Chapter Contents

  • Chinese Food and Agriculture
  • Chinese Economy and Consumers
  • How to do Business in China

China Pop Density

CHINESE FOOD AND CUISINE

The official name of China is the People’s Republic of China. Eastern China is made up of lowlands, whereas the middle and western sections of the country are mountainous. The largest river in China is the Yangtze, which travels almost 4,000 miles. Water pollution is a problem in China, but most Chinese people have access to safe drinking water.  About two-thirds of the population lives outside of the cities, but there are many people living in cities, too. More than sixty cities have populations over 750,000. Shanghai has over 14 million people, and Beijing has over 12 million. (To compare to U.S. cities: New York City has about 16 million people, Los Angeles has about 13 million, and Chicago has about 7 million.)

Food Bowls - China

HISTORY AND FOOD

Throughout its history, China’s growing population has been difficult to feed. By A.D. 1000, China’s population reached 100 million (more than one-third of the U.S. population in 2000). The Chinese constantly had to adapt new eating habits because of the scarcity of food. Meat was scarce, so dishes were created using small amounts of meat mixed with rice or noodles, both of which were more plentiful. Vegetables were added, and stir-frying, the most common method of cooking, became a way to conserve fuel by cooking food quickly.

Regional differences in cuisine became noticeable in the 1200s when invaders from neighboring Mongolia swept into China. Cooking styles and customs began to be exchanged between the two countries. As people traveled further from their homes, cooking methods and foods were shared among the different regions within China.

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FOODS OF THE CHINESE

The Chinese eat many foods that are unfamiliar to North Americans. Shark fins, seaweed, frogs, snakes, and even dog and cat meat are eaten. However, the Chinese follow the spiritual teaching of balance signified by yin (“cool”) and yang (“hot”). This philosophy encourages the Chinese to find a balance in their lives, including in the foods they eat. While preparing meals, the Chinese may strive to balance the color, texture, or types of food they choose to eat.

Rice is China’s staple food. The Chinese word for rice is “fan” which also means “meal.” Rice may be served with any meal, and is eaten several times a day. Scallions, bean sprouts, cabbage, and gingerroot are other traditional foods. Soybean curd, called tofu, is an important source of protein for the Chinese. Although the Chinese generally do not eat a lot of meat, pork and chicken are the most commonly eaten meats. Vegetables play a central role in Chinese cooking, too.

 RiceHarvesting

There are four main regional types of Chinese cooking. The cooking of Canton province in the south is called Cantonese cooking. It features rice and lightly seasoned stir-fried dishes. Because many Chinese immigrants to America came from this region, it is the type of Chinese cooking that is most widely known in the United States. Typical Cantonese dishes are wonton soup, egg rolls, and sweet and sour pork.

The Mandarin cuisine of Mandarin province in northern China features dishes made with wheat flour, such as noodles, dumplings, and thin pancakes. The best known dish from this region is Peking duck, a dish made up of roast duck and strips of crispy duck skin wrapped in thin pancakes. (Peking was the name of Beijing, the capital of China, until after the Cultural Revolution of the late 1960s. This traditional recipe is still known in the United States as “Peking duck.”) Shanghai cooking, from China’s east coast, emphasizes seafood and strong-flavored sauces. The cuisine of the Szechuan province in inland China is known for its hot and spicy dishes made with hot peppers, garlic, onions, and leeks. This type of cooking became popular in the United States in the 1990s.

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FOOD FOR RELIGIOUS AND HOLIDAY CELEBRATIONS

Although day-to-day cooking in China is quite simple, elaborate meals are served on holidays and festivals. A typical holiday meal might consist of steamed dumplings, suckling pig (or a spicy chicken dish), and a selection of desserts. Unlike in the United States, desserts are generally reserved for special occasions only. Most ordinary meals end with soup.

The most important festival of the year is the Chinese New Year, which is set according the phase of the moon, and falls in January or February. Oysters are believed to bring good fortune and have become a traditional food for dinners celebrating the New Year. Oranges and tangerines (for a sweet life), fish (symbolizing prosperity), and duck are also eaten. Dumplings are commonly eaten in the north. Neen gow, New Year’s Cake, is the most common dessert. Each slice of the cake is dipped in egg and pan-fried. A special rice flour makes the cake slightly chewy.

 Dragon Parade China

MEALTIME CUSTOMS

Togetherness and cooperation is reflected in China’s mealtime customs. A dish is never served to just one person, either at home or in a restaurant. Each person has his or her own plate, but everyone at the table shares food. Instead of a knife and fork, the Chinese eat with chopsticks, a pair of wooden sticks held in one hand. Food is cut into bite-size pieces while it is being prepared, so none of it has to be cut at the table. It is considered good manners to hold a bowl of rice up to your mouth with one hand. Chopsticks, held in the other hand, are used to help scoop the rice into the person’s mouth. Drinking soup directly from the bowl is also an acceptable custom. It is rude, however, to leave chopsticks sticking straight up in a bowl of rice.

A typical family dinner consists of rice or noodles, soup, and three or four hot dishes. At a formal dinner, there will also be several cold appetizers.  A well-known type of Chinese snack is called dim sum (“touch of heart”). These are bite-size foods served with tea in midmorning, afternoon, or at night. Typical dim sum are filled dumplings, shrimp balls, and spring rolls (also called “egg rolls” in the U.S.). Wontons, which can be boiled in soup, are also served fried as dim sum.

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POLITICS, ECONOMICS, AND NUTRITION

The rapidly growing population in China has been difficult to feed throughout history. About 13 percent of the total population in China is undernourished according a report issued by the World Bank in 2000. This problem is most significant away from coastal areas. People living in inland areas are more likely to be poor and to have a diet lacking in adequate nutrition. About 17 percent of children under age five are underweight.

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OPINION: Chinese Farms A Growing Challenge By Mia MacDonald,

China has surpassed the United States as the world’s top pork producer, raising and slaughtering 700 million pigs a year. For decades, researchers and policymakers have raised a worrying question about the world’s most populous country: “Who will feed China?” Today, while concern about reaching 1.3 billion mouths remains paramount, the phrasing has changed slightly: “Who will feed China’s pigs?”

China’s phenomenal economic growth has lifted millions of Chinese out of the hardscrabble rural poverty that was a central feature of the Mao Zedong era. The country is now not only “factory to the world,” but also the world’s largest producer and consumer of agricultural products-particularly meat.  In the past ten years, consumption of pork, China’s most popular meat, has doubled. China has surpassed the United States as the world’s top pork producer, raising and slaughtering 700 million pigs a year. It also tops the United States in meat chicken production and has a farmed animal population in the tens of billions.

Smithfield Foods-Restaurant

Western-style meat culture has gone mainstream. In the past, “children looked forward to the spring festival, partly because it was fun, but also because it was a chance to eat meat,” Zhang Xiuwen, a farmer-turned-tennis coach in Beijing, told a UK newspaper recently. “But,” he continued, “now we can eat meat every day if we want. It has become part of our lives.”

Fast food is now a $28-billion-a-year business in China. McDonald’s, a major sponsor of the Beijing Olympics, has nearly 1,000 restaurants nationwide, including four that operated at Olympic venues alone, serving athletes, spectators, and the press. China’s government has opened the doors to investments by major multinational meat and dairy producers and animal feed corporations, including Tyson Foods, Smithfield Farms, and Novus International.

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But with every fifth person in the world a Chinese, even small increases in individual meat and dairy consumption will have broad environmental, climate, health, and food security impacts. What China eats, and how it produces its food, affects not just the country, but the world. And while China is not yet a bona fide “factory-farm nation” like the United States, the strains of its fast-growing livestock sector are becoming harder to ignore. China may already have as many as 64,000 factory-type farms, compared to a U.S. total of nearly 18,800.

Meat and dairy production have a direct impact on global climate change. Fully 18 percent of global greenhouse gas emissions stem from the livestock industry, according to the United Nations Food and Agriculture Organization. That’s more than the entire world transportation sector. And in 2008, China surpassed the United States to become the world’s leading emitter of carbon dioxide (CO2). Per capita CO2 emissions in China have more than doubled, from 2.1 tons of CO2 equivalent in 1990 to 5.1 tons today. As the country’s farmed animal population expands, emissions from this sector will only rise.

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Animal waste is also a concern. China’s farmed animals produce 2.7 billion tons of manure every year, nearly three and a half times the industrial solid waste level. Xu Cheng, a professor at China Agricultural University, estimates that only 3 percent of China’s large and medium-sized livestock operations have facilities to treat animal wastes. Runoff from livestock operations has created a large “dead zone” in the South China Sea that is virtually devoid of marine life. In northern China, overgrazing and overfarming lead to the loss of nearly a million acres (about 400,000 hectares) of grassland each year to desert.

Data from China’s Ministry of Health show that in the 1930s, 97 percent of calories in the average Chinese diet came from grains and vegetables, compared to only 63 percent in 2002. China’s health profile is being reshaped in the U.S. image, and for the worse. A recent study by University of North Carolina nutrition professor Barry Popkin concluded that nearly one in four adults in China is overweight. Eighty percent of Chinese now die as a result of non-communicable diseases such as heart disease and cancer, often tied to diets high in animal fats and sugars.

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Other negative consequences of the industrialized-nation factory farm model are becoming embedded in China as well. The World Health Organization warns that many “first-line” antibiotics, such as penicillin, are no longer effective against more than 90 percent of certain bacteria in Asia due to the drugs’ overuse in farmed animals. Just before the Olympics, China’s chief veterinarian in the Ministry of Agriculture, Jia Youling, indicated that some Chinese farmers were still using banned growth-enhancing drugs, food coloring, and other chemicals, while feed additives with high concentrations of metals were polluting water and crops.

