China Business Etiquette

I just finished reading and heartily enjoying the book, Etiquette Guide to China: Know the rules that make th difference, by Boye Lafayette De Mente and Patrick Wallace. I read most of it on a flight back from Barcelona, Spain, my law firm’s European headquarters, and a city in which I have spent a fair amount of time and in a country where I have spent considerable time. Yet even on this only two day trip, I learned tons about both Catalonan/Barcelona personal and business culture.

In Barcelona, I gave a speech to an overwhelmingly European (mostly Catalan with some attendees from elsewhere in Spain) on how to protect your IP from China and on at least 3-4 occasions I realized my descriptions of how foreign companies typically act in China was too tilted towards how American companies act in China and only later did it become clear to me that some of what I had said was less true of Catalan (and Spanish) companies. In other words, I would have benefitted from having known more about Catalan culture.

Though the book obviously calls itself an etiquette guide, I view it as more a cultural guide and because so much of it dealt with China business culture, I found it helpful. This is a great book (indeed, an almost necessary book) for anyone new or relatively new to doing business in China. It also makes for an excellent refresher for China veterans.

Let me start by saying I am not terribly good with etiquette anywhere. It’s not that I don’t think etiquette matters; it’s just that I’ve always believed that being respectful and polite and not condescending and not snarky go a long way. Etiquette, whatever that means, is, to me, more like icing on the cake.

Does this hold true for China? I think it does. I was in Shenzhen last month and while there I actually had a discussion with a China lawyer regarding the importance of etiquette in China versus the importance of etiquette in Korea. We both then had great fun in telling (and in listening) to our various business etiquette faux pas stories involving doing business in Korea and then we concurred that etiquette matters a lot less for doing business in China than it does in Korea. So even though both of us have had many more business  dealings with China in our careers, neither of us had any great China faux pas stories to tell.

Below is my favorite Korean faux pas story, which just seems to get better every year.

Many years ago, I was representing a very large Korean company in a settlement negotiation with a very large American company. On the first day, the talks were tough, but going fairly well and at lunch time, the lead in-house lawyer for the Korean company invited the American side to join us for lunch. The Americans declined. We went to lunch (the Korean company representatives and me) and then negotiated the rest of the afternoon.

The next day, we made tremendous progress and a full settlement was completely in the bag when the lead in-house lawyer for the Korean company again invited the American side to join us for lunch. Again, however, the American side stressed the need to work through lunch.

So again, I went to lunch with my Korean client, but this lunch was very different from the previous day. My usually very light-hearted and sober client had a number of drinks during lunch and made clear early on that he was not in a joking mood. After lunch, we returned to negotiate and one of the more junior lawyers on the American side made some completely innocuous suggestion. I do not remember the suggestion, but for effect when I tell this story, I say that he suggested the agreement be signed in blue, not black — it really was nearly that inconsequential.

In response to the young lawyer’s comment, the lead in-house lawyer for the Korean company slammed his notebook shut and proclaimed that we were “done here” and instructed all of us to walk out. The Americans looked at me for an explanation and I had none.

Only a few weeks later did my client tell me what had transpired.

On the first day, he had invited the American company to lunch and they had turned him down in front of “his people.” The next day, the American company should have invited all of us to lunch but they didn’t. So in an incredibly magnanimous act, the lead in-house lawyer for the Korean company had invited them. Again though they declined, which made him lose tremendous face in front of “his people.”

in the end, we did eventually settle, but it took another month and a lot of lawyer time and a highly choreographed trip to Korea by the CEO of the big American company and all because of a declined invitation for lunch.

Something like this is a lot less likely to happen in China. Despite the importance of face, business practicalities tend to win out in China and had this same thing happened in China, I doubt it would have slowed down the settlement talks at all.

Though not knowing China’s etiquette rules are unlikely to destroy your business chances, it can hardly be disputed that knowing those rules can aid it. Knowing the etiquette rules on how to conduct business will  help you in doing business in China. And if you want to know the rules, you should buy and read Etiquette in China.

The parts and chapter titles of the book will tell you better about its content than I could so here you go:

Part I. The Middle Kingdom

  • The Origins of Chinese Etiquette
  • The New China
  • Cultural Influences on Chinese Etiquette

Part II. Minding Your Manners in China

  • Personal Etiquette in China
  • Chinese Meal and Celebrations

Part III. Doing Business in China

  • Foreigners and the Chinese Way of Doing Business
  • Cultural Influences in Chinese Business

Part IV. Negotiating In China

  • The Chinese Way of Negotiating
  • Preparing to Negotiate in China
  • What to Expect While Negotiating
  • Business Entertainment
  • When You Are Host in Your Own Country (this was my favorite chapter

Read the book, and no matter what your level of China cultural knowledge, I assure you that you will walk away with a better understanding of China after having done so.

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