Business Culture in China

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When establishing a business in China, understanding the workplace culture and norms observed in the country is just as important as knowing the administrative procedures of starting a company. While there are some similarities between Western and Chinese working cultures, there are many differences that you need to be aware of to make sure you are not misunderstood when operating in a business setting.

Here are the 8 most important things to know about business culture in China.

Differences Between Western and Chinese Working Culture

1. Roles and Responsibilities

In a Western professional setting, the jobs and responsibilities of every employee are well defined. This is generally not the case in Chinese workplaces, as roles often extend beyond the outlined job description, while also depending on management’s instruction.

A certain level of ambiguity regarding the roles and responsibilities of employees is tolerated because there is a collective mentality that everyone in the workplace is united based on common cause. As such, it is expected that everyone will endeavor to carry out any necessary duties, regardless of whether or not it is within their expertise or scope of work.

2. Working Hours

Although Compulsory overtime working is not common in China, many employees want to stand out from the crowd and be seen as hard workers amongst their peers. Therefore, it has been common for employees stay for unpaid overtime to show their dedication.

The culture of working long hours was previously widespread amongst numerous technology companies in China, with the term “996” representing the scheduled hours between 9 am and 9 pm, 6 days of week. While employees under Chinese labor laws should only be required to work for no more than 8 hours a day, without overtime pay, 996 was not in line with regulations and affected the well-being of employees. As of August of 2021, the Chinese government officially ruled 996 working schedules to be illegal, protecting deserved worker’s rights to rest.

3. Punctuality

In Western workplaces, tardiness can be tolerated so long as it does not become a regular occurrence and many workplaces offer a great deal of flexibility in this regard. In China, punctuality is reflective of one’s commitment to the job. Some companies enforce a penalty system that deducts a small amount from an employee’s wage each time they are late.

4. Holidays

Whereas public holidays in most countries are set out on specific days, Chinese public holidays are spread out among different dates each year based on the Chinese Lunar Calendar.

For most, the allocated holidays are when they are able to return to their hometown or travel around, as such, it is best to avoid interfering with the lives of colleagues and clients during holidays unless absolutely necessary. It is best to arrange meetings and business trips to ensure you do not overlap with the holidays.

Additionally for some public holidays such as Chinese New Year or the national holiday referred to as Golden Week, workers may be required to do make up days for extra time off, which will typically occur on a weekend.

5. Understanding the Hierarchy

In Western culture, asking questions when faced with uncertainties and challenges is a standard practice. Employees are expected to show initiative in asking questions as this shows that they are seeking to better understand a particular issue. Moreover, even challenging questions are encouraged, so long as they do not appear to be disrespectful to others.

In China, due to the hierarchical nature of the work environment, employees are expected to follow instruction and not question those in superior positions. The concept of “saving face” is strictly observed, which often restricts open discussions where employees can voice their ideas and opinions. Most of the time, conclusions made by a manager or boss is final.

6. Relationships and the Principle of Guanxi (关系)

The business culture in China emphasizes the importance of personal trust and strong relationship building, referred to as Guanxi (关系). In a corporate relationship, a business partner will voluntarily offer to provide favors with the expectation that you will reciprocate later on. This culture of reciprocity is interconnected with the concept of guanxi, signifying deep and lasting relationships.

Guanxi can be referred to as the network or connections that can be utilized to create business opportunities and deals. It plays a huge role in business interactions in China and is often a necessary element for creating opportunities that would have not been available otherwise.

7. How are Meetings Started and Concluded?

In Chinese business culture, when you arrive at the meeting, you are expected to greet each person in the room, regardless of how many people there are. Additionally, before business matters are discussed, participants are used to having a few moments for social conversation.

Negotiations from the Chinese point of view are made to build trust and harmony between the parties involved and relationships form a large part of business (as mentioned in the previous section). During the meeting it is common for the parties to provide in-depth information about their companies and the context of the negotiations.  Usually, final deals are reached in casual settings such as bars or restaurants, and not in formal business meetings. This interpersonal style is preferred over contract-based negotiations.

The Chinese prefer to have ongoing correspondence to maintain long-term relationships, rather than simply carrying out short-term negotiations and deals in an efficient manner.

8. Employee-Manager Relationships

Chinese companies adhere to a strict hierarchical system of operations. The system is made up of many levels of leadership, and seniority plays a big role in the employment relationship.

Employees follow a very formal procedure when dealing with superiors positioned higher than them. To illustrate this, when employees report to their managers, they often address their managers formally, regardless of if they are with other business partners or not.

Chinese employees usually do not talk before their boss speaks to show respect. Asking permission to talk before their boss does is common practice. In a meeting with a business delegation, the leader of the Chinese team will usually approach the boss of the other party first, before introducing themselves to the rest of the team.

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Chinese Business Etiquette Guide

Giving and Receiving business Cards

Business cards, also called “name cards,” are exchanged during meetings. The way you receive a name card indicates the degree of respect that you are giving to the other party. Use either both hands or your right hand only to receive the business card. As a sign of respect, it is uncommon to put the card away immediately. Instead, as a receiver you should generally inspect the card and then place it on the table in front of you until everyone in the meeting is seated.

When giving out your business card, either use both hands or your right hand only. Make sure that the face of the card is the portion displayed to the other person.

Entering in Order of Importance

People in China enter a meeting according to their position in the company. The highest-ranking person should arrive and enter first, followed by the next in terms of seniority. The same principle must be observed during introductions.

Gift Giving

The Chinese like to give their business partners small tokens to show gratitude and appreciation.

When giving gifts, remember that it is a professional gesture, so avoid giving personal objects. Also, refrain from providing gifts that are difficult to match, as this will make the recipient lose face. Giving expensive gifts to business partners can be mistaken as bribery and be rejected.

Dos and Don’ts in the Chinese Business Setting

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What to Do

  • When dealing with dates, choose to write the month in letters. If you do have to write in numbers, list the year first, followed by the month, and then the day.
  • Nod when listening to someone speak. This suggests that you are listening, and you understand what they are saying.
  • Address people formally in formal business meetings, as you are trying to make a good impression.
  • Show appreciation of the food, especially when your hosts treat you to dinner or lunch.
  • Initiate small talk to reduce awkwardness when speaking to either a boss or someone with a lower rank. You can talk about your family, hometown, or anything that will create a positive atmosphere.

What Not to Do

  • Do not use red ink in writing or signing business documents.
  • Do not immediately reject proposals from another Chinese company or individual. In Chinese culture, rejection is interpreted as rejecting the person and not the idea.
  • Avoid blunt criticisms. They should be discussed in a gradual process to avoid misinterpretation from others.
  • Even when you disagree with a proposal, do not respond negatively without any hint of hesitation. Pay attention to what they are saying to avoid misunderstanding so you can give a fair response.
  • Avoid talking about taboo topics like politics or current affairs.

While many cultures share similar values and appreciation for professional etiquette in the workplace, the business culture in China is especially complex and nuanced. Understanding common practices, accepted behaviors and the specificities of hierarchical relationships is highly important to the level of success one can experience when doing business in China.

MSA has supported a diverse range of clients for over a decade in accounting, financial advisory and company registration in China. We strive to help foreign SMEs effectively overcome regulatory challenges and difficulties when doing business in China. Contact us right away to learn more about our services and how we can help improve doing business in China.