Doing Business in China

MGT 210
 Business Culture in China
• Second largest economy and exporter in the world
• Chinese government is steadfastly following a policy of
internal economic consolidation and international
engagement
• In China everything is possible – but nothing is easy
• Before starting to do business in China get an
understanding of the cultural drivers and expectations
of your Chinese contacts
• China is a land of opportunities but it is also a land of
potential bear traps
• Many state-owned enterprises governing the financial sector
• Confucian society
• China scoring a low ranking of 100 on the Index of Economic
Freedom and 78 on the World Bank’s ease of doing business
index
• Corruption, non-tariff barriers and the prevalence of state-
owned enterprises, limit foreign investment and all make
doing business in China more difficult
• A growing middle-class
• Understanding Chinese culture is exceptionally challenging
 Business Structure
• Simple structure
• The traditional Maoist approaches
• Under the Communist regime the most important structure
to which an individual was linked was his or her work group
• Many overseas companies do business as joint-venture with
a Chinese organisation
• Product compatibility may be less important than
connections; cost may be less important than access to a
skilled workforce
• personal connections are important in business
 Business Management Style
• All relationships are deemed to be unequal
• Ethical behaviour demands that inequalities are respected
• Confucian approach should be seen as the cornerstone of all
management thinking
• Management style tends towards the directive
• Manager should be seen as a type of father figure
• Senior managers have close relations to the Communist Party
and many business decisions are likely to be scrutinised by the
party which is often the unseen force behind many situations
• Emphasis on any company’s recruitment and retention policies
• Modern companies select loosely structured
management systems, which can process new
information quickly, and managers who can
act independently
 Management style
• People oriented
• Common goal
• Adaptable management style
 Business Meetings
• important to show respect to those to whom respect is due
• Respect should be shown to age, seniority, party membership, the
history and traditions of China, political sensitivities, the company,
the region…
• Treat the business card with great respect
• Handshaking is the norm
• Lowering the eyes as a mark of respect
• Involved in a series of meetings rather than one big meeting
• Meetings are about building relationships and exchanging
information – it is rare for a decision to be made within the meeting
• giving of gifts is common
 Communication style
• speak Chinese
• Saying ‘no’ causes both embarrassment and loss
of face
• bad news often done through the use of an
intermediary
• very limited amount of visual body language
• Changed dress code in to western styles
• Successful people are expected to look successful
• Chinese companies teach us management’s
current imperatives: responsiveness,
improvisation, flexibility, and speed