How To Do Business in China (A Comprehensive Guide for 2022)

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Written by: pTranslate Contributors

THE GLOBAL ENTREPRENEUR | BUSINESS

This is a complete guide on how to do business in China in 2022.

This guide was written by pTranslate’s cultural experts and in-country entrepreneurs who have spent years developing their business in China.

A lot of native Chinese translators from our team also share their insights and contribute to the writing of this intensive guide.

In this guide, we will cover the business trends in China in 2021, offer clear insights on how you can establish a business in China, include tips on various aspects of starting and running a Chinese business, and give our forecasts on the 2022 China business environment.

If you’re looking to start a business in China or simply wanting to read about business strategies in China, you can find it here!

Contents

You can click on the headings to jump to the sections.

1. Overview of China

2021 was no less challenging than the previous year. We are still in a constant battle with the COVID-19 pandemic. Businesses worldwide all feel its impact. Nevertheless, China, the country with a billion-people population, still thrives and achieves significant growth in a period of such uncertainty.

We can be optimistic about the recovery of the world’s economy, as our vaccination programs have seen considerable success. Once normalcy is established, we can expect China to become one of the most attractive investment destinations. While other countries are still struggling to find stability in their economies, China is already preparing itself for foreign investments with continuous improvements to business and the regulatory environment.

As an investor or a business owner, this is an amazing opportunity for you to seize and establish your presence in the Chinese market.

With about 1.4 billion potential customers, constantly growing markets, exciting business environment, numerous regulatory reforms, foreign businesses can have a fairly easy time competing with domestic businesses.

However, China is a fairly tricky market, to say the least.

There will be a steep learning curve, because the Chinese lifestyle is the complete opposite to the Western lifestyle. If businesses don’t understand the business environment and the culture of China, they will definitely struggle.

Below is some statistics about China:

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From a nation of crippling poverty, widespread famine, and low literacy, China has undergone a miraculous recovery to become the world’s second-largest economy.

Hundreds of millions of its citizens have joined the global middle class, creating a robust consumer market for all goods and services.

The opportunity that China offers to businesses worldwide is unbelievably huge. Almost anyone can find for themselves an “angle” to penetrate and establish their multi-market presence.

China is also strategically placed. From China, you can easily gain access to the 2 Asian giants: Japan and Korea, as well as enter the rapidly-growing ASEAN markets. The benefits that China brings are simply too much to ignore.

So what have businesses worldwide done to enter China?

Many major eCommerce stores have entered China through the online marketplace. Regardless of its country of registration, online businesses can now sell to Chinese consumers without needing to have a local, physical presence.

All they need is some simple website localization to help Chinese consumers understand what they have to offer. Establishing an online presence in China by localizing your website/online content/eCommerce stores is enough to give you a huge competitive advantage over your competitors.

A few years ago, it wasn’t that easy. This ease of establishing a business was partly due to the internationalization of China’s main payment services and the availability of big cloud service providers like Amazon and Microsoft. 

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Website localization to Chinese is an important part of your online expansion to China

If you want to establish a physical, brick-and-mortar store in China, things are going to be a little bit more complicated.

Similar to any other country, expanding your business to China means that you have to understand the country’s business environment.

The risks of being unprepared can be high. In China, the support of the government can sometimes be as high as you might expect, and you mainly have to rely on yourselves to get things done. You need to be knowledgeable and prepare yourself a second plan.

If you’re not sure what to do, always find a lawyer or a strategy consultant who understands the local environment better than you do. They will bring their knowledge of China to the table and offers you insights that you don’t have. Those insights can be extremely valuable, especially if you haven’t had any previous exposure to Chinese businesses.

Now we can go into detail as to how we can establish a business in China.

2. Establish a Business in China

2.1. Pre-establishment Considerations

If you want to enter the Chinese market through the online space, there is no need to register a business. 

You can register your business in your home country, then localize all of the resources you have for your business to Chinese. These resources include your website, blog, product descriptions, and other related documentation that can help your users and customers understand your products/services.

If you want to establish a local presence, the process will be more complicated.

2.1.1. Business Scope

Business Scope is the range of commercial activities that a business is authorized to operate in.

For foreign businesses, there are certain restrictions and prohibitions to the sectors and industries that they can engage in. Restricted and prohibited business activities and investment activities are stipulated in the Special Administrative Measures on Access to Foreign Investment (released in June 2020).

