Understanding Chinese business culture opens high-potential avenues for your brand in the Middle Kingdom!
In this blog article by China Gravy, your China online marketing company, we reveal what’s important for Western companies when successfully expanding and doing business in China.
The specialties of the Chinese business culture are one of the most sought-after information from Western business owners and readers of our blog. So, to do your curiosity justice, we’ve put together the key factors for doing business successfully in the Middle Kingdom.
Advantages of Doing Business in China
To begin with, you may ask yourself, why do business in China in the first place?
Well, the Middle Kingdom is the second-largest economy in the world after the United States – with an estimated GDP of 14.6 trillion USD in 2021.
From mining, manufacturing, and construction – the industry in China is booming. And the 900 trillion USD “New Silk Road”, China’s New Belt and Road Initiative (BRI), aims at reopening the trade corridor between China and the West. The current trade war with the United States does not seem to impact the Chinese economy much.
Is it Easy to do Business in China?
Depending on your niche and company, the barriers to doing business in China vary.
Foreign companies, which are successfully doing business in China, follow these Chinese business culture tips for success to get started. This includes building a strong and reliable business relationship (Guanxi) with your Chinese counterpart first. Knowing the culture and traditions, as well as speaking and understanding Chinese, even if just a few words, are crucial to making a great impression.
Besides, it is advisable to focus on a localized online and social media presence. Lift the potential of the largest online economy by staying focused on your long-term goals.
The Cost of Doing Business in China
Whether you need to set up a Chinese company depends on your product and business model. Take a look at this article on starting your business in China to find out about the cost of doing business in China as well as the opportunities and threats of doing business in China.
If you choose to start a Chinese company, a WFOE is the most common and suitable option for foreign companies with the cost being around 35,000 USD for the first year and around 20,000 USD for the following years. This includes the setup, the monthly accounting costs (which are comparatively high in China due to its complexity), payroll, audits, getting a bank account, and so on.
Of course, you can also do business in China without a Chinese company, for example, through cross-border e commerce (CBEC). Services businesses can offer their services via a website hosted outside of China and place digital marketing ads to reach their Chinese target audience. A China expert like China Gravy can help with this.
The Business Culture in China
Discover the key aspects of how to do business in China:
- Building Business Relationships
- Key Aspects of Chinese Culture, Language & Traditions
- Be Online & Mobile First
- Stay Focused Within the Gigantic Chinese Market
- Things to Avoid in China
So, let’s start right away on the things to know when doing business in China!
1. Building Chinese Business Relationships
At the beginning of every business deal in the Chinese market, there’s a personal relationship between the business partners. In Chinese business culture, this is referred to as Guanxi.
This means the social networks, connections, and influential relationships that are the foundation of any business or formal interaction. This includes trust, moral obligations and often exchanging favors.
Without good Guanxi, doing business with Chinese partners is nearly impossible. So, how do you create a good relationship with Chinese businesspeople?
As always, building a great relationship takes time and patience. But this will ensure long-term beneficial and fruitful cooperation.
There are several aspects that contribute to establishing a good Guanxi:
Entrance Protocol for Meetings
Never Lose Face
Engage in Business Talk
For a successful business in China, never pressure your Chinese partners for a decision. If you want to speed things up, slow down!
Bring a Gift
After the Meeting
2. Key Aspects of Business Culture in China
As China is one of the earliest ancient civilizations, the Chinese (business) culture has a significant influence on the philosophy, virtue, etiquette, and traditions of Asia in general.
It may not surprise you that the most traditional Chinese value is harmony. This value is accompanied by kindness, politeness, wisdom, honesty, and loyalty.
Keep in mind that it is customary in the Chinese business culture to negotiate (讲价, jiangjia). Therefore, a higher price is typically given in the beginning to allow room for discussion and negotiation.
What makes this part difficult is that Chinese normally won’t say directly what they think, in particular, if something is not to their liking. Pay attention to soft suggestions and indirect comments like “Maybe we could also try this as an alternative option if it’s not too much trouble?”
English vs. Chinese
Besides, Chinese culture is also strongly reflected in the language, which is also referred to as Mandarin or Putonghua. In fact, more than 70% of the Chinese population speaks Mandarin, but there are also other dialects in China like Yue (Cantonese), Xiang (Hunanese), or the Min dialect.
Therefore, at China Gravy, your agency for marketing in China, we regularly post Chinese characters, their origin, meaning, and relevance for business today. This is to give you a better understanding of the Chinese culture, language, and how it relates to doing business in the Chinese market.
At the same time, English is not very common in the Middle Kingdom. In fact, less than 1 in 100 Chinese speak English. Therefore, having your website, social media presence, Baidu SEO efforts, as well as your other business materials, professionally localized is crucial to your success in China.
A simple “Google Translate” won’t do the trick and you run the danger of accidentally falling into one of the many pitfalls in the Chinese language. This means that the names of people and businesses, as well as places, require a transliteration/transcription instead of a “simple” translation.
