Doing Business in China

1. Economic Overview
Since the late 1970s, China has moved from a closed, highly regulated economy to a more open, free market one - in 2010 China became the world's largest exporter. In 2013, China stood as the second-largest economy (on PPP, i.e. Purchasing Power Parity basis) in the world after the US, having surpassed Japan in 2001. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment.

In the last decade, China has renewed its support for state-owned enterprises in sectors considered important to its strategic and economic security. After keeping its currency tightly linked to the US dollar for years, in July 2005 China moved to an exchange rate system that references a basket of currencies. From the onset of the global financial crisis until June 2010, Beijing allowed resumption of a gradual appreciation and expanded the daily trading band within which the RMB is permitted to fluctuate. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978.

However, per capita income is well below the world average. The country has a huge immigrant population from the marginalized rural areas that stay and work at bare minimum wages in urban factories. By 2011 more than 250 million migrant workers and their dependents had relocated to urban areas to find work in China. Economic development has permeated further into the coastal provinces than in the interior rural area.

The current government faces numerous economic challenges-
 * a very high domestic savings rate (~51%) and a correspondingly low domestic consumption;


 * lack of high job opportunities from marginalized rural areas


 * rapidly aging workforce due the one child policy


 * corruption and related economic crimes


 * rapid environmental damage and social strife due to the rapid transformation

Several factors together are causing China’s growth story to slow down –
 * a debt overhang from its credit-fuelled stimulus program


 * industrial overcapacity


 * inefficient allocation of capital by state-owned banks


 * slow recovery of China's trading partners

The government's 12th Five-Year Plan, adopted in March 2011 and reiterated at the Communist Party's "Third Plenum" meeting in November 2013, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent in the future on fixed investments, exports, and heavy industry. However, China has made only marginal progress toward these re-balancing goals. The new government of President XI Jinping has signaled a greater willingness to undertake reforms that focus on China's long-term economic health, including giving the market a more decisive role in allocating resources.

1.1. Chinese Economy Structure and Challenges
As is typical for a developing economy about to take off, the domestic savings rate in China is very high, giving it a potentially large capital surplus. However, domestic savings contributes to only a third of the national GDP and foreign investments amount to close to 40% of the GDP. China has to slowly reverse this trend for a sustainable growth that does not rely only on exports but rather on domestic consumption and an innovation led service economy. Thus it has to establish an efficient financial system to convert the domestic savings into investments.

The income disparities in the Republic of China are among the highest in the world. Urban GDP in Shanghai is well north of 10,000 USD per year as opposed to just over USD 1,000 in the rural province of Guizhou. Battling corruption at the senior management level in SOEs is also a major concern for China and is highlighted in the Third Plenum held in November 2013.

Lack of macroeconomic stability that is reflected in the form of a weak stock market where investments are more speculation led than and transactions lack transparency due to asymmetry of information. The real estate market has similar features; the prices for real estate are too high for the ordinary citizen. The international standard for a urban house price is six times the average family annual income and for Shanghai it is 20 times.

The rapid economic growth has also led to labor abuse with average wage being only 130 USD. On an average, the Chinese immigrant worker works 6.29 days/week, 8.93 hours/day.

A key challenge for the Chinese government is undertaking state-owned-enterprise (SOE) reform, reducing the monopolies SOEs hold over various key sectors of the economy (energy, transport, telecommunications, defense industries, etc.) while introducing mixed ownership and competition (including foreign) into these sectors.

The economy is also looking to relax or lift hukou (housing registration) restrictions to create a true labor market while alleviating the burden that migrants place on municipal governments (Shambaug, 2014).

The lack of intellectual property rights, i.e. rampant piracy in parts has hurt not just foreign firms but also Chinese firms but making them lose credibility as houses of innovation. China needs to increasingly foster indigenous innovation, esp. in the service sector.

1.2. Chinese Economy Reforms
The reforms in the late 20thcentury saw some reforms with regard to encouraging the existence of a robust private sector. However, it is important to note that these changes were incorporated only at an economic level but not as a political reform.