Incidences in China of “blue ear” disease, avian influenza, and SARS (severe acute respiratory syndrome), as well as the discovery of the industrial chemical melamine in domestically produced food and feed, have rattled food markets around the world. Indeed, food safety concerns led the U.S. Olympic Committee to accept a shipment from U.S. producer Tyson Foods of 25,000 pounds (11,334 kilograms) of beef, chicken, pork for U.S. athletes to eat during the Beijing Olympics.

As demands for meat, milk, and rice-a Chinese dietary staple-grow, and as available land and water resources dwindle, China’s government is looking abroad to ensure food security. It is not only accessing international food markets, but also looking to Africa, Latin America, and other parts of Asia for land on which to produce food for both people and livestock. In 2007, world grain prices shot up by 42 percent over 2006 levels, putting millions of already poor people at greater risk of hunger and malnutrition. While this phenomenon has many causes, one is the steady growth in demand for grain for feed.

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China’s development is proceeding at a pace and scale without precedent in modern human history. Environmental, economic, public health, and animal welfare challenges that took decades to become obvious in the West require only years in China. Given these realities, will China be able to replicate the industrial animal production model, the costs of which are now being heavily scrutinized in the industrialized world? And more importantly, will it want to?

“The present system of producing food animals in the United States is not sustainable,” wrote Robert P. Martin, director of the Pew Commission on Industrial Farm Animal Production, in the group’s final report. “[It] presents an unacceptable level of risk to public health and damage to the environment, as well as unnecessary harm to the animals raised for food.”

So far, the Chinese government’s path seems set. But a small and growing number of non-governmental organizations, academics, and even policymakers in the country are raising questions. To them, food quality, not quantity, is what matters, along with food safety, sustainability, environmental protection, and animal welfare. China’s government and people can-and should-undertake a critical examination of the consequences of industrial animal agriculture, before it’s too late for a more sustainable, humane, and secure system to take root.

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CENTRAL THEMES FOR A UNIT ON CHINA

Originally designed in the 1980s to support the New York State 9th-10th grade Global History requirement, the themes are designed to provide an infrastructure for the myriad facts and dates encountered in studying the long histories of the East Asian countries. The themes are reprinted here for educators seeking new perspectives to bring to bear on the individual histories of each of the East Asian countries — China, Japan, Korea, and Vietnam — and of South and Southeast Asia also.

These recurrent “central themes” may be referred to repeatedly in the study of Chinese history, suggesting distinctive patterns to students, until a portrait of cultural difference is accumulated. Of many possible themes, six are discussed here as illustrative of Chinese culture and its relation to the world:

Great Wall

Theme 1: National Identity and China’s Cultural Tradition

China is one of the oldest continuous civilizations in history and the dominant cultural center of East Asia; with flourishing philosophical, political, economic, artistic and scientific traditions, China developed a strong cultural identity as a universalistic civilization. China has struggled for the last century with the challenge of forging a new identity in a world of nation-states and of redefining its cultural values in a modern world.

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Theme 2: Agriculture and Population: The Agrarian Dilemma in China’s Modernization

China’s economy depended traditionally on wet rice agriculture, a labor-intensive method of cultivation with uneven demands for labor input. Chinese farmers solved this problem by using their families as their labor forces. Traditional agricultural technology and population growth thus became closely related: the best chance a Chinese peasant had to improve his life was to have a large family, intensify the family effort to cultivate rice in the traditional way, then use whatever extra income the family generated to buy more land until the amount of land owned matched what the whole family, working together, could farm at maximum productivity — or even exceeded the family’s capacity, an impetus to expand the family size. This was a highly sophisticated system. It provided neither incentive for modernization nor surplus for the state, however, as population and output remained in equilibrium. Collectivized agriculture was introduced in the 1950s as a means of generating agricultural surplus to support urban industrial development, but it proved not to be a satisfactory solution. Under the economic reforms inaugurated in the 1980s, farming is once again contracted to individual peasant families. While successful in raising output, the return to family farming is working against the other essential policy of population control.

Chinas Rapid Growth

Theme 3: Family and State: The Importance of Hierarchy and Paternalism in the Ordering of Society

Government and society in China were traditionally grounded in the Confucian philosophy, which held that the correct ordering of relationships within the family was key to the ordering of society in general; emphasis was on hierarchical relationships and the paternal line, with the eldest male holding supreme authority and responsibility for the family unit. The state claimed to be modeled on the family, with the emperor serving as the father of the people. Government in China was characterized by rule of man not law, rule by moral example, and rule by personal rather than official authority. These cultural patterns and assumptions continue to influence the Chinese political system and shape popular expectations of the role of government in China today. They are also reflected in the structure of work unit relationships in Chinese factories, schools, and institutions.

Red Square Crowd

Theme 4: The Perfectibility of Man and the Moral Role of Government

The dominant strain of Confucian thought stressed the perfectibility of man, through self-cultivation, education, and the practice of ritual. One of the government’s main functions in the Confucian state is to educate and transform the people, by moral example of the emperor and his officials. The belief that the state is the moral guardian of the people and that men are perfectible is reflected in a number of institutions, historically in the merit bureaucracy, or civil service, in which all officials are supposed-to be selected for their moral qualities, and more recently under Mao Zedong (Mao Tse-tung), in the style of Communist party leadership, the treatment of deviance, and the revolutionary role assigned to the peasantry in China.

HuangHeLowerMao

Theme 5: The Relationship Between the Individual and Society in China

The relationship between the individual and the state in China is understood not in adversarial terms, as is characteristically the case in the modern West, but in consensual terms. China did not, therefore, develop an elaborate system of civil law; instead, mediation between aggrieved parties is stressed, with local leaders emphasizing negotiation, compromise, and change through education rather than assignment of blame and punishment. Neo-Confucian ideals also held that it was the responsibility of the educated individual to serve the state and the society.

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Theme 6: Commercial Development in Place of Industrial Development

The geographical and political unity of China provided an environment in which the Chinese developed an intricate market network extending deep into the countryside in the form of periodic, rural markets that are in turn linked to regional markets. China differed from Europe, where the existence of many small countries led to trade barriers and local shortages that forced technological improvements within individual countries. In the Chinese situation, the absence of trade barriers and the existence of a huge and varied geography and population with much regional diversity meant China never was under pressure to develop labor-saving devices or to engage in expansionist or colonizing activities to the extent of those undertaken by the West and Japan in the modern period. The corresponding lack of industrial development put China in a disadvantageous military and economic position when faced with foreign encroachment in the 1800s, and industrial development has been a priority since that time. The re-emergence of the traditional Chinese market system in contemporary China has greatly facilitated economic growth under the reforms of the 1980s.

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Six Mind-Boggling Facts About Farms in China by Tom Philpott – Aug 21, 2013

Ever since May, when a state-controlled Chinese company agreed to buy U.S. pork giant Smithfield, reportedly with an eye toward ramping up U.S. pork imports to China, I’ve been looking into the simultaneously impressive and vexed state of China’s food production system.  In short, I’ve found that in the process of emerging as the globe’s manufacturing center—the place that provides us with everything from the simplest of brooms to the smartest of phones—China has severely damaged its land and water resources, compromising its ability to increase food production even as its economy thunders along, its population grows (albeit slowly), and its people gain wealth, move up the food chain, and demand ever-more meat.

Now, none of that should detract from the food miracle that China has enacted since it began its transformation into an industrial powerhouse in the late 1970s. This 2013 report from the United Nation’s Food and Agriculture Organization and the Organization for Economic Co-operation and Development (OECD) brims with data on this feat. The nation slashed its hunger rate—from 20 percent of its population in 1990 to 12 percent today —by quietly turbocharging its farms. China’s total farm output, a broad measure of food churned out, has tripled since 1978. The ramp-up in livestock production in particular is even more dizzying—it rose by a factor of five. Overall, China’s food system represents a magnificent achievement: It feeds nearly a quarter of the globe’s people on just 7 percent of its arable land.

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But now, 35 years since it began reforming its state-dominated economy along market lines, China’s spectacular run as provider of its own food is looking severely strained. Its citizens’ appetite for meat is rising along with incomes, and mass-producing steaks and chops for 1.2 billion people requires tremendous amounts of land and water. Meanwhile, its manufacturing miracle—the very thing that financed its food miracle—has largely fouled up or just plain swallowed those very resources.

In this post from a few weeks ago, I told the story of the dire state of China’s water resources, which are being increasingly diverted to, and fouled by, the country’s insatiable demand for coal to power the manufacturing sector.  Then there’s land. Here are just a few of the findings of recent investigations into the state of Chinese farms:

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  • China’s farmland is shrinking. Despite the country’s immense geographical footprint, there just isn’t that much to go around. Between 1997 and 2008, China saw 6.2 percent of its farmland engulfed by factories and sprawl.
  • The United States has six times the arable land per capita as China. Today, the FAO/OECD report states, China has just 0.09 hectares of arable land per capita—less than half of the global average and a quarter of the average for OECD member countries.
  • A fifth of China’s land is polluted. The FAO/OECD report gingerly calls this problem the “declining trend in soil quality.” Fully 40 percent of China’s arable land has been degraded by some combination of erosion, salinization, or acidification—and nearly 20 percent is polluted, whether by industrial effluent, sewage, excessive farm chemicals, or mining runoff, the FAO/OECD report found.

