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CHECKLIST

Business etiquette in China

 

By Sabine Vollmer
December 2012

ChecklistFaux pas and misunderstandings can easily doom a U.S. business deal in China. To improve chances of a successful venture in China, Len Jui, CPA, a partner at KPMG in Beijing who was educated in the United Kingdom and the United States and worked for the SEC, and Jiake Brownbill, a business culture consultant in the U.K., suggest U.S. executives acquire some essential soft skills:

 Be forthright about your intentions, resources, and goals. Successful business relationships in China are built on trust, loyalty, and honesty, which means Chinese take note of body language, keep track of what foreign investors say and do, and judge them based on their track records. Chinese business people will find out if a foreign investor failed to disclose important information or promised too much.

 Grasp the limitations imposed by a state-run economy. Learning about Chinese regulations, laws, and government policies helps U.S. companies put themselves into the position of their Chinese counterparts and understand the restrictions within the Chinese system. Chinese business partners may be bound by government targets and have little freedom to be creative. For example, structuring a deal so that the Chinese counterpart receives a government incentive is more likely to reduce the costs of the deal than bareknuckle negotiations are.

 Generate goodwill. Treat each encounter as a chance to reach a long-term goal, regardless of whether negotiations are successful. Showing respect toward others is highly esteemed etiquette in China. Diplomacy and tact are required to directly challenge figures of authority. Foreign investors that are looked upon favorably will be invited to bid for contracts.

 Hire a capable translator. Chinese don’t expect foreigners to speak the language. But make sure the translator knows technical terms used in your business sector and can properly convey the meaning of figures of speech. U.S. executives may want to interview translator candidates in the presence of a bilingual listener to make sure they hire someone who can properly convey the meaning of words in context. U.S. executives also should pay close attention to the responses of their Chinese counterparts during negotiations and ask follow-up questions for clarification.

 Translate the corporate brochures you plan to hand out into Chinese. The absence of Chinese-language material is viewed as negligent and disrespectful by Chinese business representatives and can kill a deal.

 Invite your Chinese counterparts to dinner. But be aware of the everyday symbolism that can extend to the menu of a business dinner. Fish, for example, is a good dinner choice, because it connotes abundant wealth and prosperity, but when the fish is presented, its head should point toward the most important host at all times. If your invitation is turned down, that is a clear sign the negotiations did not go well. In China, introductions are also commonly made over lunch or dinner.

 Ask to be on email lists to get notified about events and conferences. The American Chamber of Commerce, trade associations, law firms, consulting firms, and accounting firms in China regularly organize events and seminars with speakers from industry or the Chinese government. These events are perfect venues for networking.

 Resist the pressure to bribe. Bribery rarely produces long-term benefits. You can be creative, but you have to make sure that, for example, hospitality, travel, and charitable donations are reasonable under the circumstances, are obviously for a business purpose, and are clearly documented and accounted for.

By Sabine Vollmer (svollmer@aicpa.org), a JofA senior editor.

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