I’m not Chinese. And if you’re reading this, there is a good chance that neither are you.

This means that you’re already at a disadvantage when it comes to doing business in China.

Business, (like many other things for Chinese people), is all about balance. So is negotiation, especially Chinese negotiation.

Now while I don’t have a Chinese mindset, I have the benefit of being around someone that does every single day. And we think very differently.

So do you and the Chinese client you are doing business with.

Combine a culture set on maintaining a harmonious lifestyle with a skill that requires reaching a delicate balance in which both sides are satisfied, and you may already be feeling overwhelmed.

Add in the fact that you are dealing with a wholly different culture and mindset to the mix, and you suddenly have a recipe for disaster.

That is unless you learn how to think like a Chinese person…because how he or she thinks is very similar to how he or she does business. Here are three negotiation tips in accordance with the Chinese mindset. (Forbes contributor Jack Perkowski wrote 10 great tips; I’ve combined his pointers with my own reasoning and experience with the Chinese culture into three)

1. Balance Makes Perfect

As Yin and Yang are a vital concept in the eyes and minds of most Chinese people, it is imperative that you maintain a balance when negotiating with a Chinese client.

This is a two part system.

Naturally, you have to keep yourself balanced; don’t be too aggressive, yet don’t be complacent either. Stay calm and composed an keep your emotions in check, but make sure you don’t look engaged or bored either.

Obviously be respectful, honest and fair; don’t have a big ego and sincerely get to know your Chinese counterparts. This will help build trust and (hopefully) make them see you in a good light.

This may be seem a bit obvious,  but it’s surprisingly easy to tense up, start talking to much, and go back to your normal “Western client” negotiating style when you feel cornered or uneasy.

I also mentioned that this balance is a two part system; the second part is where it gets tricky.

The second aspect is maintaining the negotiation balanced itself. Ironically, this may actually be an unbalanced affair. Confused? Maybe a better word for this part is consistency. Let me explain.

While balancing yourself is key, you have to realize that that the negotiation process itself  will likely have many unbalanced pieces. By this I don’t mean that the terms of the negotiation or the outcome will be unbalanced, but rather that the Chinese culture is very different and the negotiation will require you be more reserved than usual.

While you may be a “go-getter”  who thinks and acts quickly, dealing with a Chinese client will require patience and likely many (rather than one or a few) negotiations and meetings.

You also have to stop and think carefully before making a decision and remember to talk less and listen more. Patience is truly a virtue in Chinese culture and therefore Chinese business culture.

Where the “unbalanced” factor plays a large part is when it comes to impressions. You are at a disadvantage here because Chinese people think and act very differently than Westerners, rarely showing their exact emotions or saying what on their minds.

Even if they don’t like your terms or think you’re acting impulsive and not thinking things through, they will not disagree with you in public, but rather continue to try and maintain cooperation and a friendly demeanor.

Chinese people will be very hospitable and respectful as you are a guest. They will possibly give you gifts and take you to nice restaurants and always seem cooperative.

It is important to know that they don’t want to “lose-face” or have you “lose-face” either. With that in mind, you can’t become complacent and assume everything is going well and you can approach the deal more aggressively because a Chinese client gives you compliments and is hospitable.

Respect, humbleness, and hospitality are ingrained in the Chinese culture and just because they are nice to do does not mean they will do business with you if they are not satisfied with the terms of the negotiation or your approach.

2. Not a Contact Sport: Avoid Conflict as Much as Possible

According to Andrew Hupert for chinesenegotiation.com, there is no such thing as conflict resolution in China.

Through my experiences with my Chinese girlfriend and friends, I’d have to say I mostly agree. It’s not that Chinese people don’t deal with conflict well, but rather that they deal with it in their own way, which is very different from how you and I deal with it.

Again, this is very much a cultural aspect that is out of your power to change when it comes to negotiating.

So instead of trying to, it’s better to avoid conflict altogether.

Hupert talks about how Chinese people usually avoid official institutions like police in government if there happens to be a conflict. Rather, they will try to get a third-party (typically someone older) that is mutually respected to act as a mediator.

Obviously, this relates more to daily conflicts between two people and business deals are far more formal.

