Culture clash: Five tips for Western firms that want to do business with China

EVERYBODY knows how important it is to do business with China, but many business people are making serious errors that are hitting their company’s bottom line.

So, what is the most important aspect that western companies need to focus on when dealing with the Chinese? A report released earlier this year by Blackwood Group revealed the answer: FTSE 100 firms miss out on growth opportunities in China due to the lack of cultural understanding.

Here are five top tips to developing effective and fruitful relationships with the Chinese:

1. Firstly, understand the critically important concept of “face”. Face has a much deeper meaning in China than in the west. Many Chinese will go to great lengths either to save face or to save someone else’s face. Face is about dignity and respect, and a person’s social role. It is not just about feelings, but a key part of what holds society together. An old saying is that a person would rather die than lose face. A person can lose face by declining a social or business function on a weak pretext, refusing a present, expressing emotions uncontrollably or being too independent. One case of loss of face recently occurred in China when a foreign chief executive forgot to invite his Chinese counterpart to give a speech at a banquet. Consequently, the Chinese chief executive left the banquet unusually early.

2. The notion of “guanxi” is a much more complex idea than the western concept of networking. It is the platform for social and business activities in China, and consists of connections defined by reciprocity, trust and mutual obligations. Build up your guanxi and be aware of the dynamics of guanxi around you before you do anything. Although developing and nurturing guanxi in China is very demanding on time and resources, the time and money necessary to establish a strong network are well worth the investment. Personal relationships and trust are paramount. It’s an unwritten rule in China that if someone does not trust you, they are unlikely to do business with you. Most successful multinational companies that have entered China and maintained their positions have done so by following the principles of guanxi.

3. The Confucian concept of harmony is still important today. The Chinese sometimes perceive western independence as a sign of showing off. An individual standing out from the crowd causes disharmony, and showing off is considered poor behaviour. In China, being the first to come up with an innovative idea in a group setting can have significant social implications. It could be seen as showing off and possibly generate envy too. This is a challenge for many western managers who want employees to come up with new suggestions or product ideas in a group setting.

4. The Chinese take a longer time to make decisions. Westerners believe in the value of making quick decisions and then taking action. The “time is money” concept when practised in China is likely to result in negative outcomes. In China, decision making is based on ensuring that the balance of all parties is taken into account. The Chinese want to be sure that all angles of an issue are reviewed first and all matters are thought through before coming to a conclusion. This process often involves going back to the beginning and starting the thinking and the discussion again. Also, since Chinese people do not like to tell you “no” in a direct manner, never assume a deal is struck until you hear this explicitly.

5. Chinese communication styles are indirect. For the Chinese, communications is about building relationships, while in the west it about efficient exchange of information and getting things done as quickly as possible. Silence does not mean that your message is not getting through. The wise Confucian is expected to listen in silence. Leaders in China are expected to express themselves much less directly than those in the west. Chinese communications depends on the context, or non-verbal aspects of communication. It’s not that the Chinese are unwilling to share information, but westerners will have to prompt their Chinese counterparts if they want details. Alternatively, it may be best to approach someone on a one-to-one basis, in private.

These are just some of the cultural values and features of Chinese society that westerners need to understand and put into practice if they are to have effective and successful relationships.

Barbara Wang is a programme director and China representative, and Harold Chee is a programme director, both at Ashridge Business School. Their latest book, Chinese Leadership, is published by Palgrave MacMillan.

The wise Confucian is expected to listen in silence