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How to Do Business in China, Article 1


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Two things commonly considered when doing business in China are that it is a hierarchical system and that Internet use is not as widespread as it is in other areas of the world. But do you know why? The hierarchical system stems from the teachings of Confucius. Though China’s government encourages atheism, its constitution guarantees religious freedom. Regardless of which religion is practiced by individuals, large numbers of Chinese believe in the traditional philosophies of Confucianism and Taoism. Confucius taught that to preserve harmony in the home, certain reciprocal responsibilities must be preserved in relationships, be it between ruler and subjects, husband and wife, father and son, elder brother and younger brother, and friends. Since all but the last are hierarchical, rank and age are historically very important in all interactions.

As for the issues concerning the Internet, it is true that Internet use is hampered by government censorship and the periodic shutting down of internet cafes. However, the Chinese language generates much of the problem itself due to the thousands of ideographs not easily adaptable to keyboards. Another issue impeding Internet commerce is the fact that even many of the wealthiest of Chinese do not have credit cards.

Understanding the history of China as well as the root causes for how their system works will enhance your ability to communicate effectively when doing business within this culture.

Important tips

  • Dates are displayed as Year/Month/Day, rather than Month/Day/Year.

  • Avoid traveling to China during the Lunar New Year. During this weeklong holiday, convention demands that everyone return to their traditional home, which leads to millions of trips taken by car, bus, train, or plane this week. With such enormous strains on the transportation infrastructure, people find themselves waiting for days to secure standing room on trains and buses.

  • Chinese people do not like to be touched. When exchanging greetings, bow or nod slightly. Only shake someone's hand if he extends it first.

  • When visiting a factory, theater, or school, you may be greeted with applause. It is customary to applaud back.

  • Chinese names are in reverse order from Western names; family name, middle name, given name, and often middle names and given names are combined. For example, President Hu Jintao’s family name is Hu, middle name is Jin, and given name is Tao.

    - Women keep their maiden names and should be addressed formally as “Madam [family name].” For example, President Hu Jintao’s wife’s name is Liu Yongqing, and she should be addressed as Madam Liu.

Appointments

  • Written Chinese does not have a future tense, but can only be defined by the context. Because of this you must be very specific on times and dates for appointments, contracts, or other transactions.

  • Be it for business or social meetings, lateness or a cancellation is considered a slight.

  • Spring and fall are considered the best times of year to plan a business trip.

  • China is 13 hours ahead of Eastern Standard Time, and though it is similar in size to the U.S., it only has one time zone.

  • Your business cards should include a Chinese translation on the back; bonus points if the Chinese font is in gold. Be careful how you handle your prospect’s business card. Placing it in your wallet and then your wallet in your back pocket is not appropriate.

Negotiations

  • During negotiations, Chinese businesspeople will have an interpreter. It is a good idea to make sure you have one as well to help you understand the nuances of what is said.

  • Use short, simple sentences, without slang or jargon, to make sure your exact words are understood.

  • Do not be impatient; the Chinese are good at dragging out negotiations well beyond your deadline to gain an advantage. They may even renegotiate a contract on the final day of your visit or try to snare a better deal after the contract is signed.

  • Do not overemphasize your ability to meet a deadline; humility is a virtue and your Chinese counterparts will investigate your claims.

  • Your most senior officer should be the only one to speak and lead the conversation, with other parties only contributing upon request.

  • At the conclusion of the meeting, your team should be the first to leave the room.

  • Unless you understand the nuances of color, have all your collateral printed in black and white.

Entertaining

  • Business lunches are very popular.

  • If your prospect throw’s a banquet in your honor, it is appropriate to reciprocate at the same level; make sure cost per person is similar, but do not outshine their banquet.

  • Show up early, preferably thirty minutes before your host does.

  • Never begin eating or drinking until your host has.

  • Eat lightly in the beginning; some banquets have up to 20 courses.

    - You should try everything. The Chinese may even test your fortitude with exotic delicacies such as thousand-year-old eggs or deep-fried scorpions with their stingers intact.

    - If you clean your plate, they will refill it. If you finish everything, your host will feel that they did not provide an adequate amount of food.

  • Historically, women do not drink alcohol. For formal events, businesswomen should accept a drink if offered, take a sip, and then leave it. However, it is now perfectly acceptable for women to drink at less formal events such as a trade association dinner.

One last tip: you need to establish contacts in China before planning a trip. The Department of Trade or Commerce can assist in arranging appointments with business and government officials, and can identify importers, buyers, agents, distributors, and joint venture partners.

Morrision, Terri, and Wayne A. Conaway (2006). Kiss, Bow, or Shake Hands, 2nd Edition. Massachusetts: Adams Media Corporation.

 

 

Published - March 2012

 


 

China

 

 

Deeply rooted in Chinese society is the need to belong and conform to a unit, whether the family, a political party or an organization. The family is the focus of life for most Chinese. Age and rank are highly respected. However, to the dismay of older people, today's young people are rapidly modernizing, wearing blue jeans and sunglasses, drinking Coke and driving motorbikes.