Some of the prohibited activities include developing, breeding, cultivating new species of plants and animals; mining of rare resources; printing of publications, manufacturing Chinese herbs; satellite TV; tobacco; water; scientific researches.

Due to the legal risks of opening a business in a prohibited domain, you must carefully plan your business scope before your actual incorporation in China. If your business scope is within the prohibited domains, or if during your business operation in China you show signs of business activities in an unregistered domain, you can get into a lot of trouble.

2.1.2. Registered Capital

In China, the registered capital is a declared capital figure that approximates the fund expected to be injected into the company.

The amount of registered capital varies on a wide range of factors, including the sector, business scope, sector, the scale of the business, etc. Some special sectors require a minimum registered capital such as banking, financing, insurance, etc.

A company’s registered capital is shown in the Article of Association. It must also appear on the business license and the government public business database.

Back in 2014, there were strict requirements to the timeline for capital injection. However, in recent years, this requirement has been relaxed, and WFOEs (Wholly-Foreign Owned Enterprises) can now inject all of the registered capital within up to 30 years, compared to the 2 years timeline in 2014.

Any additional injecting after the full registered capital injection will be taxed as income, so many companies try to set a high level of registered capital to reduce the tax burden. However, it is worth noting that ALL of the registered must be paid even if the business is closed, so there’s a risk of setting the registered capital too high!

2.1.3. Choosing a Location

Choosing a location is a strategic move. 

There is no true formula to choosing a city for your business because there are a lot of factors involved when it comes to setting up a business in which city. However, there is a Tier system for cities in China, which you can use as a reference when developing your China expansion strategy.

Tier 1 cities include Beijing, Shanghai, Guangzhou, Shenzhen. Tier 1 cities are the most developed cities in China. They have affluent, sophisticated customers, robust economic activities, and are also highly Westernized. If you’re a Western company, you will find these cities more “familiar” and easier to establish your business.

There are also New Tier 1 cities, including Chengdu, Chongqing, Hangzhou, Wuhan, Nanjing, Tianjin, Suzhou, Xi’an, Changsha, Shenyang, Qingdao, Zhengzhou, Dalian, Dongguan, Ningbo. These cities are developing at a rapid rate and can provide tons of opportunities to your business. Competition is less fierce while people are very welcoming of foreign companies.

There are some criteria that you should consider when establishing a physical company in these countries:

  • Real Estate cost: generally in large, Tier 1 cities, rental costs are extremely high. Utility and Labor costs are also really high, but the quality is generally excellent.
  • Supply Chain: the availability of suppliers, buyers, and competitors
  • Ease of Transportation
  • Work Force
  • Legal Environment (including regulations, tax law, level of enforcement of the law, level of corruption, etc.)

The process of choosing a location can start from identifying your needs. Understand what you’re looking for in their location, then create a checklist. After scanning for potential sites, you will find a few that suit your needs. The rest is up to your negotiation skills and a little bit of luck.

2.2. Establishment Considerations

2.2.1. Types of Business in China

how to do business in China

The process of setting up a physical presence in China can be complicated, time-consuming, and expensive. You will have to deal with a lot of red tapes, which is quite an annoyance. In many cases, you have to go through months of paperwork to register a WFOE or a Joint Stock Company. 

There are 6 legal entities available to foreigners when establishing a business in China:

  • Equity Joint Venture: a normal partnership between a Chinese and a foreign stakeholder. Profits and Loss are distributed equally based on the ratio of each individual’s initial investment. The foreign stakeholder must contribute at least 25% of the total investment. The company must frequently allocate its profits to 3 funds: a staff bonus fund, an enterprise expansion fund, and a general reserve fund. General and duty managers must be hired to manage the business. A board meeting must be held at least once per year in China. 
  • Cooperative Joint Venture: fairly similar to the EJV in terms of requirements. The main difference between CJV and EJV is the way they allocate their profits. EJV must allocate its after-tax profits to the 3 funds listed above, while CJV must allocate its pre-tax profits.
  • Wholly Foreign-Owned Enterprise (WFOEs): this is the most popular type of legal entity for foreigners. The foreigner can fully own the business and doesn’t have to partner up with any Chinese. Similar requirements to EJVs and CJVs applied.
  • Joint Stock Company: a publicly-traded company. It requires a high capital requirement to open and is bound by a lot more requirements than other types of legal entities.
  • Partnership: is a pass-through type of entity. There are a lot of compliance and taxation complications involved in a partnership business, so it is not a common form of business, not just in China but also in many other countries with similar legal environment
  • Representative Office: a low-cost entry method for businesses to gain more knowledge about the business environment in China. This is common for first-time entrants, as they can engage in market research activities, as well as act as a liaison for the parent company.

