Setting up a business in China - Essay Example

? Managing across cultures 04 April Table of Contents Table of Contents Introduction 2 Chinese Business Culture 2 Chinese business practices 4 Effects of Chinese culture on business 6 Benefits of doing business in China 7 Challenges of doing business in China 7 Conclusion 8 References 9 Introduction Business is universal and no country is exempt from business. Business can flourish in any country regardless of that country’s culture. China is one of the countries that have developed well in business. China has been in the limelight of business for several years and has attracted majority of people who flock there for business. Chinese Business Culture Chinese people perform a different form of business and culture as compared to the rest of the world especially the West. However, with the uniqueness of the Chinese history and background, China always has a special culture of business and etiquette. A simple business culture can mess a working relationship that was doing well. Conflict of culture between Chinese and another culture may cut short a working business relationship. Chinese businesses are usually based on being referred by another business associate; could be in the same business or in another business field. However, a strong recommendation from such an associate is required to win favour of clients and get good deals. Chinese business starts on a social plate and continues along the same line unless something happens that may break relationship between parties involved leading to business termination. Unlike Western culture where business is profession based, Chinese business is more of a social affair than a professional one. This is essential to help attract more clients and win hearts of many people in business. It helps maintain one’s clients in business socially rather than professionally and this increases business returns. The more one goes social in business in China, the higher the returns. Getting personal in business and sharing one’s personal life acts as an incentive to business partners. Business partners usually take this as getting close to them and this may be their interest even before they do their business with the party involved. It is therefore imperative to get personal and avoid too much of being professional as this will guarantee high returns within a short period of business. Spending time in sharing personal life in business attracts business associates from China. Personal life may include political views, hobbies, and family life among others. Protocol and priority are vital in business in China. Protocol and priority comes in when dealing with people of different ranks. Recognition is of essence to show these individuals that one recognizes their rank. Address people with their correct designation, for example, Director, Doctor, Professor, and Chairman. This will make the parties see that their rank in whatever field they are in is highly recognized even in business. Giving business cards during business meetings indicates that one is serious in doing business. A business card should face the recipient. Such a card should have one side translated to make it easy for the Chinese party to understand what one is selling to them or buying from them. It is important to mention one’s company and the rank one holds before business gets underway. Business in China pays much attention to respect. Parties are supposed to display respect to each other according to rank. It may not be easy to excel in business in China without understanding that respect is tantamount to business success. It is necessary to establish contact with a client one is dealing with so as to get as much referrals as possible from that client as business progresses. One should act as an interpreter to himself to make it easy to identify with Chinese as they like business where they understand what they are dealing in. It is vital to explain legal aspects of the business one is handling to be sure of the legal implications when doing any kind of business. Business in China is associated more with gifts though most of the times gifts in kind are appreciated and taken to be of value. Gifts do not carry any negative implications. Exchanging gifts is a means of appreciation for aid got, a way of marking an occasion, and may be as an incentive for future favours in business. However, while doing business in China, it is important to avoid giving gifts with no valid reason or a witness since people take this differently. Asking for a gift is norm for business people in China. This is should not make one feel uneasy but it is also important to display respect for Chinese culture by asking for something that falls within precepts of their culture, e.g. tea. Business meetings should be booked in advance and not on first facial contact. Chinese business people prefer to have information regarding a certain meeting before hand, as this will help them prepare. It will also help one to have a good background of the client they are dealing with or the business they are to engage in. Prior to any meeting, it is necessary to forward bronchures to introduce some company or a certain product that has necessitated this particular meeting. It is necessary to book for meetings between April to June and September to October. Chinese calendar should be at the disposal of one who is doing business to avoid fixing a meeting during national holidays, as this will make the Chinese partner fail to honour such a meeting. One should ensure that they are early for meetings since lateness is offensive. Agendas for such meetings are sent in advance so that one has control of the meeting and avoid too much dominance of Chinese during the meeting. Too much of dominance by Chinese partner could make one compromise too much of what they were to discuss and sway away from the goal of meeting. One should be ready for a series of negotiations before a Chinese businessperson agrees to business. Chinese are renowned negotiators and they do not just take any offer. When starting a business there, one should understand that they are meeting with people who do not settle on anything without debate. One should be ready to give up some strong stands and show the Chinese that he/she is ready for negotiations but this should not compromise the values of the business one is to start. One should learn to be patient with negotiations from the Chinese since this may take a longer time. It is important to take it positive but one should have set a limit below which they should not go. Display of frustration is discouraged under all cost but one should stick to the negotiating table no matter how long it may take. Doing business in China without understanding their culture may make one’s business to collapse, as they will frustrate every effort of such a person and alienate him/her from rest. It is therefore important to understand their culture when it comes to business to have an assurance of peaceful co-existence. It is highly encouraged that before one develops trust on a Chinese to first understand and appreciate cultural values to avoid cultural conflict. Chinese have passionate bargain and they do not just agree to business without some negotiations. These negotiations begin with a warm handshake, and if one is unaware of their scheme, it is easy to lose patience and let go of a business opportunity. However, persevering through their process of negotiations improves a person’s image and Chinese may give such an individual much business. It is easy to lose patience and let go of business if one does not understand that the motive of these negotiations is patience test. Chinese business practices Chinese practice business based on what they believe in as their culture. It is quite a task to separate business from culture in China. Chinese are usually passionate about business and this has seen the country rise to the third largest nation in the whole world. It is not easy for the Chinese to give up in business; they re-known to have a strong fighting spirit in all things and especially in business. China, having a population of slightly over one billion people, has majority of its population involved in business and this has made the country rise steadily in