How to Do Business in China
November 22, 2017
Made in China
“Made in China” is no longer the stigma it was or ever should have been. The standards of goods have improved considerably and because of this so have their technologies. Ecommerce is also on the rise, not only amongst locals but with companies as well. The transition from investment to consumer dominated market has been good to China.
The standards of goods have improved considerably and because of this so have their technologies.
With its ever-growing middle class, US businesses may want to consider selling to China. Chinese consumerism can be a lucrative market for US small businesses because of the connotations the Chinese have towards US products – they’re considered posh. Ironic considering it’s one of the world’s biggest manufacturing powerhouses.
China is becoming known for its smart manufacturing and constant self-analysis despite the stigma. Not to mention, there are vastly different sectors in Southern China to choose from. IT sectors are popping up all over, and industries like clean technology and healthcare are rising with them.
The Chinese themselves are immensely intelligent and an asset to the world as a whole. Their business culture and communication may be different but their goals are the same as the average US businessperson.
We’ll provide you with the knowledge you need to penetrate the Chinese market.
Now that you have an idea why your small business should penetrate the biggest force in Asia, it’s time to go more in depth. Here are our top three eastern cities for conducting business.
Although Shanghai isn’t the capital, it’s China’s most populated city with over 24 million people. It currently produces nearly 8% of the country’s GDP. Shanghai’s port holds the rank of the world’s largest container port. Shanghai International Port Group (SIPG) maintains this rank by continuously analyzing their business model and researching that of their competitors.
The Shanghai Free Trade Zone has made international import and export in the area so much easier. Ever since it was created, Shanghai surpassed the national trade average as a whole. Needless to say, this city is experienced and it’s ports are sturdy enough for any product you’d desire.
Not only is Beijing the capital of China, but it’s a hub of finance, telecommunication, and transport. China is well known for its efficiency in road building and public transit so you’ll likely find it hard to be late to a meeting in any city.
Services is the major focus of Beijing’s “exports” aside from vehicles and communications equipment. Being the capital it serves as China’s political, cultural, and international trade center that sets the pace for other countries. If you want to have any footing at all in the Chinese market, this is a good place to start. It’s home to many trade shows and fairs as well as services and companies will to help US business penetrate the market.
Guangzhou is the third largest city in China and home to the Canton Fair. It’s the most modern fair in Asia and has run in the autumn since the 1950’s. If you’re anyone who’s anyone, you need to be at the Canton Fair.
Guangzhou is the industrial manufacturing focus of Southern China. Recently, it’s also made a breakthrough in ecommerce amongst the locals. China has a vast and sporadic online market that needs major investment from outside tech companies. Make no mistake, China has it’s own technological advances but is still learning in terms of online marketing.
The currency in mainland China is Renminbi (RMB) or also known as the Yuan. The basic unit of Renminbi is Yuan, and the sign of Yuan is ￥. USD is not usually accepted in China, but you can withdraw Yuan from an airport ATM upon arrival. ATMs and banks are very safe to use but require a passport if you’re looking to get some cash.
The official languages in China are Mandarin and Cantonese to the south. Around 70% of the population speaks Mandarin, but you will find that cities like Shanghai, Beijing, and Hong Kong use English as well. It’s a required subject in university, and it is considered increasingly useful and prestigious to be able to speak it.
There are many translator apps available for smartphones that can recognize spoken or written Mandarin and Cantonese. Waygo will translate characters and text from a photo and doesn’t require an internet connection. Pleco (Apple version, Android version) is geared more towards people learning Mandarin but will help immensely with character translation. Google Translate also works if you’re looking for something well-known and easy.
Finding a Supplier
When finding a supplier in China, going to trade shows in the country and socializing is the best way. However, to get a handle on what you might be looking for or what business matches you, it’s best to look online. There are many sites to choose from when finding a supplier in China because of the sheer diversity of its manufacturing.
Global Sources allows you to search by product or supplier. It’ll even let you know what trade shows will have this product, when, and where they are. There’s also an option to look for exhibitors at trade shows. You’ll be able to see the pricing on products as well as supplier contact info and the average response time.
Made-in-China is laid out in a similar fashion except they don’t offer trade show information.
Alibaba is a more well-known site for finding Chinese suppliers. It’s a great tool that offers the same things as these other sites despite the controversies it’s had.
Once you’ve done your research, things will go a lot smoother during your trip to China.
