Doing business in China requires understanding local culture and practices. This guide helps foreign entrepreneurs succeed.
Business Culture Essentials
Guanxi (Relationships)
- Personal relationships are crucial in Chinese business
- Invest time in building trust before deals
- Business dinners and social events are important
- Long-term thinking over short-term gains
Face (Mianzi)
- Never criticize or embarrass someone publicly
- Give praise and recognition openly
- Avoid direct confrontation
- Allow counterparts to save face in negotiations
Setting Up a Business
Company Types
| Type | Best For | Capital Required |
|---|---|---|
| WFOE | Full control | Varies by industry |
| Joint Venture | Local market access | Negotiated |
| Representative Office | Market research | Low |
Registration Process
- Name approval (1-2 weeks)
- Business license application (2-4 weeks)
- Company chops/seals registration
- Bank account opening
- Tax registration
Business Etiquette
Meetings
- Arrive on time (Chinese partners may test punctuality)
- Exchange business cards with both hands
- Senior person enters room first
- Seating arrangements reflect hierarchy
Business Dinners
- Important for relationship building
- Host orders food, guest should try everything
- Baijiu toasts common (ganbei = bottoms up)
- Never stick chopsticks upright in rice
Key Industries for Foreigners
- Technology and software
- Education and training
- Healthcare and pharmaceuticals
- Consumer goods and retail
- Environmental technology
Legal Considerations
- Hire local legal counsel
- Contracts should be in Chinese and English
- Chinese law governs contracts in China
- Intellectual property registration is essential