards are just not met and your product does not qualify.
However large these problems, the good news is they can disappear rapidly as well. When the pragmatic Chinese want to do business with you, they will always find a way. And however big the problems, there’s always a way around. The advice in China is not trying to out-smart the system as a Westerner and design the perfect solution yourself. Ask your Chinese counterparts for their advice: “Your top management has not agreed with my proposal. So what would you advice me to do now, such that we can work together?” When there is trust and the Chinese want to do business, the most pragmatic, creative and unexpected solutions are just around the corner.
A long-term partnership for the Chinese includes an element of reciprocity. The two partners are expected to help each other once they have entered a relationship based on trust, and this ‘help is often not understood or mistrusted in the West. When you finally succeeded to secure a trusted partnership, signed a contract and celebrated the results with large quantities of alcohol and good food, it is not uncommon that a few weeks later the Chinese want to break open the contract and re-start the negotiations.
And while often this can be pure tactics to secure better pricing or better conditions for the Chinese, quite often also this can be a sincere call for help. Since you are trusted business partners now, the Chinese expect you to help them if market conditions change, or when terms of business need to be adjusted. When this happens, our natural response is to become defensive and educate the Chinese about the meaning of a signed contract. A better response, however, is to confirm their request and start investigating why these new requests did come up in the first place. Show the Chinese you want to help them and look for a solution that helps them. This may, in the long run, be a much better move and may gain you a lot of trust and credit.
Chinese networking skills are famous. Guanxi is the network of people you know, and by belonging to the network of somebody, you become part of the in-group. And in China – like in many other Asian cultures – members of the in-group get better treatment than people who do not belong to the inner circle. This network system can work against you, where you do not have the right connections to the company owners or top management, or when somebody who is influential in the company is not in favor of working with you or the company you represent.
Equally well, however, the Chinese network can help you. If you and your Chinese business partners get stuck during negotiations, or when the Chinese keep delaying the work with you and you suspect a relationship problem of some sort plays a role, ask yourself: “Do I know somebody who is trusted by the Chinese party I work with?” Asking this person to help you solve the problems can be a very wise move. Do not try to solve everything yourself, but go to a trusted member of their inner circle and sincerely ask for help. This person may do miracles for you. Mediation in conflict or acting as an accelerator to speed up deals is often a task that a trusted member of their inner network can perfectly well facilitate. Much better than you can…
These are just 3 characteristics of the Chinese business culture, and of course, there is a lot more to tell and learn about Working with the Chinese. When I designed my “Business Culture of China” program early last year, I did not expect to run it as often as I did last year. It meets a need apparently: a one-day program full of exercises, practical tips and advice, and lots of insight about the China business culture in one day. I redesigned the program recently based on feedback after the first 10 sessions that ran. Time next month to start with this redesigned version of the program, and continue to work with interested teams to increase their knowledge of and skills to collaborate with the Chinese.
The full brochure of the program “Business Culture of China” can be found here.