Doing business in China

von: Hakime Vanelli

Table of Contents

1. Introduction ... 6

2. Cultural Dimension ... 7

2.1 Important Factors And Value ... 7
2.1.1 Religion ... 7
2.1.2 Business Networks in China ... 7
2.1.3 Trust, Reciprocity and Harmony ... 8
2.1.4 Face and Hierarchy ... 8

2.2 Long-Term Orientation ... 8

2.3 Hofstede’s Taxonomy Applied ... 9
2.3.1 Power Distance ... 9
2.3.2 Uncertainty Avoidance ... 9
2.3.3 Individualism – Collectivism ... 9
2.3.4 Masculinity and Femininity ... 10

3. Communicating Cross Culturally ... 10

3.1 Language and Indirectne ... 10

3.2 Hired Translator ... 11

3.3 Non-Verbal Language ... 11

3.4 Technological Issue ... 12

3.5 Other Communication Tip ... 12

4. Negotiating Cross Culturally ... 13

4.1 Negotiation ... 13

4.2 Protocol in China ... 14

4.3 Negotiating Tip ... 14

5. Teams to Work in China ... 14

5.1 Leaders and Manager ... 14

5.2 Motivational Approaches in China ... 15

6. Selection of Expatriates for China ... 16

6.1 Ability to Do the Job ... 16

6.2 Ability to Adapt ... 16

6.3 Repatriation ... 17

6.4 Recommendation ... 17

7. Managing Social and Ethical Issues in China ... 17

7.1 Ethical Business Standards in China ... 18

7.2 Normative Theories and China ... 19
7.2.1. Utilitarianism ... 19
7.2.2 Ethical Relativism vs. Imperialism ... 19

7.3 Recommendations on Business Ethic ... 20

8. Conclusion ... 20

9. Reference ... 21

1. Introduction

Welcome to The Cross Cultural Guide on How To Do Business in China. China is the most populous country in the world with a population of 1.25 billion and the third largest country after Russia and Canada is China. For many this is an opportunity. China is rich in culture and this guide is created to look specifically at cultural dimensions and assist companies with the cross-cultural aspects of doing business in China. As the culture varies from region to region this guide uses a holistic approach. It addresses how the Chinese culture is different from other cultures and demonstrates different situations to consider before doing business in China. This guide is an adventure divided into six major sections including cultural dimensions, communication cross culturally, negotiation cross culturally, team work in China, selection of expatriates, and business ethics for China. Recommendations are made within each section. The appendix enclosed is also very useful for further explanation of examples given within this guide. Although China is the largest market it is also is one of the greatest cultural challenges. Deeply rooted into the Chinese society is a partnership waiting to blossom. This guide is created to prepare companies for the cross-cultural aspect of the partnership. As the Chinese proverb says each journey begins with one single step.

2. Cultural Dimensions

2.1 Important Factors And Values

2.1.1 Religions

The two main religions in China are Confucianism, Taoism and one religious concept that is central to Chinese faith is Fengshui. Confucianism is the main religion in China as it has a strong influence on Chinese life, particularly the role of family obligation, close contact with extended family, respect for elders and ancestor worship (Dunung, 1995). Religion plays a very important role in Chinese way of living and it is reflected in businesses also. When doing business in China, we should keep in mind their faith and values like respecting elders, the emperor, and tolerance with one another and then start working with them. The influence of Fengshui on Chinese people is very evident. Fengshui is based on the idea that man and nature must exist in harmony (http://www.fengshui.co.uk/fengshui.htm). A Chinese will consult a Fengshui person before starting a new venture or new construction. It is important to be aware about the physical layout of the office. As Chinese people bring the faith in their religion into the everyday business life, it is important to be considerate of these factors.

2.1.2 Business Networks in China

A study of Chinese business networks will be very helpful in starting business in China. The word guanxi is often used in a Chinese community. Guanxi is a special relationship between two people who believe more in long-term mutual benefit than short-term individual gains (Redding, 1990). While guanxi operates at a personal level, Guanxiwang goes further than that. Guanxiwang refers to a network of exchanges or transaction between two parties and beyond for value and mutual benefits to parties concerned directly of indirectly (Revid & Yong, 1998). Their main function is to protect and help each other in a wider social context. Thus it is widely accepted that one needs a good relationship (guanxi and guanxiwang) to develop business successfully in China. Although guanxiwang is transaction based, it is influenced by the key features of Chinese culture such as trust, face, reciprocity, and harmony.

2.1.3 Trust, Reciprocity and Harmony

Trust is a key element of network relationship. The primary objective is to cement long-term relationship and to establish enduring mutual trust and goodwill. Establishing trust takes time but once it is developed it is for lifetime. Thus minimum trust is very important to established before any serious business relationship. Business networks in China cannot survive without reciprocity and harmony. Most of the transaction takes place when there is mutual benefit for both the parties. Without harmony between people trust cannot be established, face cannot be saved, reciprocity will not continue, which will result in no further guanxi (Revid & Yong, 1998).

2.1.4 Face and Hierarchy

Pride and dignity is very important to the Chinese as is saving face. (Erikson, & Shrivastav 2002). One of Confucius’ virtues is to respect authority and elderly. Chinese have a great regard for seniority and rank. Someone with authority, often elderly and with good reputation can ask for favours from others (Dunung, 1995). In business organizations also the decisions of seniors are highly respected and followed.

2.2 Long-Term Orientation

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