Business & Trade

“ Give a man a fish; you feed him for a day. Teach a man how to fish; you feed him for a lifetime.”

One of China Trade Centre’s objectives is to facilitate Australians and Chinese to do more profitable business and trade by providing a “business knowledge” platform.

Many western companies have entered China over the past twenty years hoping to capture a slice of the gigantic business cake that is available amongst a nation of 1.3 billion people - some have succeeded but many have failed. The dynamics of doing business between businessmen from the West with businessmen from the East is embedded in the fundamental difference in cultural codes of behavior which can significantly influence the outcome of a business transaction.

It would be prudent for both sides to take a little time to understand and appreciate some of the cultural differences. It is very common to hear a western businessman stating that he has been to China many times or that he knows so and so in China. Conversely, we also hear from Chinese businessmen stating that this was how they do business in China.

Both attitudes are a sure recipe for failure. To start with, when you talk about Chinese cultural customs and Chinese dialects; they are as different as French would be to Irish. In China, the common formal language is “Mandarin” and the written form is universal. However, when the Chinese speaks his mother-tongue dialect from the Province he is from, it is as different as chalk and cheese to Mandarin. Remember, China has 23 provinces, 5 autonomous regions, 4 municipalities, and 2 special administrative regions of Hong Kong and Macao. And they are all very different.

For the Australian, treat each region or province as a different “country” and you will start to be on the right track and hopefully, with the right attitude in tow.

Since the signing of the Free Trade Agreement, the Chinese Government has encouraged Chinese companies to go abroad and establish business activities in foreign countries, Many are now looking to expand their operations overseas.

For the Chinese, take heed of the famous saying: “When you are in Rome, do as the Romans”.

Our advice:

• Avoid problems by getting the help from overseas Chinese. They share the common Chinese cultural values and they can avoid problems by using their understanding of the Chinese cultural codes.
• Westerners tend to be contented with the signed contract while the Chinese look beyond the contract for sincere commitment as in a good personal relationship and many are often viewed with a long-term relationship in mind. To maintain a long-term relationship, one must reciprocate.
• Always be flexible when referring to contracts seeking remedial actions, especially when doing business in China. Doors can suddenly close on you through the “guanxi” network. Use the legal route as a last result. Always try and solve differences through friendly “consultations”. The use of an influential negotiator with the right “guanxi” is highly desirable.
• Remember, guanxi is like a currency.  A good guanxi can also be “transferred” or “assigned” so long as you do not break the codes of guanxi. It cannot be overused and the favours will have to be reciprocated in one way or another.
• Wherever practical, it is recommend that business documentation (or a precise thereof) should be written in bi-lingual (English / Chinese) with one nominated as the legal language according to local law of the country where the document is executed, and the other for information purpose only.
• If you are visiting a foreign country, spend some time to understand the local customs, etiquette, and social customs of your host country. It will help to develop business friendship quicker.
• Learn some simple Mandarin (English), especially if you are visiting China (Australia) as it would go a long way of showing that you care and are interested in the local cultures and practices.

To further help highlight the various issues that are different (and sensitive) but may be innocently overlooked, we have quoted some information from the internet in the accompanying pages for your convenience under the headings of: “When in China” and “When in Australia”.

Armed with the right knowledge and correct attitude, fantastic new business deals are there to be made and long-term relationships to be forged.