Voluntary Report - public distribution

**Date:** 12/6/2004

**GAIN Report Number:** CH4835

CH4835

**China, Peoples Republic of**

**Market Development Reports**

**Shanghai Business Etiquette**

**2004**

**Approved by:**

![](media/image1.wmf)Ross Kreamer

ATO Shanghai

**Prepared by:**

Jane Hu

**Report Highlights:**

As the world\'s most populous country, China is fast emerging as a
strategically important market for many U.S. businesses. Understanding
and practicing Chinese etiquette is one of the keys to a successful
business experience in China. Generational change and increasing
exposure to global media are transforming the veneer of Chinese culture.
Beneath the surface, however change is more gradual. ATO/Shanghai has
identified a few basic observations and suggestions for visiting
American business people.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Shanghai ATO \[CH2\]

\[CH\]

**Chinese Business Etiquette**

As the world's most populous country, China is also fast emerging as one
of the most important markets for many U.S. businesses. Home to nearly
one-quarter (1.3 billion) of the world's population, this nation is also
one of the world's fastest growing markets and as such attracts business
people seeking new opportunities.

Prior to discussing Chinese business etiquette, it useful to examine
some aspects of Chinese culture that it is based on.

**Some fundamentals about Chinese culture:**

Although there are large and important regional differences, Chinese
culture can be seen as sharing a set of core values, which underlie
social interaction throughout daily life. Four key features are
emblematic of China's basic cultural values:

\(a\) Respect for age and hierarchical position;

\(b\) Group (rather than individual) orientation;

\(c\) The concept of face; and,

\(d\) The importance of relationships

Much of the business etiquette of China and Shanghai draws on the above
four key features. With this in mind, here are several tips for
effectively communicating with business contacts and new friends in
Shanghai:

**1) Establishing and keeping personal relationships**

Personal relations ("guanxi" in Chinese) are a bigger factor in getting
things done in China than in the United States. In business,
relationships are important as most agreements rely more on trust
between parties than fully articulated, legally enforceable contracts.

When you begin to do business with Chinese people, it is suggested that
you make friends with them first. This implies some investment of time.
It is usually worthwhile to impress on your Chinese customers your good
character, rather than trying to impress them on the merits of your
product. Tolerance, integrity, honesty, sincerity and a little bit of
humor can help you set up a stable, constant and long-term working
relationship with your Chinese partners.

Learning some greetings in Mandarin can also help you quickly get close
to your Chinese partners, even if you are doing business in Shanghai
where most business people use Shanghainese. Those foreigners who can
speak even a few words of Chinese will impress Chinese counterparts.
This is because they equate the willingness to learn Chinese with a
serious commitment to China. Even one or two words will make a good
impression, even if they aren't pronounced entirely correctly. Chinese
business people generally feel more comfortable with those who have
taken the time to learn a bit about China. Also, they will most likely
be quite well informed about America. Don't be surprised if your host
speaks passable or even excellent English, but insists on using an
interpreter. If possible, summoning up a few Chinese greetings during
your first meeting will be helpful in setting the mood for a good
relationship with your Chinese counterparts.

**Some useful Chinese phrases**: (Note: most hotels have short lists of
survival phrases, as do all the major guidebooks. Just remember, don't
be bashful but be prepared not to be understood.)

/ √

Nin hao - How do you do?

√ √ - \\ \\ \\ /

Wo hen gaoxing ren shi nin - Nice to meet you

\\ \\

Xiexie - Thank you

√ \\

Qing zuo - Sit down, please

\\ \\

Zai jian -- Goodbye

/ \\ / \\

He Zuo Yu Kuai - Nice to cooperate with you

\- -

Gan bei- Cheers (literally: "dry cup," i.e., you will likely prompt your
host/dinner guests to drain their glass. It is not recommended to
attempt this procedure with a large glass.)

