5 Tips for Doing Business in China

Friday, August 8, 2014 - 08:47

Guest post by Dr Celina Yu

Are you looking to win more Chinese business clients? Many Australian managers are becoming more interested in doing business with Chinese companies. However, this requires a greater level of skill and familiarity in interacting with Chinese people. Here are five tips to help you understand the differences in the way of thinking between Australian and Chinese, and win more Chinese business clients.

Business is a long term proposition

Australian business managers are well-known for their friendliness and informality. These qualities are attractive to many Chinese companies which value long term relationships. However, Australian business managers are often focused on establishing business to business relationships that are more transaction based, whereas Chinese relationships are more personal.

When working with Chinese business people, it is very important to understand that developing long term relationships is generally viewed in China as an essential part of doing business. Many Chinese business leaders and managers will only do business with you if you have established a reliable and trustworthy relationship.

Network first, negotiate later

Australian business managers may feel confused when their Chinese counterparts take them to fancy restaurants, luxury short sightseeing tours, and give them special VIP treatments. It is even more confusing when Chinese clients do not discuss business. It is important to recognize that the Chinese custom is to network first and negotiate later.

Just be mindful that in China, relationships are the key to doing business. If you are not part of the game, you are not likely to be trusted. Of course this does not mean that the Chinese are not tough negotiators when they are involved in serious discussions of price and quality.

Chinese are pragmatic

Australia has a much more mature and regulated business environment, whereas in China there is generally poor law enforcement and underdeveloped commercial and legal institutions. As a consequence, Chinese managers have tended to trust their instincts and their strategic networks to protect their interests and minimise the chance of losses. This means that spending a lot of money on lawyers and accountants is likely to be less effective than simply keeping good relationships. As a result, Chinese managers tend to be flexible and adaptive whereas sometimes Australians can be too focused on rules and regulations.

Identify who is the true decision maker

Identifying who is the true decision maker is the key to achieving a successful deal in any culture. The role and responsibilities of Australian managers are often understood by co-workers in their organisation. Everybody knows who makes the decisions. Australian managers, in other words, have clearly defined positions and delegated authority is easily understood and transparent.

For Chinese companies, the capacity of managers to make decisions is based on hierarchy. Irrespective of who is the most active participant in negotiation and who is actually implementing a particular project/task, if the “big boss” has a strong personal relationship, then all other people in the company need to fall in line.

For Australian managers, it is important to find out who is the decision maker. To win more business, you may need to ask more questions to find out who is the true boss.

Hire a well-connected Chinese executive

In Australia, local companies have the opportunity to meet many top Chinese executives.  You could win more business by hiring bilingual Chinese employees. A well-connected English and Chinese speaking employee could easily bring with them a new client base and relationships. You could gain substantial profits by tapping into the booming Chinese economy. This way will be much more effective than other types of direct or affiliate marketing to China.

So, if you are looking to grow your business and thinking more about opportunities outside of Australia or even within Australia with Chinese business, then take note of the above five helpful tips. Remember most of all that Chinese companies can present great business opportunities and even more you may gain successful, profitable and lasting friendships. If not, at least you know some of the basic rules for doing business and wining more Chinese business clients.

Celina Ping Yu is the first female president of the Victorian Association of Chinese PhD and Young Scholars which has a membership of more than 350 Chinese professionals and young scholars working in Victoria. She had developed and led groups of Victorian professionals on several trade and entrepreneurial visits to China in programmed events including business matching meetings and industrial site visits.