While the Chinese business market is constantly modernizing, adapting, and growing; there is still a concept of immense cultural importance that has governed Chinese business practices for many years. The notion of 关系 (Guan Xi) is essential for any company to understand if they intend on doing business in China.
At its core, guan xi is about building relationships. Trust is crucial to business success in China, and it is something that does not come quickly. While it may seem counterintuitive in the current fast-paced business environment of the United States, a great deal of relationship building in China exists outside of conference calls and boardroom meetings. In China, face to face interaction helps build a kind of trust that simply cannot be acquired through only communicating through a phone speaker halfway across the world. Because of the integral part that guanxi plays in Chinese business; it is essential for an American company hoping to do business in China to make sure that they have a strong understanding of Chinese culture in order to build a strong relationship with Chinese businesses.
The impact of guan xi cannot be understated. Building guanxi with a Chinese company is tantamount to forming a sort of friendship with them. Like any friendship, Chinese companies that have guanxi with American companies will be more inclined to have more confidence in business interactions as well as be more willing to pursue further business with that company. Once guanxi has been established, a Chinese company will be more willing to pursue further business ties with a company who has earned their trust and respect.
A good example of guanxi in action is when one of Incorpchina’s clients needed urgent help to apply for general taxpayer status. Robert Fisch, Incorpchina’s CEO, went to the tax bureau and found the bureau chief. Rather than immediately getting down to brass tacks, Robert drank tea with the bureau chief all morning. After getting to know each other’s backgrounds, guanxi had been established. The bureau chief was willing to connect Robert with the department heads and continue building connections with Incorpchina. This demonstrates how once guanxi is established, it will likely lead to deeper relationships.
Incorpchina’s client urgently needed taxpayer status. Normally, one would have to present themselves in person at the tax bureau in order to complete their application. Even after appearing in person, the client might still have to wait for upwards of a month for their application to be approved. Due to the relationship that had been established between Robert and the officials at the tax bureau, the office allowed the contract to be processed in two days, allowing the client to win business in China.
Ultimately, a strong understanding of guanxi can not only expedite business in China but also serve as a tool to expand and strengthen a company’s enterprise within the Chinese market. In China, trust and relationship building are truly the keys to prosperity; once one has established a close relationship in China, success will surely follow.
Without any discussion, money and time are the most valued resource for business. For western companies, traveling to china can be an investment due to the utilization of this two resources. Think about the costs of traveling, lodge, transportation, and the time spent on meetings or any process like registration and permits application. This case is about how one of our clients has saved through our effective negotiations.
In this case we are not talking about the fees involved to get paperwork filled out and submitted to register a WOFE. We are talking about the clients’ travelling expenses to personally sign the documents in order to get them approved.
It just so happened that a US client of ours, a jewellery manufacturer, had to fly to China for business reasons unrelated to us. While his WOFE application was pending and his licenses were being processed, the company did not officially exist yet in China. However, Incorp China believes in seizing opportunities. Since the client was already on the ground we decided to visit a local bank branch who we frequently work with. Could we open up a bank account for the soon-to-be company saving the jewellery manufacturer the fare for a second trip across the world?
Usually it is absolutely impossible (even as a local Chinese) to get a bank account opened without the corresponding business license. With our local Chinese staff and a lot of patience, networking and preparation we were able to convince them how detrimental it is to this business to sign the required legal documents for a bank account right away. The bank account would be pending the readiness of the business license and tax certificate and be officially opened once both the WOFE business license and the tax certificate were approved.
If your company needs to get a service done quick, we will give it our best to deliver – just because, against all odds, it sometimes actually works. In this case we saved our client a few thousand US Dollars and a lot of personal time.
Read more about how we solve problems opening up bank accounts for foreigners
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Mainland China acts as a manufacturing powerhouse for many American companies, producing their products at a competitive price. The majority of the goods exiting these factories, however, face a common issue: quality and safety standards often don’t comply with American FDA regulations and are therefore rendered inadmissible for import into the USA. This is mainly the consequence of miscommunication between those placing the order and those executing its production.
Product manufacturing in China requires more than a vague manual or basic design, and the language and business etiquette display much greater obstacles than you’d think. Let me elaborate.
Language barriers come in many shapes and sizes. Instructions are misinterpreted or misunderstood, words that exist in Mandarin might not in English or vice versa. Plays on words are literally lost in translation, and often the difficulty of having to communicate in a foreign language has people shying away from asking vital questions again and again until every detail is clear.
