6 things to pay attention to – Working with Chinese Companies
In the past two decades China has been the focus of the world’s business.
As we move into a global downturn in consumer spending and uncertainty in future production many companies are seeking to improve business relationships in the East and streamline their costs and resources.
It will require a new level of negotiation skills to speedily re-align production and here we talk about six things to watch out for on that journey.
Language can play an essential role in bridging international relationships, it can also be hugely important in creating insights into the subtleties of cultural drivers and dividers. Expectations are either met or misunderstood through language. Avoiding cultural misunderstandings which can hamper deals and harm working relationships is, of course, vital.
Understand the meaning of face
The concept of “face” is one key aspect of Chinese culture.
Face is a mix of public perception, social role and self-esteem. It has the potential to either destroy or help build relationships. A Chinese person always wants to save face, never lose it.
Paying great attention to social ‘ranking’ is one vital way to keep face, especially when it comes to company directors. Attending meetings, accepting invitations, showing respect to elders are examples of what you can do to save ‘face’.
Management systems in China are based on hierarchical values, often more pyramid in shape, than flat in structure. They tend towards ‘tiers’ of management, with senior management giving instructions to the junior ranking staff.
Even though hierarchical business structures are slowly becoming less prevalent in Chinese business culture, a less senior member of a team will not usually question a superior business colleague. More often than not, they will choose to stay silent, than offer to speak up and put forward a different opinion.
Business negotiations can sometimes take longer to solve using these cultural biases. Knowing who is in charge is key and it helps to have access to company management when you are in need of a quickfire solution.
Indirectness in communication
Chinese people normally communicate very indirectly. Strong negative statements don’t go down very well as they often become offended, so dealing with a problem is a lesson in subtle communication with a nod towards Confucious.
On the whole it is incredibly difficult for a Chinese person to say NO, even if they mean no. Disagreement is often implied, otherwise it causes embarrassment. It is therefore better to agree with things in a less direct manner, like, “maybe next time”, “I am not totally sure”, “I will think about it”. This is what they say when they refuse to do something.
Unlike the West where deals are based on and covered by legitimate contracts that clearly clarify the liabilities of all parties, in China people tend to work with the companies they know or are familiar with. Trust mainly comes from the personal or existing relationship, although an unofficial contact may be signed as well which is more for formality.
There lies the risk that companies will promise everything and say yes to anything in order to win the business but when an issue occur they will try and free themselves from obligation.
Therefore, it is crucial to always get a lawful contract signed that is valid inside Chinese jurisdiction to cover a business interest in case something goes awry.
Value your supplier as partner
In China, there is a famous marketing slogan the “Customer is God”, or the ‘Customers are Your Parents’ It’s not unusual that suppliers are bullied by their customers with late payments and severe terms. This type of bullying tactic doesn’t lead to long term business satisfaction.
Remembering that without a Chinese supplier a business will be unsuccessful. Developing strong supplier relationship can be as important as relationships with the consumer. There is always a balance to be struck which allows for fairness. Taking a professional and respectful approach with a supplier will often yield far greater long-term results, allowing for a win-win mentality.
Treating a Chinese supplier as a partner with decency and dignity and building a two-way and timely communications structure will without doubt reap its rewards with reliability and loyalty.
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