Meeting and Greeting

  • Shake hands upon meeting. Chinese may nod or bow instead of shaking hands, although shaking hands has become increasingly common.

  • When introduced to a Chinese group, they may greet you with applause. Applaud back.

  • Senior persons begin greetings. Greet the oldest, most senior person before others. During group introductions, line up according to seniority with the senior person at the head of the line.

Names and Titles

  • Use family names and appropriate titles until specifically invited by your Chinese host or colleagues to use their given names.

  • Address the Chinese by Mr., Mrs., Miss plus family name. Note: married women always retain their maiden name.

  • Chinese are often addressed by their government or professional titles. For example, address Li Pang using his title: Mayor Li or Director Li.

  • Names may have two parts; for example: Wang Chien. Traditional Chinese family names are placed first with the given name (which has one or two syllables) coming last (family name: Wang; given: Chien).

  • Chinese generally introduce their guests using their full titles and company names. You should do the same. Example: Doctor John Smith, CEO of American Data Corporation.

Body Language

  • The Chinese dislike being touched by strangers. Do not touch, hug, lock arms, back slap or make any body contact.

  • Clicking fingers or whistling is considered very rude.

  • Never put your feet on a desk or a chair. Never gesture or pass an object with your feet.

  • Blowing one's nose in a handkerchief and returning it to one's pocket is considered vulgar by the Chinese.

  • To beckon a Chinese person, face the palm of your hand downward and move your fingers in a scratching motion. Never use your index finger to beckon anyone.

  • Sucking air in quickly and loudly through lips and teeth expresses distress or surprise at a proposed request. Attempt to change your request, allowing the Chinese to save face.

  • Chinese point with an open hand. Never point with your index finger.

Corporate Culture

The Chinese are practical in business and realize they need Western investment, but dislike dependency on foreigners. They are suspicious and fearful of being cheated or pushed around by foreigners, who are perceived as culturally and economically corrupt. It is very difficult to break through the "them vs. us" philosophy (foreign partner vs. Chinese). In personal relationships, the Chinese will offer friendship and warm hospitality without conflict, but in business they are astute negotiators.

  • Punctuality is important for foreign businesspeople. Being late is rude. Meetings always begin on time.

  • Business cards are exchanged upon meeting. Business cards should be printed in English on one side and Chinese on the other. Make sure the Chinese side uses "simplified" characters and not "classical" characters, which are used in Taiwan and Hong Kong.

  • English is not spoken in business meetings, although some Chinese may understand English without making it known. Hire an interpreter or ask for one to be provided.

  • Be prepared for long meetings and lengthy negotiations (often ten days straight) with many delays.

  • The Chinese will enter a meeting with the highest-ranking person entering first. They will assume the first member of your group to enter the room is the leader of your delegation. The senior Chinese person welcomes everyone. The foreign leader introduces his/her team, and each member distributes his/her card. The leader invites the Chinese to do the same.

  • Seating is very important at a meeting. The host sits to the left of the most important guest.

  • There may be periods of silence at a business meeting; do not interrupt these.

  • A contract is considered a draft subject to change. Chinese may agree on a deal and then change their minds. A signed contract is not binding and does not mean negotiations will end.

  • Observing seniority and rank are extremely important in business.

  • The status of the people who make the initial contact with the Chinese is very important. Don't insult the Chinese by sending someone with a low rank.

  • Chinese negotiators may try to make foreign negotiators feel guilty about setbacks; they may then manipulate this sense of guilt to achieve certain concessions.

  • Two Chinese negotiating tricks designed to make you agree to concessions are staged temper tantrums and a feigned sense of urgency.

  • If the Chinese side no longer wishes to pursue the deal, they may not tell you. To save their own face, they may become increasingly inflexible and hard-nosed, forcing you to break off negotiations. In this way, they may avoid blame for the failure.

Dining and Entertainment

  • Dining is used to probe positions without any formal commitment. Business is generally not discussed during meals. Meals are a vehicle for indirect business references.

  • The Chinese are superb hosts. Twelve-course banquets with frequent toasts are a Chinese trademark.

  • The Chinese sponsoring organization generally hosts a welcoming banquet. Foreign guests should reciprocate toward the end of their visits. Invite everyone with whom you have dealt.

  • Always arrive exactly on time for a banquet. Never arrive early for dinner. This implies that you are hungry and might cause you to lose face.

  • Spouses are not usually included in business entertaining, however, businesspeople may bring their secretaries.

  • Be prepared to make a small toast for all occasions.

  • The first toast normally occurs during or after the first course, not before. After the next course, the guest should reciprocate.

  • Three glasses -- a large one for beer, soda or mineral water, a small wine glass and a stemmed shot glass -- are at each place setting. The shot glass is the one used for toasting.

  • It is not necessary to always drain your glass after a ganbei (bottoms up), although a host should encourage it.

  • Do not drink until you toast others at the table. Chinese consider drinking alone to be rude. Simply raising your glass and making eye contact is sufficient. If you are toasted, sip your drink in reply.

  • A toast to friendship among companies will help cement a business relationship.