Commonly Ignored Factors
Even the best translator might not help. For example, it is not polite in Chinese business culture to ask too many questions. More importantly, Chinese will nod in understanding even if they do not understand your explanation at all – just to be polite. The deeply ingrained cultural customs of making a guest feel welcomed, understood, and their ideas and thoughts unquestioned absolutely stands in the way of discussing manufacturing processes effectively. Chinese are just too polite to their guests.
Discover the secret to successful manufacturing with this case study. Incorp China helped an American motherboard factory train a Chinese factory’s staff to create electronic cigarettes that comply with US FDA regulations for export to the American market.
We always look to provide the best support to our clients, but due its size, China can be an overwhelming country , so we understand when our clients are hindered to come directly to our office in Shenzhen. Just recently, one of our clients, a paper products manufacturer, was looking into moving part of his manufacturing process to the South West region of China. Since the team of three was on a strict time schedule they were not able to come to Shenzhen personally in order to meet with Incorp China’s team to discuss the bureaucracy behind such a move.
Therefore, Incorp’s CEO, Robert Fisch and two of his team members took a train, planning to meet the client in the city close to where they were looking at potential factories looking to provide an appropriate support. Since it is hard to stick to a specific time schedule with factory visits, the Incorp team needed to come to the airport to catch the client shortly before they would fly back to the US. Thankfully, everything worked out and the US clients had over an hour to discuss the procedures behind setting up an entity in China with Incorp China. A Wholly Foreign Owned Enterprise (WOFE) would allow the client to invoice other Chinese factories, in the local currency, Renminbi.
Taking such a long trip simply to meet a potential client might seem like an odd allocation of company resources. Incorp China, however, has built its success on establishing personal relationships and providing the quality service and support our clients deserve. Going the extra mile for our clients shows that we truly care and are prepared to help, no matter the obstacles.
Incorp China is about much more than just serving clients. We want to be a long term partner and support system to all our clients and bridge the gap between the Eastern and Western business world. Flexibility plays a huge factor in that, especially since China can be unpredictable in terms of its rules, regulations, and conditions for foreign enterprises. We have the experience and are prepared to deal with these challenges. Incorp China will assist you no matter where you are from, where in China you want to operate and how big or small your mission might be.
Are currently looking into expanding or moving your business to China? Let us do your paper work for you – so you can fully concentrate on your business. Call us for a free consultation today at +1 (561) 729 6508, or write us an email at email@example.com. We are looking forward to hearing from you.
Want to know how Incorp China help saving an oil platform? Click HERE to read the story.
It is no secret that the recent crackdown on money laundering has left foreigners struggling to open a bank account in China. As a result, it has become even more beneficial for foreigners, seeking to move or extend their business to China, to consult an agent on the ground. The reason why there are so many China consultancies on the market is because it’ is quite challenging as well as time and labor intensive to get a company approved. Only a few of these China consultants are as committed as Incorp China, connecting with the government bureaus and banks, forming friendships, and therefore getting our clients the service they deserve.
One of our most recent clients, a US software security company, had to open up a bank account after his company license had been approved. In order to do just that, our team went to one of the bigger China Construction Bank (CCB) branches located not too far from our office. Unfortunately, since banks had tightened their requirements over the past couple of months, our first request was denied. Why, is open for speculation.
As Robert Fisch, Incorp China’s CEO did not want our client to have to fly back to China in order to give it another try at another bank, he went into the branch again with two members of his team. At the CCB branch, he found the employee who had refused our application, talked to her, and tried to find out why our client got refused and what we could do to fix it. When this did not work out, he managed to find the account manager.
The account manager, respectful and courteous as the Chinese treat their guests, offered us tea and his time in the staff kitchen. There, the Incorp China team and he talked, tea, took pictures and we each showed interest in each others’ jobs, cultures, and languages. After a while, the account manager promised to help us in every way he could, but that he would first need to get approval from the branch manager. She, luckily, was on site this day.
The account manager was incredibly friendly and helpful and introduced us to the branch manager, who agreed to see us immediately. Again, the Incorp team were offered tea, we talked in the CCB branch manager’s office about this and that – starting with small talk but ending up talking about family, the beauty of China and how rapidly it has evolved in the past decades. The manager did not, however, clearly state how she was going to help us, despite being very friendly and enthusiastic about our visit. Nevertheless, she did make sure to let us know that she wanted to assist us in the process.
