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7 - Setting up a business meeting

Leap of Faith

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Introduction
7.1 Meetings and greetings
7.2 Conducting a business meeting
7.3 Negotiation skills
7.4 Business ethics/work practice
7.5 Food and drink
7.6 Business etiquette
7.7 Gift Giving


Introduction

Communication by fax, telephone and email are popular. A confirmation letter of meeting and banquet is appreciated. You and your Chinese host should decide and confirm the venue, the participants and the date of the business meeting.

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7.1 Meetings and greetings

The business dress code for men in China is plain and simple; by contrast, Chinese women tend to prefer colourful blouses. Shirts, suits (with tie on more formal occasions), or jackets for gentlemen; suits, blouses or long dress for ladies (no shorts) are all acceptable. In general it should be remembered that initially Chinese people are formal, serious and courteous: men should remember not to appear too frivolous – so leave the cartoon tie at home!

Chinese people always shake hands and exchange business cards (with the Chinese side face up) upon greeting. Always prepare more cards than you anticipate will be needed; these should be printed in both English and Chinese, the Chinese side uses ‘simplified’ characters, not the ‘traditional characters’, as used in Hong Kong and Taiwan. Spend a few seconds reading the cards you receive, don’t put them straight into your pocket – this is considered rude.

Since many Chinese are expert at hiding their emotions, don’t be surprised if they appear to be smiling at you all the time; the Chinese take pride over their hospitality to their guests, and they smile when greeting guests to show politeness. When you are introduced to a Chinese group, they may greet you with applause, you can just bow or nod back in acknowledgement.
The simplest greeting to a group of Chinese is Nimen hao (Knee men how) (‘hello everyone’), or to one person, Nihao (Knee how). The easiest option is to follow the lead given by your interpreter, and notice that greetings tend to follow a strict order of seniority, with the oldest and most senior member of the group being introduced first. When introducing yourself, it is generally best to adopt the following order: name, company and title.

The following behaviour is considered very rude for both foreign and Chinese business people. We mention them that you might avoid giving any unintentional offence:

• Whistling (suggests disinterest)
• Pointing at a person with your index finger – use your open palm instead: the finger gesture can be interpreted as threatening
• Snapping your fingers – this can be considered arrogant
• Gesturing at or passing an object with your feet – suggestive of contempt

The Chinese often appear shy and quiet, regarding sobriety as a virtue. Emotions are generally held in check – but this is not always the case. Chinese people do tend to ‘let go’ under the influence of alcohol. If your Chinese host likes you or sees you as a friend, s/he may pat you on the shoulder just to show a closeness to you.

For more information, see:
http://www.windowontheworldinc.com/countryprofile/china.html

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7.2 Conducting a business meeting

A formal Chinese business meeting generally consists of 5 main steps or stages:

1. Introduction

There is generally a secretary or an interpreter to guide the business meeting, and to introduce the representatives from both parties to each other. A senior member of the company will then generally give a speech to welcome the UK visitor(s) and highlight the theme of the meeting, and the intentions or expectations of the day.

2. Presentations of both parties

Your company presentation should be prepared in advance in Chinese
In order to help each party understand each other’s backgrounds, both parties are likely to be asked to give a short presentation on themselves and their company this may include a brief history of the company, current opportunities, reasons for cooperation, including the benefits both parties anticipate to gain.

3. Exchanging viewpoints

This stage invites initial enquiries, questions or doubts, even probing for solutions of some of the existing or anticipated problems. Participants are expected to address the ‘how’, ‘when’, ‘where’, ‘what’ and ‘why’ of working together.

4. Discussion for agreement

Business relationship can be built or broken at this stage, since further cooperation depends on the level of agreement. A contractual agreement is unlikely to be arrived at through one single meeting – rather it is likely to be the result of an arduous process, involving several meetings before a mutually satisfactory conclusion is reached.

At this stage there may still be a degree of ‘detachment’, but there is a Chinese saying: “even if we do not make a deal, we are still friends.”

5. Conclusion

If conditions are favourable for both parties, the process will usually be concluded by formal hand shaking, followed by a banquet. Occasionally, however, you may find that the Chinese party suggests postponing the negotiation process, or leaving it to a further meeting. This need not be a cause for concern; a sudden cessation of contact is very rare and it is more likely that your hosts wish to discuss things amongst themselves for a while longer. Once a decision has finally been made, appropriate information and agendas for future meetings will also be agreed on and distributed.

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7.3 Negotiation skills

Whilst punctuality is important when you take part in negotiation, friendship and trust are the first step for establishing a basis for negotiation. You may be invited to a banquet which should be seen as a vehicle for the development of the relationship. You can also, of course, use such opportunities to develop your guanxi with others. Later on, eating out with business partners may become an integral part of the negotiation process.

‘Face’ issues

‘Face’ issues are critical for Chinese partners. ‘Face’ (Mianzi), or more importantly, ‘loss of face’ (Mei Mianzi), is an important concept to understand. To Chinese people, respect from society at large, and especially from ones’ immediate peers is of vital importance. Anything that detracts from someone’s image or standing or ‘face’ is, therefore, a serious issue. Remember to respect your hosts’ feelings at all times, and especially in public, show respect and courtesy. This will demonstrate your consideration for your host, and help to create a good impression.

