“Ru xiang sui su” (入乡随俗) is an ancient Chinese saying that means, “When in a village follow the locals.” More appropriately, the equivalent saying in English might be “When in China, do as the Chinese.” This is just generally good advice for travelers, but it is particularly important for business travelers and international businessmen.

In today's increasingly globalized world, companies have customers, partners and competitors all around the world, not to mention international employees. In this environment, China, and by extension Chinese culture, is becoming an increasingly influential force. The key to success in this environment, apart from a good technical preparation, is a good understanding of Chinese business etiquette and inter-cultural staff training.

The Basics

It is often said that Chinese people have a different way of conducting business, but this vague statement is not particularly helpful. Some specifics are necessary.

One important thing Western negotiators should also be aware of is the different function of time in business. In the West, it is often said that, “Time is money.” In China, the concept of time is much more cyclical. This is important in business because Chinese business negotiations are particularly prolonged compared to Western negotiations, especially because all decisions are made by consensus. It's important to remain patient even when things seem to be dragging on usually long by Western standards.

A much smaller but equally important social cue has to do with simple nodding. Chinese people tend, especially in business negotiations, to listen very carefully to what a speaker is saying, while nodding several times. This behavior can mislead those who are not aware that nodding means just that a Chinese person is listening, not that he agrees.

One can learn how to exchange business cards (accept a card with both hands and be sure to read it before putting it away), how to deal with personal space (it's inappropriate to touch Chinese people on the back) and how to choose the right gift (see below) and a whole host of other things. But in the end, what matters most is deference. In China deference is one of the most important aspects of etiquette. Failing to be deferential is one of the easiest ways to foul up a negotiation.

The Importance of the Informal Dimension

The relaxed atmosphere of a dinner or a night out is an opportunity to foster friendships, which is essential to the Chinese way of doing business. Chinese people say that before going into business together all parties involved have to become friends. This means that when formal negotiations end and dinner begins, business is still being conducted.

At dinners, toasts are particularly important, so underestimating them is a risk for the Western guest. Usually, the host organization gives the first toast, then the guest makes one in response. Chinese businessmen use toasts to reveal their positions and even discuss their hopes for how you might cooperate. These toasts should be answered in the same vein, with emphasis on the desire for cooperation and deeper friendship. It’s important to note that if the leader of the guest delegation is not willing to drink alcohol on offer during a toast, he should charge someone with drinking the toast on his behalf to avoid offence.

Informal situations are also important because they're good ways to meet people you would not meet during official events. These people may have been excluded from the official delegation because of age (i.e. they have passed the age of official retirement) or for any number of other reasons, but their opinions and input could be very influential in any final business decisions. Therefore, don't underestimate the importance of persons you meet in informal situations; the informality isn't an indication of their position or a reflection of their importance.

While it's important to foster friendships in order to conduct business in China, it's also important to be aware of difficulties this can cause. Once a friendship is formed, it can be easier to ask for concessions from the other party. You can avoid this in the first place by avoiding guanxi connections with people who fairly obviously want to be connected with you for no reason other than their own interests. When it does happen though, remember that it is more than possible to refuse a request, as long as you make sure to do so with diplomacy.

References:
1- http://www.fdi.net
2- "Business Confucianism: the impact of traditional Confucian hierarchy and values on modern Chinese business practices", www.renmenbi.com
3- Neil Payne, "International Business Etiquette"; an interesting example on how a lack of etiquette can negatively affect the business can be found in the essay of Kejun Xu, "The implication of Confucian and Taoist values for multinationals in intercultural business communication"
4- Chen Guo-Ming, "An Examination of PRC Business Negotiating Behaviour"
5- http://www.allbusiness.com
6- The right gift, given at the right time and to the right person can help facilitate friendship. See "Giving Gifts in the Business Environment".
7- For an explanation of guanxi connections,  see, "How to Cultivate Guanxi" at renmenbi.com

Technorati Tags: Competitors Customers Customs Etiquette Partners Ru Xian Sui Su