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General Information
Chinas consumer market is undergoing structural adjustments after 0 years of development. There are qualitative changes in the spending habits of consumers and it can be expected that during the Tenth Five-Year Plan (001-005), the consumption pattern in some Chinese cities will change from ¡°subsistence¡± mode to ¡°hedonist¡± mode which stresses the quality of life.
The policy of reform and opening up introduced at the end of 178 marked a turning point in Chinas economic development. Throughout the Sixth Five-Year Plan (181-85), Seventh Five-Year Plan (186-0), Eighth Five-Year Plan (11-5), and the current Ninth Five-Year Plan (16-000), the Chinese economy has been imbued with new vitality, making the transition from planned economy to market economy.
As the country emerges from isolation to integration into the international arena, its people are gradually moving from poverty towards a comfortably well-off life, driving the consumer market from a closed, deficient sellers market to an open, abundant buyers market. The huge potential of this market has become the focus of attention for
investors the world over.
Products and services in great demand in China include consumer electronics such as computers and cellular phones, sterilizers, dish washers, health products, personal care products, fitness equipment and work-out programs, home furnishings, credit card service, high-quality education aids and service, as well as leisure activities.
It¡¯s important to appreciate that China is made up of 1 provinces and four municipalities with together 1. billion people with diversity in culture, politics, behavior and even language where shanghai can be considered the most developed and Tibet/Xinjiang the least. China, in contrast to the West who often talk about a north/south divide, talks about an east/west dilemma.
Consumer Market
Consumer Behavior
In the past when supplies were scarce, ration coupons were required for the purchase of daily necessities. At that time, people¡¯s consumption behavior and pattern were basically identical because everyone had little to spend and there was not much to choose from. Since the introduction of reform and opening up in 17, people¡¯s consumption habit has undergone significant changes as the economy becomes more market-oriented. First, with the widening of the income gap, consumer behavior becomes more diversified. Second, following the increase on the supply side, people can choose whatever commodities and services they want. On the other hand, the consumer price index has been falling in recent years. As the prices of big-ticket items such as large-screen color TVs, VCDs, cars and computers continue to drop.
In recent years, housing, car and computer are dubbed the ¡°new three hot items¡±, or commodities most sought after by consumers in China. However, demand is stifled by their high prices. Among the three, housing and car are likely to grow in popularity in the next few years.
In 001, total retail sales of consumer goods (by location of retailers) and household consumption raised by 10.1% and 5.4% respectively from the previous year. The price raise continues into 000. The total retail sales of consumer goods in city, county and under county level raised by 11.5%, 8.7% and 7.% respectively in 000. The household consumption in 001 was 84.% compared with 178.
Income and Expenditure
Economy growth of 8% annually and would pass a few year. The income and expenditure of urban residents in current China are expected to rise.
The income of urban and rural residents has gone up steadily, and their standard of living has continued to improve. The Chinese people nationwide have jumped from the stage of having enough to eat and wear to that of living a better-off life. In 001, the disposable income per urban resident came to 6,85.58 Yuan or an increase of . percent over that of the previous year, in real terms; the net income per rural resident reached ,66.4 Yuan or a growth of 5.01 percent over that of the previous year, in real terms.
The per capita annual living expenditures for consumption in 001 raised by 6.% from the previous year and the structure of consumption has been optimized The proportion of the expenditure for clothes, food and daily necessities has decreased by a large margin, and the proportion of the expenditure for housing, communications and telecommunications, medical and health care, culture, education and recreation has gone up rapidly. (Table 1)
Table 1
Item %
185 10 15 000 001
Food 5.5 54.5 4. .18 7.4
Clothing 14.56 1.6 1.55 10.01 10.05
Household Facilities, Articles and Service 8.60 10.14 8. 8.7 8.7
Medicine and Medical Service .48 .01 .11 6.6 6.47
Transport, Post and Communication Services .14 1.0 4.8 7.0 8.61
Recreation, Education and Cultural Services 8.17 11.1 8.84 1.56 1.00
Residence 4.7 6.8 7.07 10.01 10.
Miscellaneous Commodities and Services 7.01 0.4 4.8 5.17 5.5
China Yearly Book 00
In 001, the Engels coefficient of urban residents (the proportion of food expenditure in the total consumption expenditure) was 7. percent, or a drop of 1 percentage points from that in 15, and a decrease of close to 0 percentage points from that in 178. Meanwhile, the Engels coefficient of rural residents was 47.7 percent or a decrease of about 10 percentage points from that of 15, and 0 percentage points lower than that of 178.
