The Global Leader: Understanding Chinese Business Culture and Business Practices

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Discover a number of the most important Chinese business practices, etiquette, and customs that are different from those used in the West.

Even people who speak the same language often misunderstand each other. This was illustrated in the following story.

A man walking down the street noticed a sign in the window of a restaurant that said, SPECIAL TODAY–RABBIT STEW. He said to himself, “That’s a favorite of mine,” and went to order the stew. After he had taken three or four bites, which did not taste right, he asked the waiter to call over the proprietor. “By any chance is there any horsemeat in this rabbit stew?” the customer asked. “Well, now that you ask, there is some,” replied the owner. “What is the proportion?” asked the man. “Fifty-fifty,” came the reply. Now most people would have felt that no further questioning were needed, that there was a clear understanding. But this man pursued the issue. “What do you mean by fifty-fifty?” he asked, and the proprietor replied, “One horse to one rabbit.”

There was a famous story told by Winston Churchill about an argument between American and British military officers during WWII about the planning of what came to be known as D-day. The British wanted to “table it.” To the Americans that meant to delay the matter until later-to the British it meant deal with it now.

Unfortunately, there is an even greater potential for Chinese and Westerners to misunderstand each other due to different culture and business practices. To understand why that occurs, it is important to know some of the major differences underlying how people in the two cultures think.


Understanding Eastern and Western Thinking Patterns

It’s important to realize that one of the more subtle aspects of culture and business etiquette has to do the way one thinks about how the world. The following table presents some of the differences between how the Chinese and the Western individuals think about culture and values.

Cultural Values



(America & most European countries)


(The Chinese and Most Asian cultures)

Type of Logic

Linear (More causal relationships and direct associations between A and B) Spiral (more roundabout and subtle)

Expression of Agreement and Disagreement

More argumentative, willing to express disagreement verbally More difficult to say no even if one means no, disagreement expressed nonverbally

Communication of Information

More meaning is in the explicit, verbal message.

Use of direct language

Meaning is often implied or must be inferred

Use of indirect language patterns

Expression of Honesty

More overt, one is more likely to ask the person to “speak their mind” or “get it out on the table”

Subtle, nonverbal

Expression of Self





Thinking Orientation

More rule based or based on application of abstract principles such as regulations or laws Tends to take context and the specific situation into account in rule interpretation

The Individual

Has to have rights and greater need for autonomy and individual achievement

Group duty

preservation of harmony

Nature of the Business Relationship

Less important, tend to substitute relationship for written agreement, superficial, easy to form, not long lasting Most important business cannot occur until relationship if sound, written agreement secondary to quan xi, hard to form, long lasting

Conflict Resolution

Trial or confrontation, use of lawyers and courts More mediation though trusted third parties

Time Sense During Meetings

Be on time and end on time. Appointments less driven by exact start and end times

Conflict results

Perception of two states: win or lose


To lose is to win

Lose in order to win



The Importance of Business Customs or How To Blow a Business Deal

This different culture world views cause a great deal of frustration and distrust between the individuals attempting to work together. Three examples are listed below.

• A businessman went to Taiwan to close a deal with the president of a large paper company. Since they were meeting for the first time, they started out with the normal pleasantries such as “How was your trip?” etc. It turned out the businessman happened to be from Columbus, Ohio, the home of Ohio State University. When the president of the Taiwanese company mentioned that his son was going to this school, the business person then said, “Yes, it’s a very good school, let’s talk business.”

• A while back, two dotcoms wanted to establish business relationships with potential tech partners in Singapore. Through the intercession of a couple of savvy Singaporean’s, an initial meeting was arranged to determine if there might be some areas of commonalties. The two companies chose as their representative an American lawyer.

• During the same trip, another dotcom company had sent their business development person to meet with Singaporean counterparts. Meeting followed meeting and at the end of the week things looked very promising. Both sides were very pleased at the progress and the potential. Then, two weeks after coming back to the U.S., the contact person was promoted to a VP position and a new person took over.

If you missed the point of these stories, one probably doesn’t understand certain culture values such as lianzi & mianzi and guan xi.

Americans quickly establish business relationships, but there relationships are generally shallow and not particularly long lasting. Throughout the Orient, it takes time to develop the relationship, but once it’s developed, it tends to last for a very long time. This simple observation means that Americans and some Europeans tend to lose out on business deals.

It is also a fairly common practice for multinational corporations to rotate people through a country every two or three years. Of course, once that expat leaves, they take with them relationships it took months and years to cultivate.

To make matters worse, many companies tap employees who are experts in technical or management matters as their overseas managers. However, a recent study finds other skills vital for success.

Prudential Relocation, an arm of Prudential Insurance, asked 72 personnel managers working for multinationals to name the traits required for overseas success. Nearly 35% said culture adaptability, patience, flexibility and tolerance for others’ beliefs. Only 22% of them listed technical and management skills.


Elements of Chinese Business Etiquette

A common mistake business people make before going overseas is not making an effort to understand the basics, such as how to make a positive first impression. These first impressions are based on etiquette and greeting rituals that vary for different countries. The business etiquette associated with the wai in Thailand, the bow in Korea and Japan, and the handshake in the West when done properly create a good first impression. When done wrong, one potentially botches the relationship in the first 30 to 60 seconds.