**Beating Around the Bush**

Understanding the Chinese way of thinking can help you avoid unnecessary
complications and misunderstandings and maintain good relations with
your Chinese partners. Most Chinese people are basically reserved, and
accustomed to thinking in roundabout ways. In Chinese culture, negative
replies are considered impolite, so if your Chinese customers keep
silent or just give you "may be," answers, please don't assume that they
are not sincere or disinterested. When your Chinese counterparts smile
and politely say, "No big problem" or "The problem is not serious," they
usually mean, "There are still problems". Some westerners complain that
it is difficult to determine what the real problem is from a Chinese
person. This is because, in Chinese culture, bringing "trouble" (a
problem) to or sharing the "trouble" with other people is impolite.
Therefore, Chinese people are instinctively comfortable in telling you
the positive part, while avoiding the negative part. Likewise, issues
that may be clearly related in your mind may be completely unconnected
as far as your counterpart is concerned. If it turns out that something
important has been left out, this does not necessarily mean that they
are being deliberately deceptive: they genuinely may not think it is
relevant. This makes checking for understanding a necessary part of
every business interaction: be prepared to spend time going over the
details.

**It is Better to Give Than Receive: the Concept of Face**

Considering the concept of face is another important factor in
maintaining good relations with your Chinese partners. The concept of
face is sensitive and complicated. Taking into account different
personalities and ways of thinking, Chinese people generally prefer the
passive to the aggressive, and to bury their feelings rather than
express them openly. Losing face is a humiliating experience -
especially in a business context. In the most extreme cases, losing face
once could mean losing business with that client or contact forever, as
such an embarrassment would not be forgotten. This is particularly true
for senior officials who might be embarrassed in front of more junior
colleagues. So, when you run into problems, either in meetings or on the
street, raising your voice to solve a bad situation will generally only
make things worse. Avoid losing your temper or criticizing China.
Likewise, it's a good idea to avoid political discussions. Note that
face isn't just lost, but can be given. When you publicly thank your
counterparts for their cooperation, or toast them at a banquet, you give
them face and help to cement the relationship.

**2) Making appointments**

In general, the best times for scheduling appointments are April to June
and September to November. However, ATO Shanghai notes that increasingly
U.S. business travelers are coming all 12 months of the year. When
scheduling your appointments, be sensitive to major holidays such as
Chinese New Year (i.e., Spring Festival), May Day, and Golden Week
(National Day, Oct 1). During these holidays many businesses will be
closed for up to a week or more. Dates of these holidays vary from year
to year, so be careful to check on the exact dates before scheduling an
appointment. Being late for an appointment is considered impolite in
Chinese business culture. Traffic conditions have deteriorated in most
cities, however, so flexibility is a must when hosting a potential
Chinese customer, as they may get caught in traffic.

**3) Working hours**

Business and government hours are 8:30 a.m. to 5:30 p.m., Monday through
Friday. Avoid plans to visit government offices on Friday afternoon,
because this period is sometimes reserved for "political studies". Food
and meals are a central part of Chinese culture, so most Chinese
enterprises take a break between 12:00 noon -- 2:00 p.m. Practically
everything shuts down during this period, sometimes including office
phone/messaging service.

**4) Business Attire**

Traditionally, conservative suits and ties in subdued colors were the
norm. Women wore conservative suits or dresses, and flat shoes or low
heels were the main footwear options. High heels were acceptable only
for parties or receptions. Things change, however and today Shanghai is
fast regaining its title as Pearl of the Orient, a place where fashions
for both men and women are current. The norms of business culture in
cosmopolitan cities other than Shanghai are changing as well. As a
general rule, however, formal dress is a sign of respect for your
counterpart. It is not advisable to adopt casual dress until you've
established a business relationship.

**5) Bring small gifts**

It is useful, but not absolutely necessary, to give small gifts to your
Chinese customers during meetings or meals. Items that are not expensive
and are representative of your company or organization are best. Some
examples: items with your corporate logo (mug, pen, key chain, etc.), or
a book (with pictures) of the region where your company is based. Gifts
should be given or exchanged at the end of the first meeting, or at the
end of your stay in their city. Don't expect your Chinese customers to
unwrap your gifts in front of you, since they may not be accustomed to
this practice. If you are presented with a gift, accept it and thank
your host. It is not necessary to unwrap the gift immediately.

