Doing business in China has its merits and demerits. However, if you look at the Chinese market from a holistic perspective, it has become one of the most sought-after markets in the world.

The reason is that China is the fastest-growing economy in the world. The scale of China’s economic prowess can be envisioned if one just observes the impact that Covid had on the world economy. China, going through a lockdown, stalled its global supply chains. And the ripple effects were seen throughout the world.

Nonetheless, doing business in China presents its fair share of challenges, threats, advantages, and opportunities. In this article, we will critically examine the realities of doing business in China.

Challenges of Doing Business In China

1. Finding out the Motivation

The number one challenge for companies investing in China is finding out what their motivation is. Early on, everybody was interested in China because it’s a big population. There is a very big difference between a population and a market. And companies need to find out why they’re going to China and why they’re doing what they’re doing.

Many of the times companies that are getting into trouble, find the wrong partner or they’re going into the wrong industry. It’s because they weren’t quite sure why they were going in the first place. Companies need to make sure that everybody agrees on why they’re doing what they’re doing. The CEO, the CFO, the salesperson, the board, everybody needs to agree that this is what they want to do. Because China is for the long haul. It’s not a nine-month mini-project. You’re gonna be there for a long time. It’s gonna go up and down. And you’ve got to have the staying power to really, truly succeed.

2. Lack of Information

The second issue in China is a lack of information.

Deng Xiaoping gave his famous speech in 1991 when he opened up the China market.

And one of the things he said was that development in China or the way forward is not going to be a smooth path. There’s no bridge to the future of China. It’s going to be, he said, like, “crossing the river by feeling for stones”.

And it was a really good image because it was a rushing river in front of you. When you are picking up stones, you’re not sure if they’re real stones or if they’re safe. And you have to kind of gently put your foot out, test it, then go to the next one. That’s China!

You’re going to have to make decisions based on a lack of information. And that’s very difficult for some companies to do.

3. Inside-Outside Orientation

Number three is a follow-up on number two. In China, there’s always a story behind the story. There’s a person behind the person. It’s never what you see on the front end. And it’s partially related to cultural issues.

For 5000 years, there has been this inside-outside orientation in Chinese cultures. As an outsider, you’re showing a certain view as an insider. And there are various levels of being an insider or an outsider.

Again, when you’re trying to do business with someone, do business with a company or with a person. It’s important to find out where this person is from, where this company is from, what is their history, and how did they become who they are today? How do they earn their money? And Who is behind them?

There’s always someone sitting behind someone and not in a nefarious way. You’re not talking to some puppet or a shadow. But there just is a level of complexity to Chinese business and Chinese society. And that’s important to take into account. So, we advise companies never to stop asking questions.

4. Understanding The Role Of The Government

The fourth challenge to foreign investors in China is understanding the role of the government.

The Chinese government is very involved in the business domain. For the past 30 to 40 years, it has been in the process of divesting itself to a certain standard of business. But 15 years ago, the Chinese government made a statement that they were going to get out of the business of being in business and they started to release a lot of state-owned firms.

The world saw this wave of privatization of Chinese state-owned entities. So then several years later, the government came out and said they want to divest, but also want to maintain some control and influence in key sectors such as oil, gas, transportation, rail, and media. And they stopped opening some of those.

Even in some of the private companies that have been completely privatized, there is government influence behind them. Particularly if you are doing business with smaller companies. Companies in smaller towns that are outside of the big city, if you’re doing a deal with even a private company there, they have heavy government involvement.

The local government in those places is very interested in their success and ensures that they maintain a revenue base through this company. They maintain an employment base for this company. So if you’re doing a deal with them, particularly if you’re trying to acquire them or do a joint venture with them, it’s critical to find out what the local government thinks.

5. Differences between Doing Business In Different Regions of China

One important aspect that needs to be mentioned over here is that it is very different to do business in Beijing versus Shanghai, or Shanghai versus a tier two or tier three city. Moreover, it’s very different to do business in the consumer sector versus the electronics or industrial sector. And so, China is such a complex place and as business people, the goal is to reduce complexity.

They want to reduce risk by understanding the complexity, and then packaging it up so that they can identify what China resists at every turn.

The vast majority of crises that clients deal with arise when they bring someone from Beijing or Shanghai to try to solve a problem in one of tier-three or tier-four cities. So all business in China is local. And all locales can be quite different from each other.

6. Do’s And Don’t of Doing Business In China

China remains the land of opportunity when it comes to doing business. Love it or loathe it, business culture in China is something you need to know if you are to succeed in the Chinese market.

