5 Things You Need to Know When Doing Business in China

5 Things You Need to Know When Doing Business in China

The world is changing at a remarkable pace. As a civilisation that’s at least 2,000 years old with approximately 1.3 billion people, China has all it takes to be the world’s biggest catalyst. Never before in the modern world has the largest economy been that of a developing country rather than a developed country. There are countless projections of the colossal growth of China’s economy which may eventually double the size of America’s economy. Hence, doing business in China becomes of great consequence for many companies looking at overseas expansion.

There’s a prevalent belief that when a country gets modernised, it becomes westernised. That’s erroneous. A country’s economy is shaped not only by technologies but more importantly, by its history and culture. Thus, we cannot view China through the lens of the western world and hope to understand her in western terms. Unlike the past, China no longer feels pressured to work the way the western world does.

We need a paradigm shift.


Here are 5 things you need to know when doing business in China.


1. Know Your Industry In China

The Chinese have a very different view of the State. The sense of legitimacy of the State is stronger than any Western State. Very often, the State is seen as the “Head of the Family”. Familiarise yourself with the local business climate, taking specific notes on the dominance level of state-owned enterprises (SOEs), who often get various explicit and implicit State supports. Evaluate your position in your industry and strategise on how you can level the playing field.


2. Access The Best Economic Forecast Tool On China

This is easy as pie. Whenever possible, dedicate yourself to watching the Central Chinese Television-1 (CCTV-1) station and its news programmes. Overlooked by many, this is one of the most accessible and effective business forecast tools in China. Always keep a close watch on the pulse of China’s economy and the Central Government’s policies and development plans to help you in your business strategising and planning.


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3. Examine Contracts And Agreements

Never believe contracts at their face-value. Have your legal advisor carefully review contracts and agreements. Ensure that you properly engage all relevant government agencies. Even when funds are transferred to your designated account, you should ascertain whether they can be withdrawn or transferred. In short, always stay vigilant towards agreements, whether contractual or verbal, which might lead to subsequent conflicts of interest or misunderstandings.


4. Reputation Is Your Most Valuable Asset

Despite the above, you should always be trustworthy and maintain a good reputation. Only agree to what you can deliver and never fall into the trap of exaggeration. Social relationships and connections, or what we call “guanxi” (关系), play a huge role in Chinese business practices. Having good “guanxi” is an economic asset and it stems from having a good reputation. Your reputation for trustworthiness is key to your long-term business success in China.


5. Trustworthy Partners, Not Sinking Ships

Although the Chinese believe that opportunism and fraud are prevalent, they highly value trustworthiness. The Chinese usually prefer to establish a friendship first before becoming your business partner. Likewise, choose your business partners wisely. Hand-pick your close allies carefully after the most stringent considerations. In line with the Chinese concept of “yi” (), which means a spirit of loyalty and self-sacrifice, your partner should have proven to be ethical. Ideally, between both parties, there should be a tacit understanding that mutual benefits take precedence over personal gains.


In order to achieve success when doing business in China, you’ll require an in-depth understanding of Chinese business culture and a grasp of business Mandarin. We need to understand China’s idiosyncratic cultural norms and traits: the concept of face and “guanxi” (关系); her distinctive notion of family; the deep-rooted sense of “Han” (汉) identity, and the ubiquitous patriarchal notion of the State.


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Know the Mindset. Win the Game. Our Chinese Business Culture Program helps corporations and executives in better understanding China’s unique business etiquette, protocols, and way of doing business.





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