With the growing trend for small to medium businesses to export to China or capitalise on Chinese interest in Australia in sectors like tourism, property and health, it’s useful to understand the cultural values that underpin Chinese business practice.
The traditional values associated with Confucianism are central to Chinese society. These values determine how a person should act within a community (or indeed within a business) and heavily influence business life.
- Hierarchy and respect: People are valued based on their title and seniority. Show respect at all times. Draw on the informal personal relationships you have with local Chinese connections to understand the hierarchy of organisations you are dealing with.
- Guanxi: It’s all about your relationship with someone. Guanxi refers to mutually beneficial relationships which can be used for personal and business purposes. In China, business relationships play a far more important role than in the West so it is necessary to spend time getting to know your Chinese counterparts outside the boardroom.
- Loss of face ‘mianzi’: Encourage harmony and maintain face by complimenting others. Never publicly criticise anyone, refer to their mistakes, show anger or disagree with a superior. Direct disagreement or confrontation with a colleague, may cause them to lose mianzi and is to be avoided.
- Trust is built through personal connections. Be open and don’t be concerned if your Chinese partner is interested in your personal life and discusses it in business meetings. Direct questioning is common in China so don’t be offended if you’re asked how old you are and how much money you make. The Chinese are generous hosts and hospitality is an essential part of the formalities, but be aware that does not mean you have already earned their trust.
- Symbolism The Chinese consider 8 to be the luckiest number and 4 to be unlucky as it sounds similar to the word for death. When choosing your Chinese phone number make sure it has minimal 4s and plenty of 8s. The colours red and gold signify good luck and wealth and are therefore popular on business cards and branding for the Chinese market.
If you are establishing a business in China, you will also need to navigate different laws for business and product registrations, intellectual property protection, tax, foreign exchange and dispute resolution. It’s essential to have legal and accounting advisors in China you can trust. Accru is part of the CPAAI global association and works with partner firms in China. Please contact your local Accru advisor if we can assist.
Key success factors for conducting business in China
+ Learn and understand the culture
Having a Chinese person’s perspective and insider knowledge is valuable.
+ Build relationships with key decision-makers
The need to develop and maintain relationships is essential in all contexts, including business dinners, emails, meetings and negotiations.
+ Research everything
Location, competitors, the market, business partners, negotiation plans. When pitching your product, make sure you have done your homework and can present your offering effectively.
+ Be adaptable
Build in contingencies and have flexible plans so you can adapt quickly if things don’t go your way.
+ Practice due diligence
Recognise that what is understood as ethical and responsible behaviour in China can differ from what is considered acceptable practice in a western context and exercise caution.