There was regional order to the economic reform – starting from the coast to the internal areas. Deng Xiaoping’s reforms adopted a gradual approach that put efficiency above equality, “let part of the people get rich first” while using the socialist market economy strategy at the core. In a socialist market economy, a large part of the industries are owned by the state but they compete with each other within some rules set by the market. Here, the state does not routinely interfere in setting of the prices. The State owned entity (SOE) progress can be broken down into two periods –

First Stage 1978 – 1992 – Giving managers more decision making power by separating the governmental function from the managerial function

Second Stage 1992 – current – Corporatization of the SOEs by keeping the large strategic sectors but letting go of the smaller ones. The government used a dual track pricing system, wherein some goods and services were    allocated at state controlled prices and others at market prices.

With real estate bubbles and rising food inflation continuing to be a major issue, an easing of overall economic growth to allow for meaningful reform of China’s fiscal and economic structures will be important for China’s continued economic welfare.

1.3. Differences between Public and Private Sector
The future progress and development of China will be to a large extent determined by the effectiveness of its institutions, firms and enterprises. Given the role of senior managers in formulating the policies of the institutions, it becomes crucial to measure and improve managerial effectiveness.

Therefore, understanding the basic differences between managerial effectiveness, what motivates managers etc. is useful. Based on the paper, ’Comparison of public and private sector managerial effectiveness in China’, the private sector is more likely to offer competitive pay. For the public sector, the principal concerns are ineffective leadership and lack of people-management skills. Finally, the differences identified between the two sectors might indicate a possible developing direction for future SM effectiveness in the public sector, such as the emphasis placed on teamwork and communication.

1.4. Emergence of Private Sector
Before China’s reform and open door policy, private companies were looked at as the tail of capitalism that had to be cut. However, they did exist in a small way in the form of family run business in the rural areas, illegal to an extent. In 1979, during the eleventh national congress of the CPC (Communist Party of China), it was declared that private plots, private livestock rearing and family side-line business were not to be labelled ‘the tail of capitalism’. In 1982, the role of the individual economy was recognized by law, which promoted the urban individual economy. Later the bigger question of whether an individual run private company could hire associates, workmen or labor emerged as it was viewed as fundamentally against socialism. On this, the CPC employed a “wait and see” approach. Thus the private sector expanded greatly among suspicions in the society that were voiced by the media. Against this background, several entrepreneurs lost faith in the private sector, converting their private companies into public ones by cancelling registration. In 1992, these concerns were addressed in a speech saying that whether the core of the private sector is capitalist or socialist will determine any capitalist misgivings. Thus the private sector companies slowly began to thrive, growing at an average rate of 30% since the late 1980s.

In the course of reforms, many private companies chose to don the “red cap” by affiliating themselves with public sector entities so as to avoid being viewed as ‘exploiters’. This allowed them to be registered as public firms and helped them enjoy favorable tax rates and lower interest rates from banks. In 1993, as per a survey conducted 83% of collective enterprises actually turned out to be private enterprises. Several local governments encouraged this since they earned a higher management fees and could should a higher political achievement. In 2002, the sixth national congress of the CPC proposed unwavering support for the growth of the non- public economy. The clauses on protection of such entities and their private possessions provided a sense of relief to the private company owners. Thereafter, the private companies were identified as crucial to the growth of the economy, esp. of some marginalized sectors where inefficient public companies had monopolized the market. In the 21st century, the private companies have not only increased in terms of asset base but also in terms of how they’re structured. They have diversified from mainly individual or family owned businesses to equity based corporate entities and are moving to an expert based management style.

2. Ease of Doing Business
The World Bank (The World Bank, 2014) releases economic data and analysis highlighting attractiveness as business destinations of all countries. Some key parameters to be evaluated for China are:

The Logistics Performance Index overall score reflects perceptions of a country's logistics based on efficiency of customs clearance process, quality of trade- and transport-related infrastructure, ease of arranging competitively priced shipments, quality of logistics services, ability to track and trace consignments, and frequency with which shipments reach the consignee within the scheduled time. This is on a scale of 1 to 5. China ranked 3.5 in 2014, much above the World average of 2.9.

Start-up procedures are those required to start a business, including interactions to obtain necessary permits and licenses and to complete all inscriptions, verifications, and notifications to start operations. Data are for businesses with specific characteristics of ownership, size, and type of production. China has 11 procedures as opposed to the world average of 7.

Informal payments to public officials are the percentage of firms expected to make informal payments to public officials to "get things done" with regard to customs, taxes, licenses, regulations, services, and the likes. The figure was 10.7% in 2012.