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  • China considers its soil problems “state secrets.” The Chinese government conducted a national survey of soil pollution in 2006, but it has refused to release the results. But evidence is building that soil toxicity is a major problem that’s creeping into the food supply. In May 2013, food safety officials in the southern city of Guangzhou found heightened levels of cadmium, a carcinogenic heavy metal, in 8 of 18 rice samples picked up at local restaurants, sparking a national furor. The rice came from Hunan province—where expanding factories, smelters and mines jostle with paddy fields.
  • China’s food system is powered by coal. It’s not just industry that’s degrading the water and land China relies on for food. It’s also agriculture itself. China’s food production miracle has been driven by an ever-increasing annual cascade of synthetic nitrogen fertilizer (it now uses more than a third of global nitrogen output)—and its nitrogen industry relies on coal for 70 percent of its energy needs. To grow its food, in other words, China relies on an energy source that competes aggressively with farming for water.
  • Five of China’s largest lakes have substantial dead zones caused by fertilizer runoff. That’s what a paper by Chinese and University of California researchers found after they examined Chinese lakes in 2008. And heavy use of nitrogen fertilizer takes its toll on soil quality, too. It causes pH levels to drop, turning soil acidic and less productive—a problem rampant in China.

A broad question here:   A global economic system that relies on China as a manufacturing center, in a way that undermines China’s ability to feed itself, seems like a global economic system headed for disaster.

Chinas share of global trade

What You May Not Know About China by Jack Perkowski, 7/20/2012

I’m not a trained economist, so when I want to understand what is really happening in China’s economy, I always turn to others who are. My “go to” guy in this regard, by a wide margin, is Andy Rothman, China Macro Strategist for CLSA Asia-Pacific Markets. I have known Andy for a long time. He is smart and sensible, lives in Shanghai, so he is not commenting on China from afar, and bases his conclusions on his own on-the-ground research.  Andy recently issued a Special Report titled: “Misunderstanding China” in which he “debunks” 16 popular Western illusions about the country. In the report, Andy cites some very interesting, little known facts about China and its economy. Did you know that “Net exports accounted for 8.8 percent of China’s GDP in 2007, but fell to only 4 percent in 2010.”

The Currency

  • According to the Bank for International Settlements, the Yuan appreciated 32 percent on a real basis between January 2005 and March 2012.
  • The Peterson Institute for International Economics has said that a ratio of China’s Current Account Balance to GDP of plus or minus 3 percent would reflect a “fundamental equilibrium exchange rate.” Treasury Secretary Geithner has said that a 4 percent ratio is a “benchmark for the future.”
  • China’s Current Account Surplus to GDP ratio fell last year to 2.8 percent from its 2007 peak of 10.6 percent. In the first quarter, it was 1.4 percent.

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Trade with the United States

  • 88.5 percent of consumer spending in the United States is on items made in the U.S., because services, which account for two-thirds of spending, are mainly produced locally.
  • In 2010, imports were about 16 percent of US GDP, while imports from China amounted to 2.5 percent.
  • Last year, the Personal Computing Industry Center (PCIC) of the University of California, Irvine took apart an iPad and worked out its value chain. After stripping out Apple’s 30 percent profit, amounts paid to suppliers from Taiwan, Japan and other non-China suppliers of batteries and touchscreens, only about $10 is paid to Chinese workers to assemble the product in China. While each unit sold in the United States adds from $229 to $275 to the trade deficit between the United States and China, only a tiny portion of that amount is retained in China’s economy.
  • A research note published last summer by the San Francisco Fed concluded that less than one-half the amount of purchases from China reflect the actual costs of Chinese imports. The rest went to U.S. businesses and workers transporting, selling and marketing goods carrying the “Made in China” label.
  • China is by far the fastest growing market for American goods. Between 2000 and 2011, U.S. exports to China rose 542 percent, while its exports to the rest of the world rose by only 81 percent during that period.

US and Chinese Facts

Role of State-Owned Enterprises in China’s Economy

  • In 1958, 86% of urban workers in China were employed by state-owned firms.
  • Between 1995 and 2001, the Communist Party laid off 46 million state-sector workers — equal to sacking the entire combined workforces of France and Italy in six years. As a result, the state’s share of urban employment fell to 28 percent in 2002, and now stands at 19 percent.
  • Between 2005 and 2010, almost all new job creation in China came from private companies. Employment at state firms rose by only 0.1 percent per year while employment at private firms rose by 6.2 percent annually during the period.

Chinese Suburbs

China’s Housing Market

  • In the 1980s, over 80 percent of urban housing in China was publicly owned and rented to workers for a nominal fee by government agencies and state-owned companies.
  • Beginning in 1998, many state workers were allowed to buy their flats at steep discounts to market value, resulting in the largest one-time transfer of wealth in the history of the world, as most of China’s urban-housing stock was handed over to its occupants.
  • In March, 93 percent of new home buyers in China were owner-occupiers, not investors.
  • Over 80 percent of urban housing is privately-owned in China today.

Tradition Chinese Kitched

Labor Competitiveness

  • China has the highest labor productivity growth rate of all the major economies in the world.
  • China’s industrial value-added rose by 13.4 percent annually in real terms between 1997 and 2010, while real manufacturing wages rose by an average of only 11.2 percent.

Chinese Cotton

China’s GDP to overtake U.S. by early 2020s, says analyst By Chris Oliver, April 23, 2009

China will overtake the U.S. in terms of economic output within a decade, according to estimates released Thursday by Deutsche Bank, which said it had to accelerate its forecast of the mainland’s leadership in the global economy in view of favorable growth dynamics in emerging markets.  China’s growth will be underpinned by a rapid expansion in emerging market economies, which will account for about 70% of global GDP growth in the coming decade, Deutsche Bank’s Chief Economist for Greater China, Jun Ma, told an investment conference in Hong Kong,  China will “massively invest” in these emerging economies using its nearly $2 trillion in foreign exchange reserves, extend its leverage by extending loans to the International Monetary Fund, and allow the Yuan to appreciate in preparation for the currency’s potential reserve status.

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By the early 2020s, China will over the U.S. in terms of GDP, Ma said, noting the forecast is dramatically stepped-up from his views two years earlier.  “China’s nominal GDP growth could surpass that of the United States within ten years, a period which will likely be accompanied by a gradual appreciation of the Yuan,” Ma said.  He added China had shown signs of economic recovery but cautioned the current rebound, fueled by the massive government stimulus spending and rapid growth in new loan issuance by state-controlled banks, will prove a false dawn.

The economy will slow as lending cools. The next downward leg of the what Ma described as “w-shaped” recovery will set in around the January-beginning quarter of next year.  It will take about 18 months for the economy to enter a new growth cycle, from the beginning of contraction.  “We expect a final GDP recovery, on a quarter on quarter basis, to start by middle of 2010,” Ma said.  Among favored ways to leverage China’s growth potential, Ma said he favors health care, nuclear, wind power, the resource sector and advanced equipment makers in the areas of telecoms, shipbuilding, medical and power generation.

Savvy Chinese Shopper

Meet the new Chinese consumer – February 2013

Successful consumer marketing in China is, in many ways, as much are as science.  It combines a sophisticated understanding of local perceptions and preferences with a willingness to embrace unconventional strategies and the best technology.  During the past three decades, profound social, economic and cultural changes in China have converged to create a consumer market that is unlike any other. Complicating matters is the speed at which the market continues to evolve.  To win the hearts and wallets of Chinese consumers, local and multinational firms alike need to master a new art that combines the ability to generate meaningful consumer insights amid unprecedented change with the agility to act on those insights quickly and proactively. We refer to it as art because it requires not simply applying tools and science but also sometimes embracing unconventional and counter-intuitive approaches.  Along with the promise of opportunity, these approaches come with a certain amount of risk as well..

Over the past several years, Accenture studied the behavior of consumers in China to gain a better understanding of the sales and marketing approaches that resonate in that country. In 2011, we surveyed more than 330 consumers in China to better understand their behaviors, attitudes and expectations. In 2012, we conducted a similar survey of 504 consumers. The findings reveal five areas of marketing action (some counter-intuitive) that companies must pursue and master to extend their reach and sales in China.

Crowd Consumers

1. Embrace a more complex, not a simpler, marketing channel strategy

To make informed purchasing decisions, consumers in China rely on multiple channels, ranging from direct-mail campaigns and advertising to the Internet. But it is the online channel that customers turn to most often when looking for product or service information. In 2012, the proportion of consumers doing research online topped 90 percent.  Like shoppers in other parts of the world, Chinese consumers tend to “research online, purchase offline.” And this so-called ROPO effect is growing. In 2010, 33 percent of Chinese consumers purchased products offline after looking online for pricing, product and brand information, as well as for customer reviews. In 2011, that figure jumped to nearly 43 percent. Meanwhile, the value of ROPO sales during that one-year period more than doubled, to $90 billion.  Given that the boundaries separating online and offline worlds will continue to blur, it’s critical that companies develop a multichannel marketing strategy in China that makes it easy for consumers to carry out online and offline activities. And these multiple channels must be seamlessly integrated to deliver a consistent experience.

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2. Sell yourself to everyone, including non-buyers

While the Internet is the research tool of choice for Chinese consumers prior to making their purchases, it is information from other consumers that is consistently most important in helping them understand what products are available and shaping their buying decisions. Social media is playing an increasingly critical role here. More than 90 percent of Chinese consumers use social media and micro blogs (known as “weibos”) to learn about companies’ products or service delivery.  Nearly a quarter of consumers post their provider experiences and opinions about a company’s products or services several times a week. When it comes to valuing the opinions of others, 74 percent of Chinese consumers responding to our most recent survey trust the comments about companies that are posted by people they know (compared with 68 percent in 2011). Interestingly, however, it is not just the opinions of friends and family that matter. In 2011, more than a third of Chinese consumers based their purchasing decisions, at least partly, on posts made by complete strangers. In 2012, that number climbed to nearly 44 percent.  Less than one-third of Chinese consumers are satisfied with their providers, which suggests that a huge number are willing to switch if the incentives are right.