Credit Service
In the past, there were few credit card users. The Chinese people have been taught since their childhood that they should live within their means and should avoid running into debts. Unlike westerners who are used to credit spending, they live thriftily and do not spend what they have not earned. Cash is the most preferred form of payment in China and there are less than 1 per cent of Chinese consumers purchases are by bank or credit cards at that time. In current China, although the number of real credit cards is still not large, they have been accepted by more and more Chinese people, especially preferred by young generations in big cities, such as Shanghai, Beijing and Guangzhou. The number of international bank cards rose from ,000 in 18to 500,000 in 001. Meanwhile, more and more urban residents use consumer credit offered by banks to buy expensive things such as houses and cars.
Savings
The savings deposit in urban and rural areas in 001 was 776.4 billion Yuan, which the fixed deposits and the current deposits were 514.4 billion Yuan and .76 billion Yuan respectively. It has risen by 45.76 billion Yuan compared with previous year. This was reflected in the steady increase in urban savings deposits. Although the Bank of China has lowered interest rates on six occasions in a bid to stimulate consumption, savings deposits continued to rise.
Savings deposits in China increased by 14.6% over the previous year to RMB5, 40.7bn in 18, by 10.4% to RMB5, 6.18bn in 1, and by 7.74% to RMB6, 4.4bn in 000. The desire to save is still going strong. The market economy, however, has heightened people¡¯s awareness of the need to invest and to take precautions against risks. In addition to pension contributions and medical and unemployment insurance premiums, people are saving part of their income for investment in stock market and properties.
Changes in consumer habits
Convenience and Time Saving
As China becomes more open and comes into closer contact with the world and as commercial activities continue to grow, more and more people are beginning to value their time and go after higher efficiency. As a result, fast food and instant food are welcomed by white collars that are living in urban areas, especially in big cities, such as Shanghai, Beijing and Guangzhou. Because they having so many works to do so they do not have enough time to prepare for a meal. Fast food and instant food are the best choice for them. However, currently, they do not satisfied with their convenient making, but pay more attention to the nutrition among them. So the fast food and instant food with high nutrition will have a large market in China. Clothing with zippers, instead of buttons, slip-on shoes, disposable table cloth, as well as home electrical appliances that make household chores easier are becoming hot-selling items. More people are using taxis and private cars in addition to public transport to get around. Letter writing is replaced by phone calls, and telegraphs are replaced by faxes. Pagers, mobile phones, MSM and email have become part of people¡¯s everyday life.
Better Quality of Life
Cheng Siwei, vice chairman of standing committee of National Peoples Congress and director of National Natural Science Funds latest estimates that housing expenditure will be likely to account for 15% to 0% of the family income by 010.
Chinese people¡¯s concept of living has changed from merely seeking shelter to finding a spacious, comfortable and nice place to live in. Over the last 0 years, there has been a marked increase in people¡¯s living space. The using space per urban resident increased from 11.8 sq m in 15 to 15.5 sq m in 001; and the living space per rural resident grew from 1 sq m to 5.7 sq m. In 001, 575 million sq m of floor space of urban residential buildings were completed; and the construction of rural residential buildings totaling a floor space of 1.07 million sq m was completed. Hence, housing conditions have been further improved. Meanwhile, people are also paying more attention to decorating and modernizing their homes. Usually, after buying a new house, people will spend 15%-0% of the house value to renovate it. Not only for the new house, even the old apartment, people will have renovation after living for 5 to 10 years, especially in big cities. This phenomenon shows there is a big market for building materials. And as consumers¡¯ basic needs are satisfied in quantitative terms, they begin to pursue a higher level of satisfaction, such as going after social equality, ecological balance, and fresh air, a clean and tidy living environment, as well as dignity and fun in life. That is to say an ideal living environment is now seen as an important aspect of a quality life.
Diversity and Individuality
With the development of the commodity economy, consumer goods are now available in ever increasing varieties and designs and new products are constantly introduced into the market, offering consumers with more choices.
