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China’s Evolving Business Culture

With the Chinese economy flourishing over the past decade, its citizens have prospered and begun to seek more access to foreign goods.

In fact, U.S. exports to China grew by 542 percent between 2000 and 2011.[1]  And two-thirds of U.S. companies said revenue from their businesses in China grew by 10 percent or more in the previous year.[2]

Business owners interested in becoming part of the boom can acclimate to the new Chinese economy, and start to benefit from this growth.

Whether companies are importing or exporting to China, they must adapt their selling, marketing and business development strategies to remain competitive in this new market.

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A Changing Business Culture

As China's role in the global economy shifted, so too did its business culture, says James Chan, president of Asia Marketing and Management in Philadelphia. Chan has been exporting goods and services to China for more than 30 years. "In the past, Chinese businesspeople were deferential and accommodating to Western clients, but that attitude is gone," Chan says. "The Chinese business culture today is much more assertive."

Whether companies are importing or exporting to China, they must adapt their selling, marketing and business development strategies to remain competitive in this new market.

While there are many new opportunities in the Chinese market, companies must tread carefully, says Adrian Allen, managing director of Anderen Ltd., a business consulting firm with offices in the U.K. and China. Allen says that China is a very "pragmatic place" but it's essential to have strong local partners who posses good contacts.

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In China, this is often referred to as guanxi (guan-chi), Allen says, which is a traditional business network built up through personal relationships developed over many years. "It's like a 'good old boys network,'" he says. "You have to know the right people to get things done."

Making the Most of Changes

Adapting to the new business culture is essential, but in some ways it's gotten easier to do business in China. Many younger Chinese businesspeople are educated in Europe and the U.S., which means they speak English and are more familiar with Western business practices, says Renee Hartmann, co-founder of China Luxury Advisors, a China business consultancy in Los Angeles.

And because the Chinese government has relaxed some of the regulations governing how Western companies do business in China, it is easier to start banking overseas and manage money without relying on joint ventures with local partners, she says.

In addition, business owners can benefit from using an online foreign exchange service, which provides tools such as an online currency converter to calculate the latest dollar to yuan exchange rates when doing business in China.

Navigating the Challenges

However, there are still challenges for international businesses to overcome. "Government regulations have gotten stricter for telecom and media companies, for example," Hartmann says. And the tax and customs environment can also be very difficult for Western businesses to interpret.

Western companies may also find that Chinese vendors and manufacturers are extremely price-sensitive, and that they will often demand higher prices for Chinese-made exported goods, Chan says. "Chinese business owners are more aware of the global marketplace and they are becoming more competitive," he says.

[1] "US Exports to China by State 2000-11," The US-China Business Council

[2] 2012 China Business Environment Survey, The US-China Business Council

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