Doing Business in China

Doing business in China is different, and if a businessperson conducts business in China the way he or she might conduct business in the western world, then there would be conflicts.  For instance, the Chinese place a lot of importance on the concept of gaining or losing face, which is similar to what westerners would call pride or reputation.

In any business interaction in China, it is just as important to save, or even gain face, as it is to ensure that the counterpart doesn’t lose any face.  In other words, there is little room for error.  From handshakes to eye contact, meal etiquette to after-work socializing, respect for superiors to exchanging business cards, the Chinese have different customs—and acting by western traditions hinders business relationships.

As founders of A4M group, we have, however, succeeded in navigating this different culture during the 15 years that we have been living and working in China.

From our experience with setting up different types of business in China, working with Chinese suppliers, with Chinese employees, and for Chinese clients, we have extrapolated the following tips for people planning to start a business in China:

1. Choose the Right Location

There are three great choices: Shanghai, Beijing, and Guangdong.  Shanghai is the home of most of the operational headquarters and multinationals, Beijing is home of the elite business people, and Guangdong is the most factory-intense area in China.

In Guangdong, there are Guangzhou, and Shenzhen.  In Guangzhou, they focus primarily on chemistry, machinery, food, electronic equipment, metal production, and biotechnology, while in Shenzhen, there are massive gaming and software companies.

2. Setting up a Company

The process of getting licenses from the government, which once took months, can now take a matter of weeks.  Make sure you work with local lawyers and accountants. That’s the most important tip—the locals have a much better understanding than even the biggest multinational firms.

3. A Few Points of Insider Advice

Watch out for deception.

The Chinese are far more familiar with deception in business deals than westerners, so westerners need to be extra careful.  What might be considered disingenuous or wrong in your business culture might be a standard business practice in China.  Understanding how Chinese business people think is paramount.  Many westerners learn this lesson the hard way.


4. The Language is not the Biggest Barrier in China

Most businesses have translators, so an English speaker, for instance, can have a conversation with a Chinese speaker.  Language difference is not the problem when communicating—it is making sure that what is said is understood clearly by both parties.  For this reason, it is wise to ask the same question in different ways to make sure you’re being understood and invite the listener to summarize the conversation, to ensure mutual understanding. Merely repeating yourself, or acting as a teacher would be considered rude, unless if you choose to do so, do it tactfully.

5. Choose a Strategy per Region

China is huge.  It is economically and culturally diverse. Thus, you must treat different regions as if they were in different countries.  Just as your business strategy for Germany would be different than Spain, so should your strategy for a northern province in China be different than your approach for a region in southern China, for instance.  Make sure you research regional differences before you begin.

Choose to Work with the Best:

A4M group has had a great experience navigating the business culture in China.  We understand the culture, the people, and the way of business. For that reason, we’ve established lasting relationships with our manufacturers, and we understand how to help you enter China and realize your production goals smoothly and efficiently.