Clothing is no longer just something to cover the body or to keep warm, but something to look nice in. In place of the dull colored Mao suits in the early days are now garments of various colors, fabrics and styles for different ages, different genders, different body frames, different seasons and different tastes. People are paying increasing attention to design and quality. In addition to comfort, convenience and practicality, people are also looking for style, taste and individuality in what they wear. Some consumers are also becoming more brand conscious in their choice of clothes and durable consumer goods, and tend to buy expensive brand name products of good quality. Branding is the bedrock of any successful marketing effort, but in China it takes on special importance. China¡¯s dizzyingly rapid transformation from a planned economy to a market-driven society has confronted consumers with an explosion of lifestyle choices unparalleled in the country¡¯s history. Within a generation, consumers have gone fro having almost no choices about what to eat, drink, buy, wear and drive, to having an abundance of options in those areas. In an environment of proliferating choices, strong branding cuts through the clutter and simplifies buying decisions, giving marketers a clear opportunity to build a loyal customer base. Today, the long gap in China¡¯s brand consciousness means products with strong brand recognition elsewhere in the world may lack solid footing here. In china, all brands have an equal chance to succeed-great news for upstarts facing off against larger companies, and a warning for larger firms hoping to trade on the brand equity they have accumulated in other markets.
Cosmetic sales in China show that these products are not just skin deep. Total sales of cosmetics products in 000 exceeded RMB0.0 (US$.66) billion. Since economic reform started 0 years ago, Chinas cosmetics market has grown an average of .8% a year from 18 to 18. Although this growth slowed to about 1.% a year after 18, cosmetic sales in China should reach RMB80.0 (US$.76) billon by 010.In a market already crowded with ,000 domestic Chinese cosmetics manufacturers, more than 450 foreign companies have invested in excess of US$00.0 million in China over the last decade, further stimulating the rapid growth of this sector. Of the 70 wholly foreign owned and joint venture companies may only account for 0% of Chinas cosmetics manufacturers but together, they represent 80% of the cosmetics market. At present, skincare products account for 5% of Chinas cosmetics market, followed by hair care items (8%), beauty products (4%) and perfume (8%). Skincare products are, by some distance, the fastest growing segment in the cosmetics market. By contrast, the market for shampoo and hair care products is reaching saturation, as evidenced by slowing growth rates. Make-up and beauty products have much room for expansion in this market segment. The market for childrens products, meanwhile, is expanding rapidly. Anti ultra violet (UV) components are fast becoming a driving trend and sales of anti-UV cosmetics have been posting annual growth rates of about 0%. For the young at heart, sports cosmetics are seen as products for the future, as workers develop work and play lifestyles. Men are beginning to be targeted for cosmetics, trying to turn around inhibitions of a lifetime. An unexpected byproduct of Chinas single-child policy is the growth of a boom market for baby care products.
Ice cream is a hot favorite e of the summer food business in China. Just 10 years ago, the Chinese cream market was still relatively small. Imports, mostly premium types, were a small but growing part of this market. Today dairy products are one of the fastest growing sectors of the market in China, and statistics from the China Food and Drink Industries Association show that the annual growth rate of the ice cream industry is 105 percent since 187. Perhaps the largest contribution factor in the growth of the ice cream market has been the presence of foreign dairy companies, both as active importers and now as manufacturers in China. More than 1,000 ice cream companies, including world famous ones such as the Walls of Britain and Nestle of Switzerland, have introduced new products to China, with total annual production exceeding 1 million liters last year. Statistics indicate the annual consumption of ice cream in China is 1 liter, or 0. quart per capita, a huge increase from just 10 years ago. However, considering the 7. quarts of ice cream consumed b each European I a year or the 1.8 quarts gobbled down by Americans, it is clear that there is a huge room for the Chinese appetite for ice cream to grow. As China¡¯s economic conditions improve, producers expect more people to become ice cream consumers. The vast rural markets, which remain untouched by the joys of ice ream, are next in line to be tempted by the delicious concoctions of China¡¯s ice cream moguls.
At the same time, as more cultural and recreational facilities are available and as people have more time to spare, life after work also becomes richer and more interesting. Having a taste for the cuisine from foreign countries is one of entertainment during spare time and it is now quite popular among Chinese. There are several foreign restaurants in China which can supply all kinds of flavors such as Latin-American, Curry, Continental Food, Korean, Vietnamese, Thai, Middle Eastern, German, Spanish, Mexican, Italian, French Cuisine, Brazilian Food, American Food, | Japanese Food, Indian Food, Singaporean Food, Southeast Asian Food, Portuguese Food, Pizza from Italy, Australian Food, Russian Food and Greek Food.