However, the same approach of conflict avoidance can (and should) be used when negotiating.  This may result in uncomfortable moments, especially when dealing with counter-parties, who, according to Hupert,  won’t return cash or pay restitution even after admitting they made a mistake. Rather, they’ll repay with “guanxi“, which I will go into more detail in a future post.

One issue that could potentially lead to a conflict is the Chinese perception of a yuan, the currency used in China. In the aforementioned Forbes piece, Perkowski says that Chinese people have a different, lower cost perspective than someone who grew up in a place like the US.

So when an American looks at a 100 yuan, he/she sees about $15 (exchange rate is $1= approximately 6.29 yuan). However, when a Chinese person sees that same 100 yuan, he/she sees the equivalent of $100.

It’s not that they literally believe the two are worth the same; rather it is a completely different way of looking at the same object. So if you encounter this issue when doing business in China, it’s best to avoid making a big deal about it and think your counter-part is being difficult, but instead know that it is just a matter of different cost perspectives.

3. It’s a Team Sport: Draft Good Players

According to Perkowski, if you’re negotiating in China, chances are that the negotiation will be with a whole team rather than one or two clients sitting across the table from you.

Aside from the obvious extra pressure of dealing with more people, it is crucial to do some identifying; and this should be done as early as possible. Perkowski says there is almost always one decision maker and a one or two people who can influence him/her. It’s key to identify them early as they will be the driving forces throughout the negotiation.

To help balance the situation, it is also vital that you have a team of your own. More specifically, a good Chinese team that can translate while simultaneously helping you smoothly overcome the cultural gaps.

The importance of building good personal relationships and connections (“guanxi”) cannot be stressed enough. Using these relationships can give you a significant advantage when negotiating, particularly your “guanxi” with the local government.

Perkowski says negotiating in China is “a marathon, not sprint” because you will likely have numerous face-to-face meetings that will require a lot of trust building and translation over a longer period of time than you are used to. Having a worthy team backing you up is a mandatory step in helping you achieve a successful business negotiation.

Whether you’ve been doing business in China for some time now or are just starting your business endeavors there, you are likely aware (or can guess) that in such an unpredictable and constantly-changing economy, staying up to date on economic trends is crucial as China’s emerging market continues to grow at an unprecedented rate.

This is easier said than done, however, mostly because China’s economy is truly unique and unpredictable. Pinpointing the trends, knowing where to invest, and understanding why one business succeeds while another one fails requires careful observation and intelligent research. Here are some tips to get you started.

Li Ning Sporting Goods: A Tale of Two Economies and Many, Many Segments

Tip 1: Know your place in the market and stay put

In a recent Bloomberg BusinessWeek article, the authors talked about why China’s leading sporting goods and No. 2 in sportswear has his a roadblock after trying to re-establish itself as an upscale brand.

After growing significantly in both sales and profits in 2010 and firmly positioning itself between Nike and Adidas as China’s No. 2 footwear and apparel company, Li Ning saw it’s stock drop 55% and revenues decline, while the sportswear heavyweights and lower-end Chinese rival Anta, saw gains.

With a updated logo and a fresh advertising campaign, the company attempted to re-brand itself, raising prices and looking to focus it’s distribution to Bejing and Shanghai as opposed to lower-tier cities.

By doing so, Li Ning unintentionally opened the door for Anta to steal away their “price-conscious” customers while simultaneously failing to attract the target “young and wealthy” demographic who were perfectly content with dishing out a bit more cash for Nike and Adidas.

This case represents a look into the “eyes, minds, and hearts” of Chinese people, which may help you win them over when doing business there.

The authors go on to break the country down into two economies: China-1 and China 2.

The former covers most consumer goods and services (i.e. sportswear, food and beverage, personal care, etc) while the latter consists of “strategic” industries (i.e. steel, telecom, energy, etc).

In China-1 industries, the winners and losers are determined by the logic of the market and advantages unique to the company. This means that a Chinese company can beat out a foreign counterpart and vice-verse, depending on the situation. In contrast, in China-2 industries, domestic companies have the upper hand because their success is backed by the government, whose goal is to make them national champions.

More importantly, the country is becoming even more segmented than before as it’s economy continues to grow rapidly.

China’s top 2% wealthiest people number 30 million while on the other end of the spectrum, 150 million others are predicted to bump up from poverty to lower-middle class in the next 10 years.

With this kind of class/wealth diversity, it is impossible to be able to effectively cater to every group.