Unfortunately, creating a positive first impression is not enough. One should also have an understanding of the following aspects of Chinese business etiquette:

• Gift giving
• Greeting rituals
• Business relationship development
• When to display emotions
• Time perceptions
• Differences in decision making and problem solving
• Guest-Host relations
• Negotiation styles
• How to use intermediaries
• Meeting customs and conduct
• Use of the names, titles and business card presentation
• How to establish relationships with government officials

Finally, according to Mark Buchman, who teaches a class called “Doing Business in the Pacific Basin” at UCLA, there are five principles (The 5 Ps) that one must keep in mind to successfully deal with different business etiquette in general. They are:

1. Plan. It doesn’t have to be the 60-page bulletproof version one would present to the venture capitalists, but there has to be something written that all agree on. It’s critical to define the fundamental opportunity, your competitive and marketing strategy, and its tactical components.

2. Persevere. It’s not easy to do business there, so don’t give up. Many sound business concepts fail when the company loses heart too early in the process.

3. Patience. If you are a financially driven company that sets high hurdle rates with short-term payback periods, you will give up too early and lose the investment or not have the guts to try.

4. Personal Relationships. Something generally considered *not too important for most task oriented managers is extremely important in Asia.

5. Perfection. We are bound to make many mistakes. Learn from them and don’t make them a second time.

To those five, I would add a six principle, “Prevention.” As Ben Franklin once said, “An ounce of prevention is worth a pound of cure.”

Our greatest enemy is our own ignorance. If we don’t take steps to understand the subtle aspects of Chinese culture and business practices, we will most likely never experience the sweetness of success


Chinese Business Practices and Cultural Resources

Legacee has put together a number of resources to assist with the culture side of market entry.

a. We have put together a number of books on business and business strategy to help the business traveler. These include books such as:

  • Doing Business in Asia: The Complete Guide
  • Digital Dragon: High-Technology Enterprises in China
  • China Dawn: Culture and Conflict in China’s Business Revolution
  • Passport China: Culture and Conflict in China’s Business Revolution
  • Business China: Your Pocket Guide to Chinese Business, Customs and Etiquette
  • Doing Business in China: A Practical Guide to Understanding Chinese Business Culture
  • Cowboys and Dragons: Shattering Cultural Myths to Advance Chinese American Business
  • Chinese Business Etiquette: A Guide to Protocol, Manners, and Culture in the People’s Republic of China

b. There is also coaching and workshops for the side of things not easily learned from the books.

c. We can also refer you to experts here and in other countries for individualized coaching or training.

According to Andrew Kwok, a consultant with many years of experience in this field:

Guan xi (connections/relationships) is a very important element in doing business in China. Being introduced by even midlevel government bureaucrats can give you a head start in the trust building process with your potential Chinese partners.

Bring lots of business cards when visiting China. Don’t be afraid to offer your business card. Chinese people love to exchange business cards. Chinese names are traditionally written with the last name first and other names second.

In recent years, the Chinese government has been aggressive in launching various campaigns against bribery and graft. However, bribery and graft are still problems. It would be best to establish your reputation and avoid being involved in such behavior at the beginning of the relationship.

Do not give lavish gifts. It may be seen as a bribe. Never give clock as a gift. The words “give you a clock” sound similar to “attending your funeral”.

Do invite your host to a meal. The Chinese people love elaborate meals. If you invite the General Manager of a company, do expect him to bring along a couple of deputies and assistants to the event. There will be a number of toasts throughout the meal. You are expected to make at least one toast to the most senior member of the Chinese party.


Cultural Resources For the Business Traveler

Chinese Culture

A great site that discusses the numerous aspects of Chinese culture.It contains lists of over 700 web sites organized into many different categories of subjects that include: About China, Feng Shui, Proverbs etc.

Taiwan Business Customs, Practices, and Etiquette

Here you will find a series of reports on Chinese (Taiwanese) business customs, etiquette, cross-culture communication, negotiating tactics, business culture, manners and business entertaining.

Chinese Historical Images

For the person who enjoys learning from pictures: the site contains a number of very interesting pictures from modern and ancient China. The site is organized into sections that include: maps. archaeology, art, divinities, people, historical sites, historical illustrations, technology, customs, and stereotypes.

Chinese Historical and Culture Texts

One cannot understand a Chinese culture unless one also is familiar with the classic texts that shaped this culture. The site contains a large number of translations to for classic texts of Chinese literature. It’s organized in categories that include:

  • Confucian philosophy including the Confucius and Mecums,
  • Taoist texts from Lao Tse and Chuang Tse,
  • Short articles

The Art of War

Of interest to many business people is Sun Tzu’s classic, The Art of War. Many Chinese read the book for its insights into business, it’s customs and practices even though it was written almost over 2500 years ago.

China Business Sites

A very complete listing of China and Chinese Related Business and Economic Information.

The Society for Intercultural Education, Training, and Research

This is an organization which aims to enhance awareness of intercultural issues in education, policy-making, and business, to facilitate communication between people of different cultures, to provide professional expertise in culture issues, to develop standards for interculturalism, to promote exchange of ideas and experience in the intercultural field. This site provides newsletter with great articles regarding intercultural issues.

Intercultural Relations is a free online interdisciplinary resource designed for the interculturalists around the world who study, teach, train and/or research in cross-cultural psychology, cultural anthropology, intercultural communication, multicultural education, race/ethnic relations (sociology), multicultural literature, sociolinguistics, international business and other related sub-disciplines. This site provides researchers and teachers to keep up with relevant developments (research results and methods) in other related intercultural relations disciplines, and also help to promote efficient research and effective teaching and training in intercultural relations (ICR).

Chinese Cultural Classics

This page contains a list of classic Chinese books–many of them available in English versions.


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