Chinese cultural characteristics are a key factor for increasing number of Westerners doing business in China

It's an all-too-familiar situation for many Westerners flying halfway across the globe for a string of meticulously planned meetings with their Chinese business partners.

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A typical welcome on the first day: "Oh, you must be tired after your long flight, so please have a good rest first."

Day 2: "We are going to take you out for a nice Chinese meal then maybe have an introductory meeting, just to get to know each other better."

After a few more days of genial meetings, talking and "building rapport", the foreigners suddenly realize it is the last day of their trip and think: "Wait a minute, we're flying back in four hours. Apart from the fact that we've had a lot of Chinese food and drunk a lot of baijiu (Chinese liquor), nothing's happened."

For business consultant Colin Friedman, these images end with hapless Westerners in the car with their Chinese hosts, on the way to the airport and working out the last details of their contract.

"And because the foreign business person is under pressure to get things organized, he may often concede more than he would have done if he had thought about things slowly and in a logical way," Friedman says.

These are just some of the minefields that a growing number of Western business people face in China, with limited knowledge of Chinese culture, consultants like Friedman say.

Whether it is the need to consider guanxi, the central Chinese idea of personal networking, or mianzi, the concept of "saving or giving face" and avoiding shame, many say being aware of - and being able to handle - these values continue to be extremely influential and even crucial in today's Chinese business world.

Chinese hosts might want to build guanxi by wining and dining their Western counterparts, saving business details for the end. Western business people might be too caught up with not offending their hosts, who can seem particularly sensitive to avoiding any conflict to "save face" for the Chinese side.

Then there are other Chinese concepts such as gift giving, the rigid adherence to hierarchy and culturally specific business etiquette making up a mind-boggling web of behavior that can totally throw off Westerners. (See pages 6-15.)

For Beijing-based Friedman, who is managing director of China Expert International, it is exactly these foreigners who need all the help he can give to navigate the cultural intricacies that can seriously affect the way business is carried out in the Middle Kingdom.

"A lot of it goes back to Confucius, Chinese thought and history. We are talking about 2,000, 3,000 years and a lot of it is ingrained," says the 57-year-old Friedman, whose company offers services and solutions for expatriates and for doing business in China.

"These concepts are still in place. They are not being eroded but being adapted slowly. They'll still be around for a long time," says Friedman, who was born in Britain and trained as an engineer. He also spent more than two decades in Israel and has been in China since 1998. His clients are mostly from continental Europe and the US.

Gergely Salat, who is head of the Centre for Modern Chinese Studies at the ELTE Confucius Institute in Budapest, Hungary, says Chinese ideas of guanxi and mianzi are "as important as they have ever been".

"Chinese society is a dense jungle, with a lot of dangers, stress and fierce competition. Without guanxi, it is almost impossible to survive. If you are alone, you have no chance," says Salat, who is also assistant professor at the Department of Chinese Studies of ELTE University in Hungary.

"On the positive side, guanxi saves you all the time and money that we in the West spend on securing our interests because of the lack of trust. If two Western businessmen make a deal, they write down all the details in a book-long contract, pay lawyers and accountants to make sure everything is all right legally - these all raise the costs of the deal for both sides.

"Two Chinese businessmen that have a personal relationship might just have an oral agreement and save a lot of time and money. Both models work, but the guanxi-based one might be more efficient."

Salat himself is a contributor to the Europe-China Cultural Compass, a project of the European Union National Institutes for Culture aimed at facilitating cultural exchanges between the two. The project is just one of the latest efforts from major stakeholders that stress the importance of cultural understanding for Westerners operating in China.

"For foreigners in China, it is most important to build a network of guanxi if they want to get anything done. If they establish a long-term relationship with a company or an official, they can count on them, and use them as a medium to other Chinese businesses and officials," Salat says.

Hong Kong-based sociologist Chan Kwok-bun says the Chinese emphasis on social networks is not exclusive to the business world. Alexis Hooi / China Daily

"I think many of the failures experienced by Western businessmen in China come from not knowing the importance of guanxi. When a Western businessman meets his Chinese counterpart, he wants to make a deal quickly, talks straight and only cares about business. This might be alien to the Chinese who are used to doing business with people whom they have known for some time and with whom they had enough time to build trust.

"Another mistake by Westerners is related to mianzi. For Chinese, saying 'no' is impolite, so if their partner openly says 'no', they might be offended, as they feel they lose face. For the same reasons Chinese will never say 'no', because they don't want to make their partner lose face. So they say something like 'oh, it's a very good idea, we will think about it very carefully'. The Western side may believe that they really think it's a good idea, but in reality this was just a polite form of saying 'no'."

Scott Kronick, who is president, North Asia, at global PR agency Ogilvy Public Relations Worldwide, says it is critical for foreign business people to understand Chinese culture if they want to be successful.

"We have a saying at Ogilvy, 'a brand or company cannot be successful unless the local market tells you so' and I believe that for foreign businesses operating in China. Success is contingent on a company's ability to truly embrace a local culture," Kronick says.