  • Unless you are totally drunk, it is not advised to refuse a drink. Sipping your drink is perfectly acceptable.

  • Leave some food on your plate during each course of a meal to honor the generosity of your host. It is bad manners for a Chinese host not to keep refilling guests' plates or teacups.

  • Seating is very important. The guest of honor is always placed at the head of the room, facing the door. Allow the host to begin eating before joining in.

  • Do not discuss business at dinner unless your Chinese counterpart initiates it.

  • Slurping soup and belching are acceptable. Cover your mouth with your hand when using a toothpick. Put bones, seeds, etc. on the table, never in your rice bowl.

  • Chopsticks are used for all meals. Tapping your chopsticks on the table is considered very rude.

  • When finished eating, place your chopsticks neatly on the table or on the chopstick rest.

  • When hosting, order one dish for every person present and one extra. In addition, order rice, noodles and buns. Soup usually comes at some point during the meal. The host should tell his/her guests to begin eating a new dish before he digs in himself.

  • The host (the one who invites) pays the bill for everyone.

  • If you are the guest of honor at a dinner, leave shortly after the meal is finished, as no one will leave before the guest of honor.

  • Breakfast meetings are rare, but you may request one.

  • Guests are rarely invited to a Chinese home. It is an honor to be a guest. Be on time or a little early for an invitation, and take a small gift.

  • Bedrooms and kitchens are private. Don't enter these rooms unless you are invited to do so.

  • All dishes are served at once in a home. The host will place portions of each dish on guests' plates. Sample each dish.

  • Rare beef is considered barbaric by the Chinese.

Dress

  • Conservative, simple, unpretentious, modest clothing should be worn -- nothing flashy or overly fashionable.

  • Women should avoid bare backs, shorts, low-cut tops and excessive jewelry.

  • For business, men should wear sport coats and ties. Slacks and open-necked shirts are generally suitable in the summer for business meetings; jackets and ties are not necessary.

  • Women should wear dresses or pantsuits for business and should avoid heavy make-up and dangling, gaudy jewelry.

Gifts

  • Present a gift with both hands. Gifts are generally not opened upon receiving. Always give a gift to everyone present or don't give gifts at all.

  • Older Chinese usually refuse a gift at first to be polite. Offer a second time.

  • Never give a gift of great value until a clear relationship is established. This would cause embarrassment and may not be accepted. Never give gifts in sets (i.e., dishes), but never in sets of four (a number associated with death).

  • Avoid white, which is symbolic of death, especially of parents, and black, which symbolizes tragedy or death.

  • When invited to someone's home, always bring a small gift for the hostess, such as brandy, chocolates or cakes.

  • Be prepared to exchange a modest gift with your business colleagues at the first meeting. Not giving a gift could start a business meeting off on the wrong foot.

  • Always give gifts to each member of the Chinese delegation that meets you in the order in which they were introduced. Suggested gifts: cigarettes (especially Marlboro and Kent), French brandy, whiskey, pens, lighters, desk attire, cognac, books, framed paintings. Give more valuable gifts — like cellular phones or small CD players — to senior level people.

  • Give a group gift from your company to the host company. Present this gift to the leader of the delegation.

Helpful Hints

  • Chinese find "no" difficult to say. They may say "maybe" or "we'll see" in order to save face.

  • Always refer to China as "China" or "People's Republic of China," never as "Red China," "Communist China" or "Mainland China."

  • Always refer to Taiwan as "Taiwan" or "Province of Taiwan," never "China," "Republic of China" (the name adapted by the Nationalist forces after they fled to Taiwan) or "Free China."

  • Do not in any way suggest that Taiwan is not part of China.

  • Show respect for older people. Offer a seat or right of way through the door to a colleague or older person as a polite gesture.

  • Return applause when applauded.

  • Refrain from being loud, boisterous or showy.

  • Do not be insulted if the Chinese ask personal questions such as "How much money do you make?" "How many children do you have?" or "Are you married?" Just change the subject if you do not want to answer.

  • Asking about divorce would cause a Chinese person to lose face.

  • Forcing the Chinese to say "no" will quickly end a relationship.

  • Never say or act like you are starving and don’t ask for a doggy bag.

  • Most Chinese women don't wear wedding rings. Don't assume marital status.

Especially for Women

  • China is a difficult place for anyone to conduct business. A woman may gain acceptance, but it will take time and will not be easy.

  • China is a male-dominated society. However, there are many women in business in China and some occupy high-ranking positions and important managerial jobs. One of the principles of the Chinese communist system is to work toward sexual equality.

  • Negotiating teams may have women members. Women may be used to decline unpopular proposals.

  • Businesswomen attend business dinners, but rarely bring their spouses.

  • Chinese women rarely smoke or drink. However, it is acceptable for Western women to do so moderately.