For example, the term 林先生 would be translated as Mister Forest. But it requires the transcription for 林 as Lin (instead of the translation to forest). Therefore, the correct English term is Mister Lin.
The Chinese World View
Finally, keep in mind to respect the Chinese view of the world. It typically focuses more on tradition, collectivism, as well as obligations around the society, family, and organizations.
If you really want to impress a Chinese person when doing business in China and beyond, adapt your sales pitch to the Chinese values and worldview accordingly. Make sure to solve problems that they encounter in their daily lives. Besides, speak to their desire for luxury and exclusiveness.
Communicate with (Potential) Chinese Business Partners
In China, the popular messenger app WeChat is literally used for everything. Internationally, you may be used to formally communicating with your current business partners and potential new business partners via email, Zoom, or Google Hangouts.
Businessmen and businesswomen in the Middle Kingdom often prefer business communication via WeChat as everyone has it and they use it regularly anyway. Take a look at this in-depth article on how to use WeChat for private and business communication.
Besides, DingTalk can be used as an alternative to Slack, QQ instant messages can be used in addition to WeChat, and WeCom is basically an upgraded WeChat Work. Read more about online communication in China in this China Gravy article.
3. Be Online & Mobile-First for Doing Successfully Business in China
The key to understanding China’s online and mobile-first e commerce is the quickness of the market, the importance of social media, online shopping platforms, and mobile payment (AliPay, WeChat Pay).
For your business, this means adjusting your online business presence accordingly. Implement a strong localized website and social media presence (focus on WeChat), as well as Baidu/Sogou SEO and PPC.
4. Don’t Get Lost in the Gigantic Chinese Market
For companies planning on entering the Chinese market, the number of opportunities online and offline, across niches and marketing channels may seem endless.
While China is the largest country by population and the strongest e-commerce economy in the world, remember to focus on your niche and target audience. For example, Baidu Trends (Baidu Zhishu) can help you with this. There, you can discover general user interests and needs, related searches, interests by region, and more.
At the same time, you can reach a large target group in lower-tier cities through Xiachen more cost-effectively through Baidu PPC campaigns (lower CPL – cost per lead).
Finally, remember to follow your long-term strategy and hire experts for the China market to help you! Now, let’s look at the last specialty of Chinese business culture.
5. Things to Avoid for Doing Business in China
As you are probably aware of the censorship in China. In fact, the online world is shielded by the Great Firewall of China from what the government considers bad influences. In practice, this means that more than 8,000 sites including Google and Wikipedia are blocked in the Middle Kingdom.
Censored content includes violence, sexuality, and gambling. Besides, for example, hip-hop performances, tattoos, and the LGBTQ community are viewed as “problematic” and “low morale” by the government and therefore censored.
This is important for your online presence, including SEO and pay-per-click ads on Chinese search engines, for example, Baidu PPC. Paid advertising in the health sector (in particular health supplements), finance, and gambling are not allowed.
To sum it up, avoid politics in any form, censorship topics, impatience, and losing your face. You would lose your face by becoming angry or loud, not showing respect, and disturbing social harmony in general.
A specialist for digital marketing in China like China Gravy can help you to launch your business in China. Click here to book your personal cultural awareness training course and to discuss the opportunities of doing business in China with our team of experts.
Putting “Doing Business in China” into Practice
The Chinese market offers sheer unlimited potential and business opportunities. Foreign companies planning a market entry in China should follow the particular Chinese business etiquette to ensure long-term success for their global business.
You have increased your knowledge of the Chinese business culture in general. Now, it’s time to put your understanding of the Chinese culture and business into practice with China’s business culture strategies for success.
There are some special business etiquette, customs, behaviors, and manners when it comes to the business culture in the Middle Kingdom. The Chinese business etiquette vs American (Western) may seem more strict, hierarchical, and formal.
Therefore, understanding the differences will help you to unlock the power of globalization and the limitless potential of the Chinese market as well as help you navigate doing business in China effortlessly.
Chinese Business Culture – The Takeaway
Entering the Chinese market and how to start doing business in China properly is a timely process with lots of research and specific knowledge on how to target Chinese customers. Find out how to connect with Chinese distributors to launch your brand in China here.
China Gravy, the digital marketing agency of your choice, offers digital marketing services for China and around the world. Our state-of-the-art digital agency services are affordable and at the pulse of time. Unlock the advantages of digitalization in business for your company today!
From KOL marketing to WeChat advertising – your business can benefit from an expert on Chinese marketing for Western companies like China Gravy. We can also help you to build a website for the Chinese market, or coach you for your next business meeting with Chinese partners.
Does this sound interesting, but you are not sure how to start doing business in China? Why not test our digital agency services with our FREE audit of your online appearance. Our one-of-a-kind manual review checks your social media channels, user experience on your website, Chinese SEO, and PPC. Contact us today! China Gravy is your trusted business consultant to boost your brand in China.