Be extremely persistent and patient

You may need to be extremely persistent and patient when dealing with Chinese people, and especially when working with the government. You are well advised to study very carefully the following items on a contract:

• Definitions of the ventures business - define all the elements and nature of the business very clearly.
• Terms of Equity Investment - define what the partners will invest in terms of cash, equity, capital, and facilities to the venture.
• Charges from the parties - discuss and agree upon what charges and/or support will be provided to the venture and whether it is part of the investment or to be charged to the enterprise.
• Percentage of ownership between partners - the percentage of ownership will not only determine the level of investment and risk for both partners, but also force discussion around issues of further growth and investment in the business.
• Board Members and Voting Rights - issues such as the number of members and the voting rights of each party allowed on the board.
• Protection of Minority Interests - in case the board makes decisions that tend to favour the majority partner, the rights of the minority member must also be contractually assured.
• Currency for Transactions and Equity investment - agree upon currency – generally this will be US dollars, £ Sterling or Reminbi.
• Protection of Trademark and Patents - this is an important area, as many companies have had problems with trademarks, patents, and IPR (intellectual property rights). Make sure that you are certain of the legal implications of any agreement.
• Financial Business Case
Prepare and agree to the Profit and Loss, Balance Sheet and Cash Flow of the enterprise.
• Repatriation of Profits - agree upon how profits will be returned to the shareholders and/or re-invested into the business.
• Termination Clauses - company attorneys should advise and establish termination clauses suitable to each company, thoroughly considering all the potential acceptable reasons for termination, including termination penalties.

More information can be found at:
http://chinaunique.com/business/negotiat.htm
http://business.virgin.net/robin.nunley/negot.htm

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7.4 Business ethics/work practice

Winning Chinese business requires a combination of tactics and strategies. Some even refer to Sun Zi ‘s classic ‘The Art of War’, and apply this ancient wisdom to modern business life.

Honesty and trust are at the heart of good business ethics. Consistent honesty may gain trust and vice versa. In many instances, Chinese business people prefer to rely on trust and established relationships between people, rather than on legal documents and contracts.

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7.5 Food and drink

For Chinese people, food plays a major part in everyday life: its centrality can not be overstated, a result in part of the food deprivation China has suffered down the centuries. There is a great variety of cuisine, based on regional flavours and raw ingredients.

When you are with your Chinese host, you can do little worse than follow his/her table manners. The host’s seat is normally facing the door, and the guest of honour sits on his/her right. Before eating, you may raise your glass to toast your Chinese host and gan bei, meaning literally ‘dry the cup’. Toasts may be made throughout a meal - to good health, Sino-British friendship and so on. A formal meal generally consists of large quantities of food, and you are likely to leave the meal feeling full. Even if you don’t wish to eat a particular dish you might say that your religion will not permit you to eat it, and this will be understood.

Normally, if your Chinese hosts book the restaurant, you are the guest, and your hosts will not allow you to pay the bill but you should always offer. Next time you eat together aim to be the host. You can also use the event to offer similar hospitality to your host for a future occasion.

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7.6 Business etiquette

Handouts and brochures with Chinese translations are essential when you conduct a presentation. If you need a projector, make sure that your host is aware of this in advance.

Each party should have their own interpreter, but regardless of the level of translation /interpreting available, it is always advisable to make your speech simple, clear, easy to understand, and pause regularly. The audience will usually show appreciation by clapping their hands.

Whilst banquets are the most traditional and popular way to entertain foreign visitors in China, some Chinese hosts may also invite you to join in leisure activities, such as sight-seeing, bowling, golf, karaoke, and dancing.

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7.7 Gift giving

You should present a gift with both hands to show your politeness. The recipient(s) may refuse your gift at first, present it again. You can give a gift to a Chinese group in the name of your company, but do not give a gift to one person and ignore the others. If you have a special gift for the most senior person, present it when you are alone. If you have small gifts, you should be prepared to give gifts to everyone present.

Valuable gifts are only encouraged when you have established a business relationship with your Chinese host (e.g., a deal has been completed, or a contract has been signed). When you are invited to someone’s home, remember to bring the hostess a small gift, but it is not considered appropriate to give gifts such as perfume. ‘Safe’ gifts generally include items such as:

• Books and paintings
• Premium brandy, whiskey, or other spirits
• An invitation to learn more about your business and the sector as a whole, and a chance to do a little sightseeing.
• A corporate gift (such as paper-weight etc.)
• Accessories, such as pens, home decorative items

Avoid giving the following things as gifts:

• Clock (it means accompany till death in Chinese pronunciation) This does not apply to watches.
• However, if you would like to give an electric watch, rather than give it to your Chinese business partner, you should give it to their child: if it is an expensive watch, it hints of bribery, if it is a cheap watch, it could be embarrassing.
• Chrysanthemum (also related to death)
• Money (maybe considered straight bribery)
• Green hats and caps (all Chinese married men are sensitive on this as it suggests the wife in a family is an adulteress)
• Avoid black and white wrapping paper. Red is regarded as good luck
• Avoid writing names in red on a card or note (it signifies that these people are dead)
• Umbrella and fan (they all mean separation in Chinese pronunciation)

For more information, see http://www.culturalsavvy.com/china.htm

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