And yet while the company understandably wants to compete with the big boys, the one consistent thing about China’s economy is that the middle income segment will continue to be the largest in the emerging market.

So whether you are looking to start your own business in China or trying to steer your team onto the right path that will most benefit the company, remember that the middle is (usually) the safest and (often) best option.

It’s a Jungle Out There: Be Careful Where You Invest

Tip 2: With China’s Stock Market on a daily teeter-totter, be very careful when investing

While China is trying to control the swinging pendulum that is their stock market, it still constantly goes back and forth and you need to be careful where and when to invest.

This may sound like advice for any investor anywhere in the world (because it is),but China is a unique case, not only because of it’s unpredictable stock market, but also because it’s still seems a very attractive place to invest in.

But be cautious…China’s market appears to be slowing down.

According to Businessweek, officials are worried that the equity market may be on the verge of another turn-around. And while Liu Minkang, Chairman of the China Banking Regulatory Commission, is about to to introduce a variety of financial market reforms, they are overdue and it is a slow process.

Google Out, Baidu On Top; Censorship Continues to Rule

Tip 3: You’re a long way from home; play by their rules

Google may be slowly taking over the world, but after pulling out of China in 2010, it may be a while (or never) before the giant can become search engine king of China.

The censorship is frustrating and access to internet and TV are limited and controlled, but that is just something you have to accept for now, and despite protests, it doesn’t look to be going away soon.

Now while Google may not pertain to your business or company or plans in China, the point to take out of this is that the Chinese have a totally different mindset, culture, and government than anything you’re likely used to.

And despite progressively becoming more open, the Chinese government is far from lifting or easing their censorship regulations.

You have to be extra careful not only to respect the Chinese culture and tradition (see my last post), but to also be up-to-date on current Chinese policies and trends, business struggles and successes, and be extra careful when and if to invest.

From “Feng Shui” (English for wind-water), a Chinese geomancy system that is believed to improve life by getting positive qi, to the Chinese zodiac, to a variety of superstitions, getting familiar with Chinese culture and tradition is an integral piece of the puzzle that is doing business in China.

How so? You may be asking.

Positioning is Powerful

Being around Chinese culture on a daily basis for the last four-plus years has allowed me to see everyday things from a Chinese perspective. Before, when I walked into a Chinese restaurant and was greeted by a large fish tank, I saw it as a mere decoration. I know now that the direction the fish tank faced and the amount of fish inside was likely not random. It’s Feng Shui.

While “Feng Shui-ing” your home is gaining popularity outside of Chinese culture these days, Chinese people have relied on this ancient system of creating good energy in their lives for thousands of years. And since creating good energy  results in prosperity and abundance, you can probably guess how important Feng Shui is in Chinese business.

So if you find yourself in a conference room or a businessperson’s office in China wondering about the “money frog” or other Feng Shui wealth cures dispersed throughout,  all these are believed to bring money and good fortune in Chinese culture.

But whether you want to buy one as a gift or place it in your office to show off your knowledge of all things Chinese before you meet that important Chinese client, the important thing to remember is that these aren’t simple decorations. They are important cultural items with different meanings and purposes; where they are placed is just as important.

Not all wealth cures are created equal and their effectiveness varies from person to person. The three-legged mythical money frog is popular because it is believed to bring wealth and abundance.  However, if the person happens not to like the money frog, the energy connection will be poor and likely not effect their Feng Shui. Also likely, you will look silly rather than culturally adept.

In other words, if you don’t know the person well and want to make a good impression,  don’t go over-the-top with gifts, but rather do your research and be knowledgeable about Feng Shui and…

Red, go ahead! White, not alright! (Usually)

Colors. Different colors are significant in different cultures and Chinese is no exception. And some maybe more obvious than others. If you’ve been at a  Chinese New Year’s Celebration or simply walked by and glanced at some decorations (celebrations of Chinese New Year 2012 just recently concluded), you can probably guess that red is a good color in Chinese culture.

Red symbolizes fire and is believed to be lucky, bringing fortune and joy. During Chinese New Year and other holidays and celebrations, people give out red envelopes filled with money to loved ones and friends. Who gives to who and the amount given depends on the occasion.

Red also supposedly keeps evil spirits away and traditionally symbolic of happiness. Thus, it is strictly forbidden in funerals.