When we went to visit the branch a second time, the mood was slightly more dampened and the odds did not look like they were in our favor. Even a long meeting, talking about all the technicalities of the bank account opening procedure, did not change or clarify anything.
Unfortunately, for the following couple of days, there was honestly more confusion than progress. Nobody could really tell us what had gone wrong, what we needed to do to get the process going, or whether, in the end, they couldn’t do anything for us at all.
Therefore, our CEO headed back into the branch and had a meeting with all managers he could find on site together. After, yet again, some tea and chatter, the situation looked a lot better. We finally got a hint of what had gone wrong, and after ensuring the team at the bank branch that we would love to bring them more business, they understood that we were as serious about the legislations as they are. They agreed to restart the bank account opening process all over again – a clean slate – without the head of the client’s company having to travel to China again.
While this was time-consuming for our team, it got us connected with the CCB branch team near us, taught us yet another lesson about China’s bank requirements, and reminded us that with friendliness, patience, and a true passion for our field, every problem can be resolved. We are thankful for all of the China Construction Bank team’s time and effort and their dedication to their clients. Even more so we are proud to have resolved this issue for our clients and helped them to the best of our ability.
The trick to why all of these meetings with the managers of the bank’s branch where possible, and ultimately why they listened to us, was for Incorp China’s boss to speak Mandarin fluently. His China experience, consisting of well over 30 years and counting, gave us the insight into what is and what isn’t possible in such delicate situations, and, perhaps more importantly, displayed the legitimacy and seriousness of our business. It showed that Incorp China is helping both Western companies as much as the Chinese economy by bringing them here. We have been here for a long time and are intending to stay. This feeling of stability combined with our China knowledge has helped us more than once in negotiating a great deal for our clients.
Therefore, it is truly important and money well invested to have somebody on the ground in China who can provide this support to your business.
If you are currently looking into expanding or moving your business to China, let us do your paperwork for you so you can fully concentrate on your business. Call us for a free consultation today at +1 (561) 729 6508, or write us an email at firstname.lastname@example.org. We are looking forward to hearing from you.
Nationalities are a way of creating a sense of belonging. As soon as you are born, you are gifted one, sometimes two, nationalities. They play an important part in how you identify yourself throughout your life and they can come with – or prevent – great liberties. The problem with belonging to one nationality is that, as soon as you take a step beyond your mother land’s borders, you are a stranger. It is human nature to protect what we know and recognize and seek distance from what we see as foreign and unknown. Whether executed consciously or subconsciously, this behaviors is deeply engraved in our DNA.
It comes at no surprise, therefore, that institutions within one country make it their duty to protect their own citizens as best as possible from everything and everyone outside national territory. Foreigners are therefore naturally subjects to greater controls, restrictions and more tightly supervised legislations.
Coming to China will illustrate this point precisely. Being treated like this by banks and bureaus is neither meant intrinsically bad nor malicious, but can be very frustrating and drag out simple tasks seemingly forever.
One of our US clients, providing HR services for companies worldwide, was experiencing grave trouble with banks in Shanghai. While we cannot name the exact cause for this problem, it essentially prevented our client to pay their staff in multiple countries as a large part of their profit was stored in the Shanghai bank accounts. Incorp China had the entire team on their phones talking to banks in all time zones – Shanghai, Singapore, the United States and the United Kingdom – day and night. It was our goal not only to find a short term solution and get the client’s staff payed with whatever bank accounts were accessible, but even more importantly, smooth things over with the Shanghai branch and regain access to the client’s account. The issue was resolved, salaries were payed on time and the Shanghai account was reopened for transfers in and out of the country. Incorp China is continuing to look after this client’s staff all over China and helps the individual branches manage their HR payroll processes.
Contact us to find out how we can help you. With over 30 years experience in China, we have the knowledge and passion for the field to support you and your business.
Last week, three Incorp China team members and the CEO, Robert Fisch, headed to the Shenzhen tax bureau to help one of our US clients on shuting down their entity in China. When shutting down a foreign company in China, the tax bureau has to issue a “notice of cancellation of tax registration”’ for the Foreign Trade & Economic Cooperation Bureau. This is a rather difficult and time intensive procedure: The company owner, or a representative thereof, has to physically visit the local tax bureau in order to fill out and hand in the requires paperwork. While some documents are in English, the majority of the procedure will necessarily be dealt with in Mandarin. This highly bureaucratic task involves dozens of different forms that are each tailored to the nature of your business as well as the reason for its closure.
