9 things you must know when doing business in China

12 June 2020 / By Shizhao Ding

How come a Singaporean could win LinkedIn China Spotlight Award?

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Eric Sim, who has 2 millions followers on LinkedIn, also teaches at top Chinese universities such as Peking university, Tsinghua University (Schwarzman scholars) and Renmin University. He has a successful investment banking career covering Chinese clients including state owned enterprises.

I wonder how someone educated in English in Singapore can achieve all these in China.

A quick sharing of my personal background. I was born in China and came to Singapore 8 years ago when I was 16. Spending substantial time in both countries has granted me a good understanding of both western and Chinese cultures. Based on an interview with Eric Sim and my own observation, here are the 9 things you must know when you do business in China:

1. Manage your social media

LinkedIn is the only international social media that is allowed in China.

Being a follower of Eric, I scanned through all his posts on LinkedIn, and I realize that one of the reasons that leads him into this great success is most of his posts are written in both English and Chinese. This attracts both English and Chinese readers. I noticed that his Chinese version is not a direction translation. For example, when he write “Google yourself” in English, the Chinese version is “Baidu yourself”.

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The next “Super-App” I must mention here is WeChat.

In China, WeChat is the most popular social media where people communicate and socialize virtually with each other.

Therefore, this app is where you leave your first impression on your clients. Post some WeChat moments to let other people know more about you. “Moments” is something similar to your post on Facebook or Twitter, and others can view and know who you are from it. Do think carefully before posting as all of these carry your personal brand and image.

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2. How to make cashless payment

In China, even an old man selling sweet potatoes on the street is using cashless payment! You can leave home without a wallet, but you should never leave your phone behind!

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In 2020, more than half of the population in China will utilize this payment method, with that figure rising to 60.5% in 2023.

In shopping malls, transportation, convenience stores, or even in markets, QR code scanning payment can easily help you make any transactions you want. Imagine you are rummaging in your wallet for cash when you pay for the bill after you invite customers to dinner, or you don’t have enough cash and end up asking the customer to pay for it. How would the customer think of you afterward?

Let me introduce the 2 most popular mobile app payment method. They are,

“WeChat Pay” by Tencent & “Alipay” by Alibaba.

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With the most current changes in policy, if your WeChat Pay is not connected to a corresponding bank account, you will not be able to pay or receive remittance. Therefore, what you need to do is, first of all, get a mobile phone number in China, which also requires you to register with your own identification. Second, register an account with a mainstream Chinese bank and deposit an appropriate amount of money. Next, bind your phone number and bank account with WeChat Pay or Alipay. Now you can make cashless payment in China just like how locals do.

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3. Mixing business with personal life & pleasure

In western countries, work and personal life are separated in most cases. But in China, work and personal life are closely integrated. They tend to ask highly personal questions of their business contacts, which is just another illustration of how the Chinese value personal relationships far more than impersonal business relationships.

They will ask you about your family, your personal life, and so on. This is because the Chinese let their professional and personal lives overlap, which is the central aspect of Chinese business customs. They want to consider you a friend and not just a business associate. They, therefore, need to build their trust in you or they won’t be able to do business with you. Do not be mistaken, however, you should still maintain your formality, even in such situations, and be respectful and polite. You should not take this as an invitation to be informal and excessively familiar.

4. “Wine-table culture”

In the long history of China, wine-table culture has played an important role in all aspects of people’s life, especially in business. Understanding this culture can greatly improve your success rate in signing contracts and gain trust from Chinese clients.

“Baijiu”, a clear, colourless distilled beverage of typically 40%-50% alcohol, is mostly favoured by majority of the Chinese population. The taste is very different from whiskey or vodka. Here are the 2 most famous brands “Maotai” and “Wuliangye”.

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Take note, when you “cheers” and clink glasses with someone, it is always good if your rim of the cup is lower than your senior’s. This is a sign of showing respect and truthfulness to your guests or clients.

5. Protocol & titles

In China, a lot of businesses are settled at dinner. In a business dinner, there is even a rule for sitting arrangement. For example, in a private dining room facing the entrance, the position in the middle of the dining table is the main position, which must be given to the most important person.

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There are many ways of sitting arrangement, but the 2 most common and popular are the following ways:

The first host should sit at this main position. On your left and right are your most and second important guest. The second host shall sit directly opposite you.

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You can position your most senior guest in this site, while on the left and right are the first and second host. The most junior from the host side shall sit directly opposite the most senior guest.

Based on each of their ranks and so on, sit accordingly until the position nearest to the door. These 2 ways enable you to engage your guests in the most proper manner.

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6. Appointment time is “call me when you arrive”

In China, be prepared for unexpected things. “Americans are used to having a fixed schedule of when and where to go.” “But in China, everything is flexible,” said Zhou Tong, a strategy consultancy based in New York and Shanghai.

“It’s not that they don’t want to make a commitment, it’s just their tradition.” “If you call a factory and say, ‘I’ll be at your place next week, can we make an appointment to meet?’ The typical answer is, call me when you get there.”

At least a large portion of Chinese companies are not used to western arrangements for appointments and schedules. If the boss has another meeting of a higher specification, even if the appointment is made, it may be canceled.

7. Relationship (Guanxi) doesn’t mean “building connections”

Many foreign businessmen who came to China for the first time didn’t understand the meaning of the word “relationship”. Isn’t a relationship just about making connections? If you understand it in this way, you will never be able to sit down with the Chinese to do business well. “Guanxi” means much more. A “relationship” should be a trusted network built over the years, if not decades.

It’s a Chinese rule to be friends before doing business.

In De Nobel’s blog, he said that he and his former partner of “KrO’s bird’s nest” spent a lot of time entertaining in order to have a good relationship with local businessmen and officials.

8. Essential and useful mobile Apps in China

Most of the international apps we are using are not applicable in China. For better daily experience, below I listed some mobile phone apps that would be very useful for you (I am not sponsored from any of the following companies).

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滴滴(DiDi) – similar to Uber & Grab, offers ride/taxi services. You are able to book a ride in areas with limited number of taxi

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大众点评(Dazhongdianping) – main function is food delivery service. But it also has many functions, such as buying tickets for scenic spots, booking hotels etc.

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高德地图(Gaode map) – similar to Google map, helps you arrange the most convenient and fastest trip from place to place

Kickstart your understanding with a movie

If you want to understand some conversational topics, you can start of doing so by watching Chinese movies. A recommendation by both Eric and myself is “Jiong-ma”(囧妈), which is released online for free due to outbreak of COVID-19. The movie has both English and Chinese subtitles.

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Wish you have a successful journey in doing business in China!

This article was first published on LinkedIn by Shizhao Ding.


About Shizhao

Born in China and moved to Singapore at 16, Shizhao has a good understanding of both Western and Chinese cultures through his substantial time in both countries. Being the president of NUS Chinese society and BBA student at NUS, Shizhao is constantly seeking for a meaningful transformation of Chinese business models into the contemporary globe. He is an analyst at Institute of Life (IOL) which helps young professionals to be successful at work and in life.

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