General Information about China:

In a fast growing world in times of globalization, convenience and rendition of business is becoming more and more important. Part of this new way of living is a life without dependence on culture difference. The increase in international business and in foreign investment has created a need for executives with knowledge of foreign languages and skills in cross-cultural communication. Americans, however, have not been well trained in either area and, consequently, have not enjoyed the same level of success in negotiation in an international arena as have their foreign counterparts.

In studies of American negotiators abroad, several traits have been identified that may serve to confirm this stereotypical perception, while undermining the negotiator’s position. Two traits in particular that cause cross-cultural misunderstanding is directness and impatience on the part of the American negotiator. Furthermore, American negotiators often insist on realizing short-term goal. Chinese negotiator, on the other hand, may value the relationship established between negotiators and may be willing to invest time for long-term benefits. In order to solidify the relationship, they may opt for indirect interactions without regard for the time involved in getting to know the other negotiator.

This article is written for give an introduction to China’s business and living environment. The purpose of this report is trying to give a clear and convincing picture of five important factors that Americans should know when they are doing business in China. Besides, attached there are ten articles about those five factors which will give you more information.

Economic situation in China

Currently, the Chinese government emphasizes the growth of personal income, and encourage use new management model to increase production. The government also uses foreign trade as a mean to stimulate economic growth. Therefore, there are more than 2,000 special economic zones have been set up in China in 20 years in order to provide more liberal investment policy and better investment environment to attract foreign capital. This policy was very successful, since 1978, the GDP has grown four times and become the world's fourth largest economy. However, because of the population, the China is still relatively poor and is a developing country. According to official statistics, the annual growth in GDP is about 8.7% in 2009, which is still the faster economic growth in the world. Besides, China is one of 22 members of WTO and its GDP reached 1,700 U.S. dollars. In addition to that, from the term of purchasing power aspect, China's GDP has already more than 6,000 U.S. dollars.

On the other hand, there are also some negative aspects in the stage of China's economic development: the gap between rich and poor, unemployment and bureaucracy.

For instance, because Beijing and Shanghai is China’s political and economy centre respectively. This situation leads China to two parts that business activity more concentrates on south part of China, and people who live there are relatively rich. This gap is very huge. One the other hand, the north part of China has large business potential waiting for developing. The Chinese government obviously realized that, it just announced to set up two big special economic zones in order to control this unbalance.

The unemployment is another problem that China is facing. Because of the cheap labor, most of Chinese companies are not willing to pay salaries that the employees expect for. This condition leads to a situation that lots of graduate students cannot find a job or they have to accept the job with low salary.

The last but not least problem is bureaucracy. We have to admit that the bureaucracy in China is very serious. There is a Chinese saying that people should never fight against government official. This saying shows that the company has to strictly under government’s control. It emerged not only that such a job existed, but that it was particularly subject to bribery.

Social Relations

There is a special term for social relation in China is called “Guan Xi”. Some of western people think “Guan Xi” is another term of bribery, however it’s not true. The “Guan Xi” is not only building on the bribery but also on other relationship such as schoolmate, relative, introduced by other people, or even townie.

When Chinese people build good “Guan Xi” with important roles whom can observe in their career outcomes, charge the entire business process, even for long term view, including attaining certain jobs and being assigned to good positions, making a deal in business field and etc. Taking career outcome as an example, firstly, receiving favorable results from evaluation and having the high-quality work relationships with their supervisor. Indeed, most Chinese people make great effort on building trust relationship with their managers, usually display of great dependence and confidence on their managers. They accept manager’s orders and judgments rather than give suggestions and alternatives. Most Chinese people show their respect for managers through expressing fear of being fired and regarding the managers with awe, even flattery. In brief, the large power distance social value is emphasized by both sides—the Chinese managers and subordinators.

Besides, most Chinese people adopt implicit and indirect one-way in direction communication. The Chinese culture is a culture in which communication is highly contextual, communication seems to be a form of art in Chinese context, and it consciously implies a wider communicative expression than elsewhere. In fact, most acts of communication are embedded in the word of Chinese people. Ambiguous and indirect communication is accustomed to be used by most Chinese people when they represent their opinions and demands. Other Chinese people largely depend on these covert clues to speculate their meanings. Besides, one-way in direction communication is applied to foreign subsidiary as well.

Business Negotiation

You may heard some advices for negotiating with Chinese business person, such as bowing, dressing like attending a funeral, giving valued gifts, taking translator with you, even not speaking long sentences, and etc. However, if you want to make your business success, you have also to learn Chinese business style and cultural context. Those suggestions above may help you with one business negotiation, but not for keeping long-term business relationship.

The Chinese negotiator is more concerned the method but result, and progress but objective. This is about Chinese culture. There are some important factors which may influence your business negotiation.

The first one is personal connections. Which has already been mentioned this above. In China, a good personal relationship may not give a help immediately like American does. “I gave up this time, and I am looking forward that one day you give up once for return.” In China, if you helped someone, then this person will always remember that and will offer you a help in the future. However this long-term based personal relationship also brings disadvantages such as if a person gave helped you before, but you didn’t give any kind of return, then your personal relationship will be destroyed.

In addition to that, another element is Intermediary. As the report mentioned before, this intermediary could be a schoolmate, relative, even a townie. The American couldn’t success in negotiation in China without intermediary. The trust is a very important factor in China’s business. “Taking the class together, joining the military together, cutting the melon together” is a Chinese joke says how to make strong relationship with each other. The fact is that, Chinese business person usually is very careful to do business with someone who don’t know before. Then if there is a intermediary could introduce you to this Chinese business person, then anything can be negotiated.

The second key factor is so called “Face”, which related to social status in China. This social status could be given, and taken away. If you give enough “face” or respect to your negotiators, then they will feel very comfortable. Therefore, the negotiation will be much easier than before. “You have shown your respect and honesty, then I can offer other things as return”, that’s typical what Chinese people’s thought.

Differences in Religion

Strictly speaking, Chinese people do not have their own religion. The so-called Taoism in China is only a religious sect, it should not be considered as a belief. Therefore, there are two major sects are Buddhism and Catholicism in China, and also some of minority's religion such as Islam.

So we usually do not have to consider about differences in religion. All government officials should be communist in China. And there is not allowed for communist to have religion. For those private companies, people who have religion are respected by their colleagues. However, if one negotiation failed because of someone’s religion, then he/she will be fired soon. Even though the religion is protected by law, the company cannot tolerate this situation because it can easily find someone else do this job but has no religion.

However, there is one point needs to be noticed is that don’t talk about Tibet problem. Most of Chinese people think Tibet is one of part of China. If you agree with this point of view, you could speak it out, and it will win you a great favour. However, if you don’t agree with this point of view, you should never argue on this in public. It will bring you trouble, which means you are fighting against about 12 billion Chinese people.

Differences in nonverbal communication

Chinese people are not use to kiss or huge each other. Those nonverbal communications are considered an impolite, especially to women. They usually shock hands when they are showing their welcome and greeting. Besides, eye-contact should not be too often and direct. It means disrespect to your negotiator.

Body language is very important for American negotiators. The negotiators form US are very often to use body language when they are doing a negotiation or presentation. However, the negotiators from China has the famous "deadpan", and nearly don't use any body language. That's because people who come from the conservative culture discourage to show their emotion in public. They regard showing emotion in pubic as a childish and an immaturity.

Another thing which needs to know is about social status. Chinese people follow rule of “elder people first, and ladies first” in any situation including meeting, dinner, and etc.

The last but not least, be dressed formally when you are attending a business meeting. An informal dress is considered as disrespect in China.