Chinese Negotiation Style - How Chinese Say No

Hi, this is Steve Hubbard

One of the things people new to conducting business in China often don't understand is the way the Chinese say "No".

According to business etiquette in China, it is generally considered a bad thing to directly say "No" so someone.  This is based in the fact that it is considered disrespectful and could cause the other person to lose face, or mianzi.

Instead of directly saying "No", the Chinese cultural custom is to use indirect means to signal disagreement.  The Chinese negotiation style is to use objections to indicate disagreement.

An example would be that if the Western business person proposed that they take some action, the Chinese partner might object that it will be too expensive.  The Westerner would overcome this objection and assume that the issue is settled.  If the Chinese partner does not make any more objections than it may be true that this issue is resolved.  On the other hand, if the Chinese partner continues to raise objections, this could be their way of trying to communicate that this course of action is unacceptable.  The Western business person often misses the point and focuses on overcoming each objection instead of realizing that the Chinese partner is trying to say "No" to their suggestion.

This type of misunderstanding is common when Westerners come to Asia and do business.  So, when you come here and setup a company in China, be aware that there are many differ China business customs and practices.  Gradually, overtime it is possible to learn how to work harmoniously together.

If you find this information helpful and want to learn 3 Chinese habits visit

http://www.YourGuideToChina.com

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China Patent - Setup Company In China

One of the questions I'm often asked about is China patents, or when conducting business in China, how well is intellectual property protected.

 

The answer is that when you setup a company in China it is possible to protect your patents, trademarks, and copyrights as long as you are proactive and careful.  It is true that intellectual property protection in China is not as good as in many more developed countries, though not as bad as people may think.

 

A key thing to keep in mind is that China, despite being the second largest economy in the world is still a developing country.  The majority of the Chinese population is still living in poverty.  Historically, most all developing country go through certain phases of development, including an industrialization phase where pollution and environmental damage is high as well as a period of taking the technological knowledge of the more developed countries.

 

It might be interesting to know that it wasn't until the 1800 that the United States started developing robust intellectual property laws.  Before that time the United States also tended to borrow whatever technology they could find.

 

Of course, if your product is a digital product, such as movies on DVDs or even famous trademarks like name brand watches, purses, and clothes, than your situation is pretty bad in China.  If on the other hand you have a technological process or patent that is used in your business, you stand a good chance of being able to protect it.

 

When you register a business in China, be sure to hire a good attorney and make sure you tell them about all of the intellectual property you want to protect and insure they advise you how to proceed.

 

If you find this information helpful and would like to understand China better and learn 3 Chinese habits, than visit my website at

http://www.YourGuideToChina.com

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Chinese Negotiation Style - Talking Business

Sometimes when foreigners are conducting business in China, they are not aware of certain of the China business customs and practices.  One of these is when is the right time in a meeting to start talking business?

Business etiquette in China is different than in the West.  The Chinese negotiation style is one of first establishing a relationship, or guanxi, before moving on to business.

It is not uncommon for the Chinese to start a Chinese business meeting by talking about everything except what most foreigners would think a business meeting should be about.  They will talk about their children, your children, where you are from, why do you like China, how much money you make, how much does your house cost.  Be prepared for questions about money that most foreigners would think are inappropriate, this is another Chinese cultural custom.

It is only when you get down to the end of the meeting where it might be appropriate to indirectly start talking about business.  You might say something like, "Mr Wang, it is a pleasure meeting you and there might be some ways that my company could help your business."

This Chinese negotiating style is something that sometimes tries the patience of people that have setup a company in China and are doing business in China.  It is important to realize this is not an issue of what is right or wrong, it is simply an example of Chinese cultural customs.

Of course, it is important to realize that this is a generalization and there are some Chinese whose manners and etiquette are quite similar to Westerners.  They are also interested in getting right down to business.  It is important to be sensitive to your host and follow their lead.

If you find this information helpful and would like to learn 3 Chinese habits to further understand the Chinese than visit our website at

http://www.YourGuideToChina.com

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Conducting Business In China - 3 Habits

When conducting business in China it is important to understand China business customs and practices.  People often ask me about business etiquette in China.

If you understand the following 3 Chinese habits it will help you doing business in China.

The 3 habits are Face, Guanxi and the Chinese view of contracts.

The first habit, Face, is called Mianzi by the Chinese.  What this means is that according to Chinese manners and etiquette it is considered bad to public disagree or point out the faults of others.  Doing so would cause them to loose face or respect.  An example of how this shows up is that when Chinese conduct meetings, it is common for the Chinese to want to avoid making decisions during a large group meeting because it might mean disagreeing with some and causing them to lose face.  Instead, it is common for them to meet in small groups of 2-4 after the meeting and make the real decisions at that thime.

The second habit, Guanxi is the Chinese term for relationships.  This Chinese cultural custom means that the Chinese historically prefer to do business with people they know and like.  In the West we have a saying "Don't mix business with pleasure" and for the Chinese it might be changed to "You must mix business with pleasure".  Expect to spend time socializing, even going to Karaoke bars and singing some songs to improve your business relationships.

The third habit, is the Chinese view of contracts.  It is important to understand that the Chinese do not necessarily put as much importance in the written contract as Westerners do.  A good analogy is to think of a business contract as a marriage between two companies.  In a marriage, it is often for new challenges to come up and for their to be mutual compromise for mutual benefit.  The contract is just a starting point for a relationship and as circumstances change be prepared to have to work togther with your Chinese partners to mutual satisfaction.

