How to save face in China

Update:27 Feb 2007

To negotiate the booming Chinese economy, understand the people. Tom Pattinson, editor of Time Out Beijing, offers some insights.

The case for doing business in China is overwhelming: there are about 100m middle-class people in the country capable of buying mass-produced goods and around 14m already in the market for luxury items. By 2010, the number of middle-class consumers is expected to reach 200m. The luxury-brand market is growing at a rate of approximately 60 per cent year on year.

Due to the abundant and cheap labour force, many companies are entering the Chinese market to manufacture for re-export, which can be up to 10 times cheaper than manufacturing in the UK. But be warned ?? the lack of intellectual property rights means that if your company relies heavily on a unique idea or product, you need to think carefully about how you will protect it. You may find somebody nearby starts selling the same widgets for a couple of pence less per unit.

It's important to think about where you want to be based. For the textile and garment industries, the hubs are Shanghai and Zhejiang. Automotive trade is mainly located in Beijing, Shanghai, Guangdong, Anhui and Chengdu, while light manufacturing is found in Guangdong, Shanghai, Jiangsu and Zhejiang provinces. For high-tech companies, Beijing, Shanghai and Hangzhou are the focal points but many electronics firms are in Shenzhen and Guangdong. Most food processing goes on in Qingdao and Shandong province.

Service industries are also beginning to take off in China. The demand for good international legal teams, advertising and public relations firms, as well as insurance and estate agencies, is increasing.

Before you go: Unless you are a Chinese passport holder, you will need a visa to gain entry to mainland China. Go to the Chinese embassy website (www.chinese-embassy.org.uk) to download a business visa application form. For British citizens, visas cost £30 for a single entry, £45 for a double entry, £60 for a six-month, multiple-entry visa and £90 for a 12-month one. UK passport holders can stay in Hong Kong for 180 days without a visa.

Etiquette: Stock up on business cards before you go. If you can, get your name printed in Chinese on the reverse of the card. Ask a Chinese person to help you or visit www.mandarintools.com for a sensible Chinese name based on your own. Everybody you meet in China will hand you their name card. It should be taken with both hands and read thoroughly before being put in a safe place or on the table in front of you.

It is always a good idea to go prepared with a gift. The value of the gift should depend on the position of the person you are meeting. Stay away from clocks, white flowers and green hats, this would be the same as wishing them an early grave.

Eating and drinking is much more a part of Chinese business culture than in the West and you will find deals are made and broken at the dinner table. To gain some serious ??face?? (respect), wait to be seated ?? the host will tell you where to sit. Don??t start eating or drinking until the host has given the go-ahead. Don??t ask for rice as you would be implying that the feast your hosts have laid out is inadequate.

Drink slowly and try to stick to beer, rice wine can be lethal for a first-timer. Your hosts will toast you and expect you to ganbei (drink your glass dry).

Culture: Chinese people are hospitable; they regard friendships and business partnerships as long-term investments. The concept of face is important ?? do not try to make somebody lose it. If somebody makes a mistake, is embarrassed or humiliated, they lose face. Avoid direct confrontations, contradictions, raised voices, losing your temper and putting people on the spot.

The most important aspect of doing business in China is probably guanxi, meaning connections or who you know. You will find companies and individuals do business with people they know and like, which may mean the best firm loses out if they don't have the right guanxi. Taking clients and contacts for dinner is one way to build up yours.

Traps to avoid: Before you set off, make sure you know who you are meeting and set out the trip's objectives clearly. Don't choose a potential business partner simply on their ability to speak English.

Corruption is endemic in China, from top-level officials to office juniors. It's incredible how many Chinese companies have terrible senior management who are unskilled and incompetent. Many firms would rather hire somebody they have guanxi with than the best person available.

The good news is that there is slow progress. A vice-mayor of Beijing, in charge of the 2008 Olympics building programme, was recently sacked for being corrupt when a western businessman called in the authorities after he was ordered to pay a bribe.

Hotel choice: The Peninsula, Beijing (http://beijing.peninsula.com). Located in the Wangfujing shopping district. Not for the budget traveller but expect service that's second to none.

Westin, Beijing (www.starwoodhotels.com/westin). Modern hotel in the city's financial centre, with meeting space and facilities to suit the tech-savvy business traveller.

The Shangri-La, Hangzhou (www.shangri-la.com). Its lakeside setting makes this a pleasant place to socialise. The hotel, with 382 rooms, has a modern business centre and an auditorium.


SOURCE: Time Out Beijing

From the Editor

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