Saving Face" Key Theme in China Business Dealings

"Saving Face"- Key Theme in China Business Dealings
(Marketing Memo, October, 2008)

During a recent trip to China we spotted foreign firms in most cities. I asked two China experts for some advice on conducting business in China.

THERE IS NO "ONE CHINA" - MARKETING IN CHINA

Merrill Weingrod, principal of China Strategies, business advisors to companies wishing to enter the Chinese market (www.china-strategies.com), provided these insights:

Marketers need to understand China's diversity to make intelligent decisions. China consists of many diverse regions with different cultures and economies. A mass market does not exist. China includes 56 different ethnic groups and many dialects. In China the range in individual incomes is greater than in the US.
What constitutes "brand value" may be different in China. "The Chinese urban consumer is complex� and very well informed. Industrial and consumer goods companies should survey Chinese consumers/buyers to see "what drives the consumers/buyers."
Successful marketing requires access to China's "complex, multi-tiered distribution networks." Unlike the US, China does not have a single mass market.
Obtaining reliable, "complete" market data is difficult, but not impossible. "With diligence and a reasonable investment, companies can develop a strategic understanding of the market sectors they want to penetrate and build low risk market entry plans."
Chinese regulations require foreigners to complete a detailed business application process before directly distributing goods in China. Or, "a US company can sell products to a Chinese company, which can pay for the goods in US dollars. [Then,] it is the responsibility of the Chinese company to import the goods into China."
Successful marketing requires "significant cultural navigation skills." US business people may fail if they assume that business etiquette is the same in China as in the US.

BEHAVIOR IS AS IMPORTANT AS DEALS - NAVIGATING THE CULTURAL DIVIDE

Wayne K. Johnson, Dean of Corporate and Community Education, Mass Bay Community College, commented on important cultural differences in China:

Learn about differences in etiquette and behavior that can make or break deals. For instance, the Chinese value humility, not boastfulness. "Maybe" and "perhaps" may be code for "no" in China. Moreover, the Chinese sometimes try to renegotiate "done" deals.
Remember that "the collectivist way of thinking still prevails�. Responsibility for all decisions rests with the Communist party and assorted government bureaucrats."
Note that "a person's reputation and social standing rest on� saving face�. Causing embarrassment or loss of composure�can interrupt business negotiations."
Build relationships as strong relationships play more of a role in negotiations than effective use of facts and arguments.

Finally, seek advice. Ask the East Asia & Pacific office of the U.S. Department of Commerce to help identify contacts, and make appointments with Chinese business and government officials. Engage a public relations firm to help with business negotiations, says Johnson. Before our trip I consulted http://www.vayama.com/china-etiquette for etiquette tips.