How to close a deal in China

How to close a deal in China

China is the world’s largest exporter and second-largest importer of goods. It is a modern society that has boasted a GDP growth of around 10% a year for the 30 years since 1978. But its culture and customs are very different from those in the West and you will need to prepare for a different way of doing business if you want to successfully close a deal. 

The social and ethical philosophy of Confucianism is a major part of life in China, which means a great deal of value is placed on saving and giving ‘face’ and respect for rank and elders, as well as patience, politeness and modesty. The Chinese see themselves as seamlessly integrated with a wide range of other people, including their family, colleagues and friends.

Face is developed through experience and age, and is increased by showing wisdom and avoiding mistakes and through compliments made about you to a third party. It is given to others through compliments and respect, but can be lessened by involvement in a negative action or deed which is then exposed.

Saving face though your behaviour and showing face by being respectful are both important parts of doing business in China. As a foreign businessperson you will automatically be shown respect and deference and in return you must show your Chinese business partners deference and formality, especially with those superior in rank to you within their own organisation. You should avoid becoming too informal and it’s best to avoid humour in case jokes are lost in translation.

In China, company decisions are typically only made by those at the top. Delegation is very limited and mid-level managers are rarely afforded power, instead ensuring orders are passed down and correctly executed.
 
Building a relationship based on friendship and trust is often a prerequisite of doing business, so you’ll need to invest time to achieve success. Expect event invitations and plenty of long dinners, where alcohol plays an important role and drinking intelligently is essential.

Establishing a local contact to act as an intermediary and provide support can also be wise, as they can also act as interpreter and help you to navigate through the local bureaucracy and legal system.

Introductions

When doing business in China it is customary to start meetings by a gentle handshake, which is accompanied by a slight nod of the head (overly firm handshakes can be interpreted as aggressive). Other than this the Chinese avoid physical contact when doing business, so make sure you refrain from patting or slapping your business partner’s arms on greeting.

Make sure you have translated business cards, ideally with Chinese characters printed in gold ink, which detail your company, rank and any qualifications you hold. When receiving a card it should be placed in a case rather than in a wallet or pocket.

It’s essential you pay close attention to preferred titles and forms of address and use appropriate phrases of respect, with any junior members of your team being aware of the need to show respect for elders and those of higher rank.

How to close a deal

Meetings should always be made in advance and punctuality is of the utmost importance, as lateness is seen as an insult.

Send information introducing your company ahead of any meeting. Make sure you know your company inside out and if you want to have some control over the flow of the meeting, it’s wise to send an agenda. Meetings usually begin with some brief small talk, which should be positive and non-political.

Known for being tough negotiators, the Chinese like to feel they have gained major concessions. In order to close a deal it’s important that you are seen to be flexible and willing to compromise in order for them to achieve this.

Also key to success is maintaining body language that shows you have self-control and that you are worthy of respect. While decisions can take a long time in China (due to a lack of confidence or urgency, or simultaneous negotiations), it’s important never to show any anger or frustration, as this is considered a sign of weakness to be exploited.

Enforcing contracts to the letter can be difficult, so if you secure a deal, you may want to consider taking suitable countermeasures, such as cash on delivery. Again, it’s important to maintain a positive composure during these discussions.

Emma Tidey
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