Over the past two decades I have worked in both China and the West for some of the biggest multinational companies. My company today, www.dhgate.com, has an international management team which services our thousands of clients from China and the rest of the world particularly the US. This has given me a unique insight as to the major differences between Westerners and Chinese in their approach to business.

In this post, I want to provide an insider’s look into the Chinese business world.

It is sometimes not that well understood in the West that the main driver of China’s extraordinary economic success over the past couple of decades is due to private enterprise, particularly SME entrepreneurs and family businesses.

There are two key aspects of Chinese entrepreneurship: the first is that Chinese businesspeople emphasize trust and reliability in long term relationships with customers and suppliers; and the second is the gradual building of networks of relationships often based on family and other long standing relationships.

What does this mean for a Western customer in dealing with a potential Chinese supplier?

• Firstly, don’t treat your Chinese supplier as you would treat a supplier at home. The Chinese have a different approach to business. Business is personal and relationships are paramount. Don’t expect Western-style service concepts like ‘The customer is king’ or ‘The customer is always right’ from a Chinese supplier. Great service takes years to develop. Remember that a short term deal on the internet is not the ideal Chinese business model, so take that into account.
• Chinese business relationships emphasize balance and harmony, so don’t try to push too hard for the best deal you can get. Try to define your relationship as one of equals or that of a partnership. It may be more productive in the long term to give a little in the early stages of negotiations in order to establish a great long term relationship. Many smaller Western importers initially focus too much on getting the lowest price. This approach may not deliver the best product and service. Remember also that competition in China is ferocious and margins for Chinese suppliers are very thin so unless you are a big volume buyer or long standing customer, there will be little room for price reductions.
• Don’t underestimate Chinese business savvy. China is the most competitive manufacturing market in the world and Chinese business people are highly sophisticated and savvy. Don’t fall into the trap that just because the products are cheap, the producers of those products lack business sense or skills.
• Don’t get angry if there are problems with delivery delays or quality issues. This approach is counter-productive and may exacerbate the situation. Whilst acceptable in Western business as a technique of getting your way or resolving a dispute, such displays of anger are seen as disrespectful in Chinese business.

Also, it is worth remembering that it is only relatively recently that Chinese businesses have been introduced to Western business styles and procedures. Whilst things are changing, it will still take some time for Chinese businesses to catch up to Western standards. We are working closely with our Chinese clients to introduce them to Western business culture by instituting training programs which focus on delivering better service, dealing with Western customers and providing quality products.