Most businesses are open during the same times as the US – Monday to Friday, 8:00 am to 5:00 pm and so on. People have been known to work long hours and still come in the next day at the same time regardless of overtime. They do observe holidays, regardless of their rigorous work ethic.
There are seven official public holidays in China, and a list is published yearly at the Office of the State Council of China.
|New Year’s||Dec 31st - Jan 1st|
|Spring Festival||Early February or late January based on the Lunar Calendar|
|Qingming Festival||April 4th or 5th|
|Labor Day||May 1st|
|Dragon Boat Festival||Usually sometime in June based on the Lunar Calendar|
|Mid-Autumn Festival & National Day||Late September to early October based on the Lunar Calendar|
Communication from the US
If you need to contact a supplier in China from the US, here are the steps:
- Dial the US exit code 011.
- Then China’s country code +86
- Next, the area code for the place you are trying to call which you can find online. It’ll likely be two to four digits.
- Lastly, the phone number itself which should be six to eight digits.
The Chinese don’t usually like communicating via email. In fact, they probably won’t even respond because they prefer phone calls or in person meetings. Sometimes it could just be the language barrier as well. Make sure to do a lot of research about your prospects and look into hiring a representative of some kind to help.
Make sure to do a lot of research about your prospects and look into hiring a representative of some kind to help.
No one expects you to be fluent in Mandarin or Cantonese, but they’ll certainly respond better to someone who is!
Traveling to China
Now that you’ve done your research and know what you’re looking for in a supplier – it’s time for you to make that trip. China is one of the many wonders of the world and any travel junky will tell you you need to go, regardless of business obligations.
Traveling to China can seem intimidating considering how extremely different the language is. But, we promise to load you up with the basics of acing a business deal in the trade powerhouse.
In order to enter China, you will need a valid passport and a visa. Although there are different types of visas, it shouldn’t be too complicated to acquire one. There is a definite difference between a Tourist and a Business visa. Business Visas are for conducting business or participating in trade in China and usually allow 30 to 60 days of entry.
If you’re looking for employment in China, there is a Work Visa for that.
A good thing to practice for traveling anywhere is making sure that your passport will be valid for at least six months after you’re supposed to enter a country. If anything happens, your passport is your lifeline and you should make sure to keep it up to date.
Using a Cell Phone in China
Roaming can be quite expensive in China. We recommend either buying an international SIM card at home or buying a Chinese SIM card once you arrive. SIM cards are typically pre-charged in China and are easily available around the city and at most airports.
China has a strict set of websites it doesn’t allow to be used which can be an obstacle for a foreigner. The official list of banned sites is updated often enough that there are too many to list here, but it’s safe to say that you won’t be able to access your email from China.
The good news is that there is internet all over China. Hotels, cafes, libraries, and many other public places offer free wifi to anyone. It will be very different because there is no Google or Yahoo, but it’s free nonetheless.
It isn’t necessarily illegal to use a VPN in China, in fact local businesses use them, but it can cause you trouble.
It isn’t necessarily illegal to use a VPN in China, in fact local businesses use them, but it can cause you trouble. The government has been cracking down on the use of VPNs in China as of 2017 and 2018 and it’s likely to get worse. For now, there are no fines or legal punishments involved but you could spend several hours at a police station trying to unlock your phone or laptop.
The Canton Fair
The Canton Fair is China’s biggest national trade fair, featuring every type of industrial product imaginable. The event is held twice annually in the spring and autumn, and their specific dates can be found online.
Though most of the buyers are from other Asian countries, European, American and Russian importers each make up about 10% or more of the audience. It’s designed to be an international event, with language assistance for people from 200 countries.
The Yiwu Trade Fair
The Yiwu Trade Fair is a permanent fair that targets small business buyers from all over the world. It’s generally less expensive than the Canton Fair, but with less variety as well.
China has over 500 different trade shows to choose from. If you’re set on going to one but don’t know what’s out there for you, try Eventseye. They have a complete list of trade shows by time of year for almost every country in the world, China included.
The concepts of respect and investment are a huge part of Chinese business culture no matter where you go. You will often hear the terms “guanxi” and “mianzi” in your search for business tips. These notions are pretty easy to understand and surprisingly similar to the way some westerners do business as well.
Fundamentally, guanxi is about building a network of mutually beneficial connections which can be used for personal and business purposes. In a sense, guanxi is important for businesses in any part of the world. However, in China guanxi is more important because the political system is centralized, bureaucratic, and the legal system is comparatively weak.