2.2.2. WFOE Setup Procedure

The first step is to choose a business name.

There are comprehensive guidelines in Chinese law as to how you can choose your name.

In recent years, the Chinese government has been making an attempt to limit the use of foreign words in China-based business names.

Of course, big brands can keep their English names, because their business name is a valuable asset in itself, and can’t be changed. But if you’re a small business, take care to choose an appropriate name to avoid unintended cultural offenses.

You can choose a name that has some resemblance to the parent company’s name. Or you can consult a language expert to translate your business name to Chinese.

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You will need to prepare your documentation for registering your WFOE:

  • Registration Form
  • Lease Agreement
  • Feasibility Study Report
  • Bank References
  • Article of Association
  • Investors’ Passport
  • Resume of Chinese legal representative
  • Most recent annual audit
  • Customs Code

If you’re a manufacturing business, you might need to add:

  • Statement of Business Purpose
  • WFOE’s Operational Structure 
  • Land Use Permit
  • Lists of Products and Anticipated Size of Production
  • Detailed List of Equipment
  • Business Plan

You will need to apply these documents to the Ministry of Commerce (MOFCOM) and the Administration for Industry and Commerce (AIC).

3. Opening a Bank Account

how to do business in China

Every foreign business in China must have minimum 2 bank accounts:

  • 1 RMB Basic Account 
  • 1 Foreign Currency Capital Contribution Account

The RMB Basic Account is for daily operations of the business in China. This is also the only account from which the business can withdraw RMB cash. And, of course, this will be the account for making tax payments.

The Foreign Currency Capital Contribution Account, as its name suggests, is the account that receives foreign capital injections. 

More accounts can be opened for various purposes. 

3.1. Popular Banks in China

Popular international banks in China:

  • Bank of East Asia
  • Citibank
  • DBS Bank
  • Hang Seng Bank
  • HSBC and Standard Chartered

Popular Chinese banks:

  • Industrial and Commercial Bank of China
  • Bank of China
  • China Construction Bank
  • Agricultural Bank of China
  • Bank of Communications

3.2. Advantages of opening a Chinese Bank Account

As a foreigner, many tend to prefer international banks. However, setting up a Chinese bank account when doing business in China can be advantageous:

  1. It is less time-consuming to create a Chinese bank account in China
  2. Faster RMB transactions
  3. Chinese business partners prefer doing transactions in local banks
  4. Better security

When opening a bank account, the banks will require you to provide a “signature”, either in the form of a “chop” (a seal or a stamp) or a hand signature. The former is usually preferred for obvious reasons. 

In recent years, however, Chinese banks have implemented even stricter requirements to open a business bank account. To validate that the business is indeed “real”, a bank officer will perform an on-site visit to verify that everything registered was true.

After that, investors’ passports as well as other legal papers will be required for compliance purposes. In the COVID era, these lengthy and bureaucratic procedures only present extra challenges to those who want to put up a business in the country.

4. Intellectual Property Consideration

Intellectual Property is the biggest asset a business can potentially have in today’s advanced technology landscape. Those who have in their hands the latest, patented technology will hold great competitive advantages against the competitors for decades.

Unfortunately, China is notorious for intellectual property violations. There is a reason why Chinese products are recognized in the global market as low-quality.

Infringement of copyrights, trademarks, patents, and designs happen too frequently, and the authority still hasn’t done enough to enforce the law and prevent the constant violations from happening.

As a foreign investor and business person, you wouldn’t want to see your inventions and processes being stolen by your competitors.

Many foreigners in China often rely on themselves, not the authority, to protect their technology. The methods they employ include proactively searching for copyright infringement and partnering up with customs officials, who can report them on any violations they see.

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China has a first-to-file system, which means that whoever files the application to secure their rights over the invention first will win, no matter if they are the real inventor or not.

Moreover, if you have a patented product in a Western country, and want to patent it in China, you will need to file the patent application again because the patent validation doesn’t extend beyond the country of application. Your patented invention in the US isn’t protected in China.