These 3 habits are a good start to help you with conducting business in China and to  understanding China business customs and practices.

If you find this information useful, you can find more at

http://www.YourGuideToChina.com

.

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Chinese Negotiation Style - Meetings

When negotiating with the Chinese, it is important to understand that they are going to be conduct business in a way that is comfortable to them, which is the Chinese way.

Business etiquette in China is different than in the West, the idea of face and harmony are important concepts to the Chinese.  The means that public telling people they are wrong, or that you disagree with them is something you should try and avoid.

How does this affect how they view business meetings and the Chinese negotiation style?

When the Chinese have a business meeting, they often don't expect there to be a resolution to issues during the meeting.  To come to a resolution might mean having to tell someone that they are wrong and therefore cause them to lose face.  Loosing face is a big insult to many Chinese.

Instead of making major decisions during a group meeting, the Chinese will often meet afterwards in smaller groups of 2-4 people and come to a resolution in the post meeting get togethers.  This is perfectly acceptable to the Chinese because it helps them maintain harmony and nobody loses face.

Remember this does not bother them because it is part of the Chinese cultural customs and Chinese business etiquette.

Just realize that you may encounter this as part of the Chinese negotiating style and it will help you be more successful when conducting business in China.

If you find this information helpful and you would like to find out 3 more habits about conducting business in China than just go to

http://www.YourGuideToChina.com

.

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Conducting Business In China - Contracts

The following is a presentation given by Greg Gabissky.  You can find him at www.treasuremountain.com

When you think Chinese business relationships don't contract think marriage.  If you know how to make a marriage work in the West, you know how to do business with the Chinese.  You just don't know you know.

What is a marriage? And what's the difference between a marriage and a contract?  Well the first thing is a marriage is meant to be forever.  Where as a contract has a set period of time.  When you make a business relationship the Chinese, they don't want to know, oh in 5 years we'll renegotiate and maybe choose another partner.  They want to now know that you're going to be their partner for the long term.

A marriage is meant to be mutual benefit. And how do we achieve mutual benefit?  Though mutual compromise.  That's very different again than from the West.   In the West, the contract defines the terms, we don't change the terms of the contract, once it's signed.  Where as in China, a marriage is fluid, sometimes I work to benefit my partner, sometimes my partner works to benefit me.  Over time, we both benefit, it's a win-win situation.

In the West, we believe, in our arrogance perhaps, that we can predict the future accurately.  That's what a contract is.  And a contract now specified that we will now get punished, this way, if we do not do exactly this, in the future.  However, the Chinese don't have that same analytical sense about he future.  They don't believe that they can predict the future, it's a saying that the Chine use, ren suan bu ru tian suan.  Literally translated it means, Man may propose things, but the Gods decide what happens.  

The Chinese are very fatalistic, there's only two times that are important to the Chinese, now and the past.  The future is unknowable.   So, when the Chinese sign a contract, with a Western firm, what the Chinese believe that contract is, the beginning of the relation ship.   That this is we hope happens.   However, as situations change, we would expect the contract terms to change as well.  Remember, marriage, mutual benefit.  Compromise, flexibility, that's the way the Chinese think about the contract and the future.

You cannot use future benefits to get what you want now with the Chinese.  Say, "Look, if you give me this now.  You will benefit this way in the future."  The Chinese don't believe that.  The future is unknowable, who knows what will happen in the future, the gods may decide something different.  So therefore, they're not going to be lured into doing something good for you now, because that will get them some benefits in the future.

Your benefits to the Chinese must be short because they don't look long term.

If you like this information and want to learn more than visit our website

www.YourGuideToChina.com/ConductingBusinessInChina-Contract.html

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WFOE China - Start A Business In China

So, you're ready to setup your business in China.  Now you must decide what is the best legal structure to use to conduct business in China.

 

There are generally three choices to choose from, the Representative Office (Rep Office), Wholly Foreign Owned Enterprise (WFOE), or the Joint Venture.

 

The Rep office and the WFOE offer the most control and are the two most preferred choices unless there are some special circumstance that might force you to form a Joint Venture.

 

How do you decided between these two types of company formation?  The most basic deciding factor is whether or not you will need to issue a Chinese tax receipt, called a fapiao, to your customers.

 

If your customers are Chinese businesses or Chinese consumers than they will most likely require a tax receipt. If your customers are multinational corporations than it might be possible to process payments outsite of China and avoid the Chinese tax receipt.

 

Only the WFOE is able to issue Chinese tax receipts.  In addition to being able to issue tax receipts, the WFOE also allows the foreign business to have independence and to formally conduct business.  The WFOE is also able to convert RMB profits to US dollars. The Rep Office is unable to issue tax receipts and is more restricted in the scope of work it is able to perform.

 

It usually takes 3 to 6 months to setup a WFOE.  This includes registering with the various government offices.

 

These days, most foreign business that have a permanent presence in China are choosing the WFOE because it gives them full legal standing and indepedent control of their business within China.

 

If you would like to get more information about doing business in China, visit us at

www.YourGuideToChina.com

.

 

Looking forward to seeing you here in China soon.