 


 

Ten things you didn’t know about China

 

 

 

The first Chinese car you drive will likely be a Chery

In 2005, Chery (its English translation should have been “Cheery” but there was a mistake in the translation process and it was decided by the company to not correct the error) was upgraded to ISO/TS 16949:2002 production quality, the highest and strictest quality control system in the global auto industry. They also began working with Malcolm Bricklin’s company, Visionary Vehicles, hoping to be one of the first Chinese automobiles sold in the United States. The plan was to import five new car lines. Bricklin planned to have 250 dealers in the United States selling 250,000 cars a year by 2007. However, after 2 delays and various disagreements over finances and car design, the deal broke down. Instead, Chery is pursuing its own export plans and is designing a large array of cars for the American and European market and Chinese market.

en.wikipedia.org

Tencent is the name of the number one internet company in China.

No other Internet company in the world — not even Google — has achieved the kind of dominance in its home market that Tencent commands in China, where its all-in-one packaging of entertainment offerings and a mobile instant-messaging service, “QQ,” has reached more than 100 million users, or nearly 80 percent of the market.

theledger.com

China is an exporting juggernaut and has about $1 trillion in foreign reserves, most of which is used to buy U.S. debt, including $350 billion in U.S. T-bills.

China will soon create one of the world’s largest investment funds, with ramifications for global stock, bond and commodities markets and for how the U.S. finances its trade deficits.

inthesetimes.com | globalresearch.ca

By next year, cement consumed in China will amount to 44% of global demand.

China will remain the largest national consumer of cement in the world, accounting for close to half of global cement consumption in 2010.

cementamericas.com | marketresearch.com

The Year of the Pig will see an unprecedented number of births in China.

Pig years, which occur every 12 years, are considered auspicious. But the coming one, or so many believe, will be especially fortunate since it is not just a pig but a golden pig, the first in 60 or even 600 years, depending on which astrologer one consults. China’s state-owned media have carried numerous stories of gynecologists struggling to cope with unusual numbers of expectant women. Life Times, a weekly newspaper, quoted an official as saying that Beijing alone could see 170,000 births this year.

economist.com

Chinese citizens are among the fastest growing groups of tourists to destinations outside of their own country.
Chinese citizens were only freed by their government to travel for leisure in 1997, but by 2004, 29 million mainland Chinese citizens traveled abroad. Some reports estimate that Chinese tourists will number 115 million by 2020.

www.worldhum.com

China has the most rapidly growing thirst for “foreign” oil.
With 1.3 billion people, the People’s Republic of China is the world’s most populous country and the second largest oil consumer. A report by the International Energy Agency predicted that by 2030, Chinese oil imports will equal imports by the U.S. today. When world energy leaders gathered in Houston last week to dissect industry issues, their remarks were translated from English into only two other languages — Russian and Chinese.

www.iags.org | www.chinapost.com

Of the 20,000 new English words unofficially logged last year, up to 20 percent were “Chinglish. ”
Chinglish terms include “drinktea,” meaning closed, from the Mandarin Chinese for resting; and its opposite, “torunbusiness,” meaning open, from the Mandarin word for operating.  An older example we all recognize: “Long time no see," a word-for-word Chinese-English translation, is now a standard English phrase.

www.post-gazette.com | news.xinhuanet.com

A Taco Bell, Pizza Hut, or KFC opens at the rate of a store a day in China.

Yum Brands, the world’s largest fast-food operator in terms of number of locations, is opening up one restaurant a day in China, with plans to add 400 restaurants this year.

www.chicagotribune.com

129 surnames represent 87 percent of all surnames in China.

This statistic was compiled as part of the reviving of an order of the Emperor many years ago to compile the 100 most popular surnames (or last, or family names) in China at the time. School children used to memorize them.

english.people.com | www.chinapage.com

* All links found in this article are meant to be points of departure, and for further informational purposes. If you have information that is different or even contradictory to these factoids, please tell us, and we will print it in next month’s E-Buzz.

 


 

Learning how to negotiate with the Chinese

 

 

John Freivalds photoWhenever a client of ours comes back from their first trip to China to negotiate a deal I always ask “Did you remember not to say when you were returning?”

The three pillars of successful negotiating are: time, power, and knowledge. You can make a better deal for yourself if you have all three in your favor. The only thing I can really help a client with is knowledge. If they give away their “time pillar,” they have already lost a key negotiating advantage by giving their return time. Instead of saying when you will return say “as long as it takes.” If you give your departure time, you put yourself at a disadvantage because the other side knows you need to get something done quickly. With public companies getting things done “right now” is a big issue because every quarter they have to show some progress to their shareholders and skeptical analysts. But to be successful in China you can’t let them know what your time agenda is. So if you gain anything from these words, keep your departure time to yourself. By thinking that you will gain something by saying “I have got to get back” is really committing negotiating suicide particularly with the Chinese.

ClientSide News Magazine pictureAs to the issue of power, Western firms do have some in dealing with the Chinese. A recent UPS survey showed that the Chinese prefer American goods so they want them in their country. Chinese firms also want to have access to the US market whether to produce outsourced goods, or to increasing their own branded products.