Personal Development
Chinese consumers are now aware of the importance of education and culture to man¡¯s development and are beginning to go in quest of knowledge and science. There has been an educational upsurge in China since the 80s. On the one hand, full-time institutions of higher learning and technical schools are enlarging their enrolment while on the other; marked progress has been achieved in adult education. Distance learning through TV and correspondence, evening universities and all kinds of short-term training programs are offered all over the country. Getting a diploma or acquiring a special skill has become a must in the highly-competitive modern society. Out of this grows the demand for a fuller life. Many Chinese students now choose to study abroad. Statistics show that the total number of Chinese students studying abroad was 00,000 and some 5,000 Chinese per year go abroad to study in 10 countries around the world. This puts China at the top of countries throughout the world in the number of students studying abroad, which in turn has created an industry in China of intermediary agents that provide students -- 80,000 of whom are paying their own expenses -- with services in regard to their travel, tuition fees, board and other matters. The cost was the major consideration for Chinese people in choosing where to study. Students from an ordinary family can not afford the expenses in America or England because the living level is too high for them. Security and the degree of difficulty in getting visas are also factors to consider for Chinese students when they make their choices of countries to go. With the development of Chinas economy, Chinese people are willing to invest more in education, which made it possible for more students to study abroad, so there is a potential market in China for Malaysia universities. MBA, Management, IT and MPA are the most attractive courses to Chinese student.
More families are now buying books and ordering newspapers and magazines. Sales of electronic organs, violins, accordions and even expensive pianos are growing. Watching TV and movies, listening to music, reading books and newspapers and going away on holidays have become a way of life for many families. In the rural areas, people are also attaching greater importance to their spiritual and cultural life. Illiteracy has been gradually reduced. The establishment of cultural centers in many places has enriched people¡¯s life.
China¡¯s Outbound Tourism
The growing number of Chinese tourists is bringing economic benefits to their destination countries around the world. In 001, Chinese outbound travelers totaled 1.144 million, 15.87% more than 000. Among them, business travelers were 5.1877 million, accounting for 4.75%, down .48%. Travelers for private purposes were 6.467 million accounting for 57.5%, up .48%.
Total Number of Chinas
Outbound Travelers in 001
Unit RMB (Yuan)
So far, countries and regions have received the Approved Destination Status (ADS) from the Chinese, making China the biggest source of tourists in Asia and the number is growing. Many countries applying for ADS expressed the hope of sharing in the prosperity of the worlds most populous nation. The WTO predicts that by 00, China will be the worlds the fourth major source of tourists. Although Chinese people are able to travel to 14 countries, Southeast Asian countries -- especially Thailand -- is still the most favorite to tourists for its comparatively low prices. According to statistics from CITS, 4 per cent of the tourists who traveled abroad chose Southeast Asian countries as destinations in 001. Chinese outbound tourism has been growing since the mid-10s. The country now has a significant affluent middle class with substantial disposable income and a desire to spend. Over the past decade outbound travel has increased at an average of 1% a year; and a conservative estimate puts today¡¯s potential long- haul pleasure travel market at close to three million people. In 001 about 10 million Chinese traveled within Asia, and as China¡¯s economy continues to grow, it seems likely that more of these travelers will venture further field. Chinese tourists are especially lucrative as they tend to spend freely. In some countries with ADS designation, Chinese tourists spend on average more than $4,660 per trip, as they make purchases not only for themselves but for friends, family and co-workers back home.
How to Market in China
Market Entry & Development
With over 1. billion people, China is one of the largest consumer markets in the world with high economic growth momentum. However, maximizing your ability to capture this market involves challenging processes. In China, normal sound business practice still applies. International businesses frequently face difficulties when they cut corners and are left with poor infrastructure, disjointed supply chains, or at worst the copying of your goods. We can create solutions that provide long term, sustainable market growth to be considered to setting up cooperation in China are as follows
V Feasibility Studies
V Logistics & Customs Importation
V Sales & Distribution
V Agents
V Marketing
V Brand Management
V IP Protection
V Competitor Analysis
V Government Relations
V Industry Intelligence
V Partner Identification/ Evaluations
V Risk Assessments
V Regional Evaluations
Developing a Business Case for China
Developing a business case is all about the bottom line. How much does it cost? What is the risk? You know your business better than anyone else and within enough China knowledge will allow you to prepare a sensible, practical study into the whys and wherefores of conducting business in the PRC.