Overall China ranks 90 among 189 countries on the Ease of doing business criteria.

2.1. Economic Implications of the Third Plenum (November 2013)
Given the new focus of the government on re-balancing the economy, the preferential treatment enjoyed in China by foreign businesses in the past will be no longer, whether it be tax rates, access to land or government support in shepherding applications through internal approval processes in exchange for hard currency and investment dollars in order to drive simple GDP growth. This is an approach no longer aligned with macro policy priorities. Beyond a leveling of the playing field, there is risk that the pendulum could swing much further. Foreign businesses will need to create much more sophisticated levels of engagement with government and other stakeholders in China around clear common goals.

3. Work Culture in China
In a highly competitive business environment, it is more important than ever for us to understand the business culture of our target markets. Understanding business culture helps us understand, anticipate and respond to unexpected behavior. It also enables us to behave in an acceptable way and avoid misunderstandings. As the Chinese saying goes, ‘ru jing sui su’ (When you enter a region, follow its customs).

3.1. Hierarchies in a Chinese office
The Confucian philosophy : All relations are unequal and this inequality must be respected.

Following this philosophy, in China, the older person (or superior) automatically receives respect from the younger (or subordinate). In China, the manager is seen as the father figure who expects and receives loyalty and obedience. In return, he takes holistic interest in the overall well being of the subordinates. Such a mutually beneficial relation is considered the cornerstone of business relations in China. Failure to show/receive respect can result in loss of miàn zi or “the face” which is a very sensitive issue for any Chinese (Buttery, et al., 1997).

Hofstede’s cultural dimension theory also highlights that China has very high ‘Power Distance’. There is a clearly visible unequal distribution of power and wealth. Chinese value ranks and status. It is therefore imperative that the most important person in the company or the group leads important meetings (Williams). During a meeting, it is customary to show respect to by standing up when a senior person enters the room, offering the seat of honor to him/her and being attentive even if the key person’s English is weak. Subordinate members should not speak unless asked to do so by the most senior person. Golden rule: ‘Don’t be late for a meeting and know who the boss is.

As would be expected in a Confucian society, operational structures, chains of command, management style etc. tend to be hierarchical and directive. Orders are passed from a manager to his immediate subordinate who in turn passes the instructions down the line. Since orders are dispensed word by word, one must remember to always give a detailed and complete instruction (World Business Culture, 2013). Questioning these instructions is considered disrespectful. It is therefore quite likely that the subordinate will never use his judgment to conclude that the boss is wrong.

Chinese society considers empowerment and open access to information as bizarre notions and ‘root cause of the problems of the west’. According to this school of thought, moral degeneration and the anarchic idea that an individual is more important than the group to which they belongs, are the two ‘big evils’ prevalent in the western society caused by the lack of observance of hierarchy. The communist party maintains close relations with the senior managers at most Chinese firms and thus they are in a position to scrutinize business decisions (World Business Culture, 2013).

Chinese have good recruitment and retention policies. Switching jobs is uncommon though not unheard of. As typically seen in a growing economy, there is a dearth of experienced managers.

If a company wants to enter the Chinese industry, a joint venture (JV) with a Chinese organization is highly recommended as it allows you to meet people and build relations in China. It is often been said, 'In China, if you don't have Guanxi, or personal connections, you don't have anything.' A JV is the easiest path, not only to establishing Guanxi, but also overcoming a lot of cultural obstacles with minimum frustration, since the Chinese enterprise will already have the advantage of knowing the culture and procedures, while being part of the guanxi network. It may be advisable to seek the help of a qualified China business consultancy which will be able to bridge the cultural and language gaps. However, in any such attempts, it is critical for the overseas company to ensure that they have selected the 'right' joint-venture partner (World Business Culture, 2013). In general, introduction of a more matrix-oriented approach is bound to lead to conflict with local expectations.

3.2. Guanxi: Relationship Building
The Chinese prefer to establish strong relationships before closing deals therefore. It is important not to be offended by what may be deemed as ‘personal’ inquiries by the Western world. The secret of being successful in China is the right Guanxi. Both Chinese and foreign companies will often attribute their business success to having good guanxi. But the obligations of guanxi are very real. In the wrong place, at an inappropriate time, with unsuitable people, the obligations can become a trap which is hard to escape.

