China

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DOING BUSINESS IN CHINA

No matter where you are located in the world it is not difficult to see Chinese investment and influence. As the world’s 2nd biggest economy and largest exporter, the Chinese economy shows no signs of slowing down and is predicted to grow by 6.3% in 2019, making the nation a force to be reckoned with. China’s economic dominance aside, while doing business in China may be an alluring idea, the practicalities of entering the Chinese market remain challenging.

A Communist party rule with little inclination for liberal reform and many state-owned enterprises governing the financial sector all contribute to China scoring a low ranking of 100 on the Index of Economic Freedom and 78 on the World Bank’s ease of doing business index. Corruption, non-tariff barriers and the prevalence of state-owned enterprises, limit foreign investment and all make doing business in China more difficult.

A growing middle-class, however, look set to put pressure on the government to effectively manage the growth of the economy as they demand higher wages, whilst creating a massive new internal consumer market, presenting both local and international businesses with new opportunities.

Understanding Chinese culture is exceptionally challenging as communication can be an obstacle, unless you speak Mandarin Chinese, with a translator often being required. Many Chinese business professionals do not like to say ‘no’ to requests, believing that to do so would cause embarrassment. Thus, it pays to be wary of phrases such as ‘Yes but it might be difficult’ and ‘Yes, probably’ as they can often lead to misunderstandings.

Other elements of Chinese culture include the fact that it is regarded as impolite to look people straight in the eye. Instead, Chinese professionals tend to look down, lowering the eyes as a mark of respect. When doing business in China it is beneficial to remember that respect plays a large role in the hierarchical nature of Chinese business and society.

If you are looking to do business in China, you will find a wealth of insight and practical advice on the World Business Culture website to help successfully navigate the country’s unique economic systems and communication and cultural styles.

OVERVIEW

China seems to grow more confident by the day. Is it too strong a statement to say that China is starting to regain its historical position as the pre-eminent global economy? The Chinese government is steadfastly following a policy of internal economic consolidation and international engagement. Wherever you are in the world you can start to feel the impact of Chinese investment and influence. China can no longer be classified as an emerging market. China has emerged and is taking on the world – much as America did in the early twentieth century and Japan in the 1970’s.

How the traditionally pre-eminent global economies such as the USA, Germany and Japan react to the growing strength of China will be fascinating to watch over the coming decades but one thing is sure – China is a force to be reckoned with and cannot be ignored. If you are not currently doing business in (or with) China, you probably should be.

However, China is not easy – somebody once said ‘in China everything is possible – but nothing is easy.’ Before starting to do business in China it is essential that you try to get an understanding of the cultural drivers and expectations of your Chinese contacts. Do you really understand the importance of ‘face’ in China and do you feel confident you can navigate the complexities of Chinese corporate hierarchy? How are you going to develop those all-important relationships and what impact will Chinese long-termism potentially have on your cash-flow forecasts?

China is a land of opportunities but it is also a land of potential bear traps. Do your homework – don’t fail through lack of research and planning.

This country profile provides an overview of some of the key aspects of Chinese business culture in a concise, easy to follow-format. The document includes information on:

  • Background to business
  • Business Structures
  • Management style
  • Meetings
  • Teamwork
  • Communication
  • Women in business
  • Entertaining