White, on the other hand, is the predominant color used in funerals, and isn’t celebratory or pure like in many other cultures. In fact, ancient Chinese people only wore white while mourning for the dead so it would be safe for you to avoid it in presents, clothing, cards, etc.

A few more general Chinese color associations: Black is neutral, corresponds to water, and is regarded as “Heaven’s” color in the Book of Changes (I Ching). It is also used in daily Chinese clothing in modern China.

Green is another good color generally associated with health, harmony, and prosperity, but more recently  in regards to the People’s Republic of China’s harmonization efforts. 

While blue is symbolic of immortality, dark blue is often associated with funerals and death.

Yellow/Gold is believed to be the most beautiful color and corresponds with the earth. There is a Chinese saying that implies that “yellow is the center of everything”. Because of it’s neutrality, beauty, and luck, yellow is a good color and is usually always a safe bet. However it is important to know that Chinese Buddhists use it as a mourning color.

It’s a Game of Numbers

Certain numbers bring happiness and fortune in Chinese belief and thus are considered lucky while others are avoided because they are unlucky or represent something bad.

The word  ”four” in Chinese is “si”. As you probably know, one word in Chinese can have numerous meanings depending on the tone and context. “Si”, when said with the third tone, also happens to mean “die/dead” so Chinese people often avoid the number 4. In fact, some buildings in China, Taiwan, Hong Kong, and Macau don’t have fourth floors or room number 44, etc.

The number 8, which is “ba” in Chinese, on the contrary is lucky, because “ba” has the same sound as the word for “wealth”. The fact that the Beijing Olympics started on 8/8/08 is no coincidence. For a full list of lucky and unlucky numbers, click here.

An (even) More Direct Connection

In an article I read last week, I was surprised to find out that Feng Shui and Chinese astronomy can play a direct role in the business world, particularly in investments.

Turns out, CLSA, a Hong Kong-based brokerage firm, releases a yearly Feng Shui index that combines traditional market forecasts with Chinese astrology to help determine if the year will be good or bad for investing.

And while it can be completely wrong in it’s prediction (last year was supposed to be a lucky and “especially good for playing the markets”), this doesn’t discourage many Chinese from believing or at least respecting the index.

In case you’re wondering, while the Year of the Dragon is traditionally auspicious, the animal is not the only determining factor. Each year is associated with an element too and 2012 is a water year and a water dragon is less lucky than it’s fire or metal counterpart.

To Sum-Up

As a person wishing for successful business endeavors in China, you are now hopefully armed with better knowledge of Chinese culture and tradition and how they can directly impact the success of your business venture.

The Chinese are very serious about their traditions and the last thing you want to do is to unintentionally disregard a tradition or dishonor the culture. Doing business on the fourth of April or wearing that lucky white suit to meet an important Chinese client may be a deal-breaker to some people.

And while the Cultural Revolution in China in 1960 attempted to eliminated many of these traditions, in a thousands-of-years old country ingrained with a rich cultural history and populated by more than 1.3 billion people, this was impossible. Traditions survived and are evident all over China today, especially as the economic giant becomes more and more open.

To make a very long, 5000 year-old story short, the point is that all these intricate details and Chinese cultural traditions are important and nothing is too minor to overlook  if you plan to do business in China.

A Humorous Lesson

To reiterate the importance of all this, I leave you with an anecdote in the form of another article I recently read. Although not directly related, I believe it accurately portrays Chinese’ trust in themselves and superstitions.

Remember Roland Emmerich’s 2009 apocalyptic disaster thriller “2012″? I don’t expect you to since it underwhelmed despite millions of dollars worth of special effects and an intriguing premise. However, it is one of Hollywood’s top grossing movies ever in China with $466 million in revenues.

Why? It is the Chinese that build the arks that save humanity at the end of the movie. This “good guy” portrayal has had a strong influence on the Chinese and some even believe the film to be prophetic.

The article discusses this in depth so I will not bore you with the details. But if you can see how a three year old over-the-top movie made in America can impact China as a nation simply because it portrays them in a positive light, imagine how much better you will be seen through the eyes of a Chinese businessperson if you take the time and effort to research and respect his or her culture and traditions.

You will learn:

• Some basic cultural tips for getting along in China
• How to pronounce words in Mandarin
• The four tones
• Some basic phrases like “Thank you” and “What’s your name?”