That leaves the “knowledge pillar.” I hope that the following words can give you some insight as to how the Chinese regard the negotiating process. I will throw in some Chinese words and concepts which are part of our “guerilla linguistics theory” that our firm has developed over the years. This concept is used by many firms when they begin their negotiating process in another country and culture. By using common terms of the other side, they don’t really know what you do know or don’t know about their culture. I relish the fact that a number of firms have used the concept, the NY Times recently lauded the practice and firms like UPS and Jacobs Trading have used it. And yet when I first introduced the concept in 1994 the Modern Language Association wouldn’t accept our advertisement for the concept or the posters that represented it because it wasn’t “professional” enough; I framed the rejection letter.

THE CURRENT PRACTICE

For the most part when Western firms go to deal with the Chinese they follow the common practices of taking lots of business cards in Chinese with them, wearing a dark business suit, drinking the toasts, and negotiating in short sentences. But these actions can only get you so far.

While the Chinese opening to the West is of recent vintage, the Chinese have been around and trading for many thousands of years. Westerners are regarded as newcomers.

John Graham, writing in the Harvard Business Review, states the most important cultural concept to take into account in China is agrarianism. In contrast to the US and other Western countries, two thirds of the Chinese still live in the country side and retain their rural roots and values. “Rural living is communal, not individualistic, and survival depends on group cooperation and harmony.” Morality is part of the agrarian heritage as well and going out to a club with others is unthinkable. Don’t let the skyscrapers of Shanghai and Beijing fool you; it’s still a traditional society in more than a few ways. Take former CEO of General Electric Jack Welch’s words in writing his best selling book Winning, “…learn everything you can about China, because it will permeate every aspect of your business in your lifetime.”

 

“While the Chinese opening to the West is of recent vintage, the Chinese have been around and trading for many thousands of years”

One way of putting this in a negotiating context is that the Chinese are concerned with the means as well as the end. A good negotiation involves going back and forth, reaching a compromise with both parties, who are each holding a valid point of view. To say its “my way or the highway” as particularly American firms are wont to say won’t work. Just remember the ancient Chinese proverb “Merchants as folding screens must bend in order to stand.”

Some of the other differences are: Western firms are information oriented; the Chinese are relationship oriented. We are sequential (if this, then that); the Chinese are circular. We argue; the Chinese haggle. We live in a culture of cold calls, while the Chinese work through intermediaries. We like quick meetings, where the Chinese like a long courting process. In other words, Westerners are impatient while the Chinese are enduring.

My favorite insight on the Chinese negotiating style comes from author James Macgregor in his book One Billion Customers: Lessons from Front Lines of doing Business in China; he writes “The Chinese have a no ‘blush’ gene when it comes to negotiations. No matter how egregious the demand the Chinese can say it with a straight face. They will ask you for anything because you may just be stupid enough to agree to it. Many do. Western attorneys in China make a good living unraveling these contracts.” Don DePalma who just got back from China put negotiating a joint venture this way, “…don’t be surprised if your partner chooses to re-visit the agreement sooner than the renewal date.”

Finally language enters the fray. It is helpful to note that Chinese is a pictographic language. Words are really a sequence of pictures, not single words crafted by lawyers. It was Michael Harris Bond, a psychology professor at the Chinese University of Hong Kong who found that Chinese students are better at the big picture while Americans are good at the details. And the big picture for the Chinese is that a signed deal is just the starting point for a relationship, not the end point.

GUERILLA LINGUISTICS FOR NEGOTIATIONS

Guerilla linguistics can be defined as the art of giving the impression that you know more about a language (back to the knowledge pillar) than you really do. These eight terms define the elements that form the base of the Chinese negotiating style. To acknowledge them or even to say them, during a negotiation will go a long way towards you accomplishing your goals.

  • Guanxi- There is no equivalent term in English, but it is the concept that friendship can enable one friend to make substantial demands of the other.

  • Shehui Dengji-“The Just call me Freddy” informality usually does not work well in China.

  • Renji Hexie (interpersonal harmony). Having a hissy fit won’t get you any points nor will giving ultimatums, or to quote another Chinese proverb, “a man without a smile should not open a shop.”

  • Mianazi (Saving face) A person’s social standing and reputation rely on saving face. If you cause someone to lose face, you best tell them when your plane leaves as your negotiation is over and you are done.

  • Chiku Nailao (endurance). The Chinese are beyond famous for their work ethic. The one time I told a Chinese citizen when my plane l eft (I said 6:00 AM at 7:00 PM the night before to get rid of him) he responded “I will have my people work all night to get the custom made suit and ten shirts done by the time you need..” And he did!

  • Zhongjina ren – To deal with the Chinese you have to have an intermediary. The Chinese regard people as guilty instead of innocent until proven guilty. Thus you have to have a trusted intermediary make the first contact.

  • Zhenghti Guannina (Back to the pictographs) Chinese think holistically, that is they think about the whole or big picture while westerners break apart the deal into segments price, quantity, delivery etc. The Chinese might talk about these all at once and skip over some. It seems very circular to Westerners but remember they are the fastest growing economy on earth so get used to dealing with them and their way of negotiating.

  • Ganbei – This literally means “dry glass” and is a popular toast. Part of any negotiation is a ban quet and lots of toasts. While baiju, a potent liquor, used to be a staple at banquets, wine mixed with soda is increasingly becoming the primary toasting drink. Be prepared to give and receive lots of toasts.

