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Careers: What You Need To Know To Do Business In China

How should you negotiate with the Chinese? What’s Guanxi? For many Western executives, doing business in China remains a mystery

Thu Oct 26 2017

1.38 billion people live in China—20% of the world’s population. China accounts for 15% of global GDP. 25% of unicorns – startups valued at over $1 billion – are native Chinese.

The stats just keep coming. Whether you’re a startup entrepreneur or a multinational conglomerate, China is the place to be to expand your business.

But, for many Western executives, doing business in China remains a mystery. The world’s leading emerging economy appears an impenetrable landmass where foreign ideas, like Confucianism and Guanxi, reign supreme.

So, what do you need to know to do business in China?

Bo Ji is the program director of the China Mini EMBA+, a nine-day, five-city course designed for Western executives looking to learn China-specific knowledge and gain access to the Chinese business elite.

Launched by Beijing’s Cheung Kong Graduate School of Business (CKGSB), the China Mini EMBA+ will immerse participants in Chinese business, with four days in Europe—in London and Paris—either side of a five-day expedition to China, visiting Beijing, Shanghai, and Shenzhen. The program’s first intake will begin in London in February 2018.

Bo, also chief representative of CKGSB Europe, has been coaching Chinese negotiation skills to European executives and politicians for the past decade.

One client, the mayor of a European city, came to Bo after struggling in negotiations with a major Chinese shipping firm. He was thrown, faced with a room of over 10 people from the Chinese side, but only one junior person doing the talking.

“Most foreign organizations are clueless when it comes to negotiation with the Chinese,” Bo explains. “The Chinese are born negotiators; they have many tactics and strategies to negotiate with unprepared foreign partners—that’s why many Western companies fail.

“When the Chinese go into a negotiation, they like to appoint one person to act as the coordinator—only one person in the room will talk. That person is usually not very senior. They negotiate hard and, once they enter into a deadlock, a senior official may graciously come out, maybe offer a concession, and close the deal.”

For Western execs, the best idea is to follow suit. Language is often cited as a big barrier to negotiating with the Chinese. But, for Bo (pictured below), Mandarin is not a prerequisite to success in business in China—most multinational company execs who’ve successfully relocated to China have never learned Chinese. Plus, more and more professional Chinese speak English.

bo jis

Instead, Guanxi—an emphasis on personal relationships and a key element of Confucianism philosophy—is key.

Whereas in the West, business may give way to more meaningful relationships, even friendships, in China it’s the other way around. Personal relationships form the basis of business in China.

Participants on CKGSB’s China Mini EMBA+ will explore Eastern perspectives on business and management through interactive class discussions, real-life case studies, small group workshops, and company visits to disruptive Chinese firms like Didi Taxi, China’s Uber alternative.

They’ll have the chance to build connections with CKGSB’s elite alumni network—the school’s former students lead one-fifth of China’s most valuable brands, and include Alibaba founder and chairman Jack Ma.

“Trust is the most important thing in business in China,” Bo continues. “Whether you can progress fast with a Chinese partner largely depends on whether you’re successful in developing a strong relationship with them.

“How can we build that kind of relationship? Gifting, having dinner or drinks together, social activities—the most important thing is consistency. You have to care about the person first, not just business.

“Through the China Mini EMBA+, we teach from the roots of negotiation, to help students really understand where all these differences come from.

“We’re trying to help Western leaders avoid the kind of problems that it could take 10 or 20 years to try and figure out.”

Boris Nikolic started his own clean technology—cleantech—startup after completing the full-time MBA program at CKGSB in Beijing. Now based in Boston, Massachusetts, the Serbian entrepreneur is aiming to expand his business activities into China in the not so distant future.

What’s his advice for anyone looking to do business in China?

“Be open-minded and patient,” he says. “It’s very important to develop deeper relationships with Chinese partners and then build on your business venture. Once you establish that bond, you can do great things together.

For Boris, the cultural immersion he got from his experience with CKGSB was important: “20 years from now, when I look at world affairs, I will understand more about why things are the way they are than somebody who didn’t study in China,” he says.