It is important also to consider that business environment in China is changing. Regulatory procedures are gradually becoming more transparent, and the legal system is evolving to more effectively resolve disputes. Also, the successful long-term business relationships in China are indeed anchored by strong personal bonds. China does not draw a hard line between business and personal relationships in the way that many Western societies do.

The necessary trust must be developed in two different ways. The first is trust from the head — the sort of thing Westerners are used to. The second is trust from the heart, which is not only different but more difficult. In either case, if you want to create guanxi, it begins with trust (Chua, 2012).

Ways to maintain and to nurture a relationship (EU SME, 2013):

•	Give before you take –make sure that you are a useful source for others.

•	Guard your reputation to maintain your network’s respect.

•	Check in regularly and spend time with your contacts, for instance over a meal, a coffee or at an event. It takes time and effort to establish a relationship, and it takes even more time and effort to maintain it.

•	Be available.

•	Be selective– focus on the most fruitful relationships.

•	Be patient- don’t be pushy if it takes longer than you expected or disappointed if your contacts cannot solve your problem.

•	Be appreciative and reciprocal- return the favor even if it is not necessary.

3.3. Negotiations
Different approaches to the negotiation process (EU SME, 2013):

Important aspects that need special consideration:

• Scheduling a meeting : Check the Chinese calendar. If you are scheduling a meeting, avoid all national holidays, especially Chinese New Year, when the entire country effectively shuts down and it can be very difficult to organize meetings with key individuals. The May 1 and October 1 holidays also affect businesses: be forewarned.

•	 Preparations for a meeting : Be well prepared in advance of your meetings. Your Chinese hosts will most likely know you and your business quite well. Have a detailed proposition of the value of your company and product; your counterparts will have one for you. Your contact in the company might be speaking English fluently, but it is possible that the senior officials and key decision makers don’t. It is thus advisable to carry Chinese translations of your company brochures and presentations. Try to capture their attention at the first meeting, else you may not be able to secure follow-up. Also, remember to communicate meeting requirements, if any (ex. Projector and screen), well in advance.

•	 Contracts : There is a specific time that it is suitable to sign a contract. Early signing in a transaction is demonstrated as a lack of personal trust. A negotiated contract may mean little more to a Chinese negotiator than a checklist of points or a sign of a developing relationship and it is common for clauses that appeared to be agreed to be re-opened (Cypress Recruiting Group Inc., 2014).

•	 Ability to understand and communicate : Experience shows that jokes, subtle or eloquent speech, as well as emotional or dramatic presentations do not translate well and can lead to misunderstandings. A good way to reduce the possibilities of misunderstandings is to create more than one communication channels (more than one person who speaks Chinese). Relying on one channel only can be fatal to negotiations, especially when there are personal interests or conflicts of interest involved.

•	 Chinese Communication Style : The Chinese have a reputation for 'impassiveness', limited display of reactions and rigid body language. They often use an intermediary make “introductions” to deliver bad news so as to soften the blow and preserve good will. They also find it extremely difficult to say 'no' and prefer to agree with things in a less than direct manner. If you hear phrases such as, 'Yes but it might be difficult' and 'Yes, probably', take the cue (World Business Centre, 2013).

•	 Get the matching game right : China is a country with high power distance. This means that the hierarchy is very important and the response to the top decision-makers can accelerate the negotiation process, in contrast to the lower-level staff (Fang, 2006).

•	 Managing the process : Chinese focus on the holistic picture of each issue. The details are analyzed during the process of the project (EU SME, 2013).

•	 Superstitions and business : Decision making is slow in China and most people would like to consult their stars or wait for their lucky day before taking any decisions. Therefore, be prepared for a delay and do not rush them into taking decisions.

•	 Dress code : Government officials and top management dress formally for meetings, while business people at working levels may adopt a more casual style. If you’re not sure, go formal. Chinese favor conservative dressing. Subtle, neutral colors should be worn by both men and women. Women should avoid high heels, short sleeved blouses and revealing clothing as they can be considered offensive to Chinese businessmen. Appearance is important within Chinese business circles. Successful people are expected to look successful. Wealth is admired, so wear good quality clothes, watches etc. if you want to impress - but don't be overly ostentatious.