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The lure of online opinion sharing explains the popularity of sites such as Dianping, on which people rate restaurants and merchants in approximately 2,300 cities across China. By 2012, the website had more than 48 million monthly active users who had posted some 20 million reviews on more than 1.5 million member merchants. The site reports more than 1.2 billion monthly page views—60 percent of which come from its 40 million unique mobile users.  To take full advantage of the social media channel, companies need a clear understanding of its potential for the organization. It also requires them to enhance their analytics capabilities to identify and monitor customer-relevant sites and opportunities, respond to comments from consumers about their brands, and continuously assess the social media presence of competitors.

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3. Develop and manage a brand “persona” that customers recognize and like

It is increasingly hard to maintain consumer loyalty in China. Currently, less than one-third of consumers are satisfied with their providers, which suggests that a huge number are willing to switch if the incentives are right.  China’s shoppers tend to be even more opinionated and outspoken than their American and European counterparts. Negative experiences can be particularly detrimental to customer relationships. Retailers, banks and Internet service providers are most susceptible to losing customers due to poor service. But no industry is immune from customer churn.  With word of mouth and social media playing such dominant roles in shaping customer preferences, one negative experience can quickly “go viral” and influence the purchasing decisions to tens of thousands of consumers. Indeed, our research revealed that 97 percent of Chinese consumers told others about a bad customer service experience in 2011, and 52 percent posted comments about the negative experience online.

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More important, half of our survey respondents noted that loyalty is driven by factors other than financial incentives. These include open and honest communications, the availability of opportunities for consumers to take part in designing or improving products and services, and the provider’s commitment to corporate social responsibility.  Companies should take all these factors into consideration when developing customer loyalty and retention strategies in China. They should also consider applying predictive retention analytics and other forms of analysis to determine the root causes of customer unhappiness. Having such capabilities in place will make it easier not only to protect their market share but also to develop strategies and offerings that will attract new customers.

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4. Focus on the invisible customer expectations as well as the explicit

Today, it is no longer enough to exceed consumers’ expectations; you must anticipate them before they are explicitly articulated. This is especially true in China, where, according to the Accenture surveys, consumer expectations for better customer service are at an all-time high.  So what do Chinese consumers demand of their providers? First and foremost, they want to conduct their business with providers in a fast and hassle-free fashion. This means there are basic service expectations that cannot be compromised: speed of service, ease of obtaining information and service, and agents’ knowledge and experience.  Digging deeper, we found that polite employees, a service experience that matched the company’s promise, and reasonable wait times are consistently the most important components of customer service. Conversely, several factors contribute to negative customer experiences. Frustration levels are highest among consumers who have to contact customer service agents multiple times about the same problem or feel they must wait too long to be helped.

Naturally, companies want to avoid creating a negative impression that causes their consumers to flee. Instead, they want to give their customers what they want—and more than they expect—via a differentiated sales and service strategy.  This can be accomplished in several ways. By building their capabilities in predictive modeling and analytics, companies will find it easier to generate valuable customer insights, recognize “moments of truth” that contribute to (or erode) loyalty, and develop offerings tailored to meet the needs of specific consumer segments. And by enabling customers through channel integration and automated self-service features, businesses will be better positioned to provide a holistic customer experience, reduce their cost to serve, improve service and distinguish themselves from the competition.

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5. Let the customer help you create your “palette” of offerings

In today’s global economy, what matters is not where an idea comes from but how fast a country’s firms and consumers are willing to try it out. Amar Bhidé, an economist from Tufts University, dubbed this propensity for consumers to welcome new products and services “venturesome consumption” and noted that their willingness to try new products and services may be an important component of innovation.  This is certainly relevant for companies operating in China, where consumers are in fact surprisingly “venturesome.” In our 2011 survey, about 30 percent of Chinese consumers said they are very interested in participating in innovation efforts for a company, in either online formats such as idea portals or offline via focus groups or product trials. More than half said they are somewhat interested in such activities.

They are also more than willing to try new things—and this openness to new experiences can inspire companies to launch new products and services. Few companies have taken better advantage of Chinese consumers’ venturesome spirit than KFC.  The fast-food company, which has 4,000 outlets across China, distinguished itself in the Chinese market by adapting its menus to local tastes. Today, KFC customers in China can order buckets of “original recipe chicken” just as easily as KFC customers can anywhere in the world. But in China, they can also order fried dough sticks, egg tarts and a number of new food products designed to appeal to regional tastes. The strategy has paid off in terms of revenue growth and customer loyalty. Nearly a third of KFC customers in China visit the shops specifically for the chance to try new products.  According to our research, most Chinese customers did not participate in innovation efforts for a company in the past two years. This will certainly change. With China’s young, connected population, the potential to engage consumers in technology-enabled innovation programs is significant.

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RECOMMENDATIONS

There are several paths companies can pursue to consistently create meaningful experiences that attract more—and more valuable—customers. That is, to apply their artistic skills to create valuable outcomes. Specific initiatives will naturally vary from one business or sector to another, but there are things all companies can do right now to bolster their likelihood of success in the Chinese marketplace.

  • Develop a customer experience blueprint. High-performance businesses know that their customers’ most satisfying experiences don’t just happen. They are carefully planned, consistently presented and continually refined to deliver on the brand’s promise across channels and throughout the customer lifecycle.
  • A customer experience blueprint can help you deliver memorable experiences, maintain relevancy and reinforce your brand’s value proposition. To create such a blueprint, you should first define the big picture by establishing a strategic vision. Next, define what “good” looks like on the ground, outlining the ideal customer experience blueprint at the tactical level—making clear for employees the step-by-step path customers are expected to follow.

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  • Adopt and/or strengthen a digital marketing strategy. Most marketers in China attempt to make their product and service information available via a broad range of channels. Yet some channels are much more effective than others. Assess your existing multi-pronged marketing strategies to ensure they are aligned to the customer experience blueprint, and allocate resources to those channels that deliver results. That will most likely mean rethinking the role that digital marketing and social media programs can play in taking advantage of the “research online, purchase offline” phenomenon, producing higher conversion rates, and building dynamic conversations and interactions.
  • Pursue outside-in innovation. As noted above, customers are eager to share their opinions and are increasingly looking to do so via imaginative, high-quality experiences. One of the most effective ways to access customers’ insights is by taking advantage of their willingness to participate in innovation programs. At a minimum, create opportunities that encourage consumer involvement in product design and testing. You may even want to make innovation an essential part of the customer experience. The potential payoff is enormous in terms of new ideas, meaningful feedback on new products and services, and enthusiastic consumer support and loyalty.
  • By taking the time to understand Chinese consumers’ buying preferences and behaviors—and then adopting appropriate strategies based on those insights—companies will be able to create differentiated sales and service programs that will, in turn, enable them to acquire, engage and retain more customers. Individually, these actions can help businesses create a more engaging and rewarding experience for their customers. Together, they provide a roadmap for high performance.

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UNDERSTANDING THE FUNDAMENTALS OF CHINA’S CONSUMER MARKET

Companies looking to improve their art and extend their reach into the vast Chinese consumer market must, at a minimum, understand the general market conditions and drivers. However, it is not enough for them to have a passing familiarity with their art; they must become masters. Consider the following:

  • China is not yet a consumption economy.

The contribution of household consumption to China’s GDP was just 38.8 percent in 2010, compared with 71 percent in the United States and 50 percent to 60 percent in most European and other BRIC countries. The government is striving to reverse this trend with policies aimed at increasing domestic consumption so that it accounts for 45 percent of GDP by 2020. How much Chinese consumers will be willing to spend remains to be seen, since they have one of the highest savings rates in the world (38 percent of earnings).

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  • Income disparity is alarming.

The chronic income disparity between urban and rural residents continues to widen. In 2011, the average disposable income of urban Chinese consumers was 323 percent higher than that of their rural counterparts. While the government has launched a series of social and economic initiatives aimed at increasing incomes for both rural and urban individuals by at least 7 percent each year by 2015—resulting in 7 percent of households having annual disposable incomes of more than $25,000, compared with just 2.4 percent in 2010—we do not expect the gap between urban and rural households to narrow significantly.

  • Urbanization is accelerating and will continue to drive consumption.

Approximately 13 million people in China move to cities each year. In 2000, the proportion of urban dwellers climbed to 36 percent, up from 20 percent in 1980. By 2015, it is expected that 60 percent of the population will reside in urban areas. And by 2020, there will be 70 to 100 cities in China with more than one million people. This dramatic urbanization is, and will continue to be, a main driver of China’s domestic consumption.

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  • Profound demographic changes are making the consumer market landscape more complex.

China’s population is aging. The number of people over the age of 65 will increase by more than 51 percent from 2010 to 2020 and will account for 14 percent of China’s total population. Thanks to the country’s one-child policy, its workforce is simultaneously shrinking and will actually decrease by 2020. Given that the social security safety net won’t cover the majority of older residents, younger workers will be faced with a heavier burden to support the seniors.

The rise of online consumers marks a new frontier for growth. The prevalence of mobile Internet applications and smartphones is accelerating the rate of online consumption. By 2015, the number of Internet users in China will soar to more than 800 million, up from 538 million as of June 2012. Internet access is growing ubiquitous in consumers’ daily lives for shopping and entertainment. Online shopping accounted for 3.3 percent of China’s retail sales in 2010 and will increase to 8 percent (with sales volume of more than $360 billion) by 2015.

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Decoding the Chinese consumer By Andrew Moody: 2012-08-10

China’s consumer confidence index, according to data published earlier this month, showed a marked decline from 104.2 in May to just 99.3 in June.  With spending showing signs of drying up, there has been evidence of a price war in China with Gome, a leading domestic electronic retailer, offering 50 percent online discounts and even McDonald’s slashing the price of its value dinner to 15 Yuan ($2.35, 1.90 euros).  This weakening in the consumer mood was also detected by global information company Nielsen in its China consumer confidence survey published earlier this month.  It showed confidence slipping five index points in the second quarter to 105 from 110 in the first three months of the year, although the confidence level was still 14 points ahead of the global average.