Distribution Channel
China is a country and its consulate has distribution channel in big cities such as Shanghai, Beijing and Guangzhou.
Poor infrastructure and lack of a national distribution network can make it difficult to move goods cheaply and efficiently in China. Therefore, companies that can develop distribution solutions are at a distinct advantage over competitors.
Chinas distribution problems stem from two primary factors
A Developing Economy Not only is China a developing nation, but also it is a massive one. China is no different from other developing nations with similar infrastructure problems, only it is much bigger. The regional systems of distribution are only patched loosely together. The market in China is better treated as a grouping of several regional ones each with their own challenges.
The Closed Door Legacy The traditional system had three tiers of distribution national, provincial and local. Imported goods under the direction of the central government passed through each level, so a national system to distribute domestically produced goods never developed. Chinas previous leaders dreamed of creating an economic system in which each city would be self-sufficient, with no need to build a national distribution system. As a result, todays market is made up of many smaller local distribution hubs. Perhaps more frustrating for the foreign firms are the fact that many Chinese distributors look on their roles very simple, just as moving products from one area to another. Only recently have concepts of product promotion and evaluation made their way into the PRC.
Since most distributors have limited market reach on a national level, importers may be forced to cultivate relationships with individual distributors and wholesalers in various regions at various levels.
In such a complex system it is critical that distributors are properly assessed in advance and that once a relationship has been established the importer can work closely with the wholesalers to insure the proper sales and service ethic. Additionally, independent agents are frequently essential, as they have the contacts and market knowledge to effectively guide your product into the Chinese marketplace. Furthermore, the cost of maintaining multiple representative offices can be quite a burden to the small to medium sized foreign enterprise.
Distribution systems in China
V Distribution systems in China can be divided as follows
I. Import
II. Domestic Trade (if there is production in China)
a. Direct Sales (self distribution)
b. Indirect Sales (via intermediaries)
V Currently there are four main ways to import goods into China
Through state owned I/E companies or others with an import license
Advantages Disadvantages
V Good guanxi (relationship)
V Well experienced in handling customs V High costs
V No initiative
Through trading companies in Hong Kong
V Low costs
V Well experienced in handling customs
V Good guanxi (relationship)
V Dangerous (some goods might be brought into China inllegal)
Through multinational trading companies
V Various services in sales and marketing
V Low exit costs V Less market knowledge
Through free trade zone trading companies
V Preferential policies (lower tax) V Still have restrictions to bring in products and still require local import/export companies to bring goods
Goods produced locally can be distributed directly via own offices, showrooms, traveling sales people, etc. or with the help of intermediaries. Such intermediaries can be international logistic companies, international trade companies or Chinese (state owned or private) trade companies
If distributors have to be chosen a thorough evaluation of potential distributors (by conducting benchmarking and due diligence analyses) can help to find the most appropriate partner.
Business Practices
General Business Practices
¡ñ The Chinese will nod or bow slightly as an initial greeting. Handshakes are also popular wait, however, for your Chinese counterpart to initiate the gesture.
¡ñ If you visit a school, theater, or other workplace, it is likely that you will be greeted with applause as a sign of welcome. In turn, you should respond by applauding back.
¡ñ Avoid making expansive gestures and using unusual facial expressions.
¡ñ When speaking, the Chinese do not use their hands too often.
¡ñ Some hand gestures, however, are necessary. They are outlined in the next two points
To summon attention, turn your palm down or up, waving your fingers toward yourself.
Use your whole hand rather than your index finger to call a person towards you.
¡ñ Chinese people, especially those who are older or in positions of authority, dislike being touched by strangers.
¡ñ Acknowledge the most senior person in a group first.
¡ñ In the past, Smiling is not as noticeable in China, since there is a heavy emphasis on repressing emotion.
¡ñ In negotiation with Chinese people, one should be serious but friendly.
¡ñ Chinese businessmen like to entertain their foreign partners before talk.