After the class, we give you 6 mp3 files:

• All Pinyin sounds – Learn quickly by listening in your car.
• The Four Tones – Master the tones and sound like a native speaker.
• Specialty mp3 files for the sounds: 1. Ji, Qi and Xi, 2. Z, C and S and 3. Ch, Sh and R
• Ni Jiao Shenme Mingzi – What’s your name? – Use these on your next trip to China.

Here is what our student, Mark Moore says about our classes:

CCLC has changed my life! Like any thing in life worth doing you will “hit the wall” at certain times in the process. At CCLC they have the know-how to guide you through these times and keep you on track in reaching your language goals. I highly recommend CCLC’s “personal touch” teaching methods. Take a chance and try the “first lesson free” offer. I did and I have never looked back! – Mark Moore, Salesman in Denver

You will learn:

• Some basic cultural tips for getting along in China
• How to pronounce words in Mandarin
• The four tones
• Some basic phrases like “Thank you” and “What’s your name?”

After the class, we give you 6 mp3 files:

• All Pinyin sounds – Learn quickly by listening in your car.
• The Four Tones – Master the tones and sound like a native speaker.
• Specialty mp3 files for the sounds: 1. Ji, Qi and Xi, 2. Z, C and S and 3. Ch, Sh and R
• Ni Jiao Shenme Mingzi – What’s your name? – Use these on your next trip to China.

Here is what our student, Mark Moore says about our classes:

CCLC has changed my life! Like any thing in life worth doing you will “hit the wall” at certain times in the process. At CCLC they have the know-how to guide you through these times and keep you on track in reaching your language goals. I highly recommend CCLC’s “personal touch” teaching methods. Take a chance and try the “first lesson free” offer. I did and I have never looked back! – Mark Moore, Salesman in Denver

Key Points From my Perspective

1. Learn how to say and respond to greetings in Mandarin Chinese. “It will open hearts.”

2. Learn proper business card etiquette

3. Stand up with authority when giving your presentation.

4. Convey respect for Chinese people and the Chinese way.

5. Learn Chinese Of course we’d love to help!

They did not cover the concept of relationships.  This is a key concept to understand and understand well if you want to succeed in China.

(So is getting them, to learn how to take a business card properly, sign up for our free business email course!)

If you don’t give it out the correct way, it is a sure sign that you are either rude or don’t know what you are doing.

If you do this wrong, your new connection won’t feel that connected.

In my view, it really boils down to paying the proper attention and respect to the person you have just met.

1. Business cards in China are called name cards or míng piàn.
2. Give everyone a business card personally. Don’t pass them around.
3. Get nice business cards and take care of them. Never give out one that is dirty, smudged or wrinkled.  Always have several on hand. You lose a lot of respect if you run out.
4. Hand the business card to your new connection with both hands.  The type should be facing your new Chinese business partner. Your thumb should be on the top of the card with your first and second finger behind the card.  You should be looking at them but not staring them down.   Think of it as offering your full but polite attention to the person.
5. When they take your card, nod your head in a respectful “bow.”
6. If you are feeling adventurous, you can say “Qǐng Duō Zhǐ Jiào,” which means, please teach me more.  Teach in this case means mentor or guide.

To learn how to take business cards, sign up for our free email course!

You may wonder what a bottomless cup of tea is.  First, let’s talk about the chá experience.  We would visit my mother-in-law every Sunday and we would always “yòng chá”. Chinese people enjoy the fragrance and taste of the tea.  They put the chá yè into the chá hū and fill it with boiling water.  They use the first pot to rinse the tea by pour that pot out.  They frequently smell the tea.

You can see a video on YouTube of the Chinese Tea Ceremony Here.

Yòng chá is a zen like process that involves talking and sitting.  There aren’t any video games.  The TV might be on, but the volume is typically low and the focus is on one another.

I first ran into the bottomless chá bēi at my mother-in-law’s .  We had gone over for a visit on a Sunday.  We made tea (pào chá).  When it was time to leave, I emptied my chá bēi be polite.  Before I could stand up the chá bēi was full again.  I quickly finished that and said, “That is wonderful, but I can’t drink anymore.”  My host gave me a confused look and clearly wanted to dào chá.