**6) Bring name cards**

Name cards are an essential part of living and doing business in China.
Whether your visit is for business or pleasure, you should carry a good
supply of name cards with you at all times. Try to remember to accept
and offer cards with both hands; this is the polite form of exchange.
After exchanging the name cards, don't put them away immediately. You
should look at them for a few seconds and then put them on the meeting
table in front of you. After the meeting, be sure to collect all the
name cards for your records and future reference.

It would be better for you to give your Chinese customer a bilingual
Chinese-English card. If you don't have bilingual cards, you can ask a
local Chinese company to print one or two boxes for your temporary use.
We recommend that you have a Chinese name on your name cards, as this
will help those who do not speak English well, but wish to address you
by name. Most business centers in major hotel chains offer
quick-delivery name card printing services, and they can assist in the
selection of a Chinese name.

**7) Pay attention to small details when you see your Chinese
counterparts for the first time**

Generally speaking, shaking hands and changing name cards is the common
way to begin a first meeting with your Chinese counterparts. Don't be
too demonstrative, e.g., don't try to hug or kiss your Chinese
counterparts, as this will most likely cause embarrassment. Laughing
loudly is generally not polite or appropriate when people meet each
other for the first time. Try not to be too talkative, but be sure to
take an interest in what your host has to say. Give your host a chance
to bond with you, but expect your host to be more reserved in a business
setting than is common in the United States.

**8) Business meetings**

In accordance with Chinese business protocol, people are expected to
enter the meeting room in hierarchical order. For example, the Chinese
will assume that the first foreigner to enter the room is head of the
delegation.

During the business meeting, it would be beneficial to bring your own
interpreter, to help you understand the details being discussed. In
order to express your opinion clearly and let your Chinese partners
easily understand you, speak in short, simple sentences free of jargon
and slang. Pause frequently so that people will be able to understand
everything you've said.

Making presentations is very normal in a business meeting, so be sure to
have enough copies of your briefing materials ready for distribution.
Try to have them translated into Chinese.

Except for those educated in the West, Chinese businesspeople largely
rely on subjective feelings and personal experiences in forming opinions
and solving problems.

At the end of a meeting, you are expected to leave before your Chinese
counterparts.

**9) Comprehending the necessity of working lunches and dinners**

Generally speaking, business breakfasts are not a part of Chinese
business culture, except in Guangdong and Fujian provinces where the
"Morning Tea" is popular.

Business lunches and dinners, however, are a very important feature of
Chinese business culture, and will be common during your stay in China.
Participation is strongly recommended, since this is where your Chinese
counterparts get to know you, and exchange information (e.g., competitor
information) that was not presented in the formal meeting. This is where
you establish "guanxi" with your counterpart and begin to build trust.
Count on attending banquets arranged by your host. As a guest, you
should return the favor, if feasible. If not possible on this visit,
consider doing so on your next trip or when your Chinese counterparts
come to the United States, but be sure not to miss the opportunity. In
China, people tend to eat early. Lunch begins from around 11:30 a.m. to
noon, while dinner is served from 6 p.m. onwards. It is better not to
serve alcohol before the meal. It is also important to articulate any
food preferences. You should not feel pressured to eat or drink
something you don't like, or to drink more than you feel comfortable
drinking. Work out the seating arrangements in advance, making sure to
place the senior figure from each side next to one another with an
interpreter, as necessary. Generally, the seat in the middle of the
table, facing the door (i.e., 12 o'clock), is reserved for the host. The
most senior guest of honor sits directly to the left (i.e., 1 o'clock).

At a meal, wait for your host to make the first toast before drinking.
If you wish, you might then offer a brief return toast. In fact,
toasting can be a good opportunity to 'give face' to other members of
the group, though care should be taken not to detract from your host. It
is polite to use both hands when offering or receiving anything. Once
the meal is over, it is not expected that either the guests or host will
linger.

**10) Behave yourself on informal occasions**

Social occasions are worthwhile in order to improve team spirit. Your
presence will show your human face, but remember that staff will expect
you to act as a leader, even in an informal setting.

**Conclusion:**

As a visitor to China, it is polite to show respect for local customs.
If you want to learn more please see ATO Shanghai's **Business Travel in
China** (CH4836) report, and our **Exporter Guide** (CH4824).