This is part one of a two part article that I will continue with in the May issue of ClientSide News. As you can imagine, this is a vast subject and I will deliver more insights and depth on negotiating with the Chinese next month!

 

 


 

Going local in China

 

www.to-in.com

 

 

An Insider’s View From TOIN

ClientSide News Magazine pictureClientside News recently interviewed Shinichi Kojima, Country Manager of TOIN China, to get an insider’s perspective on how China and the general emergence of Asia is impacting the localization industry.

CSN: In 2006, the Asian and China markets were exploding. How has rapid growth changed the landscape?

SK: With all the interest, one trend is that global companies are treating Asia and China not as a special situation, but more as an integral part of their plans. China is a player as a source of labor and intellectual capital and, more importantly for the future, it is a rapidly growing consumer market.

Also, our industry and our clients will need to view China as something beyond the world’s production factory. Labor costs are getting higher, and I think we will see the Yuan get stronger. The city of Shanghai, for example, is changing its inducement strategy to attract knowledgebased service industries, instead of manufacturing.

Plus, the Chinese government is discussing ending preferential treatment of foreign companies to protect Chinese businesses. In fact, we will continue to see Chinese companies make a push to compete internationally with their own brands. You might recall that Chinese automakers Geely and Changfeng made a good impression exhibiting their own cars at the Detroit Auto Show this year and last.

For localization firms, I think these trends have created an impetus to act globally, like our clients. For instance, our company has developed a presence in China and also recently created TOIN USA, to mirror the global structure of our clients and to create back-and-forth services among China, North America, and beyond, since that is required by the flow of trade.

The Chinese languages are relatively inexpensive, often less expensive than European languages, because the cost of labor is cheaper, but since the demand exceeds supply, the cost of Chinese is getting higher. Japanese has been expensive because the cost of labor is already high, but Western companies are less willing to treat Japanese as a special case, and they want pricing to fall in line with other languages. Innovative localization firms will need to build capacity, search out talent in competitive labor markets and make greater use of translation technologies, among other strategies, to get an edge.

CSN: The focus on China has cast a shadow on other parts of the region. What should we keep in mind about other emerging Asian countries?

SK: With economic growth rates topping 10 percent annually, clearly China is a flashpoint, but many other Asian countries offer growth and opportunity. India’s economy is booming. Many companies are looking beyond China to Southeast Asia and, in particular, to Vietnam, a new WTO inductee, for more competitive labor markets.

CSN: With all the fervor for expansion into Asia, it’s hard to know what is hype and what is real; what are some overstated and understated conditions that impact clients?

SK: Working in emerging markets is exciting. Growth opportunities combined with the feeling of really building something can be tremendous. But success is not guaranteed. The stakes are high, just like anywhere else, and businesses that wish to expand into Asian markets will experience hardships, obstacles, and ups and downs. In China, there are industry sectors that now present serious barriers to entry, because foreign companies have already invested so much over long periods of time to establish market share. Many companies will look for new opportunities beyond the major Eastern Seaboard markets.

In many ways, China still is a special case, even if multinational companies do not wish to see it this way. Walking down the street in Shanghai, it is easy for one to succumb to the illusion of being in a cutting-edge capitalist city. But the reality is something else. Culturally, westerners will probably feel a much greater gap doing business in China than they do in Japan. One must always keep in mind that China is a communist country with a government that has the authority to change laws and regulations overnight—literally. There is no such thing as private property anywhere in China. Real estate is owned either by the government or the community. For example, all the high rise buildings in China are built with leases. And you should never underestimate the power of local government offices.

CSN: Some North American clients are fearful of entering Asian markets from a cultural standpoint, a technology standpoint, and an implementation standpoint. They feel the need to have a presence, but lack the knowledge base that gives them the confidence to jump head first into this market. What are some of the emerging solutions to help them launch into an Asian expansion plan with confidence?

SK: The irony of this question makes me smile, because in the eyes of some Asian companies, North American and European markets seem daunting. Obviously, we believe localization firms that offer clients specialized expertise in unfamiliar markets are part of the foundation for success. We have the cultural, technical, and procedural knowledge to act as the facilitator. As far as emerging solutions, I think this goes back to the idea of clients making Asian localization a more integral part, instead of treating it as an afterthought. This creates the opportunity to build Asian localization into the overall plan, benefiting from efficiency and cost savings.

CSN: What are the biggest mistakes companies make as they launch into the Asian market?

SK: As I have mentioned, I think there are common misconceptions and assumptions about Asian countries, China in particular, that can lead to mistakes or pitfalls. It has to do with Western companies having expectations that are too lofty, and having a picture of the region that is not always accurate. These are cultures and economies that are in flux, and good business requires fresh information, whether you are looking to sell products or services in these markets or whether you are looking for labor solutions.

On that note, certainly you do not want to go to Asia solely because the cost of labor is cheaper. This is true for any market, but in Asia you really have to understand the local market and consider the benefits for the local people. If you are extending your business into China, you have to put effort into understanding the Chinese culture, respecting their way of thinking, and considering the pros and cons of globalization, not just for your company, but also for the local people and economy. This is also true when you extend your business to other Asian countries like Japan or Singapore.