My wife explained my mistake to me on the way home.  Polite hosts will always fill your cup.  They might even pào chá.  When you are done, it is okay and polite to simply stop drinking.  When you walk away the cup will be full and cold.

Basic Tea Phrases - chá jù

Tea - chá

Make tea - pào chá

Drink tea – hē chá

A more polite way to say drink tea - yòng chá

Pour tea - dào chá

Leaves - chá yè

Pot - chá hū

Cup - chá bēi

If you don’t understand how to say the above Chinese words, sign up for our free email course here: Free Email Class Signup Form

A great place to learn about Chinese tea traditions in Denver is Seven Cups Denver Tea Shop.

For more information on Chinese tea traditions in Taiwan, click here.

ChineseTeaCeremony.eu has information on the Chinese Tea Ceremony.

An article, published on Bloomberg.com on August 30, 2011, discussed the advantages of speaking the local language when doing business there.

“Speaking the language confers a huge advantage for anyone who wants to do business in a non-English-speaking country,” he said. “It gives you flexibility, knowledge that you need, and personal connections that can make a difference in the speed and effectiveness of your negotiations.” - Leigh Hafrey, a senior lecturer in communications and ethics at the Massachusetts Institute of Technology’s Sloan School of Management.

So why learn Mandarin Chinese?

The article tells us:

Mandarin, spoken by 845 million people, scored highest in a ranking of languages, excluding English, based on business usefulness. The ranking scored languages according to the number of speakers, number of countries where the language is official, along with those nations’ populations, financial power, educational and literacy rates, and related measures.

But Mandarin is hard!

Actually, learning Mandarin Chinese is not that hard.  Yes, there are a lot of characters, but you don’t need to know that many and you certainly don’t need to know them all. Yes there are tones and they change the meaning, but almost all of the time, the meaning of a word is clear from the context.  As one of our student’s found out, you don’t need to master the language to reap the benefits:

Nonetheless, I found very quickly that, even with the most rudimentary Mandarin skills, my understanding of culture, custom and conversation, and my relationships with friends and partners in China improved exponentially.  - Geoff O’Keeffe, Vice-President, Global Sourcing, American Recreation Products, Boulder, Colorado, USA

Learning at a University is Boring

I took German at a University.  It wasn’t horribly boring, but the classes were large and moved at the pace of a University.  I learned what I did because I studied really, really hard.  I didn’t get a ton out of the classes and the instructor certainly didn’t push me every week.

Learn Mandarin Chinese in a Small Group Environment

Our school is located in Broomfield, Colorado.  Our group classes are reasonable in terms of cost and range in size from 4 to 6 students.  If you want to maximize your progress and have the complete attention of the instructor, you can take private lessons.  You will learn Mandarin from a trained, experienced instructor who is also a native speaker.  We offer a Free Introductory Class if you contact us here.

There are so many reasons that it’s hard to list them all.  There are even more reasons for someone doing business in China or Taiwan to learn Mandarin.  You see these reasons on the news. 1.1 Billion people (with a capital B) speak Mandarin.

There are significant reasons that you don’t hear about.

It’s not that hard.

Contrary to common perception, it is just not that hard.  Yes, the first few classes are difficult. You must learn new sounds and how to make them.  You learn the new phonetics and the tones.  This takes a few hours.  After that, your ability will skyrocket and it takes about 15 minutes a day of practice with one class a week that lasts one hour to 90 minutes.

The grammar is easy.  Especially early on.

There is no case.  You don’t say “I gave him…” You say, “I gave he.”  Learning the grammar is a step by step process.  It takes time and some of the grammar is difficult to understand, but it is a LOT easier than German in my opinion.

Writing is memorization but while there are many characters, there are common pieces of characters called radicals.  You put radicals together and you get a word. The radicals even offer hints to the meaning of the word.

Learning Mandarin Makes You Competitive

Even some basic knowledge gives you a step up over your competition.  Chinese people typically don’t expect you to learn to speak Mandarin.  When they discover that you speak even very basic Mandarin, they are pleasantly surprised. In their eyes it shows you are serious about China and doing business in China.

Broaden Your Horizons

Understanding the language helps you understand the culture.  You miss so much when everything is translated.  They can translate the words and explain the culture behind the conversation, but you just can’t keep up.  If you understand half of what is said, you will develop a much clearer understanding of the culture.