In the US you may be able to make a deal strictly over the phone or through business meetings, in China it is necessary to get to know your counterparts outside the boardroom at meals or over tea.
Relationships based on “guanxi” are deeper than mere business connections. For example, people who have a good “guanxi” will loan each other money or take each other out to dinner.
Businesses in China often attribute their success to having good guanxi.
Guanxi is a two-way relationship in which one relates oneself to others in a hierarchical manner, maintaining social and economic order. It does not end at a favor for a favor, but instead emphasizes ongoing mutual obligation, reciprocity, and trust.
Mianzi, or public face, is a central part of business culture. The concept of face carries more weight in China than it does in the US because of the hierarchical nature of Chinese society. Having face means having the respect of others which can also be a person’s dignity.
As in the US, you can lose face in China. The most common way to lose face is to be criticized in front of others. This can be a form of humiliation. If you are the person criticizing, you could be destroying your face as well. It can not only destroy any business opportunities with that person but also your relationship. Never share your negative opinions of a person in front of others, it’s extremely disrespectful.
In general, Chinese communication is more subtle than US business culture. For example, it’s rude to say “no” outright. Saying no could potentially embarrass the person you’re saying it to, which would mean they would lose face. A more polite alternative is to delay the answer, by saying, for example, “perhaps we can come back to that.”
Similarly, a Chinese business person won’t say “no” to you. They may reply “I see what you are saying but…” when in fact the “but” means they completely disagree.
In most countries in Asia, hierarchy is a large part of business culture. The same could be said for the US and the West as a whole but it’s particularly important in Asia.
When introducing yourself, make sure to shake the hand of the most influential person in the room and work your way down. Usually people will line up in the proper order of seniority for a hand shake. It can be typical for people to enter a room in this order too so that can make things much easier.
Like we said earlier, it’s crucial to respect hierarchy in China. The business card is a big part of making a good impression as well. It should be handed over and received with two hands as a sign of respect and holding something significant.
Because the Chinese business culture is always changing to accommodate more US business owners, it can be tricky to decide whether to bow or shake hands when meeting potential business partners. To make it easy, always wait to see if a person extends their hand before you offer yours.
Gestures in China
Beware that gestures have different meanings in China so they should be used sparingly. In particular, nodding means “I hear you,” not “I agree with you.”
It is considered rude to point at someone with either your hands, feet, or chopsticks. Gesture with an open hand instead.
In order to wish someone good fortune with a gesture, you interlock your hands as you would in prayer but without the fingers pointed.
We suggest you hire an interpreter for your business trip so you can have an easier time at these meetings. English is still a language of business in China, but anyone can appreciate someone using their mother tongue. This person could also help when it comes down to the negotiations.
Gift giving at the end of a meeting is a common business custom in China. Gifts must strike a balance between being not too expensive and not too cheap. An inexpensive gift shows you don’t value the relationship. An extravagant gift forces the receiver to give you a just as expensive gift to prove they are on your level. This can be a result of the hierarchical culture in China.
Business gifts are usually given in public and, as with business cards, should be received with two hands. The receiver might initially refuse your gift as a courtesy. Insist until they accept, but don’t expect them to open the gift right away because it can be viewed as greedy.
Certain items and colors can have negative connotations in China. Avoid giving clocks, cut flowers, white linens, storks, cranes, or anything sharp, such as knives and scissors. Avoid gifts that are colored white or black or wrapped in white or black paper as these are funeral colors. The meanings of colors vary from region to region, although red is generally a neutral color.
This is another reason to get an interpreter or a representative. They can help you with what to get and what to wrap it in. That being said, there are plenty of resources online that work just as well.
It’s a good idea to keep in touch with your suppliers or business associates even after the face-to-face meeting. This is part of “guanxi” and will help you both maintain good “mianzi.” Congratulate them on any successes they have or offer help if they need it – these are all things they’ll appreciate.
Considering the cultural differences between China and the US, there are a couple things to keep in mind. Most of these points should be things that any good business person should be practicing, but there are certain subtleties of presenting yourself when in China.
Attire – It is best to dress conservatively in China. Jeans are not acceptable for business meetings, and shorts are only used for sports. Men should wear dark-colored suits but should avoid black. Women, on the other hand, should wear flat shoes and long-sleeved blouses that have high necklines, as revealing clothing is considered tasteless.
