There are thousands of articles all over the Internet about how to market products, solicit customers, close sales pitches, write press releases and lead management teams in the American business culture. But what happens when you need to conduct business with a Chinese company or client?
The differences between American and Chinese business culture are extensive, particularly when it comes to direct communication between buyers and sellers. How well you understand Chinese business culture can mean the difference between a successful career and a failed one.
The Family Business Dynamic
When we eat at a restaurant or shop at a store in America that is said to be “family owned and operated”, we typically think it is “cute” and “quaint. For the Chinese business culture, however, this is the norm. Business models are operated based on family obligations rather than the pursuit of riches, a custom that was strengthened by Confucianism.
So how does this help Americans understand the Chinese way of conducting business? If you understand that businesses are typically family owned and operated (unless they are affiliated with the state), then you can begin to understand the motivations that drive your target customers.
The Purpose of Business
In the Chinese business culture, the purpose of owning a business is to provide for one’s family. In most cases, the business is run primarily by the dominant family head, to whom all other family members and employees defer. He is responsible for making important decisions, hiring new employees and executing changes.
Unlike the American business culture, the Chinese don’t follow an organized chain of command except for purposes of appearance. It isn’t rare for a middle-management employee to take a question directly to the dominant family head, rather than observing protocol through the chain of command. For Americans who do business with the Chinese, it is essential that you find out who maintains the most power in the organization and deal directly with him.
Financial Disclosure
Most large corporations in America are publicly traded, which means that they are also publicly scrutinized. The Chinese, on the other hand, are far more private about financial matters, and usually keep the majority of that information to themselves. They file their taxes, but keep a separate set of books for the dominant family head.
When Americans do business with the Chinese, it is important to maintain respectful distance concerning financial matters. It might be appropriate in America to bring up quarterly reports and other public information, but the Chinese don’t appreciate forthright discussion of finances.
Sources of Financing
American businesses are funded largely by financial institutions, private lenders, and the sale of securities. Chinese businesses, on the other hand, are largely financed by the family. They might take out loans with friends of the family or use familial connections to secure investment funds, but they don’t typically look outside private sources.
Because of this, the Chinese business culture is based primarily on the informal impressions of the dominant family head. This extends not only into financing, but also executive decisions, hiring, firing and acquisitions. When working with a Chinese business, Americans most tone-down their hard-nosed scrutiny of the facts and maintain a personal rapport.
Sales & Marketing
In America, we rely on advertising and monetary incentives for sales and marketing. Most of our efforts in this area are concentrated on monetary gain and the most cost-effective ways to get the word into the community. The Chinese business culture, however, is much different in that they garner most sales through family connections.
When you work with Chinese businesses, it is important to establish a personal connection with whoever makes the most important decisions. Tokens of your appreciation, phone calls to inquire about customer satisfaction, and in-person visits to express your interest are the best ways to ensure repeat sales. This is why many businesses that work with Chinese corporations require extensive international travel of their sales personnel.
Future Business
The Chinese business culture is centered around long-term profitable relationships and family honor. While Americans look at the current bottom line and this month’s profits, a Chinese business will be more likely to view each transaction as an investment in the future.
Americans must learn how to cultivate long-term relationships with the Chinese. Continued satisfaction with products and services is essential, as is a continued personal bond with those in charge.
