Considering the dramatic cultural differences from the West, doing business in China can be difficult. How well you adapt to the deeply rooted Chinese customs will profoundly influence the success of your business.
In China, cultural competence takes time. Business culture is very traditional, involving behaviors and beliefs that date back over 5000 years. That said, having a local representative who clearly understands both sides is crucial.
Guanxi is everything. Defined as the connections and relationships which facilitate business and commerce, this is the most critical aspect of Chinese business culture. Cultivating strong relationships is the first step towards any Chinese market. To properly establish Guanxi, awareness of and compliance with the following aspects of Chinese business culture should be the primary focus of all companies.
In China, even at the most fundamental level, we find a tone language entirely different from common western dialects. Having someone able to communicate in a native Chinese tongue will be favored and seen as a sign of respect.
Clear communication by your host country’s standards may translate rudely in China. While the individualistic mindset of Western business fosters the idea of speaking up, of using as many words necessary to communicate one’s point, China business culture favors extreme modesty.
Furthermore, there are considerable differences in both verbal and non-verbal communication.
To name a few:
• Greetings and pleasantries differ
• Chinese names are reversed compared to western names
• Eye-contact is not necessarily a sign of respect
• Casual talk is a necessary precursor to business
Westerners often view themselves as highly independent entities, whereas in China, an interdependent mindset is essential. China’s workforce is built on discipline and corporation, where the group always takes priority over the individual.
To showcase one’s commitment to the bigger picture, one is expected to act in a calm collective manner at all times. They should listen with intent and always be heedful to the needs of others.
In China, hierarchy holds true, and status is power. Seniority must always be respected.
Especially in the decision-making process, seniority dictates authority and patience is pivotal. Decisions made with haste will be seen as insulting. Even simple matters are expected to be processed by multiple people until eventually, the manager with the highest status decides on a verdict.
The concept of face, or miànzi, is an essential abstract notion that governs all social interaction in Chinese culture.
Extreme emphasis is placed on harmony and public dignity. People are expected to further these values by “giving face” or “saving face.”
To give or save face, extensive etiquette must be applied to all interactions. Composure is key. Limit expression to what is appropriate, and continuously consult a trusted Chinese representative on how to behave.
Especially in the midst of conflict, the art of “face” is vital. No matter the issue, maintaining face will always be the most pressing concern. You will find, negotiations often preserve harmony, and consequently save face, by implicitly working around a conflict, as opposed to confronting it straight on.
Such diversity may be overwhelming at first, but with patience and the right representatives, this highly educated, highly capable business atmosphere will generate authentic and successful long-term foundations.
“The time is now. Be part of the process as China becomes tomorrow’s economic powerhouse.”
Ready to expand your business and break into China’s upcoming markets? Call now for a consultation with an IncorpChina team member, and establish your most important relationship in China success.
+1 561 729 6508 | [email protected]
#chinesebusiness #chineseculture #whychina #chineseindustry
The future of China’s economy has never looked this bright. With a thriving middle class, a new wide-spread consumerist approach to spending, and increasing liberalization, China is now home to a wide variety of promising untapped markets.
Since the late 1980s and 1990s, China’s economy has been executing significant reform to the state-owned industry. Upon the passage of The Company Law in 1993, limited liability companies were approved, and firms were able to retain a share of their profits. As a result, private ownership increased rapidly. By 2005 it accounted for about 70% of China’s gross domestic product.
Among reforms, China established an unprecedented manufacturing presence as a result of highly competitive pricing and sheer production power. After dominating our global economy as the world’s largest exporter of goods since 2009, China’s focus now shifts from expansion to stability, that is back to service and consumption.
Amidst all this economic activity, China’s middle class has boomed. With a current urban population of around 800 million people, that is only going to grow, 54% percent are expected to be the upper-middle class by 2022.
Take a look:
At this point, the economy’s growth has slowed. However, China is still ahead of their goal to double GDP between 2010 and 2020 and more industries are open to investment than ever before.
See below China’s GDP yearly growth since 2008 and China’s GDP annual growth rate over the last four years, respectively:
Even with a declining growth rate, China’s economy is still expanding at a rate three times higher than that of the US.
This is merely the start of China’s rebalancing. Economic prosperity is spreading as wages rise and workers demand better treatment. Furthermore, the quality of life is improving thanks to upgrades in transportation, health standards, and a wealth of technological advancements.
Increased opportunity and success is leading to higher disposable incomes and ideal target markets as the new Chinese consumer emerges, ready to spend. See below China’s consumer spending trend over the last ten years:
What is driving the Chinese consumer? Markets dealing with luxury items and services are bursting with opportunity and demand.
Interest continues to increase in:
• technological products
• luxury brands
• nutritional care
• trendy foods
• high-quality goods
Get specific: See why Hong Kong is a great place to start
“The time is now. Be part of the process as China becomes tomorrow’s economic powerhouse.”
Ready to expand your business and break into China’s upcoming markets? Call now for a consultation with an IncorpChina team member, and establish your most important relationship in China success. +1 561 729 6508 | [email protected]
#chinesebusiness #chineseculture #whychina #chineseindustry #RO #JV #WOFE #chineseeconomy #GDP #thenewconsumer #culturaldifferences #chinesemarket #economictrends #AIC
Western companies face every day the struggles of having a split operation between Head Quarters and a Chinese manufacturing division. Complying with due dates, design specifications, proper storage, and shipping can become a nightmare. Obvious questions just rise when dealing with those situations. How do you guarantee quality and oversee the process cheaper than by hiring even more staff? How to effectively communicate with the production team? How to save the operation without sacrificing the budget?
Through many years, Incorp China had helped clients to overcome this struggle and here are the three main challenges you need to overcome when trying to conquer Chinese manufacturing.
Naturally, the factory order changed several times before the final product was agreed upon. In order to get everybody on the same page and organized instead of confused, make sure every detail is translated correctly and in a timely manner. Correct translation doesn’t guarantee accurate engineering though and you need to be sure those instructions are executed properly. Let’s say you’re a flower pots manufacturer. You need your product to be produced according to specific design-details and stored in a specific way and conditions to preserve the integrity of your product. Communicating these instructions during the production process is crucial.
A strong plan for logistics is key to success. You need to think about every detail affecting your production and how you can come over with an alternative plan. This particular plan needs to be designed with a wide perspective over your SWAOT’s analysis. Does the location of your production site a key factor in delivery? Are there potential threads due to climate conditions over the year that can affect both the production and delivery? Do you have alternative resources to deal with last-minute struggles? As we can see, logistic is one of the biggest challenges to face and can ruin your operation if you don’t plan it properly.
This is the most underestimated task and this is precisely the reason why is a challenge and it’s also related to logistic. You need to know which clearance and documents you need to have for transport and freight but also need to have a scope on how long you’ll be ready with it. Some products have a live period and getting stuck in your warehouse can end in huge losses for your business. Also, paperwork and documentation can delay your delivery affecting contracts and damage your reputation. As you can see, an eye for detail is indispensable. Risking paperwork not being compliant with China customs is not an option.
Letting us assist you with your business in China means you don’t have to look for multiple contractors to help you with aspects like factory quality control and help with logistics. With Incorp China you get full service in one stop.