Doing Business in China

Business Negotiations in China Business is conducted between friends

 The early stages of contract negotiations is a period of getting to know one another, breaking down(and understanding) barriers, and forming a "friendship". The Chinese still believe that business should be conducted between friends. There will usually be a number of meetings and dinners(the "banquet circuit"). During the banquets too much cognac is consumed, and despite the desires of the western businessman, too little work is accomplished. But trust and friendship, an important ingredient to business dealings, is what both parties are looking to establish at this point.

Throughout your dealings with your future Chinese partner, care must be given to "face" issues of the chinese partner. Simply put "face" is a much more complicated form of honor, respect and positive recognition. These face issues can quickly destroy the negotiating process. More on Face.

Once a level of trust and friendship develops, the negotiations become more meaningful both at the bargaining table and at the dinner table. Much progress and many a deal is still casually struck in backroom meetings over cognac and a cigar with just the leaders of the two parties, leaving the teams to work out the details in meetings the next morning.

To dispel an issue many have heard and believed: The Chinese are rumored to prefer working and dealing with American and Western businesses over the Japanese. The roots of this comment go back to World War II and the many crimes and abuses by the Japanese upon the Chinese. This has merit. However, the Chinese fully understand business, values, and making money. In fact there are many many Japanese investments in China and trade between the two is quite healthy. They will accept the deal that best suits them and is the one that produces the highest monetary value.

Business Negotiations in China tactics Business is conducted between friends