Although recent confidence may be ebbing, the Chinese consumer continues to show different characteristics to his or her Western counterpart; and some of that difference is explained by the Chinese being relatively new to consumption.  In its modern history, China has only been a consumer society by any Western definition since the mid-1990s.  A lot of behavior is a result of China being a freshly born consumer society.  “People who are in their 40s and 50s now have not grown up with consumption unlike people in the West. They are not used to being able to afford a car or a computer. There is a lot of discovery going on,” he says.

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Other developing nations are new to Western-style consumption but do not show the same patterns of behavior as the Chinese.  In Boston Consulting Group’s recent annual consumer sentiment survey, 53 percent of Chinese consumers say they plan to trade up, compared to just 29 percent of people in India. Only 18 percent in the US and 13 percent in the EU planned to do the same.  In the same survey Chinese consumers were the most optimistic in the world, 83 percent believing their children would have a better life than themselves, more again than India where 65 percent felt similarly. Just 21 percent in the US and 13 percent in Germany had such a confident outlook.  This optimism and the desire to buy better products and services mark the Chinese out from the rest.  China is always the No 1 country when it comes to trading up and looking forward to the future.

With Chinese consumers weighed down with shopping bags increasingly visible on London’s Oxford Street and New York’s Fifth Avenue, one could be left too easily with the impression the Chinese are consumption crazy.  But this is not reflected in the overall statistics. The Chinese are still a nation of savers.  Retail sales have lagged the pace of growth of the economy, according to official data, by 16.9 percent a year over the past decade, partly as a result of wages not rising in line with GDP growth and also greater affluence leading to a greater proportion of saving.  As a result, consumption spending in China is only about 35 percent of GDP, about half of that in the US. …

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One intriguing aspect of the consumption market is the increasing influence of women.  According to the recent McKinsey survey, participation by women in the workforce on the mainland is 67 percent, more than the 58 percent in the US, 48 percent in Japan and just 33 percent in India. It is also far higher than the 52 percent in Hong Kong.  Women often play a major role in the spending decisions of households in all markets but in China independent women are increasingly making their own mark.  In the Western world a man might buy a diamond for a woman as a gift but in China quite a high proportion of diamonds are bought by women themselves. It is not that they can’t wait for diamonds to be bought for them. They may just want more.

All this is taking place in an environment where a savings culture still remains dominant.  If the Chinese are such big savers, it begs the question as to what types of expenditure they are foregoing.  It is really hard to say. Even within a single province there are a lot of differences. In Guangdong, for example, you find that in Shenzhen people do a lot of outside dining, whereas in nearby Guangzhou, people do much less of that.

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A major interest of Chinese companies and foreign multinationals is the gray Yuan with China facing one of the severest ageing demographics in the world. By 2050, one in three will be aged over 60.  Unusually in China, the people with the real spending power now are in their 30s and 40s and within the next 30 years this is likely to translate into older people being the biggest spenders.  There is going to be a lot of expenditure on healthcare and there is also going to be a focus on health food products and low fat diets. Today’s major consumers are going still be the main consumers in the future but they will be obviously older.  For now, however, the younger generation seems to be obsessed with the latest gadgets with people often lining up around the block at Apple stores when a new product has been launched.

With China being a new consumer market it is often difficult to detect what are the actual Chinese characteristics of behavior and those that are common to all developing markets.  Chinese people are currently only behaving in a way similar to the way consumers behaved in the markets around China 100 years ago.  They are very much into value for money. They like brands but they are not brand loyal. They want a bargain and they will shop around to get it. This is probably deep in the Chinese culture.

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How to Do Business In China: A Guide For Entrepreneurs And Investors By Connor Adams Sheets – August 09 2013

China is one of the world’s largest and most alluring markets, and as it continues to become a more attractive destination for foreign investment, entrepreneurs and investors are flocking to the country to take advantage of the many benefits of doing business here.  But not without some trepidation  The country is notorious for its tangled bureaucratic web, and it has gained a reputation as a place where deals and contracts are often treated more like suggestions than concrete agreements.  In recent years, however, the Chinese business climate and regulatory structure have improved, and experts and businesspeople say that with a little effort and knowledge, launching a venture in China can be easier than ever.

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Find a Chinese partner

The first and most important thing anyone hoping to set up a business in China should do is find a local partner. A local partner will most often be an established Chinese-owned company, or a businessperson with good contacts in the country who can navigate the complicated regulations and legal processes and, most importantly, deal with China’s government directly.  Having a Chinese partner does pose some risk — the partner company could take your intellectual property and leave you behind, for example — so it’s critical to vet potential partners thoroughly before making any decisions.

A good partner is an incorporated company that is about the same size as your firm, at least partly Chinese-owned, and well-connected in the Chinese market.  You want to avoid partnering with massive state-owned enterprises (they’ll out-leverage your firm every time) but ensure that the partner has the network necessary to get things done in China. You will likely work with these large state-owned enterprises anyway, as they end up being involved in much of the significant business that takes place in the country.  It’s a good idea to retain a Chinese lawyer before attempting to enter the Chinese market, as the paperwork and regulations, while nowhere near as opaque and complicated as in the past, are still difficult for a foreigner to navigate.

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Understand the business culture

China is a world away from America or Europe, and more than a world away when it comes to doing business there. In America, contracts, deals and other arrangements are fairly transparent between businesses working together. Not so in China.  Understanding how China operates, or working with someone who does, is essential for a businessperson eyeing the Chinese market.  That said, you should educate yourself somewhat so that you’re not blindly led by your partner during interactions with the Chinese. One of the key things to know about China: Nothing is aboveboard.

In China most business gets done over drinks in social settings, as opposed to in America, where it often goes done in the boardroom or on the golf course. And decisions are more often made informally during conversations rather than on paper, a fact that helps keep the country’s “old boys network” alive.  It’s also important to be aware that the government will generally have a hand in almost everything that happens in China.  These are the tough realities of Chinese business, but the situation appears to be improving as China’s companies and government realize they need to adapt to the times and to globally accepted best practices.

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Realize unique opportunities

It may sound like doing business in China is quite the nightmare, and it can be in some ways. But if you can deal with the headaches, you can get access to a wide range of unique and lucrative opportunities.  The Chinese government is emphasizing innovation as one of the keys to its future economic success, and as such, it’s providing a number of unique incentives that can make doing business there very profitable.  One such opportunity comes from the abundance of state-funded tech parks and incubators. These massive projects have been set up in hopes of bringing innovative companies together in self-sustaining communities, and the government is doing everything it can to attract foreign investors and firms to these sites.

Another major benefit of doing business in China is Chinese government-backed venture capital, which has some major benefits over typical American-style venture capital.  China is no longer the Wild West of business that it once was, but it is still a dynamic place where bold, informed investors and entrepreneurs can trade a little risk and uncertainty for potentially great reward. It’s globalization in action, and it’s not as difficult or scary as it was even a decade ago.

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Business Success in China:   Winning Skills to Help Seal the Deal

TWO-WAY TRADE between the United States and China exceeds $100 billion each year and it is poised to grow as China joins the World Trade Organization. As more companies sell or make more products and services in China, our technical professionals have begun to realize that success in doing business in China requires more than having the right technology or expertise. Just as there are technical standards such as ASTM’s for quality and testing, there are also standards of behavior, which are essential to building a successful business relationship.

It is only natural that as we go about conducting business, each of us understands and is comfortable with our own cultural norms. When we do business abroad, however, we must be mindful that there are standards of behavior that are different from ours. Hence, when doing business in China, Americans tend to communicate with the Chinese using our own standards of behavior, meanwhile many American procedures, body language, and values are not the same as those expected by the Chinese.

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1. Respect the business card.

The Chinese place a great deal of emphasis on the formality of exchanging business cards.  When Chinese individuals give their cards to someone, they often present it with both hands. To be courteous, you should receive business cards with both hands. Never put the card away immediately in your wallet or briefcase. Rather, place the card on the table or hold it in your hand for some time to acknowledge it and show that you care to know who they are.  The Chinese are a very status-conscious people. Make an effort to recognize people’s rank in their organizations.

2. Smile. Don’t look too serious.

A smile to the Chinese is like a handshake among Westerners. It is the most common means of communication in China when people meet. The Chinese view a smile as a friendly gesture. Smiling is universal in China.  In short, a smile is not a sign of weakness. So don’t look too serious—you may get off on the wrong foot.

3. Learn to talk “metric.”

For technical professionals, it is important to be conversant in both metric and English measurements. Present your charts, tables, data, and transparencies in both English and metric units. Your audience will appreciate and understand you better this way.

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4. Don’t expect much eye contact.

Americans expect steady eye contact when talking with people. This is a behavior considered basic and essential. But it is not the case in China.  For the Chinese, a lack of steady eye contact is not an indication of lack of attention or respect. On the contrary, because of the authoritarian nature of the Chinese society, steady eye contact is viewed as inappropriate, especially when subordinates talk with their superiors.  Eye contact is sometimes viewed as a gesture of challenge or defiance; so the Chinese often talk while looking downward.

5. Make friends first, do business later.

Americans pride themselves on getting straight to the point. We want to cut to the chase. We haven’t got all day. This is not the Chinese way at all.  The Chinese like small talk and pleasantries. They want to learn more about you. Initial meetings are rarely expected to produce results. One salesman took seven trips before he got a retailer to carry his merchandise. A Chinese chief engineer told my client that he should make friends first before worrying about doing business.  Chinese sales people routinely wine and dine prospects before they sit down to talk business. It is not in your self-interest to cut to the chase too fast. Let people feel “connected” with you before you proceed.