CSN: As we kick off a new year, and if you were able to look into your crystal ball of the region, what are some future trends the industry should be aware of, and how should clients adjust their existing approach or plan to capitalize on these trends?

SK: The Chinese economy appears to have every chance of continuing to grow at a high rate in the near future. There will be significant shifts away from manufacturing to knowledge-based service industries. Companies will look more to marketing products and services in China, rather than seeking cheap labor. Look at the expansion of General Motors, for instance, which has a healthier business selling cars in China than in the United States right now. Plus, we will see more Chinese brands outside China.

China’s success is beginning to create a class of people with more expendable income. For example, those who can afford it will spend a lot of money for their child’s education, due to the one-child policy. On the other hand, some experts point out that the next generation of labor might be too spoiled, due to this policy.

Plus, I think the consumer market will continue to expand within China, reaching the inlands.

This all sounds very positive, but again it is critical to understand the social and political context with its inherent tensions and contradictions. Conflicts could arise within China between the winners and losers in the new economy. And the dichotomy between the communist government and the forces of capitalism is ever present.

For more information on TOIN or this article, please visit www.to-in.com.

 

 


 

 

Getting China Straight

 

www.1stoptr.com


Don Shin photoToday in 2005, how many people in the world can go a day without using a product ‘Made in China’? Although the answer is not yet “none”, it soon will be. Whether people know it or not, the Chinese tide is already lapping at our feet. Yet most people remain ignorant of what it stands for.

I have worked for the past eight years with many Chinese companies and translators, having founded and run a company that provides Asian Language translation services. I recently rang in the New Year in China with 30 employees from my successful local office there. So I am glad to share with my fellow GALA members a few lessons learned about doing business in China in the hope it will be helpful to them.

1. Don’t just think of China as a poor country.
This is true not only for China but also for many developing countries. One could make the case that a Chinese wage earner making US $300 per month is relatively better off than an American earning US $3000 per month. With that salary, the Chinese worker can enjoy a good quality of life while saving almost 50% of his pay. He can eat out almost every night and watch new movies every week. As long as you hold on to the notion that you’re richer, happier, or better than the average Chinese salaried man simply because Western per capita income is greater, you will be unable to develop the mutual respect needed to do business in China.

2. Learn about Quanxi, or relationships.
As in other Asian countries, relationships are very important in China, sometimes more so than regulations or the law. This means that even if you prepare everything according to the rules, you may be unable to get a business permit. But if you have the right relationships with right people, you do not need to worry because those contacts will make sure everything is prepared according to the regulations. Rather than simply dismissing this as sign of “corruption,” you need to understand that that this way of doing business as a long and successful history. The Chinese people value relationships, experience and tradition more than numbers, systems or regulations. For example, if you hire your friend’s son as your accountant, that son cannot afford to act deceitfully as an employee because he knows that doing so will affect his father’s relationship with you. Chinese business people have developed these kinds of “relationships” for the last 5,000 years and the loss of money or a job is far less serious than losing a relationship. This high-minded view of relationships is found not only in business but also in every aspect of life, careers, marriage, and friends and family. This makes it less risky to depend on the long-standing tradition of Quanxi than to depend on changing regulations or laws. So don’t be surprised if your Chinese counterparts do not speak a word about your impending business contract and want to go out for a drink with you every night. Be aware that they are building a “relationship” before they can decide on a business matter. Remember that the Great Wall wasn’t built in a day.

3. Learn the language and culture.
Before saying “That’s easier said than done!” please understand that I do not ask you to attend language classes for six months or read a pile of history books. Simply carry a small phrasebook with you and read it on the airplane. You will be surprised how your attempts at a few basic phrases, such as Se Se (Thank you), Zai Zhen (See you again), or Ni How (How are you), can completely change the mood of a meeting. At my first dinner meeting with my 30 new employees, I ate 2-inch thick butterfly pupae. That set the tone for our meeting and changed their attitude toward me.

4. Gifts are nice, but…
In China, gift-giving can work very well in building a relationship. But there’s a catch. You should know that the gift will be measured against gift customs, which exist on a very large scale. For example, when a colleague gets married, it is customary to give between a quarter and a third of your monthly salary as a gift. If the person is a close friend, you may be expected to give one month’s salary. So, when giving a gift, you must be very generous. In China, business is very much about give and take.

5. China is not one-dimensional; Keep learning!
My final piece of advice is to not depend too much on my advice at all. It is impossible to characterize 1.3 billion people and 5,000 years of cultural development in a few pages. There is so much diversity! For example, did you know more than 10 thousand Chinese are Arabic speakers? And people in Shanghai are very different to those from Beijing. This brings me to my number one golden rule: As long as you respect others and are open-minded, don’t worry and feel free to speak your mind. You will always find that you share something, and that words spoken from the heart will always reach the heart.


Don Shin is the CEO of 1-Stop Translation USA, a company specializing in Asian languages with offices in USA, Canada, China and Korea.



