A Vancouver-based company was in China hosting its counterparts from Beijing at a local Cantonese restaurant. The Canadian team brought a translator with eminent qualifications from Hong Kong University. After receiving the business cards from the Chinese delegation, the Canadian team put them away and proceeded to relate how successful its company was in India and Japan.

To ensure that the Chinese and Canadian teams had ample opportunity for discussion, the Canadian hosts arranged for alternating seating of their Chinese counterparts next to the members of the Canadian team in alphabetical order. The food was delicious. The Canadian team showed its facility with chopsticks by eating quickly.

Hoping to build clarity for the negotiations that were to begin the next day, the Canadian team focused the discussion at dinner on business issues. The Canadian team’s goal was to impress its Chinese counterparts. It failed.  

While business negotiations with counterparts from China are often similar to negotiations elsewhere, local contexts and expectations on the part of Chinese negotiators require careful preparation. The following themes may be helpful in avoiding missteps.  

  1. The role of relationships (guanxi). Relational networks are cultural vehicles for communication and risk management and are an essential part of doing business in China. Chinese business-people rely as heavily on information obtained through these networks as they do on information found in documents.  

Canadians need to be aware of the importance of their personal relationships with their counterparts from China. Also, the importance of reputation cannot be overstated. Far more than financial statements, reputation and personal ties play a key role in achieving business success. Remember that relationships take time to develop. One or two meetings do not create a relationship.

  1. Diversity of culture. A common mistake made by foreign businesspeople is to assume that culture across China is uniform. Differences of family background, regional orientation and professional training can contribute to significant differences in outlook.  

Failure to appreciate this can lead to taking guests from Beijing to a local Cantonese restaurant, or using a Shanghainese interpreter to support a business discussion with counterparts from Guangdong or Fujian.  

  1. Business cards. When receiving a business card, spend time reading it carefully. This honours the person who provided the card. Do not just put the card in your pocket. Keep it on the table in front of you, signifying your continued interest and respect for the person who provided the card to you.  
  2. Who is in charge? A key challenge in negotiations (particularly with state-owned enterprises) is to determine who among the Chinese negotiating team has leadership authority and who has the final authority to approve important deal points. This is often not apparent.

The real authority often does not participate in the negotiations, or their participation may seem passive (like an observer). Often the power to decide outcomes rests with individuals or groups whose existence is often undisclosed and who do not participate directly in the negotiations.  

Effusive efforts to honour the apparent team leader may work to offend the real leader (and amuse other team members), all of which undermines negotiating effectiveness.  

  1. Banquet etiquette. Sharing meals is an essential part of negotiations with counterparts from China, but the meal is primarily a relationship-building opportunity.  

Food should be consumed slowly and business talk should be kept to an appropriate level. Discussion topics during dinner may include recreation, travel and current events. Meals should be selected with the regional context of the visitors in mind. Seating should be according to rank.