6. Speak slowly.

Because English is the international language of commerce, we often forget how hard it is for non-English speakers to understand us.  Sometimes we don’t even realize that we are speaking a mile a minute. The result can be that we lose our audience. It does not matter how superb your expertise or ideas are if you can’t convey them in ways the Chinese can understand. Slow down when you speak.  The Chinese do not like asking people to repeat themselves. It is considered impolite. If they don’t understand you, they will continue looking attentive, all the while letting your thoughts and ideas pass them by. It is critical that you speak slowly.  The same is true with interpreters. If you speak too quickly, interpreters will ignore translating those segments that they don’t understand. Chinese interpreters seldom ask you to repeat yourself.

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7. Let people save “face.”

What may seem to many of us to be showing an interest by asking questions, seems to the Chinese as if we were conducting the Spanish Inquisition. It is easy to understand why we want to have all the answers. After all, that’s why we’ve traveled all the way to China! However, it’s best to practice restraint. Remember, “You can’t make a plant grow by pulling on it,” as the Chinese saying goes.  The Chinese are not accustomed to revealing much about themselves or their company in public. Chinese employees are discouraged from exhibiting individuality. Few people volunteer to divulge much information, particularly if they are not sure whether their bosses will allow them to share the information with Westerners.  If people are vague or unwilling to give you a straight answer, don’t try to force them. Trying to force them to divulge the information will only earn you animosity.

8. Arrange one-on-one meetings.

There is one sure way to get good information from the Chinese—when they are alone with you. With no one around, the Chinese are direct, straightforward and free to speak their minds.  One skill I’ve disciplined myself to learn over the last 20 years in doing business in China is to stay a little longer after each sales or corporate presentation. I have learned not to expect much meaningful information in a crowd. Invariably, after my presentation, when most people have gone, a handful of people will walk up to me. They will ask if I can meet with them in their facilities or privately. Those are the moments I seek to get critical business information.

9. Avoid being too casual.

Americans are casual people. We believe that our society is not that class-conscious. We want to believe that we are not obsessed with social status. This may be the case in America, but it is definitely not so in China.  In America, we are used to calling people whom we don’t know very well by their first names. CEOs and workers may address each other by their first names. Even telemarketers call us by our first names!  Avoid calling your Chinese contacts by their first names. Always be formal in addressing people. It is the only safe and proper thing to do. Only childhood friends and spouses will refer to each other by their first names in China. So, when you start calling someone you don’t know very well by his or her first name, he or she finds it uncomfortable, embarrassing, and gauche.

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10. Let them smoke.

You may dislike smoking very much. But many Chinese smoke and consider smoking, especially among men, the right thing to do in a business environment. If your contact offers you a cigarette, simply decline and thank them. But don’t lecture on how smoking is bad for them. If you allow them to smoke, they’ll listen to you longer.  I’ve learned not to meet people in my hotel room, so that I can still go to sleep without feeling that I’m turning into smoked meat. Try to meet people in a public, well-ventilated place so that they can smoke to their hearts’ content. They can smoke and you can breathe.

11. Don’t take a Chinese person saying “yes” literally to mean affirmative.

Chinese people have a habit of saying “yes” to show that they are paying attention to you or that they are following what you say. In such a context, the word “yes” does not mean that they agree with what you are saying.  To find out whether or not they agree with you, wait until they speak in complete sentences or put things in writing.

12. Watch your language.

Many Chinese who speak and read English learn the language in school, not in real life. Their English teachers may not have living and working experiences in the West. As a result, they may not understand colloquialisms or figures of speech that we take for granted.  I’ve seen all sorts of translation problems arise from nuances in speech, ranging from silly mistakes to off-color misinterpretations. An example of the confusion caused by a common expression is found in an article on negotiation skills that mentioned a “football field” in the middle of a sentence, when the English original talked about a “level playing field.” To avoid these pitfalls, find someone who has living and working experiences in the United States to go over your translations or interpret for you.

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13. Avoid the color white in general–and a green-colored hat specifically.

White is the color of mourning in the Chinese tradition. When packaging products for Chinese distribution, avoid too much white background. Crimson or persimmon red is the preferred color. It suggests power, prosperity, and authority.  Avoid giving green-colored hats to Chinese men. Wearing a “green hat” in Chinese means that someone’s wife is unfaithful. It is shameful for a man to wear a green hat in public. Some Texas business people gave the late Deng Xiaoping a green hat as he was visiting a manufacturing company there. People wondered why Mr. Deng was reluctant to wear the hat.

15. Be sensitive to Chinese sensitivity to numbers.

Many Chinese people are superstitious about numbers. The pronunciation of the number 4 in Chinese rhymes with “death” or “failure.” Many Chinese try very hard not to have their addresses or telephone numbers contain the numeral 4. And the number 14 is worse. The Chinese word for 14 rhymes with “sure to fail, sure to die.”  The numbers 3 and 8 are good numbers. The number 3 in Chinese rhymes with “growth,” which is therefore very welcome to business people. The number 8 rhymes with the Chinese word for “prosperity.” The number 168 sounds in Chinese like “forever prosperous,” which is a definite crowd pleaser. It is not an accident that the last four digits of the telephone number of the Ritz-Carlton Hotel in Shanghai is 8888.

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Doing business in China: Tips for success By Teo Kermeliotis, for CNN – October 21, 2011

As western countries remain mired in financial turmoil, business people are looking to get a foothold in China, hoping to tap its growth and expanding middle class.  Solid economic expansion, coupled with a rapid market transformation and a series of government reforms, mean China — the world’s second-largest economy — is no longer just a country for low-cost manufacturing. It is also an increasingly attractive destination to do business.  Several western companies — including global giants such as Starbucks, Volkswagen, Boeing and Procter & Gamble — have established a presence in the country.  But despite China’s increasing influence, challenges remain for those looking to do business in the country. Intense competition, corruption, business etiquette and language are some of the barriers that can be faced.

China is the world’s most populous nation, with its sprawling 1.3 billion people making up a highly diverse market.  “There is no such thing as the Chinese market,” says Martin Roll, a business and brand strategist who provides advisory to global and Asian brands on China. “You have to look at China more like a mosaic of cultures.”  There is no single consumer profile, and analysts suggest companies remain flexible and innovative, while understanding how their company would fit in each specific market.  “You need people who’ve been in the market, you talk to trade associations, you talk to trade promotion bodies, you talk to people and bit by bit you get to understand the dynamics.  There’s no simple answer in China — it depends so much upon the specific market and upon the specific characteristic of your own company.

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Business culture and etiquette

Operating in a country with a history of thousands of years — and ways of doing business that go back as far — it is valuable to develop insight into China’s business culture and social etiquette to avoid misunderstandings that could scuttle deals and harm working relationships.  One key aspect of Chinese culture is the concept of “face.”   Face is a mix of public perception, social role and self-esteem than has the potential to either destroy or help build relationships. A foreign CEO can give face by attending meetings, accepting invitations, providing suitable expensive gifts and showing sensitivity to Chinese culture.  In contrast, entrepreneurs can lose face by insulting someone in public, refusing invitations and gifts or by behaving inappropriately, like losing their temper or crying — acts that are seen as lack of self-control and weakness.

Business outsiders can impress with their knowledge of local customs, acknowledging hierarchy, offering gifts, addressing people by their designation — especially when dealing with state representatives — and appreciating the food.   Such awareness of cultural nuances illustrates respect and sincere interest.  On the flip side, Chinese business people generally respect cultural differences and won’t expect westerners to be fully customized to their tradition, analysts say.  The Chinese are very pragmatic.  If you have something they want, they’ll do business with you no matter whether you can hold chopsticks or not.

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Western businesses looking to tap the Chinese market should be aware of local preferences, and adapt accordingly.  For example, Starbucks started serving green tea lattes in a bid to get a traditionally tea-drinking nation hooked on coffee; McDonald’s adapted its menu to include items like spicy chicken wings and chicken burgers in an effort to appeal to local tastes.  No matter how good you think your product is, no matter how well it sells in the UK, the United States or anywhere else, you need to really look at that product in the context of China and say is that the right product, is it too high-priced, do we need to do something different, do we need to adapt?”

Western companies looking to tap China also need to show a long-term approach that will prove that they’re in the country to stay, analysts say. It’s very important when a western company tries to go to China they have to realize that success in China takes time, it requires patience and it costs a lot of resources.  People have got to be very open-minded about anticipating what China is going to be in the coming decades.  China is growing in the field of consumer goods and it will grow fast so people have got to find a way to match the future impact of China with the current characteristics of China.  The only way you are going to ultimately be successful is by putting together a good team.  Newcomers wanting to crack China will need to move, get someone from their organization to relocate or find an experienced group to represent them.  Surrounding yourself with local talent can help you break deals, understand the culture and the complexities of the market as well as compensate for the language barrier for those who don’t speak Mandarin.

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The Ten Principles for Doing Business In China by Zoe McKay 3/06/2012

Everyone is opening shop in China because “it’s the place to be.” Before you sign the lease, read this.  Since the 1840s, Western companies have dreamed of the riches a country as large and – since 1978 – as dynamic as China would generate for them. Some have succeeded: General Motors would have found it much harder to re-emerge from bankruptcy without its profits from China. Many, though, have found the going to be tough and the rules of the game, difficult to comprehend. The following are ten insights intended to help your business be successful in its China operations.

1. Do your homework

When China operations get into trouble, a lack of preparation is a common theme. It is surprising how many businesses decide to enter China because everyone else in their industry is going or because a key decision-maker was impressed with Shanghai. Entire generations of management consultants have lived off sorting out the resultant messes. What you need is hard-nosed, agnostic, data-driven analysis of your business potential in China, just as you would do it for any other country.  Get your top management team to take a week off to go to experience China. In China, take them outside the usual experience of Audi limousines and luxury hotels and arrange for exposure to experiences relevant to your business – for example, do store checks or visit private homes of average citizens. Take the team to a fourth-tier city and to the countryside for a more holistic picture.