 

How to Do Business in China, Article 2

 

 

Are you currently doing business in China, or are you planning to in the near future? Consider this…

  • The Chinese have the oldest known calendar that dates back to 2600 BC. One year is based on the phases of the moon, and a complete cycle of the Chinese calendar takes 60 years.
  • Ice cream was invented in China around 2000 BC when the Chinese packed a soft milk and rice mixture in the snow.
  • Long ago, silk making was a closely guarded secret in China. Anyone who tried to give the secret away or was caught smuggling silkworm eggs or cocoons was put to death.
  • Each minority in China speaks its own dialect or language, and there are over 200 different ones recognized today. The most common are Mandarin, Cantonese, Shaghainese, and Kejia dialects.
  • During the world financial crisis, 40% of all Chinese small businesses either crashed or went bankrupt.
  • Despite its immense size, all of China is in one time zone.
  • Exports from China to the United States total to about $200 billion. Both countries depend on one another for continued prosperity and success.

Did you know that China is the fourth-largest country in the world and is home to over 1.3 billion people? If you would like to take advantage of this enormous business opportunity, then pay close attention to these tips they can ether make or break your ventures.

Important tips

  • Personal relationships, known as guanxi, are very important in the Chinese culture. Relationships signify the commitment to help one another, not just to do business. Focus on building guanxi before jumping into corporate details.
  • Business cards are exchanged on an initial meeting. Make sure one side of the card has been translated (in Mandarin) and try to print the Chinese letters using gold ink, as this is an auspicious color. Mention your company, rank, and any qualifications you hold. When receiving a card, never place it in your wallet and then in your back pocket.
  • Meetings typically start with a nod or bow. Shaking hands is also common, but wait for your Chinese associate to extend a hand first. (An overly vigorous handshake can be interpreted as aggressive.)
  • Avoid making dramatic gestures or using exaggerated facial expressions. The Chinese do not use their hands when talking and become distracted by a speaker who does.
  • Gift giving is appropriate on certain occasions. Avoid giving anything of value in front of others; it could cause embarrassment and trouble. Acceptable and appreciated gifts include high-quality pens, gourmet foods, liquors, and stamps if your associate is a collector (stamp collecting is popular in China).
  • Red is considered a lucky color in the Chinese culture. In contrast, white is the national color associated with funerals and mourning.

Appointments

  • Try and book meetings between April-June or September-October. Avoid national holidays especially the Chinese New Year.
  • Punctuality is vital when doing business in China; late arrivals are seen as an insult.
  • Meetings should begin with some brief small talk. Keep it positive and avoid anything political. (If it is your first meeting in China, talk of your experiences in the country so far.)
  • Always send an agenda prior to any meeting. Start with core issues and end with minor or side concerns.
  • Expect to make presentations to many different groups at different levels.
  • When entering a business meeting, the highest-ranking member of your group should lead the way.

Negotiations

  • It is not uncommon for the Chinese to supply an interpreter. If possible, bring your own interpreter as well to help you understand the nuances of the discussion.
  • Be patient and never show anger or frustration. Patience is the most important skill needed to do business in China. The Chinese are very good at figuring out when a foreigner is under pressure and will turn that into their advantage.
  • Never pressure your Asian colleagues for a decision. To speed up the decision process, slow down, start from the beginning, and work through a solution in a logical fashion. Then stand your ground.
  • Never argue or say “no” directly, as it is considered rude and arrogant.
  • The Chinese are known for being tough negotiators. They aim for concessions in negotiations, so you must be willing to show compromise.
  • Decisions will take a long time either because there is a lack of urgency or confidence, or because there are other negotiations taking place with competitors.
  • The Chinese expect the business conversation to be held by senior officials. Subordinates may speak when asked to provide data or comments, but in general, they do not interrupt.

Entertaining

  • You will probably be treated to at least one evening banquet. If so, you should always return the favor but never surpass your host in the degree of lavishness.
  • Never begin to eat or drink before your host does.
  • Expect your host to keep filling your bowl with food whenever you empty it. Clearing your bowl may be an insult to your host, because it can mean he did not provide you with enough food. However, leaving a bowl completely full is also considered rude.
  • Your attempts at using chopsticks will be appreciated. When finished, place them back on the chopstick rest. Placing them parallel on top of your bowl is considered a sign of bad luck. (Dropping your chopsticks is also bad luck.)
  • Serving dishes are not passed around. It is acceptable to reach over others to get the serving dishes. You should reach for food with your chopsticks but not with the end you put in your mouth.
  • Generally, conversation during a meal is centered on the meal itself and is full of compliments to the preparer. Other suitable topics include Chinese sights, art, calligraphy, and the health of the other’s family. 

For your Chinese business document translation needs, contact McElroy Translation. Visit our website to learn more about how we can help you and your company become successful in your international business ventures.Morrison,

Terri, and Wayne A. Conaway (2006). Kiss, Bow, or Shake Hands, 2nd edition. Massachusetts: Adams Media Corporation.

http://www.businessinsider.com/

http://www.chinaexhibition.com/

http://westarka.com/







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