4.1. Business dinner etiquette
Business meals and banquets are an important issue in China that can’t be ignored when doing business. The act of dining is not only important because of conducting business deals; it is more important to build relationships with the business partner and is also relevant for showing respect. It is a social event in a formal context. The discussions usually center on information about the history of both companies and about the region of the companies. Finalizing business deals is not the use of a dinner. For the Western business person, the dinner etiquettes can be quite strange. Before participating a business dinner, it is therefore important to be familiar with the rules (Sean, 2013).

•	 Arriving : It is very important that you arrive on time. Do not arrive early for the dinner because the host will consider that you are hungry and so you may lose your face. Normally the guest does not bring her/his men/wife to the business dinner but business persons are allowed to bring their secretaries (Ediplomat, 2014).

•	 Seating : On arrival, the participant should first introduce himself, or let the master of the dinner do the introduction - this is the better option when there are unknown guests at the table (Wu, 2014). The most important part of the Chinese dining etiquette is the proper seating arrangement. The host is always placed at the head of the room (also a sign for the highest level in the hierarchy), facing the door. The second highest-level attendee sits to the left of the highest level and the third highest sits to his right site (only people with the same ranking are allowed to talk with one another, people of lower level are not allowed to talk with those above). Do not seat yourself before the host is not seated.

•	 Eating : Do not start eating before your host does. After the seating there will be cold dishes on the table, wait until you are invited and then slowly start to eat. Be aware that the host of a business dinner normally orders the food. Sometimes the guest is also allowed to order dishes for everyone; in this case you should order dishes that are in the medium price range (Sean, 2013).

•	 Chopsticks : China is famous for their traditional chopstick culture. There are some rules that everyone should keep in mind. You shouldn't wave around with your chopstick. It is also important to not stick the chopstick straight up in the bowl because this is only done on funerals. Dropping the chopstick is considered as bad luck and should be avoided (Wu, 2014). Never use your fingers no matter how small and difficult the meal might be and never tap your chopstick on the table, this is considered as rude. The chopsticks should never be kept after use; you will be served with new chopsticks when the new dishes arrive. After you finish your meal, place the chopsticks neatly on the table or on the chopstick rest (Lininger, 2011).

•	 Dinner progression : During the dinner, there will be a lot of dishes served, so to have a sense what coming you should know that the meal will proceed with meats of various varieties and peak with a fish course, followed by stable and will end with a sweet or dessert (The Canadian Trade Commissioner Service, 2014). It is also acceptable to refuse food if you have a dietary restriction or allergies. Otherwise, you should accept a sample of everything because this is a sign of politeness. Be aware to leave some food on your plate during each course of a meal to honor the generosity of your host. It is not considered as bad manners if you slurp soup or belch, it’s more of sign that you like the food.

•	 Drinking : It is really common throughout Chinese dinner to drink. But be aware of the alcohol that is served; it is a strong distilled alcohol (baijiu) and is mainly used for toasting. There are many toasts during the dinner. The Chinese alcohol is considered as strong, especially for foreigners, so avoid drinking on an empty stomach (The Canadian Trade Commissioner Service, 2014). The host is the first to give a toast to your presence, cooperation or friendship. After the first toast you should reciprocate the toast and make sure that your toast is no longer than your host’s. Stand up for the toast and hold the glass with two hands. It is also important to toast everyone at least once, starting with the highest ranked person and then moving down. During Chinese dinner it is expected before you begin to eat or to drink anything that you say “youyi” (“here’s to friendship”), and that after the meal you thank the host (Lininger, 2011). If you can’t drink for medical or personal reasons, please inform the host before dinner. There are big differences in toasting rules among the different regions in China; if you are not sure about the rules please ask your host.

•	 Paying : After the dinner the host will pay the bill. If you are the host, do not pay in front of everyone. Leave the room and pay but be aware that there is no tip. Tipping in China is illegal (Lininger, 2011). Leave shortly after that meal is finished, because no one will leave before the guest of honor does.

4.2. General do’s and don’ts
There are a couple of definite no-no’s and absolute do’s that foreigners doing business in this land should know about, in order to avoid ‘losing-face’ situations. Outlined below is a comprehensive list of cultural norms to take into consideration.

Do’s

Introductions and greetings

•	During introductions, always acknowledge the Chinese group members in order of seniority or rank (most senior first). Senior members should begin the introductions (Ediplomat, 2014).

•	Family names and titles should be used until invited by Chinese host to use given names.