2. Beware of industrial dynamics

A common cause of losses in China is that foreign firms are so focused on market growth rates that they neglect the basics of competitive analysis. In the beer industry, for instance, more than 20 foreign brewers entered in the mid-1990s, each of them planning to capture on average 15 percent of their market segment. In a market lacking clear differentiation, they also found themselves competing with around 600 local brewers, many of them subsidized by local governments. Some expected these issues to disappear over time, but almost twenty years later, the fundamental situation has changed little. Many industries in China resemble the beer industry, with overcapacity, high levels of fragmentation, subsidized local competition, and foreigners willing to absorb losses from their “strategic” investments.

3. Take your time

Many companies want to get on the ground quickly. In one case, the CEO told his head of strategy to get China operations going within six months. Time pressure of this sort can create problems later on. It tends to result in sloppy planning and analysis. It shifts the attention from finding the right partner to finding any partner, regardless of partner fit. Moreover, it weakens your hand in negotiations. Your Chinese counterpart will know how to use your time constraints against you, and you will walk away with a worse deal.

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4. Chinese society is collectivist

Conventional wisdom and cross-cultural management studies, such as Geert Hofstede’s seminal work, emphasize the collectivist nature of Chinese society. However, visitors to China often remark how individualist they find behavior to be. This seeming contradiction is the result of a conflation of collectivism with widespread cooperation. Chinese society is collectivist in that individuals identify with an “in-group” consisting of family, clan, and friends. Within this, cooperation is the norm. Outside it, zero-sum competition is common.  As a result, self-organized, as opposed to hierarchically imposed, cooperation can be difficult to achieve.  In addition, zero-sum competition means that your Chinese counterpart may not believe in win-win solutions. One can observe this, for instance, in the tendency to re-open negotiations just as everything seems settled, especially if one seemed too ready to agree with the negotiated terms; one’s counterpart may interpret this as an indication that s/he has not bargained hard enough.

5. Mistrust and opportunism are endemic

There are two opposite ways of extending trust. One is to trust until given reason not to; the other is not to trust until there is enough evidence of trustworthiness. China takes the latter approach. The zero-sum competition already noted creates an incentive to take advantage of people outside the in-group. China still lacks reliable and impartial mechanisms to check such behavior, such as a well-functioning legal system. This opens the door for opportunistic behavior.  As a consequence, the Chinese tend not to trust people outside their in-group. Take your cue from them. The absence of a reliable system to ensure fair outcomes means that you can encounter difficulty in enforcing contracts to the letter, and you should take suitable countermeasures, such as cash on delivery.

6. Trust is interpersonal and takes time to build

A common safeguard against opportunism is to build relationships of trust with persons who matter for your business. Unlike in the West, the creation of personal friendship is a prerequisite of doing business. Building friendship takes time, which is another reason to avoid rushing into things. Besides numerous invitations to sports and other events, one key element in building trust is long dinners during which everything but business is discussed. In these, alcohol plays an important role. Learn to drink intelligently. Seasoned negotiators dispose of the alcohol into their water glasses or into the wet towels most good restaurants make available.

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7. Notions of “out-of-bounds” behavior do not necessarily match.

Chinese negotiators occasionally push beyond what their Western counterparts consider appropriate bounds. For example, the representatives of a large Western firm were negotiating the distribution rights for one of their products. Their Chinese counterparts closed their initial pitch by threatening to use their political connections to prevent distribution of their products if they did not receive the rights. In another case, the Chinese party got their Western guests drunk to prevent them from being effective in negotiations the following morning (which, on the Chinese side, involved a completely different set of people).  Be alert and prepare suitable countermeasures. For instance, negotiation teams should learn how to drink without getting drunk, include women (as they are not expected to get drunk), and know that the heavy drinking can be delegated to one of the team members.

8. Chinese society is hierarchical

Company decisions are typically reached in a top-down manner, with only the very top of the pyramid involved in decision-making. Mistrust puts limits on delegation, and supervisory control at each level is high. Mid-level managers typically have little power to make decisions of consequence, and their main role is to pass on orders from the top and ensure execution.  Be aware in negotiations that the decision is ultimately made at the very top. If your counterpart is not part of that group, s/he is typically not authorized to make major decisions but must report back to the top for instructions. Also make sure your representative matches the status of his or her counterpart. Important dimensions of status are formal position, age, and education. Once you run your business in China, be mindful of the limitations to delegation.

9. Government in China is decentralized and in important respects, bottom-up

Conventional wisdom holds that China’s governmental structure is highly centralized, with all key decisions made in Beijing. In reality, Beijing directs little of what happens throughout the country, especially in far-flung regions. To be sure, if Beijing truly wants something to happen, it will. At the same time, Beijing recognizes that decentralization of power plays an important role in taking economic reforms forward. By running things in a slightly different way, the thousands of localities throughout China constitute a large population of local experiments collecting information about what works. From these experiments, the central government can select suitable future policies.  Expect conditions to vary by location. In addition, to the extent you need to negotiate with government, it is crucial to involve the local government. Even if you have agreement from Beijing, if the local government wants to thwart you, it will.

10. Be conscious of the large picture

Most of the growth in China since 1978 has come from private small and medium-sized enterprises. Today, they make up about 65 percent of Chinese GDP. Moving forward, policy-makers are keen for China to produce its own large multi-national enterprises, and government is re-asserting its role as the key orchestrator of these initiatives. A group of about 100 state-owned enterprises – those under the tutelage of the State-owned Assets Supervision and Administration Commission – is being groomed toward that end. Government ownership – or at least partial control – and support also appear in many of the new industries being put together under apparently local and private initiative.  You should know whether any of these targeted firms are active in your industry. If so, fierce competitive battles seem likely for the future, and easy access to state money for these firms means the playing field will not be level. Government may be on your side as long as your technology is needed. Keep this in mind when selecting a partner for cooperation or considering market entry.

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Doing Business in China

The new seven-man politburo which was invested in November 2012 is charged with the task of overseeing the future of China for the next ten years. They come to power after decades of miraculous economic growth with a mandate to continue the country’s upward trajectory whilst at the same time ensuring continued social and political cohesion. This will undoubtedly be a challenge but the track record of their predecessors points to a positive future.  As China moves into the ‘Asian Century’ it needs to continue to develop its infrastructure, educate the whole of the population, manage mass-urbanization on an unprecedented scale and balance a growth agenda with the need to improve its environmental credentials. The rapidity of change in China has been miraculous but also brings challenges in its wake.

China will continue to expand economically and its political and cultural influence will also grow – especially within the Asian region. China will also, however, be of incredible economic significance for both the US and Europe as the old economies continue to stagnate and the ‘emerging’ economies take on the responsibility of delivering global growth. Whereas, for the last couple of decades China has been a market of interest for the larger corporations, mid-size companies now have to consider expansion into geographic areas of which they have little, if any, knowledge.

Whilst many things in China are in a state of constant flux, some things remain deeply rooted in the millennial-old culture of the country and one of the things which changes most slowly in any country is culture. Chinese business culture is not suddenly going to become a clone of western business culture. China will cling on to its own approaches and ways of doing things and as China becomes increasingly economically powerful any pressure for change will probably diminish.  This is why – if you really want to succeed in the China market – you have to invest time and effort into understanding how the Chinese think and how they approach any specific business situation. Assuming that they will accommodate you or understand the ‘western’ way will get you nowhere with any but the most well-traveled and cosmopolitan of Chinese business contacts.  You really do need to get an understanding of Chinese business culture and business etiquette in China.

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Background to Conducting Business in China

At the beginning of the 21st century, the People’s Republic of China finds itself in the midst of social, economic and cultural transition (some might even say turmoil). The old certainties, which epitomized the iron-tight grip of the Communist Party during the reign of Mao Zedong, have long since been replaced by the more liberal but unclear policies instituted by Mao’s great reforming successor, Deng Xiaoping and continued by subsequent regimes.  The pursuit of profit is no longer ‘counter-revolutionary’ and business people have long since ceased being viewed as enemies of the people. Yet the Communist Party is still in power and shows little appetite for any of the political reform so much clamored for by the West.

Thus in the new order of the PRC, what business rules apply? How do you re-invent a business culture in a country where commerce was outlawed for over thirty years? Where does a country find the rules by which to play? The answer is, of course, to fall back on traditional cultural drivers and in China, that means a return to Confucian values (see below.) This does not imply that modern business systems and approaches are ignored – more that they are given a Confucian twist to enable them to lie happily alongside the mainstream Chinese world view.  And new contradictions continue to emerge – a burgeoning middle class brings a massive new internal consumer market and both local and international companies struggle with the best ways to capitalize on that new market.  The growing middle class wants higher wages which puts strain on China’s traditional cost-advantages which could impact on its balance of payments surpluses in the coming years.

The increased expectations of the growing middle-classes puts pressure on the government to continue to effectively manage the growth of the economy.  The latest 5 Year Plan has identified seven Strategic Industries which it wishes to concentrate on and these 7 industries (including alternative energy, biotechnology, new-generation information technology, high-end equipment manufacturing, alternative-fuel cars and eco-friendly technology) will receive central investment to the tune of $1.5 trillion.

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Chinese Business Structures

While the traditional Maoist approaches are long gone, and understanding of past approaches can be helpful when dealing with the new China which has emerged.  Under the Communist regime the most important structure to which an individual was linked was his or her work group or dan wei. In the past, the dan wei guaranteed workers security throughout their lives in a ‘cradle to grave’ arrangement and the dan wei mentality still lingers on in large measure. It was  extremely risky for a worker to leave the security of the dan wei as this meant the automatic forfeit of the rights and privileges associated with membership – and those were such basics as food, accommodation and medical assistance. In order to maintain the security blanket afforded by the dan wei and at the same time take advantage of the new opportunities arising in the ‘new order’, many people have taken on two jobs until new opportunities are viable enough to risk losing the traditional support mechanisms.