So, if you want to protect your intellectual property in this country, you need to act fast. Translate your patent to Chinese and file it to the National Intellectual Property Administration in Beijing, or its local agencies in up to 30 cities around the country.

There have been certain improvements in China’s Copyright Law this year, including stricter law enforcement and stronger punishment for infringements, which is a positive sign for local and foreign businesses.

5. Taxation

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5.1. Income Tax

5.1.1. Corporate Income Tax (CIT)

All businesses in China, domestic and foreign, are subjected to Corporate Income Tax (CIT) at a flat rate of 25%. 

It is a tax on profit (after deducting operational expenses). 

CIT is calculated on an annual basis but paid quarterly.

Small and low-profit enterprises are entitled to a reduced CIT of 20% on 25% or 20% on 50% of the taxable income amount.

High-tech enterprises or enterprises in special sectors (advanced technology, pollution control, software) and special regions (mainly West China – the underdeveloped region of the country) are entitled to a 15% tax rate.

5.1.1. Individual Income Tax (IIT)

Individual Income Tax (IIT) is imposed on all individuals residing in China or dividing income from China. 

The following income is subjected to IIT:

  • Income from wages and salaries
  • Income for remuneration for personal services
  • Income from author’s remuneration
  • Income from royalties
  • Income from business operations
  • Income from interest, dividends, and bonuses
  • Income from lease of property
  • Income from transfer of property
  • Contingent Income 

There are 2 categories of IIT taxpayers:

  1. Resident Taxpayers

Resident Taxpayers have a domicile in China, which means they reside in China due to household purposes, family, and economic interests.

Those who don’t have a domicile in China, but stay in China for more than 90 days in a tax year (or more than 183 days for treaty countries), are also considered resident taxpayers.

For resident individuals, the first 4 types of income listed above are consolidated together and taxed on an annual basis at a progressive rate from 3% to 45%.

        2. Non-resident taxpayers

Non-resident taxpayers are those that don’t reside in China but earn an income from China. The first 4 types of income listed above are calculated separately when it occurs. The same rate to resident taxpayers applies. 

5.2. The Fapiao System Explained

fapiao is a legal receipt that serves as proof of purchases for goods and services. 

However, that doesn’t make it any more special or different from the invoice system that Western countries use.

It’s the complex fapiao invoice system that plays a central role in China’s tax law and compliance for businesses that we are analyzing here. 

It is the way the government monitors the tax paid on any transactions. Fapiao are printed, distributed, and administered by tax authorities, and taxpayers are required to purchase the tax invoices they need from the tax authorities.

It helps the government track tax payments and deter tax evasion. Essentially it is a combination of a goods and services receipt and a tax payment tracker. This system is unique to China. 

There are 2 types of fapiao: 

  1. General fapiao: simply a proof of purchase – a receipt
  2. Special fapiao: used for tax deduction purposes. Special fapiao contains a lot of personal information of the taxpayer for that reason. 

As a business owner, you need to ask for a special fapiao whenever you need proof of purchase or claim expenses. Failing to do so can put you in serious trouble with the tax department. It is illegal if a company fails to produce a fapiao when requested by a customer. Customers have the right to report to the tax bureau if a company can’t provide them a fapiao. If you want to do business in China, you should take your time to learn about this interesting system.

However, the process of reporting fapiao can be extremely time-consuming, so many customers never go the extra miles to report these cases. As a customer, claiming a fapiao can be beneficial as they can claim their VAT refund and reduce their tax liability.

Tax evasion and fapiao non-compliance can be an issue to Chinese businesses. A business refusing to provide a fapiao to the customers may actually have trouble getting a fapiao themselves from their supplier. 

In recent years, China has digitalize its large and intricate fapiao system. e-Fapiao was truly a reform: less paperwork and higher trackability. However, it is this trackability that makes it unappealing to the average business. Customers don’t expect to receive a fapiao either unless it is an online transaction, or business related transaction.

So, fapiao are necessary for:

  • Large purchases
  • Business-related purchases
  • Housing purchases
  • Online transactions

Chinese tend to not ask for a fapiao if:

  • It is a trivial purchase
  • It is a private purchase and don’t have tax implications
  • Other forms of expense records are accepted

Although not issuing a fapiao is illegal, it is not really enforced in the country. In cases when fapiao is not that necessary, people usually let it slide.

6. Accounting and Auditing

6.1. Requirements

Businesses in China are required to follow the Chinese Account Standards (CAS). Generally, the CAS reflects all IFRS principles but has been slightly modified to fit with the local compliance environment. The differences primarily lie in the wording. 

