Cultural Factors in Doing Business in China
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
June 30, 2022
Cultural Factors in Doing Business in China
With the globalization of business word, China has become an attractive market for foreign
investors and entrepreneurs. However cultural differences present significant barriers between
Chinese and western partners. To be successful it is crucial to understand and respect China’s
long history and culture. Let us highlight some important key areas one may encounter while
doing business in China.
1. Guanxi
China is a relationship-oriented society. Guanxi or the network and interaction, is vital for
business. By building Guanxi, the company minimizes risks, failures and setbacks. The Chinese
prefer to deal with people they know and trust. First, among the partners should be established
interpersonal relationship, before they can begin to work together. Moreover, it is not just
relationship between companies but also between members of these companies. The more
you will have areas of intersection with the Chinese (family,hobbies,life inspiration),the easier it
will address issues in business.
2. Confucianism
Confucianism affects business practice a lot: all relationship are deemed to be unequal. It is
necessary to show respect to age, seniority or educational background. Management style
tends toward the directive, which reflects basic Confucian concept of the hierarchical nature of
society. It is not executed that subordinates will question the decision of superior-that will be
disrespectful. The manager should be seen as a type of father figure who receives loyalty and
obedience from colleagues. In return, the manager is expected to take an interest in all aspects
of colleague’s life.
3. Face
The concept of Mianzi or “Face” is important for the purpose of business interaction. “Face” is a
combination of dignity, pride and public reputation. A slight mistake can make the Chinese
“lose face” and it can offend them. The easiest way to cause someone to lose face is to insult
the individual, to criticize in front of others or to treat her/him as an underling when official
status in an organization is higher. “Giving face” means showing respect to someone, giving
compliments and doing things that increase self-pride. This should not be done in a showy
manner but with utmost sincerity and honor. If the concept is carried in a well-mannered way,
it enables the person to gain loyalty, respect and even a positive aspect in business negotiation.
“Saving face” refers to maintaining a good self image.You can help somebody to save face by
helping to avoid embarrassing situation. The person whose face you saved will never forget a
favor, and will be in your debt.
4. Collectivism
Chinese culture is collectivist oriented. The group, rather than individual, is honored. This
results in tighter teamwork, more consensual decision making, more obedience and spread
information sharing. The asian tradition of slow-decision making is due in part to the people’s
group orientation. Many people feel obligated to get the other’s involved in important decision,
even of the are certain of outcome. Rewards and blame equally shared among all members of
the team. However, while the Chinese are cooperative within their own group, organizations
are usually display a competitive orientation in their dealing with other organizations.
5. Meetings & Greetings
When meeting businessmen in China, foreigners should display sincerity and respect.
Handshaking has to be very lightly and followed by exchanging of business cards, preferably
with English text on one side and Chinese on another. It is important to receive cards with both
hands and study. When Chinese greet someone they do not look straight in the eye, but lower
their eyes slightly. This is a sign of deference and respect. Meetings are often long and
seemingly without clear objectives. Often they are exercise in relationship building and the aim
of the meeting is to move the relationship forward, rather than any specific business task.
Chinese people do not want to be rushed. It can take several, very long meetings before any
tangible progress is made. In addition, the Chinese are very interested in long-term
commitment.
6. Giving gifts
Chinese are inveterate gift givers. Gifts express friendship and can symbolize hopes for good
future business. However, it is important not to give presents in the absence of a good reason
or a witness. This may be construed differently.
The above few examples of cross cultural differences and business etiquette demonstrate
areas where business people can face challenges. Avoid cultural conflicts in order to maximize
business trip and leave a good impression.