Many overseas companies who set up operations in the PRC do so in the form of a joint-venture with a Chinese organization and there certainly seem to be manifold benefits to be accrued from doing so. Probably the biggest benefit from the joint-venture approach is that it helps the overseas entity to establish relations – via the Chinese part of the venture – into a complex network of Chinese relationships. Guanxi, or personal connections, are the all-important weapon in all business situations in the PRC. As has often been said, ‘In China, if you don’t have Guanxi, you don’t have anything.’ Forming a joint-venture company would seem to be the quickest and most effective way of developing good quality relationships in a country such as China.  This, however, puts enormous pressure on an overseas company to ensure they have selected the ‘right’ joint-venture partner.  It is a mistake to rush this process or to fall-in with the first potential partner who comes along.  Think out of the box.  Product compatibility may be less important than connections; cost may be less important than access to a skilled workforce.

As would be expected in a Confucian society, operational structures, chains of command, management style etc. tend to be hierarchical and the introduction of more matrix-oriented approaches are bound to lead to conflict with local expectations.  Never underestimate how important it is to understand, and work with, a Chinese hierarchy.  Trying to circumvent the hierarchy will almost always slow a process down rather than speeding it up.

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Chinese Management Style

In Confucian philosophy, all relationships are deemed to be unequal. Ethical behavior demands that these inequalities are respected. Thus, the older person should automatically receive respect from the younger, the senior from the subordinate. This Confucian approach should be seen as the cornerstone of all management thinking and issues such as empowerment and open access to all information are viewed by the Chinese as, at best, bizarre Western notions.  Thus, in China, management style tends towards the directive, with the senior manager giving instructions to their direct reports who in turn pass on the instructions down the line. It is not expected that subordinates will question the decisions of superiors – that would be to show disrespect and be the direct cause of loss of face (mianzi) for all concerned.

The manager should be seen as a type of father figure who expects and receives loyalty and obedience from colleagues. In return, the manager is expected to take an holistic interest in the well-being of those colleagues. It is a mutually beneficial two-way relationship.  Senior managers will often have close relations to the Communist Party and many business decisions are likely to be scrutinized by the party which is often the unseen force behind many situations.

It is often said that China has a lack of good-quality, experienced managers – this is typical of a rapidly growing and modernizing economy – and that the good managers who are available are very expensive (even by Western standards.)  This places enormous emphasis on any company’s recruitment and retention policies – you have to be able to recruit the best and then keep them.

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Chinese Meetings

It is important to show respect to those to whom respect is due.  This is one of the ways in which you can show yourself to be honorable and in turn worthy of respect. Respect should be shown to age, seniority, party membership, the history and traditions of China, political sensitivities, the company, the region – the list is almost endless. Stand up when a senior person enters the room, offer the seat of honor and be attentive even if the key person’s English is weak.

Business cards are always exchanged on first meeting a new contact. Cards are held in both hands when exchanging and then scrutinized in detail. It is best to have your card printed in Chinese on the reverse and always offer it Chinese-side up. Treat the card with great respect as the card is the man.  Handshaking is the norm but a Chinese handshake will tend to be light and lingering. As it is considered impolite to look people straight in the eye, it is customary to look down, lowering the eyes as a mark of respect.

It is common to be involved in a series of meetings rather than one big meeting at which all major issues are disclosed and assessed. Meetings are about building relationships and exchanging information – it is rare for a decision to be made within the meeting. Decisions will be made elsewhere in consensus-style discussions, which involve all the relevant people (including possibly the Party.) As a result of this approach to meetings and their serial nature, patience is very definitely a virtue. Impatience will achieve nothing other than delaying things even more.

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Gift Giving

Although there is a large amount of well-documented corruption which takes place within the Chinese business environment, the giving of gifts is endemic to Chinese culture and has been for thousands of years. The giving and receiving of gifts is part of the ritual of business relationship development – and in a country where relations are placed firmly before business, gifts are therefore an important business tool. A mere ‘thank you’ for a favor done is considered rude by the Chinese.  Avoid expensive gifts, as this could be mistaken for bribery (a serious criminal offence) and always wrap the gift. If visiting an organization, take one gift to present to the whole group. Gifts are often refused two or three times before being accepted and, if wrapped, rarely opened in front of the giver.

Chinese Communication Styles

Unless you speak Chinese, (Mandarin being the most common as well as the official dialect), it can be difficult to do business in many parts of China without the aid of a translator. English language levels are very patchy and although a layer of fluent English speakers exists, the layer is quite thin and levels fall away very quickly. Communicating in China can, therefore, be a slow, laborious activity and fraught with constant dangers in terms of misunderstanding and mistranslation. Don’t assume comprehension. Cover the same ground several times and constantly check for understanding.

One of the reasons that communication can be such a problem in China is that along with many other Asians, the Chinese find it extremely difficult to say ‘no’. Saying ‘no’ causes both embarrassment and loss of face and it is therefore better to agree with things in a less than direct manner. Thus anything other than an unequivocal ‘yes’ probably means ‘no’. Be very wary of phrases such as ‘Yes but it might be difficult’ and ‘Yes, probably’.  It is also difficult to deliver bad news and this is often done through the use of an intermediary who can soften the blow and try to preserve as much good-will within the relationship as possible.

The Chinese have a reputation for ‘impassiveness’ and this is largely based on Western misinterpretation of Chinese body language. As with the Japanese, the Chinese use a very limited amount of visual body language and Westerners interpret this rigidity as a lack of responsiveness and emotion. Lack of overt body language does not mean that the Chinese do not show their reactions – more that westerners are not skilled at reading it across the cultural divide.  Finally, don’t always assume that just because somebody happens to speak ‘good’ English that they will automatically more competent than somebody who doesn’t.  Unless frequent interface into the West is tantamount, fluency in English should be seen as an added extra.

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Women in Business in China

Officially, women have the same rights as men in the workplace and the party has promoted this sense of equality over the past thirty years or so. However, traditional Confucian thinking does not sit easily with this notion of gender equality and it is somewhat ironic that the liberalization policies of the last decade might have reversed many of the advances made by women in Chinese society under the previous hardline regimes.  Foreign businesswomen will be treated with great respect and courtesy. They may find that, within a delegation, the Chinese defer to male colleagues regardless of the actual seniority of the western party – the Chinese assumption being that the male will naturally be the decision-maker.  Having said that, it is now more and more common to encounter women in reasonably senior roles in large Chinese organizations – especially in the larger, more modern cities.  Chinese women are highly successful within the education city and are actively managing their careers.

Chinese Dress Code

One of the most visible changes to the human landscape of China over the past few decades has been the change in dress code. Gone is the standard unisex Mao jacket and trousers in blue or green and these have been replaced by a much more western style of dress – especially in the commercial and urban areas. Many men now wear suits and ties and women tend to wear skirts and blouses of a modest cut.  It is advisable to have smart business attire with you when visiting.  Appearance is important within Chinese business circles.  Successful people are expected to look successful.  Wealth is admired, so wear good quality clothes, watches etc. if you want to impress – but don’t be overly ostentatious.  Be aware of the vagaries of the Chinese climate, which veer from sub-tropical to freezing and dress appropriately for the weather conditions.  Make sure you check the weather conditions before you travel and check the climatic zone of the city you are visiting – China is a big place.

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Top 20 Tips

  1. Guanxi, or personal relationships are of vital importance when doing business in China. Do not underestimate the importance of the relationship building process.
  2. People are comfortable building relationships with honorable people who show respect to those to whom respect is due.
  3. As all relationships are unequal it is important, if you wish to appear honorable, to show respect to age, seniority and educational background.
  4. Managers tend to be directive, which reflects basic Confucian concepts of the hierarchical nature of society.
  5. In return for loyalty, the boss is expected to show consideration and interest in all aspects of a subordinates’ life.
  6. There are often close relationships between senior management of a company and local party officials.
  7. It is important that you do not make people ‘lose face’ in front of their group. Always respect seniority and do not openly disagree with people.
  8. Do as many favors for people as possible – debts must always be repaid.
  9. Business cards should be formally exchanged at the beginning of meetings. Treat the business card with great respect, as the card is the man.
  10. Meetings are often long and seemingly without clear objectives. Very often the meeting is an exercise in relationship-building and the aim of the meeting is to move the relationship, rather than any specific business task, forward.every-second-chinese-shoppers-spend-40-000-online
  11. It can take several, very long meetings before any tangible progress is made. Patience is essential if you wish to capitalize on the situation.
  12. The Chinese are very interested in long-term commitment. Build long-term goals and objectives into your proposals.
  13. Do not be too direct. Strive for diplomacy, consensus and harmony. Remember that this takes time to achieve.
  14. Do not assume comprehension. It is often useful to go over the same point several times from different angles in order to aid comprehension.
  15. It is difficult for the Chinese to say ‘no’ directly. Anything other than a direct ‘yes’ could mean ‘no’. Be circumspect and reflect on seeming agreements reached. Has an agreement actually been reached?
  16. It is difficult to read body language as, by western standards, it is somewhat muted in China. Be very alive to any changes of posture, animation etc.
  17. Gift giving is an everyday part of Chinese business culture. Giving and receiving gifts helps to cement relationships. Take gifts with you when visiting and put some thought and effort into the gift selection process.
  18. Always wrap gifts before giving them. Gifts are rarely opened in front of the giver.
  19. The Chinese are an intensely patriotic race. Do not make disparaging remarks about China, the political situation, human rights etc.
  20. Entertaining is very important in the relationship building process. If entertaining, do it well. If being entertained at a banquet, take you lead from your hosts – they will enjoy taking you through the process.

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