Effort. Whether we’re talking about friendships or business, relationships don’t spring up from nowhere. They require work. Starting and building effective business relationships in China calls for an especially targeted approach.
If you’re new to Chinese business hierarchy and Chinese negotiation techniques, the road to proficiency is long.
Read this primer and, when you’re ready, book a cultural coaching session to let us address the pressing questions you have about working with Chinese partners.
Negotiate in Chinese like a pro
We won’t be asking you to learn Chinese, that’s for sure! However, it’s still an advisable move to learn basic Chinese phrases, to help build rapport with your business partners.
Whether your representatives speak the language or not, to master Chinese negotiation techniques we have to start somewhere else. Success starts with understanding—and following!—the rules of Chinese social hierarchy.
Chinese business hierarchy
China has a strongly hierarchical culture. However, it’s one thing to know that this system exists, but another to understand its practical impact on running a business.
- Chinese business protocol dictates that people enter the meeting room in hierarchical order. For example, the Chinese will assume the first foreigner to enter the room is the head of the delegation.
- Only the senior members of your group are expected to lead the discussion.
- Interruptions of any kind from subordinates can be considered shocking by the Chinese. While brainstorming and incorporating everyone’s voice is a normal procedure in the West, you might want to keep the team discussion outside of the negotiation room. Otherwise, the head of your delegation will risk losing face and status.
Understand Chinese business negotiation tactics
Understanding the hierarchy already gives you an indication of how to negotiate with Chinese companies. Let’s walk you through the process step by step.
Setting up the negotiation scene
- Seniority. Typically, only senior members of the negotiating team will speak. Even if the team is larger, expect to hear mainly from one person. Likewise on your end, designate the most senior member of the group as your spokesperson and for the introductory functions.
- Hierarchy. We can’t emphasise it enough. Business negotiation in China are hierarchical. These rules dictate who speaks in the meeting and in what order.
- Process. Chinese negotiations are process-oriented, and hence they can take a long time. At the first stage your Chinese counterparts want to determine if the relationship can reach a point where all parties are comfortable doing business with one other.
- Confrontation. The Chinese are very non-confrontational. Under no circumstances should you lose your temper. Displaying too much emotion will make you lose face and irrevocably damage your relationship.
- Pressure. Do not use high-pressure tactics. You might find yourself outmanoeuvred.
- Straightforwardness. The Chinese language is largely context dependent, and so the Chinese culture is much less straightforward than what we’re used to in the West. Your business partners will usually not overtly say “no”. Rather, they might say they “will think about” your offer, or that they “will see”.
- Decisions. Decisions will take a long time. They require a careful review, consideration and, potentially, a consultation with other parties. It’s unlikely a final decision will be made during the meetings you attend.
- Pace. As you might have inferred already, operating based on all the principles above means that business negotiations will be very slow. It will take several meetings and dinners to reach an agreement.
- Finality. Business decisions in China may not be final even when they seem to be. Expect to revisit your agreements.
Guanxi in China
Guanxi is a powerful concept in the Chinese business culture, and an integral part of business negotiations themselves. Guanxi’s definition is complex—the term implies a widely-encompassing sense of obligation in a business relationship. It’s something you built up through many interactions and exchanges and which creates a deep sense of responsibility.
Guanxi encapsulates a need for both reciprocity and anticipation of the needs of the other. You can understand it as a kind of currency between two parties—something that can be saved or spent. If you don’t reciprocate the favors of your counterparts, guanxi will die off.
How does guanxi impact your business relationship?
Chinese business culture places more emphasis on building a strong long-term relationship, and less on honoring the details of one specific agreement. This might be the reverse of what you’re used to in Western business relationships.
Each business relationship is different—there are straightforward business deals and more complicated ones. When in doubt on how to approach guanxi in your business operations, consult with the experts.
Gender roles in China
There are several misconceptions about women’s rights in China, and it’s important to be prepared for the situation on the ground.
A lot of effort has been made to fight gender inequality in China—men and women are considered equal in Chinese society. Women have equal succession priority and, when getting married, they keep their last name. After marriage couples live independently from their parents.
Gender dos and don’ts s in China
Meeting and greeting.
- Like in the Western culture, whether you’re interacting with a man or a woman, handshakes are common in Chinese business encounters.
- Hugging or kissing the other sex—whether on the lips, cheeks or hands—is not accepted, except within families or among close acquaintances.
- Glaring at a lady from top to bottom is regarded as very impolite.
Making and receiving compliments. Follow the etiquette of giving and receiving gifts.
China LGBT. Discussing LGBT issues in public is not appropriate in China. Chinese society is still pretty conservative, so you can add the topic of LGBT rights in China to your list of cultural taboos.
Putting it all together…
For a successful business strategy in China, it’s important to understand the local culture and take a market-based approach to your operations.
Procedures and business negotiations in China will take a lot of time, patience, and money. Considering the role of hierarchy, guanxi, and long terms relationships it’s a worthwhile investment to create a strong and dedicated local team.
While we did our best summarising cultural lessons on Chinese communication, hospitality, and the famous guanxi, we know each business relationship is different. To get advice tailored to your company’s needs, book a short coaching session.
Travelling to China and still looking for a sophisticated Chinese translation software or translator app?
This small investment of time is guaranteed to bring exponential returns.