business and in other fields. Businesses in China are mostly located in urban areas, and it is imperative for one to understand this fact in case of interest to open up a business. There happens to be a very high rate of urbanisation thus causing majority of the population to put up in areas close to town. China boasts of being in possession of some of the largest industrial sectors in the world. Among these are electronics, which happens to be the third largest market. Another sector that has been enjoying stability is automobiles sector, which happens to be third largest sector in dealing in automobiles in the whole world. Doing business in China is not about the near future but about the long run. One should not give much concern about the short-term performance of the business even though it is important. It is essential to first study how markets operate in China before having to open business there. When doing business in China, one should have an open mind. It is not always that whatever one is presenting will go through on first meeting. However, first impression counts a lot and it could make someone win or lose business within first few minutes. Chinese do not express disagreement verbally but they prefer non-verbal expression of disagreement. Disagreement does mean disapproval but this should be viewed as another chance for the one doing business to alter some things to suit the practice of business in China and avoid further disappointment. Chinese communicate via indirect language mostly and it is wise to understand this and know that silence does not mean always. However, nodding should be very lightly since a vigorous nod could mean aggressiveness and this could make one lose business. Chinese express honesty in a non-verbal manner. It is therefore important to understand this to avoid doubting a sincere business partner. However, one should also be cautious not to entrust anyone in business having not spent enough time with him or her. It is not easy to trust a stranger hence one should be cautious who they trust as this will ease much loss. (Tadla, 2007 p.113) One should also understand the mode of conversation to use to avoid being misunderstood. Chinese do not like pats on the back, one should rather use hands in a conversation. They do not also appreciate direct looks in the eyes as this will make them feel offended and this makes one to appear like having lost all. One should always avoid saying no but refusal of an opinion should have a different statement. One would rather say, “I will consider that” rather than saying no expressly. Chinese prefer pauses in between business meeting or any meeting to have intentions understood well and avoid misunderstanding. Businesses in China depend on how well one understands their practice, the more one understands, the higher the gains, and the easier it will be to penetrate their market. After a business meeting in the attempt to have business in China, one should not be irritated by the way Chinese respond. They may be slow in reacting to presentations and may put pauses but this indicates deep thought and attempt to give calculated answers that have some weight and finality in them. Pauses in between responses are an accepted custom in China as this indicates serious consideration to an offer. One should not expect sudden reaction to business offers. Chinese make several consultations before giving a final answer. They consider culture, fashion, contact made with whoever is presenting before sealing a deal. Prior to having a business meeting with Chinese, one should prepare some gifts that are in line with their culture. One could come with something that will help tell the country they come from without having to speculate too much. Chinese appreciate conservative kind of dressing. A man should be in a tie as ties are customary in China. (Branine, 2011 p.321) Bright coloured clothes have little or no appreciation same with short skirts for women while jewelleries should not be too flashy. Effects of Chinese culture on business Operating a business in China has a lot to do with the country’s culture. Foreigners who do business in China have felt the effect of Chinese culture. It is therefore important that business people understand Chinese culture so that it does adversely affect their business. However, one should also be ready to absorb positive effects to attract as many Chinese as possible in business. One of the major implications of Chinese on business people is punctuality of meeting appointments. In the process of rising in business in China, a businessperson gets good training to honour appointments early enough though through the hard way if one was not honouring them early enough. Another effect is way of conversation. After close socialising with Chinese in business or in other fields, one changes mode of conversation and adapts to the way Chinese communicate. Chinese shy away from direct or immediate discussion before proper consultation to avoid half-baked responses. One also adapts to addressing business partners as per the way Chinese address them. (Tian, 2007 p93) Doing business in China helps one to appreciate gifts that are in line with the culture of the Chinese. After a series of meetings or appointments with Chinese, business people operating in China eventually understand the importance of gifts in business. Chinese business people could decline gifts in the first few attempts to appease them with gifts but they compromise their culture after sometime and accept to avoid being termed as reserved or greedy. A person who wishes to do business in China should learn to appreciate their way of negotiations since they do not just give in to any offer. Thus, this requires patience on the side of one affected to give them time to exercise their culture. However, this should not mean compromise that could lead to doubts in business. Business cards change hands during these negotiations. Chinese culture teaches one to be patient and control temper at all times. In the event of business, one should be ready for long negotiations comprised of strong stands. This makes one to lose temper but after getting used to this, it becomes evident that a virtue of patience is developing. Benefits of doing business in China Doing business in China has many benefits. It grants one an exposure to different cultures and hence appreciates diversity. Chinese do businesses under strict observation of culture hence those who do business there get to learn this culture making them understand how this culture operates. Engaging in business in China also makes one to be empowered economically since the sole reason of doing business is financial freedom. Doing business in China promotes unity among individuals as well as countries that business people hail from. It also promotes peaceful co-existence between individuals involved and countries. Challenges of doing business in China Language barrier is one of the challenges that one may encounter in the attempt to do business. It is not easy to go to China and flow well in Chinese language. One has to learn this new language and it could prove a challenge owing to the fact that it is not one’s national language but a foreign one. (Selmer, 1998 p213) Chinese are worldly known for their lengthy negotiations. This could pose a challenge to them that are not patient enough to wait. One can lose business if patience is not part of him, which translates to loss of business opportunity. Conclusion Setting up a business in China requires one to be daring enough and be an opportune taker. It is not for the weak to do business in China since it could prove to be too hard to operate one in China. It is necessary for an aspiring businessperson in China to also understand the taxation system to avoid tax evasion. This would make one to go to the wrong side of the law. References Tadla, E. 2007. How to live & do business in China: Eight lessons I Learned from the Communists. Bloomington, Indiana: Trafford. Branine, M. 2011. Managing Across Cultures: Concepts, Policies and Practices. United States: Sage Publications. Tian, X. 2007. Managing International Business in China: Cambridge: Cambridge University Press. Selmer, J. 1998. 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