The most populous country in the world, The People’s Republic of China has emerged over the last 30 years as one of the world’s leading political and economic powers. At the same time, etiquette and ceremonies still form a key part of Chinese culture. The unique character of the Chinese is built on a strong sense of pride in their ancient history and culture. Understanding Chinese cultural, ethical and business values is vital for any organisation doing business in today’s rapidly changing and growing China.

China in Focus

The People’s Republic of China is the world’s largest country in terms of population (approximately 1.3 billion people, according to the National Bureau of Statistics of China, 2012). The Chinese government is a one-party socialist state, controlled by the Communist Party. There are 22 provinces, five autonomous regions, four directly governed municipalities and two special administrative regions known as SARs – Hong Kong and Macau.

Over 90 percent of the Chinese population are ethnically Han Chinese. Officially, 56 different ethnicities are recognised by the Chinese government. Standard Chinese, also known as Mandarin Chinese, is the main official language and is spoken by about 70 percent of the population. Seven additional regional languages are also recognised.

According to the IMF, China now has the world’s second largest economy at approximately US$8.3 trillion as of 2013. The IMF also reports an average GDP growth of 10 percent for the past 30 years.

Core Cultural Values

• Mianzi – The concept of mianzi, or face, is important throughout China, and should never be underestimated. Face can be defined as an expectation of the level of personal dignity or respect given to someone due to their status, reputation or other position in society.
• Guanxi – The concept of guanxi can be described as building, nurturing and leveraging a network of relationships. These relationship networks are interdependent and are the ‘glue’ to Chinese business and social culture. Knowing the right person in the right position is generally more important than your level of experience or expertise.
• Confucianism – Dating back to the 6th Century BCE, Confucian philosophy has played a major role in the ethics and behaviours of Chinese cultures. Key Confucian values that have particular significance in business environments include relationships, humility, responsibility, obligation and loyalty.

Important Business Values

Face first

Face cultures expect all business contacts, including overseas visitors to recognise the importance of saving face and giving face above and beyond all other behaviours. Individuals from a culture which values face will generally go out of their way to avoid a situation that causes embarrassment or shame. They may also avoid or sometimes even deny blame if they consider it to imply a loss of face. Visitors to China should note that it would be nearly impossible to do business with someone who does not trust you to respect their mianzi or who could cause them to lose face.

Relationship building

Business visitors to China should never underestimate the importance of establishing and maintaining their own network of connections and business relationships, as they will be vital to any chance of getting business done successfully. Nothing works as well as face-to-face visits, with good channels of communication kept open in between visits. An emphasis on socialising, whether on the golf course or in a karaoke bar, are all important business tools. In the early stages of business development in particular, relationship-building activities may be more important than completing tangible tasks or progressing through a project plan or forecast.

Establishing trust

Whilst most visitors will inevitably always be regarded as outsiders, strong connections that are honoured and respected will go a long way to establishing trust between the visitor, their Chinese counterparts and their wider network. For example, initial business meetings should be established through a connection or a referral as ‘cold calling’ would usually be treated with suspicion. Recognition of your Chinese counterpart’s status and demonstrating consistency in your behaviour also fosters trust.

Getting things done

Organisations doing business in China should expect things to get done only after prioritising face, relationship building, and establishing a level of trust. In addition, Chinese businesses as well as the Chinese government typically have a long-term mindset, especially as compared to most Western organisations, as reflected in the government's 10-year plans.

Visitors to China should expect decision making to take a long time, but then expect a lot of pressure to implement the decision very quickly once a decision has been taken. Cultures who are quicker decision makers but who operate within elaborate and controlled agendas and project planning may find this approach unsettling. Setting expectations with the Chinese is a must to minimise frustration in getting things done.

Do’s and Don’ts

Although most Chinese will overlook small political and social faux pas, visitors doing business in China should be aware of the following pitfalls that could jeopardise their business relationship.

DO

• Show respect for people, including status, job titles, age and guanxi
• Be prepared to field personal questions, including topics about family and money
• Learn to use chopsticks if you don’t already know how to use them
• Learn about important Chinese holidays, especially Chinese New Year

DON’T

• Discuss the ‘3Ts’: Tibet, Taiwan, Tiananmen Square
• Criticise the Chinese Government or Communist Party
• Refuse gestures of hospitality, including invitations to banquets and other social functions. These are opportunities to build business relationships and should be regarded as important as transactional business tasks
• Assume that modern/westernised Chinese people have the same values as you. Beneath the surface, traditional cultural values may prevail