A few accounting and bookkeeping requirements:

  • RMB is the base currency for ledgers and financial reports
  • For foreign enterprises using other currencies, foreign currencies can be used. However, financial reports must use RMB
  • Accounting records must be in Chinese, or Chinese and other languages
  • Adopt the accrual basis for accounting purposes
  • Books and records have to be retained for 10 years under Chinese law
  • All statements must be audited on an annual basis by a Chinese-registered CPA firm. This adds to the overall compliance cost, so, once again, it is wise to consider carefully the type of entity to register.

6.2. Annual Reports

The annual report submitted should cover the following information:

  • Basic information of the enterprise
  • Investor profile
  • Name and URL of the online shop
  • Equity change information
  • Balance sheet information
  • Warranties and guarantees
  • Income statement
  • Taxation information
  • Customs relevant information

6.3. Due Diligence

Due diligence is a thorough review of a company to uncover financial, legal, and operational non-compliance and fraud in a business. Due diligence can sometimes extend as far as to include reputational and cultural risks. 

Due diligence in China is in large similar to any other country. A typical due diligence procedure can include:

  • Legal document review
  • Financial document review
  • Real Estate papers and agreements
  • Intellectual Property documents
  • Contracts
  • Litigation documents
  • HR documentation

7. Human Resources

7.1. Hiring in China

Once everything has been addressed, you can start running your business in China. Recruiting staff may seem like a simple and straightforward task, but it is not in China. Your type of business dictates who and from where you can hire.

A CJV needs to recruit staff from the Chinese partner’s employment pools, or from their recommendation. 

A WFOE can recruit anyone they want, as long as they are Chinese citizens.

A RO (Representative Office) has to pay an authorized labor agency to recruit staff. These agencies charge a monthly service fee and salary for each employee they hire.

There are 3 types of employment contracts that the Chinese labor law allows: 

  • Fixed-term contract: creates an employer-employee relationship for a fixed period of time. The employee may resign after giving a 3-day notice. 
  • Non fixed-term contract: creates an employer-employee relationship for unrestricted term. There are limited grounds for termination. In a mass lay-off event, the non fixed-term employee is prioritized over the fixed-term employee.
  • Job contract: a job contract is a temporary contract that is project-based. Once the employee finishes their task, the employment relationship comes to an end. The legal framework of this type of contract lacks clarity, and usually leads to disputes, or worse, litigation. The job contract is, therefore, an unpopular choice in China.

7.2. Working in China as a foreigner

In order to work in China as a foreigner, you will need to apply for a few special types of visa that enables you to perform special business activities in the country. There are up to 12 types of visa, but there only 2 main types of visa for employment purposes: Z Visa and R Visa.

Z Visa is issued to applicants who is invited to China for employment.

Requirements for Z Visa include:

  • Valid & original passport with at least one blank visa page and valid for at least 6 months beyond the date of application
  • Visa Application Form
  • Work Permit for Aliens
  • Visa notification issued by the authorized Chinese unit
  • Proof of kinship for accompanying family members
  • Physical examination for Foreign Citizen

R Visa is also fairly common, although it is still a new type of visa. It is issued to high-level foreign personnel and those with high-level skills. They are classified as Tier A Talents.

M-Visa is also a useful type of visa to do business in China. It is known as a business visa.

With an M-Visa, you can invite foreigners to China for commercial and trade activities. Visa applicant should be located in the US, but not in Mainland China while the application is submitted. Besides basic application material such as passports and personal papers, the applicant must also provide an invitation letter issued by trade partners in the field.

7.3. Labor Law in China

7.3.1. Minimum Wage

As China is a huge country with huge income inequality in different regions, China government doesn’t apply a unified minimum wage to workers in the entire country.

Instead, the local authority will set the minimum wage for themselves. Before 2016, the local government has to adjust the minimum wage every 2 years. After 2016, China started to give the locals more independence in this matter.

7.3.2. Overtime

The standard is that an employee normal working day should not exceed 8 hours, and a normal working week should not exceed 40 hours. One rest day per week is guaranteed.

7.3.2. Termination

In general, terminating staff in China is fairly similar to Western countries.

The most “peaceful” form of termination is when both parties: the employer and the employeee, agree to the termination. If the termination is put forward by the employer, there will be a termination fee.