¡ñ Do not put your hands in your mouth, as it is considered vulgar. Consequently, when in public, avoid biting your nails or use fingers to remove food from your teeth, and similar practices. Using toothpick to remove food is acceptable.
¡ñ If a Chinese person gives you a compliment; it is polite to deny it graciously. Modesty is highly valued in China.
¡ñ The Chinese point at objects with an open hand instead of the index finger. Beckoning to someone is done with a palm facing down. Avoid beckoning with your index finger facing up.
¡ñ Do not try too hard to go Chinese. Chinese do not expect you to know all of their etiquette, and they make allowances for foreigners. Keep the above guidelines in mind, but above all, be yourself.
¡ñ The Chinese do not like to be touched, particularly by strangers. Do not hug, back slap or put an arm around someones shoulder.
¡ñ Do not snap finger.
¡ñ Do not show the soles of shoes.
¡ñ Do not whistle.
Business Practice
Greetings
Address a person using his or her family name only, such as Mr. Chen or Ms. Xu. The Chinese family name comes first and is usually one syllable. A one or a two-syllable given name follows a family name. For example, in the case of Teng Peinian, Teng is the family name and Peinian is the given name. In some instances, Westernized Chinese might reverse their names when visiting and sending correspondence abroad. Therefore, it is always a good idea to ask a native speaker which name is the family name.
For business purposes, it is traditionally acceptable to call a Chinese person by the surname, together with a title, such as Director Wang or Chairman Li. Avoid using someones given name unless you have known him or her for a long period of time. Formality is a sign of respect, and it is advisable to clarify how you will address someone very early in a relationship, generally during your first meeting.
Do not try to become too friendly too soon, and do not insist that your Chinese counterparts address you by your given name. The American pattern of quick informality should be resisted.
The Chinese way of greeting is a nod or slight bow. However, when interacting with Westerners, Chinese usually shake hands. Bear in mind that a soft handshake and a lack of eye contact do not necessarily indicate timidity. It only implies that the person is not accustomed to the firm handshakes commonly used in the West.
Business meetings
In China, it is assumed that the first person that enters the room is the head of the group. Malaysian should observe this convention so as not to confuse the Chinese. Important guests are usually escorted to their seats first. If the meeting room has a large central table, the principal guest is likely to be seated directly opposite the principal host.
When exchange business cards, hold out your card using both hands, with the writing facing the recipient. Cards should always be exchanged individually (one-on-one).
Never toss or deal your business card across the table, as this is considered extremely rude. Receive a business card with both hands and scan it immediately for vital information. Then lay the card in front of you on the table. It is demeaning to put someones card directly into your pocket without looking at it first.
Malaysian businessmen should obscure punctuality as Chinese now are very punctuate in all their events of functions.
Meetings begin with small talk. Resist the temptation to get down to business right away. Also, avoid telling jokes, because jokes sometimes do not translate across cultures and can cause confusion or hurt feelings.
Business cards
Chinese business people always have business cards with them and cards exchanging is the usual practice when meeting for the first time. So, bring enough business cards with you. It¡¯s embarrassing if not presenting your own card when you are offered one.
When giving or accepting cards, one should use both hands.
Once having the card, don¡¯t tuck it in the pockets immediately; use some time to study the characters even if you don¡¯t understand them. It¡¯s a way to show respect to the person. Very often one side of the card is in Chinese, the other side in English. If you also have your card both in English and Chinese, make sure some real expert do the translations, because the same sound will have several Chinese equivalents, and some are often of better meanings than the others.
Bring a large supply of business cards. You may meet many more people than anticipated.
Social events
At a formal banquet be prepared to give a brief and friendly speech in response to the hosts speech.
When inviting Chinese to a party, one should remember to serve a real meal rather than snacks and drinks.
When invited for dinner, it is considered to be proper etiquette to sample every dish served. Your host may serve some food for you, and it is nice to reciprocate, if you feel comfortable doing so. Always leave something on your plate at the end of the meal or your host might think that you are still hungry.
Gift giving
If is appropriate to bring a gift, particularly something representative of your town or region, to a business meeting or social event. Gifts indicate that you are interested in building a relationship.
Chinese do not usually accept a gift or favor when it is first presented. Refusing two or three times is thought to reflect modesty and humility. Accept something in haste makes a person look aggressive and greedy. And Chinese usually do not open the gifts in front of the givers. Present your gifts with both hands. And when wrapping, we should pay attention to colors.
