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7 Things You Need To Know When Starting a Business in China
Starting a business in China can become quite challenging to most companies and firms of foreign origin. If your business is Western, you might find almost total opposite. Business owners find themselves getting the advice of a Chinese consulting firm. It is the most obvious method to follow as these consulting firms know the ways of the complex business system in China. You might find that the legal structure is unique and it isn’t like the legal structure you are used to.
China has a handful of laws and regulations that are concerned with the treatment of employees. It includes the Labor Law, Regulation on Labor Management of Sino-Foreign Joint Ventures, Regulations on Labor Management of Foreign Funded Enterprises, and Regulations on the Control of Resident Offices of Foreign Enterprises. There are also separate standards and details that are dedicated to minimum wages, holidays, and working conditions. Additionally, they also have another set of regulations that are applicable to foreigners working in China.
It can become a hassle on your part to be doing the research and doing all of the necessary requirements to register your business in China if you choose to do it yourself. Plus, you run the risk of violating a couple of these regulations most probably because of linguistic difference. To avoid this, it is wise to hire a company like NNRoad to help you.
NNRoad is a one-stop shop for all your business needs. They offer all the services necessary to start a business from scratch in China. They are very knowledgeable when it comes to how to do business in China. So, when you choose to work with them, you are assured that everything is taken care of down to the littlest detail. You don’t have to find another company like NNRoad because they already have everything that you need. NNRoad makes sure that you can focus on what is more important for your business while they work on what is important to keep your business running smoothly in China.
However, it is important that while NNRoad is doing their part for your business, you should also be knowledgeable with some of the protocols and etiquettes when doing business in China. This is most especially important if you start hiring Chinese employees or dealing with other Chinese business owners. You don’t want to put everything that you and NNRoad worked so hard to waste, right? Here are some of the things you must take into consideration when you do business in China.
- Communication Differences. Unlike the Western culture, Chinese people can become quite timid and they are inclined in indirect communication. As an example, “yes” and “no” can have multiple meanings depending on the non-verbal cues that are accompanied with it. Oftentimes, when there is a disagreement, Chinese people wouldn’t normally directly reject and say no. They would water it down by saying, “Well, yes. That might be a good idea but I’d have to think about it carefully.” You may think that they would really think about it but that statement will suggest a strong NO in the Chinese setting.
A direct and straight “NO” for an answer is considered disrespectful and offensive to the other party. This also applies to you when a Chinese person presents an idea to you and you want to disagree, indirectly pointing it out would be better than being up straight.
Another example of how different the Chinese culture is, is when you call them for a business meeting and offer them tea or coffee. They would most likely refuse and provide some sort of an excuse. But, in reality, they’d really appreciate some drink. Chinese people are brought up with the teaching that it is always good to be polite to the point that they have to be asked at least three times before they should accept the favor.
- Business Meetings. In Western countries, time is of the essence and when setting an appointment, being late is always discouraged and it is considered disrespectful to be even just three minutes late. Also, arriving too early can be inappropriate in the Western setting. However, in China, you’d only get a simple, “Call me when you arrive,” instead of having a specific time, date, and place for the appointment.
- Wine and Dine. Another difference between Chinese people and Western people is their practice when it comes to arranging business trips and meetings. When a Chinese businessman has to go abroad for a business meeting, they often wouldn’t have a specific agenda other than the specified meeting. And, when their business is done, they would most likely spend the rest of their trip sightseeing and being a tourist. Westerners on the other hand would have every little detail planned for their entire business trip.
When you do business deals in China, you should be ready for invitations to fancy fine dining restaurants or luxurious banquets from the host. Drinking is a requirement at every business meeting table between business owners. However, if you do not drink, you should politely inform the Chinese host so they could skip the drink on the table. Being offered a toast and then refusing to drink might cause miscommunication, most often putting the business opportunity on the brink of failure.
Meals in China are served on a big table and are referred to as “family style”. This means that they are served in large amounts for sharing like how Chinese families would dine in their own homes. Oftentimes, there will be food leftovers and Western people might see this as being wasteful but for the Chinese host, it will be considered as good hospitality.
As an addition, Chinese hosts may invite guests to a karaoke session. Karaoke might not be that common in the West but it is quite famous in China. If you can’t sing, you can just sit and enjoy. But, sometimes, you can just break free and have fun with your Chinese host by singing your heart out and having fun.
- Mian Zi or Face. Mian Zi in Chinese refers to the social reputation, prestige, and credibility. Face is quite a big thing in China. Losing it is worse than being publicly embarrassed. You can think of Mian Zi as some sort of “points” that you gain and lose. For example, in a meeting with a Chinese CEO, you can “gain face” by saying words of praise about the company and the CEO. No matter how much a Chinese person earns, he or she will spend all the way for a high-end phone just to gain face.
At the end of the day, the Chinese people will prefer those who have a high value when it comes to their “face”. They value reputation and credibility more than all the things that your business proposal might have to offer.
- Closing Deals. The Chinese culture takes time to build relationships, rapport, and trust before they could make business decisions. Western people will have pre-planned terms before they go to a business meeting. But, a Chinese businessman would try to negotiate the terms of the deal and they could take more than a few days or even weeks to process it and finally close the deal. Also, you should be ready for what will happen after the contract has been agreed upon and signed. Most Chinese people will try and negotiate with you to modify the terms of the deal.
- Casual Dinners. Sometimes, out of courtesy, the Chinese host will invite you over for dinner or lunch. Commonly, Westerners will find this as an opportunity to discuss business. But, for the Chinese, meal time is supposed to be for fun and for building trust and relationship.
It is quite disrespectful to be invited for dinner with entertainment and then you start to discuss and talk business with them. It will cost you the whole business deal. Not only that, they would paint it against you and they’d lose the trust and relationship you built so far with them.
- Gifts. Unlike in Western countries, giving and exchanging gifts have become customary in most Asian countries, especially in China. They rarely come to an appointment empty-handed. Red packets or “hongbao” are regularly given in China on many occasions like birthdays, graduations, funerals, weddings, New Year’s, and even when visiting someone admitted in the hospital. Hongbao is the money placed inside a small red envelope. For Westerners, it is considered offensive to give money as a gift. But, for Chinese, it is perceived as an act of courtesy and kindness.
If you want to impress and “gain face” with possible Chinese investors and business partners, try bringing something from your country. It can be simple chocolates or candies. Or, you can bring a unique souvenir that can only be found in your local area.
If you take note of these etiquettes, your business in China will just run smoothly. Of course, that is with the guidance of NNRoad who made it possible for your business to operate in China with their one-stop shop complete services when it comes to global HR.