•	Bowing is a lost formality, so during greeting, nods and handshakes are more prevalent today (National Geographic, 2014).

•	 When introduced to a Chinese group, they may applaud you in greeting. Be sure to join the applause (Ediplomat, 2014).

•	Efforts to speak a few phrases in Chinese are considered highly. In the very least, learn the correct greeting phrase (National Geographic, 2014).

Meetings / Negotiations

•	The status of the initiator contact to the Chinese is very important as it shows how the foreigner perceives the value of the Chinese relationship. The initiator should be someone of a high rank.

•	 Business cards are an absolute must. They should be printed in English on one side, and Chinese (simplified characters) on the other side.

•	When presented a business card, receive it with both hands, with respect. Take a moment to read it carefully, and either keep it placed before you (in a meeting setting), or respectfully store it in the front pocket of your shirt (not the back pocket), or safely stow it away, in their presence. This shows that you value the person represented on the business card (Culturally Savvy, 2010).

•	After receiving a business card, present your own in response, with both hands. The writing should face the person receiving the card.

•	When presented with a gift, receive it with both hands, and show effusive gratitude to the gift giver. Place gift aside, to be opened later in private in order to avoid coming across as greedy (Lonely Planet, 2009).

•	If giving gifts, give one to everyone present, or do not give gifts all. It is however recommended to give a relatively valued gift to the Chinese side at the first meeting ( it goes toward establishing guanxi) (Culturally Savvy, 2010).

•	Should older Chinese refuse first offer of gift (out of politeness), make a second offer and third if necessary.

•	English is not used as the medium of communication for meetings in China, even if the Chinese may understand it. Hire or request for an interpreter.

•	Respect the silent pauses that happen during meetings, however long. Resist the urge to fill the silence.

•	After hosting a Chinese delegation, during departure, accompany guests to the elevator. High ranking guests should be accompanied up to the car, and the host should wait till the car is out of sight before turning his back (Culturally Savvy, 2010).

•	Finally, dining and entertainment are a big part of doing business with Chinese. This bit is covered extensively in the business dinner etiquette section.

•	Consider it a great honor, if Chinese invite you to their house as they prefer to entertain people, especially foreigners, in public places. If you however, must turn down the offer, do explain your constraints else offense might be taken by your rejection.

Don’ts

•	Do not be late for any appointments or meetings. This is a sign of disrespect for the other party’s time. Better to reschedule in advance.

•	Do not touch or hug, as Chinese do not like being touched by strangers.

•	Do not yell or lose your temper in any situation as it is considered a ‘face-losing’ situation. Keep calm, or keep your face expressionless in tense situations (Lonely Planet, 2009).

•	When seated, do not point the bottoms of your feet to anyone.

•	Do not point with the index finger; use the open hand if you must point.

•	Do not blow your nose in front of people, or pocket the used handkerchief afterwards – it is considered disgusting.

•	With regards to gifts, do not give items in the white and black color spectrum. These are funeral or death-related colors in Chinese culture. In the same vein, do not give inappropriate gifts (like clocks whose Chinese word is similar to death) or items in even numbers (even numbers are bad luck). Thoroughly research the potential implications of any gift to be given in this culture to avoid embarrassment (Culturally Savvy, 2010).

•	Do not write with red ink, as it symbolizes the end of relationship (Culturally Savvy, 2010).

5. Tips for first time business travelers to China
For the foreigner business people making the trip to China for the first time, it can be rather overwhelming, more so if the trip is intended to be a short one. Below are some tips to help make the stay a bit less daunting.

•	 Visa: some countries do not require visas to get into Hong Kong for visits up to 30 days. However, to get to mainland China does require visas, so be sure to find out the respective visa requirements ahead of time, and apply early to allow for any delays (Traveler's Digest, 2013).

•	 Flights: thoroughly research your flight routes before departure. The modern airports (Being and Shanghai Pudong) are efficient, but going through second-tier cities, as well as use of domestic air travel is a bit different as getting to the right gate is confusing, and the boarding time is relatively shorter. It is also better to book flights such that you land in the evening. It gives you time to get some much  needed sleep and rest in (Traveler's Digest, 2013).

•	 Travel insurance : while medical care in China is affordable, do make it a point to get travel insurance from your home country for the travel period to cover any eventualities (like lost luggage, evacuation, etc).