Red, pink, yellow, gold are colors indicating luck, happiness, prosperity, etc. while white, black are not so good. Some gifts to avoid
Chrysanthemums¡ªused for funerals
Pears/ umbrellas¡ªsound the same as separation in Chinese
Clock¡ªsounds like the expression ¡°the end of life¡±
Red ink for writing cards or letters¡ªsymbolizing the end of a relationship
Never give sharp objects such as knives or scissors as they would signify the cutting of a relationship. Lucky numbers are 6 and 8 (especially in a series, such as 66 or 888). An unlucky number is 4.
Women in the workplace
Officially, women have equal pay and equal status at jobs in China. They hold positions in factories, offices, government ministries, etc., right beside men, though most company leaders are men. Foreign businesswomen coming to China should not encounter any discrimination. On the contrary, if a woman represents a company in China, she would be considered a person of exceptional competence to be given such an important job. Of course, she should maintain a businesslike manner and her attire should be rather formal.
Survival tips
Keep in mind that in China, and virtually all other countries, that /6/01 means June , 001. When sending correspondence, avoid confusion by writing your date in full.
Do learn a few words of Chinese. This shows an interest in your hosts language and culture. It also is a very good icebreaker.
Learn the legal environment in China. China is undergoing great changes in laws, rules and regulations at accession to WTO. Getting familiar with applicable laws where your business conduct takes place is the first and foremost step.
Look for a business partner in China. The partner can be a supplier, customer, distributor, agent, consultant, etc. depending on the type of business, product or service. Such partner can help overcome the communication barrier in the process.
Be aware of Chinese culture value and ways of doing things. You can expect Chinese to speak English or other foreign languages and understand the Western ways of doing things, but you should also develop patience in working with ordinary Chinese people including government officials.
Everyday Etiquette
China is known as a state of etiquette and ceremonies. To well understand Chinese, some concepts should not be ignored
Mianzi (Face)
The idea of shame usually expressed as face could be loosely defined as the status or self-respect in Chinese and by no means alien to foreigners. It is the worst thing for a Chinese to lose face. Never insult, embarrasses, shame, yell at or otherwise demean a person. Neither tries to neither prove someone wrong nor shout at him in public.
Guanxi (Relationships between People)
The fundamental glue that has held society together is the concept of guanxi, relationships between people. It is very important for the Chinese to have good relationships.
The importance of Guanxi
(1) Initiate contacts in person
() Create a good ¡°first impression¡±
() Relationship brings relationships.
Keqi
Keqi not only means considerate, polite, and well mannered, but also represents humbleness and modesty. The expression is most often used in the negative, as in buyao keqi, meaning you shouldnt be so kind and polite to me, or youre welcome.
Form of greeting a brief handshake
Sometime as an expression of warmth, a Chinese will cover the normal handshake with his left hand. Embracing and kissing when greeting or saying good-bye is highly unusual. Generally, Chinese don¡¯t show their emotions and feelings in public. Except young lovers in cities, you might catch a glimpse of young couple kissing, or walking hand in hand.
Conversation
Family matters can be a good topic of conversation, and will go into great details. The subject of income often comes up. Jokes are okay in informal situations, but not when speaking to a group. Besides, jokes are hard to get through. The meaning is often lost in translation. Be fairly cautious in political discussions or better leave the subject alone. Generally speaking, Chinese will usually
(1) Avoid saying no;
() Say things that they believe that you want to hear;
() Be reluctant to break bad news.
So explain to your Chinese co-workers that you appreciate forthright communication.
Confucianism not a religion.
Some basic ideas are
(1) Respect for and obedience to the superiors and parents, duty and loyalty to friends.
() Age and rank are respected. Older foreign businesspeople are likely to receive more serious attention than younger people.
() Confucianism honors humility and courtesy. Individualism is not encouraged.
Survival tips
As a health precaution, it is advisable for international visitors to drink bottled water, even in hotels and restaurants.
Bring basic cold and anti-diarrhea medicines and your own prescription drugs.
Avoid talking politics or religion. Good topics Chinese food, sports or places one should visit.
Important festivals and holidays
New Year¡¯s Day January 1.
Spring Festival the first day of the first lunar month.