Our team had spent the days prior to our visit of the tax bureau preparing the individual documents. Good preparation, however, never actually guarantees that your paperwork will be dealt with quickly. Often, you will be asked to return with special, additional documents. The Incorp China team knows from experience that establishing a good relationship with employees of the bureau will make this procedure as effective and stress free as possible for both ourselves and our clients.
As we arrived at the bureau we headed to one of the front counters in order to find out who in the building would handle a case like ours. We were directed to an office on the 6th floor. After some chatting and having explained the purpose of our visit, it was obvious we had been directed to the wrong office. A few doors down the hall, the government official was willing to process our case. Our CEO, Robert Fisch, didn’t leave it at that.
He found out who the immediate superior of the tax officer was. This allowed us to talk to him personally and show our respect for his work and his country. Due to Robert Fisch’s fluency in not only Mandarin and Cantonese, but his added knowledge about numerous Chinese dialects, allowed him to prove that he was not just any “laowai” – a foreigner. Showing genuine interest and knowledge about China, builds trust, shows respect, and often gets a chuckle or two out of your conversation partner if you happen to be able to introduce yourself in the respective home dialect. Knowing how to sing a couple traditional, Communist songs has never failed to lighten the mood. After all, people are more likely to help if they know you are a friendly, trustworthy and interesting soul.
The team returned to the office of the official who would be processing our paperwork. After some more chatting and giving face to a couple of his colleagues, we finally returned to the head of the department once again. This last visit was just to ensure that everybody was on the same page. Especially knocking on the head tax officer’s door, a second time proved beneficial. Even though we only came to thank him again for his help, saying our goodbyes and paying respect to how well he is running his department, he immediately grabbed the phone to call his co-workers, who we had just seen a minute ago, to ensure them to process his friends’ request as soon as possible.
Our work was done, hands were shaken and we headed back down to the crowded ground floor. It took us the entire morning but was well worth it. Our clients are getting their paperwork in a timely manner and our office has formed a good relationship with a new department within the tax office for future collaboration.
Incorp China offers special attention to its clients: we are not just sending your documents off to be processed by government departments which we have never seen from the inside. We try our best to constantly create and enforce our relationship with different bureaus in order to provide the best service possible for our clients.
While every business needs to keep a tight grip on their expenses, some investments do truly pay off. One of such investments is hiring a local company in China to represent your business here. Why? Because Chinese bureaucracy and law is of complicated and ever-changing nature. Even more importantly, here, nobody stands a chance doing paperwork over the phone. Doing business face-to-face remains the most effective and respectful after all.
Incorp China was just retained by a Human Resource company based in the US to register their consulting WOFE (Wholly Owned Foreign Enterprise) in China. As part of establishing a WOFE, the company is required to own a bank account at a Chinese bank. Until the recent crack down on money laundering by the central government, representatives were able to open up bank accounts on behalf of their clients as long as an attorney was present.
Now, however, the client himself has to make the request personally, which is not only a time intensive procedure but often impossible, as our clients tend to be based overseas. This issue doesn’t just affect businesses on Chinese main land but equally in Hong Kong. Since Incorp China is a small boutique consultancy our management is able to personally oversee every project we take on.
In this case Incorp China’s CEO, Robert Fisch, went directly to the bank manager’s office to first establish guanxi over tea, talking about their families and personal life, before addressing the issue of the bank account. Having initiated a personal connection, the bank manager instructed his employees to open the account for Incorp China’s client that same day even though the customer could not be present.
While this case reflects the benefits of hiring a local consultancy very well, there is a deeper reason why a company might employ an advisory team for business in China. Rules and regulations are constantly changing in every country around the world. Other than in the Western hemisphere, however, laws made in Beijing when funnelled down to the provincial level, are being translated and reinterpreted differently in every part of the country. Fully understanding the impact of such non-transparent law on individual companies, and arguably even more importantly, knowing what legal changes to expect in advance, is crucial to every successful enterprise. Incorp China’s task is to stay informed and ahead of the game so we can give your business the best advice for its growth and success.
On the Hong Kong side of the border the Hong Kong border commander who made a grand entrance with his two bodyguards greeted our CEO. The initial encounter was rather tense but after tea, good conversation and Mr. Fisch’s ‘renqingwei’ (English interpretation: “human touch/flavor”) he managed to get through to the officer. Since the Hong Kong border commander was seemingly nervous about granting such a great exception, Mr. Fisch called the Chinese border commander to speak to him personally over the phone. With reassuring words the two officers came to an agreement.