•	 Check the weather : it is always recommended to check the weather situation of your destination before departure. Warm temperatures would call for lighter clothing, while cold temperatures would call for heavier clothing.

•	 Travel light: avoid packing a lot so that you have to check luggage in. No checked luggage means shorter time at the airport of your destination, and more time for more important things. Do not forget to pack the correct chargers and adapters for your gadgets (Wadell, 2014).

•	 Language barrier : Mandarin Chinese is still the default language in China, so learning a few phrases before hand is advisable. While in China, be sure to carry Chinese business cards of your hotel and the places you wish to visit in order to make it easier for you to communicate your destinations. Having a Chinese phrase book, and/or English-Chinese pocket dictionary can also be very helpful (Lonely Planet, 2011).

•	 Currency : most major credit cards are acceptable in the larger cities of China. However, do have some cash on hand to be exchanged for local currency on arrival to cover miscellaneous items like transportation. Keep in mind that Hong Kong and China have different currencies.

•	 Taxis : taxis /cabs in China are very easy to use and are a cheap and efficient way to get around. With the Chinese-written business cards, it shouldn't be a problem communicating where you want to go to the cab driver.

•	 Unlocked mobile phone : carry an unlocked phone when going to China. Local SIM cards and credit can be purchased all over (in convenient stores) at cheap prices (Choi, 2010).

6. A Case Study: The Chinese Negotiation (John, et al., 2003)
Key learning : The people who represent your company in China will make all the difference when it comes to negotiating deals and forging business relationships.

Long ago, Nigel Campbell, a leading expert on business strategies in China, concluded that it was essential to have the right people participating in negotiations: Foreign companies that had Chinese-born executives driving the negotiations succeeded. Others did not.

In 1994, Ford ignored this sage advice when it appointed Jim Paulson president of Ford of China. Paulson, an affable Midwestern engineer and a lifelong Ford man, had worked on plant-related issues in several foreign countries. In trying to get an entrée for Ford into China, he faced a complex negotiation environment. Governments of both countries were embroiled in fights over intellectual property regulations. GM, Toyota, and Nissan lurked in the background. Substantial product changes needed to be negotiated. Most important, Paulson didn't possess a deep cultural understanding of his Chinese counterparts. Later, in Time magazine, he lamented, “We tried to find out more about how they were arriving at their decisions, but we didn't have enough Chinese-speaking people to establish close contact with the officials in Shanghai.”

Meanwhile, arch competitor GM had an ace in the hole named Shirley Young. Born in Shanghai, Young spoke fluent Mandarin. Her father was a war hero. Her stepfather had served as China’s ambassador to the United States, the UK, and France. Young, who had worked as a consultant to GM since 1983 and joined the company in 1988 as vice president of consumer market development, boasted an Ivy League education and a wall full of awards, including Woman of the Year for the Chinese-American Planning Council.

Young offered another advantage: She brought great guanxi. Even though Ford had been one step ahead in the initial bidding phase, Young was able to pass the final victory to GM. By 1997, 100,000 midsize Buick Regals had been produced at a new billion-dollar assembly plant in Shanghai.

Oddly enough, Ford had the ideal person for the job—Dr. Lawrence T. Wong. An engineer raised in China, Wong possessed all the language and cultural skills that Young had, and he was president of Ford of Taiwan. He even had the critical engineering expertise that Young lacked. Perhaps the best measure of Wong’s capabilities is his current position. Since 1996 he has held the reins of the Hong Kong Jockey Club—the most important horse-racing operation in the world, with annual revenues of $12 billion, and the largest charitable donor in all of China. How could Ford, blessed with such a trump card, have overlooked him?

Eventually, Ford wised up and appointed an ethnic Chinese executive to a senior position in Beijing in 1998—Mei-Wei Cheng. In April 2001, Ford completed a 50–50 joint venture agreement with Chongqing Chang’an, China’s third largest automaker, to produce 50,000 small cars. It took Ford some five years to begin recovering from its shame in Shanghai. Subsequent interviews with executives at Shanghai Auto confirmed that the key mistake Ford made was in Dearborn; that is, not selecting someone like Larry Wong to lead Ford of China in the first place.

7. References
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Chinese business partners [Online] shiva god 10 -10 - 2018 https://www.shivagod.com