Lantern Festival the 15th day of the first lunar month
Women¡¯s Day March 8.
Qingming Festival April 5.
Labor Day May 1.
Children¡¯s Day June 1.
Mid-Autumn Festival the 15th day of the eighth lunar month
National Day October 1.
Negotiation with Chinese
There is no way to anticipate or avoid all of the problems of dealing with Chinese business people and bureaucrats, but there are a number of common-sense guidelines, learned the hard way pioneers in the country. They should help to minimize the problems and significantly enhance the possibilities of success. Here is a list of dos and donts that front line business is quick to share with newcomers
1. Know your own company and its products inside and out.
. At the beginning of a relationship with a Chinese company or government bureau make a special point of emphasizing that your own company follows high ethical standards, that you are bound by those standards, and that they specifically prohibit under-the-table payments. In order to make this pill go down a little easier it pays to emphasize how everyone on both sides of the table will benefit from a successful business relationship, appealing to the nationalist pride of the Chinese. I recommend that this statement of your companys ethical standards be in written form and printed on impressive stationery.
. Know everything possible about the Chinese company or agency you are going to be dealing with, including personal details about the managers and executives you will be meeting. If necessary, engage the services of an investigative agency to get behind the facade of the organization. Make sure that whatever investigation is done covers the corruption rating of the company or bureau concerned. If you are going to do business in China through an agent, take special pains to ensure that the agent is not one of the many that rely on primarily bribes in dealing with bureaucracy and suppliers. If you are asked for a bribe, do not show anger. Apologize sincerely and present a copy of your companys ethical guidelines, adding that if you agree to any kind of unauthorized payment you will be fired. (If you need and escape from this position, you can always agree to try to arrange some kind of authorized consideration).
4. If you are going to have employees in China, prepare a formal written code of conduct and require that all new employees sign the code as part of their employment contract.
5. Be as informed as possible about current social, economic, and political aspects of China. One of the best ways to accomplish this is to interview other foreign business people who are stationed in China and have been there for several years.
6. Know as much as possible about the Chinese market as it relates to your products and goals. Again, the insights of foreign business people on the scene can be invaluable.
7. Keep in mind that there is a social and political as well as economic content to business in China and that you will have to be knowledgeable enough and flexible enough to adapt to the Chinese environment.
8. Make sure your presentations are specific, comprehensive, and clear.
. If you are using your own interpreter, make sure you qualify him or her in advance. Also make sure he or she has studied your presentation before your meetings.
10. Prepare summary copies of your presentation, preferably in English and Chinese, and pass them out at the beginning of the meeting.
11. Take an open, friendly, sincere stance in your presentation. Some say nice things about China (but dont overdo it) and about your own country, adding that you believe a successful relationship will contribute to both countries.
1. Be totally honest and frank in your responses to questions, proposals, or criticism. If anything is amiss, if there is any kind of misunderstanding, cover it immediately. If you let it go by, it will likely come back to haunt you because the Chinese will assume that you approve or have no objections.
1. Exude sincerity and goodwill, but be firm and consistent in making points and position clear.
14. Do not expect fast agreement from the Chinese side. Do not expect seemingly endless litany of questions, requests for more information, and a variety of demands.
15. Be prepared to give a little on some points where you have leeway, but always get something in return.
16. Do not put yourself in a position where you have to have an answer or a contract in three days or any other short time-frame. It also pays to not put all your eggs into someone elses basket.
17. Keep in mind that the Chinese are generous in their use of time. They know that in most cases it is on their side and they will take the fullest possible advantage of it. Put yourself in a position where you can be patient and do not suffer.
18. Stay friendly, stay firm, stay unflustered. Let the Chinese know that, if you cannot reach an agreement within a reasonable period of time for any reason beyond their control or your control, you are prepared to do business with someone else.
1. If you do not have powerful connections in China, get some help from friends and or other connections and make them.
0. Emphasize that the relationship must be mutually beneficial-a relatively new concept in Chinese thinking. (The traditional and still generally automatic reaction is that, in any foreign relationship, the Chinese side should benefit first and foremost. Part of this reaction is a holdover from the generations when foreigners were expected to bring gifts to demonstrate friendship and recognition of China as the supreme power. Nowadays, part of it is based on the concept that Chinas needs take precedence over the foreigners desires to make what are typically perceived of as excessive profits.)
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