Timing – Businesses are closed in China between 12 p.m. and 2 p.m., and appointments must also be scheduled around holidays. It’s considered polite to arrive early or at least on time.
Appearance – It’s important that you dress to impress. The Chinese are very particular about hygiene and being clean, which is why it’s customary to take your shoes off when entering houses.
Make sure you dress conservatively as well. Maybe even get your shoes polished before going overseas, or even when you’re in the country.
Handshakes – Americans value firm and strong handshakes with a lot of eye contact. The Chinese, however, have only adopted this form of greeting for other countries, and in most cases, won’t do it the same way. The handshake will likely be limp, and they won’t maintain the eye contact as long. Lengthy eye contact is viewed as confrontation, which the Chinese find uncomfortable. Playing your gestures and words by ear will be important.
Make sure to address a person by their last name. You’ll find that if you receive any written form of a person’s name, their surname always comes first. You should make bilingual business cards for your name too.
Small Talk – Diving right into business is not the way the Chinese do business. They appreciate a cultivated, long-term business relationship. That doesn’t mean you’ll be stuck in the country for forever, but you will have to put in the time. Small talk is the first step for this. They’ll likely ask you about your trip, have you tried any food, where you’re staying, etc. It’s light and meant to be a way to break the ice as well as show interest and appreciation.
Chinese business people are great negotiators and will expect you to be the same. Here’s a few things that you should look out for:
- Controlling the time and place of the meeting: They may schedule a meeting close to your departure date knowing you won’t want to go home empty handed. One way to deal with this is to arrange an open-ended ticket, or to claim you are leaving earlier than you are.
- Threatening to do business with someone else if their terms are not met: this is another technique that pressures you to make the deal. The best way to handle this situation is with patience.
- Using friendship to their advantage: this is the downside to guanxi. A business partner may insist that true friends make mutually beneficial deals. Be sure that the deal is indeed mutually beneficial.
- Displays of anger: Chinese business people may apply pressure through outward shows of anger causing you to fear that you may lose the contract. The best option is once again to remain calm and patient.
- Attrition: Chinese negotiators may engage in lengthy discussions to wear you down. Be patient and be prepared.
In addition to strategic differences, cultural differences will also be at play. Where someone from the US would search for the clear alternative, someone from China might look for a way to combine both options to minimize risk.
Although banks and ATMs are reputable sources in China to get currency, be careful using any other means. There are still instances of fraudulent yuan throughout the cities. Just be aware if you see any shops or places saying they are willing to exchange cash.
As we said earlier, we do not condone the use of VPNs, but China does filter and see online information that leaves or enters the country. As you would when travelling anywhere, be wary of sharing any private information such a banking information or anything else sensitive.
On a another note, there are certain places you can’t take photos in China. It’s illegal to take photos of people in public places without their permission. Places like political buildings, military bases, customs centers, religious places, cultural monuments, or even airports is illegal. Various wildlife reserves are off limits for cameras as well.
Even if you’re not looking to sightsee, it’s good to know in case you’re using a translator app that requires a photo.
Regulations and Permits
Hiring a customs broker can help you to better understand how to handle your supplies and what you’re up against in terms of cost.
China has 14 different trade agreements all with different countries and is a part of a number of groups that make trade way easier. Certain places aren’t open to foreign trade in China, like the government, so be aware if you’re looking. Importing and exporting from China can be very reasonable but things like ivory and agriculture can be prohibited.
Things like guns, chemicals, medications, and the other usual sensitive products are either highly vetted or prohibited. This shouldn’t be an issue for the typical small business of course.
All in all, China is a highly reputable source to get your goods and services. The products are regulated and the people are incredibly smart. Countless businesses in different countries trust China with their products daily. Perhaps yours should too!
Making a Payment
Something your Chinese business associate will definitely love is a quick and economic payment system. Transfering money in and out of China is hard to do even without the headaches a wire transfer can cause. You’ll be spending valuable time on trips to the bank, large amounts of paperwork, and all the while you won’t know where your money is.
Veem is an online payment program that allows you to pay your supplier without the hassles that a bank would cause. You can sign up for the service without having to leave the office. Best of all, you can track your money without having to pay hidden fees. With clients in over 60 countries, it’s no wonder Veem is one of the few payment systems that can efficiently and securely transfer money in and out of China.
Give Veem a call today and join the thousands of businesses across the world.