Understanding Chinese Business Culture

This year coincides with the 50th Anniversary of the establishment of diplomatic relations between China and Australia.

Reflecting on this relationship over the past half-century, we have managed to find common ground by adopting mutual respect for mutual benefit. China has remained Australia’s largest trading partner, export market, source of imports, source of tourism revenue and source of international students. This has helped Australia become the only OECD country to maintain economic growth for 29 consecutive years and sail smoothly through multiple global and regional economic upheaval.

Our 50th Anniversary is a timely reminder that we share a common purpose and ambition for the people of both countries to continue to grow and prosper.

With the growing trend for small to medium businesses to export to China or capitalise on Chinese interest in Australia in sectors like tourism, property and health, it’s useful to understand the cultural values that underpin Chinese business practice.

The traditional values associated with Confucianism are central to Chinese society. These values determine how a person should act within a community (or indeed within a business) and heavily influence business life in China.

  1. Hierarchy and respect: People are valued based on their title and seniority. Show respect at all times. Draw on the informal personal relationships you have with local Chinese connections to understand the hierarchy of organisations you are dealing with.
  2. Guanxi: It’s all about your relationship with someone. Guanxi refers to mutually beneficial relationships which can be used for personal and business purposes. In China, business relationships play a far more important role than in the West so it is necessary to spend time getting to know your Chinese counterparts outside the boardroom.
  3. Loss of face ‘mianzi’: Encourage harmony and maintain face by complimenting others. Never publicly criticise anyone, refer to their mistakes, show anger or disagree with a superior. Direct disagreement or confrontation with a colleague, may cause them to lose mianzi and is to be avoided.
  4. Trust is built through personal connections. Be open and don’t be concerned if your Chinese partner is interested in your personal life and discusses it in business meetings. Direct questioning is common in China so don’t be offended if you’re asked how old you are and how much money you make. The Chinese are generous hosts and hospitality is an essential part of the formalities, but be aware that does not mean you have already earned their trust.
  5. SymbolismThe Chinese consider 8 to be the luckiest number and 4 to be unlucky as it sounds similar to the word for death. When choosing your Chinese phone number make sure it has minimal 4s and plenty of 8s. The colours red and gold signify good luck and wealth and are therefore popular on business cards and branding for the Chinese market.

If you are establishing a business in China, you will also need to navigate different laws for business and product registrations, intellectual property protection, tax, foreign exchange and dispute resolution. It’s essential to have legal and accounting advisors in China you can trust. Accru is part of the MGI global association and works with partner firms in China. Please contact your local Accru advisor if we can assist.

Key success factors for conducting business in China

+   Learn and understand the culture
Having a Chinese person’s perspective and insider knowledge is valuable.

+   Build relationships with key decision-makers
The need to develop and maintain relationships is essential in all contexts, including business dinners, emails, meetings and negotiations.

+   Research everything
Location, competitors, the market, business partners, negotiation plans. When pitching your product, make sure you have done your homework and can present your offering effectively.

+   Be adaptable
Build in contingencies and have flexible plans so you can adapt quickly if things don’t go your way.

+   Practice due diligence
Recognise that what is understood as ethical and responsible behaviour in China can differ from what is considered acceptable practice in a western context and exercise caution.

At Accru Felsers in Sydney, our Chinese-Australian staff understand both Australian and Chinese business cultures, are bi-lingual and can facilitate establishing your operations in China through our partner firms in China and throughout Asia. If you’d like our assistance, please contact us.

About the Author
Jean Zhang | Auditing Expert | Accru Felsers
Jean is known for excellent problem solving skills, clear logical thinking and an aptitude for numbers. Most importantly, she is truly dedicated to delivering high quality, accurate accounting advice.