Let’s discuss the dos and don’ts in Chinese business culture.

1. Maintaining Relationships

Try to understand Guanxi?

What, you might ask is, does a Confucian concept have to do with business in modern China?

It turns out the answer is quite a lot. Guanxi translates into English, as relationships or connections, and forming your business connections with other people. In China, it is crucial if you are to be successful. In Western countries, this can sometimes be mistaken for corruption. In China, however, it is a normal way of doing business.

2. Do Acknowledge Hierarchy

Chinese companies usually have a rigid understanding of hierarchy. This may be important when you meet with a Chinese business party. During a meeting, for instance, Chinese employees may be unwilling to speak before the boss speaks, or they may ask for permission from the boss before they speak.

3. Respect Formalities.

This is perhaps where Chinese business culture most overlaps with Western business culture.

4. Do Appreciate the food

China has so many delicious foods. China has such a rich food culture, regardless of how they express themselves, Chinese people are proud of their cuisine.

5. Do Give Gifts

Just make sure you don’t overdo it. Perhaps something that represents your hometown and or home country. Snacks, little souvenirs, or anything else you can think of is all okay. Be sure to present the gifts with two hands extending your arms out towards your host.

Okay, now you’ve learned the importance of do’s in Chinese business culture. Let’s move on to check out the don’ts.

6. Don’t Ignore Traditional Culture

Traditional Chinese culture still very much plays a part in the lives of many Chinese people. And this rubs off on businesses as well. Take holidays as an example. Chinese public holidays are arranged according to the Chinese lunar calendar. That means that holidays will fall on different dates each year according to the Gregorian calendar. You should bear this in mind when arranging business trips to China.

The biggest holiday is the Chinese New Year, also known as Spring Festival. Other holidays include National Day, Dragon Boat Festival, mid-autumn festival, and a few others. Many workplaces with exceptions of course will be closed during these times.

7. Do not Avoid Making Small Talk

Don’t avoid making small talk whether you’re speaking to the boss or someone with a lower rank, Chinese colleagues will always feel less awkward with a bit of small talk to start the conversation. If your mind goes blank, here are a few ideas you can start with.

Talking about your hometown, your family, nice places to visit, good food and drink, etc. are all good starting points. When talking about your impression of China, probably best to stick to the positives. Perhaps talk about what foods you enjoyed and whether you have been to any interesting scenic spots. Keep the conversation openers light.

8. Don’t Talk about Taboo Topics

Being opinionated about current affairs is fine, but when it comes to business stick to talking about just business.

Here are a few topics you should avoid with Chinese colleagues.

  • Human rights, especially China-related human rights issues.
  • Taiwan, specifically the question of whether Taiwan is an independent country.
  • Hong Kong; This is particularly current in light of clashes between anti-Chinese Communist Party protesters and police

9. Don’t Tip

If the service is good. A tip makes sense right. Why should a waiter or waitress or bartender not be rewarded for their hard work?

If you leave a tip, it may simply cause confusion. The person who receives it may chase you down and insist on giving the money back to you. Or they may put it aside for safekeeping in the hope that you will return later.

Some establishments may even have official policies banning tipping. One travel website points out that in the worst-case scenario, you may even cause distress or offense to the person you tip. The act of tipping may imply that because you are financially better off than the person receiving the tip, it is your job to offer them some charity. This may lead the person to lose face and become embarrassed.

10. Don’t Speak Directly

This may make you come across as pushy and aggressive in the view of your Chinese counterparts. So when you want to say something like, ” we need to get this done by Aprail 21“, consider altering it to, ” let’s aim to get this done by April 21. Does that work for you? ”

Or if you want to criticize something done by the other party? Let’s talk about where we can make some improvements. We’ll probably come across better than this part was not up to scratch. This part of Chinese business culture is also related to the concept of saving face.

If a Chinese person does not know the answer to a question, they may not wish to admit this directly to save any potential embarrassment. Therefore, of course, business culture is not the be-all and end-all.


Your ability to do business in China successfully will depend on a whole range of factors such as planning, investment, market conditions, etc. But it is nonetheless something you should be aware of. It could be the first step to making valuable connections in China. And after that, who knows where it will lead you

However, if you ever get the chance to speak to a successful operational business in China, then you will hear that most of them take assistance from Professional translation services such as Chinese translation services. These services have professional translators with expertise in the nd translation experience. They will guide you as to how you can effectively penetrate the market.


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