Initial Contact

Business cards are always exchanged. If possible, your business card should be in English on one side and Chinese on the other. You give a business card by offering it with two hands. You receive a business card with two hands and spend a few moments admiring it before putting it somewhere safe.

Chinese people go by their family name first (e.g. Smith Joe). It is customary to call senior people by their job title (e.g. VP Smith or Director Smith) and for more junior people in formal situations Mr/Mrs/Miss.

Business Meetings

The first meetings are quite formal. You will be introduced to the most senior person first and move down the pecking order. It is normal that at the start and at the end of a meeting there is “free talk” - general non-business related chit chat. You should expect that for formal meetings there will be a large delegation from the Chinese company.

Although more and more Chinese people are speaking English there is massive scope for errors in the translation. It is quite common for a Chinese person to be able to understand English but not speak it. A lot can be lost in the translation and the nuances of the English and Chinese languages. It is important to paraphrase the main points and any agreements made. For further clarification, minutes of meetings should be published (in English and Chinese if necessary) as soon as possible. The people you are dealing with will use any ambiguity to their advantage in future discussions.

Discussions in meetings between Chinese people are often quite lively and even heated. This is quite normal and you shouldn’t be alarmed when this happens. It is very difficult for a Westerner to “read” how a meeting with Chinese people is going through body language and voice tones and volume. You can experience what you think is an awful meeting only to come out of it find that it was, in fact, a good session.

Chinese Banquets

Eating together is part of developing Quanxi. Important meals are often taken in private rooms of restaurants. The most senior guest is seated at a round table facing the door with the most senior host to his right. The most junior people have their backs to the door. This rule is broken to allow Chinese people that can speak English to mix better with foreigners that can’t speak English. The host will always help with the seating arrangements.

The host will order the food for everyone. The more important the guests are and the more important the occasion the more lavish the dishes are. This means that you could be presented with some unusual food that you would not encounter in the West. If you are served a dish that you are not comfortable with just leave it – it will disappear when your plate is next changed.

Some young Chinese people seem to like playing the “get the Westerner drunk” game. This is done by “campe” or bottoms-up when you have to down your beer in one. The trick is to campe everyone first a few times to get your hosts, who typically cannot hold as much alcohol as a Westerner, drunk before you.

White Collar Crime

White collar crime or corruption is an issue in China. A week does not go by where someone is executed for either receiving or giving a bribe. The Chinese Government is actively trying to clean things up. You will inevitably lose deals that you thought were in the bag because of a bribe by a competitor. The situation is much worse in poorer areas or less well paid companies where it can be seen as a perk of the job.

Formal Contracts

Chinese companies do not put much emphasis on formal legal contracts. Quanxi is much more important. In China business is conducted between two individuals and not between two companies. Drafting a contract early in negotiations is seen as a lack of trust that will damage relationships. A contract does, however, document the common understanding and can be used to avoid misinterpretation.

Payment Terms

China is a very cash based society. Chinese companies often trade on much lower margins than Western companies and cash flow and sales volume in this environment are key.

Also, considering the importance of Quanshi, many Chinese companies demand cash-up front before they will start to work with you (especially if you are new and do not come from China). However, it is often possible to negotiate a down payment and a “letter of credit”. Chinese companies simply do not offer 45 day payment terms to new customers.