Immediate termination happens when an employee makes serious violation of the company rules, makes great loss, takes up another job, or committed criminal offense during their employment.

If the employee is incompetent for position, even after transfer, or unable to continue working due to injury, or unable to perform job due to objective circumstances, then they can be terminated on 30 days’ notice.

If there is a mass layoff, or non-renewal of contract, the employee can be eligible for termination fee.

8. Culture

8.1. Confucianist values

Confucianism have been the biggest influence on Chinese culture for thousands of years.

Confucianism places the family in the center of social interaction. The people in the higher ranks have more rights than people in the lower ranks.

Parents have more rights than children.

Husbands have more rights than wives.

The older have more rights than the younger.

Of course, this shouldn’t be taken too literally or in an extreme sense. Asian societies in general tend to value social rankings, and there is a clear sense of order.

There is a clear-cut set of rules for how people in each rank are supposed to act. And the very same set of values is still in place today despite the growing Westernization of the younger generations.

8.2. Guanxi

One of the most interesting concepts of Confucianism commonly used in business is Guanxi.

Guanxi can be translated as “relationships, connections, networks”. It includes everyone that we know: family, friends, acquaintances, business partners, even political connections.

If you can develop a lasting relationship with the right people, you will have a much easier time advancing on whatever path you took in life.

In the US and the Western world, this concept is not emphasized. Although we still have to rely on our relationships in one way or another, Western cultures still don’t value relationships as strongly as Eastern cultures. Western cultures value individualism. Eastern cultures value the community. In a country where interdependence and community values are so important like China, it makes sense why Guanxi is that crucial to business success.

In a way, guanxi prevents outsiders from getting in. Only those who have relations with the insiders can do business with them.

Guanxi is a representation of Confucianism’s values of solidarity, loyalty, and courtesy. If you have a lot of good guanxi, it means that you are a good and trustworthy person. On the contrary, if you have only bad, or no, guanxi, you are also a bad person, and shouldn’t be trusted in business.

This idea of Guanxi leads people in China to prefer long-lasting relations. They try to weigh the importance of the people involved instead of evaluating the importance of the deal.

If you are only focusing on achieving profitability, but neglecting to improve and consolidate the guanxi, then you won’t be able to do business with them for long.

Building guanxi is not difficult, Chinese believe. It involves having casual dinners, drinks, home visits, or golfing, depending on your social class and your budget. They will judge your personality and trustworthiness during these “guanxi-building” periods.

Acknowledging the importance of guanxi and working hard to cultivate it can be a major turning point for a Western business in China.

For example, it is wise to establish connections with business partners who appear to have good guanxi with their employees, customers, and other business partners. When you have guanxi with a reputable person, it is safe to deduce that you are also a trustworthy one.

Having guanxi with someone that has political influence is even better because such powerful connections can come in handy in the future. Westerners also have to show that they have rich guanxi networks and can provide something in return to their Chinese counterparts. The ultimate of making connections is to make even more connections. Guanxi builds guanxi.

It is not always the case in some regions, though. In places that have been highly Westernized like Shanghai, Beijing, or Shenzhen, Guanxi is much less appreciated. Be flexible. If your business partners express an interest to develop guanxi with you before signing the deal, so be it. 

8.3. Hierarchy

Asian cultures in general value hierarchy in both family and society. There have to be divisions in all aspects of social interaction.

These divisions determine a lot of things, from the way we act, speak, look, to even the hand gestures.

People are expected to behave in accordance with their social position. After all, China is among the countries with the strictest hierarchical system. Those who violate the system are heavily looked down upon.

The rankings in China are not based on achievement and accomplishment, but experience and, again, guanxi.

In a family, the children of older siblings have a higher rank than the children of younger siblings, no matter the age. In the corporate world, the more experienced, and sometimes the elder, are more respected than the young.

Seniority has a huge importance on the weight of your opinion.

If you pay respect to people of the higher ranks in the company, you will be respected and valued, in return. However, if you don’t, there will be a lot of consequences. They even have sayings that can be loosely translated as “Respect the elder, and you will be rewarded with a long life”.

Decisions and commands are passed down from the higher ranks to the lowers.

The information does not flow freely. It has to be passed from department to department instead of flowing directly to the ones in need. When the information flows back, it has to go in the same order.

Senior managers and leaders don’t appreciate being contacted by lower-ranked members because it seems like a disrespect to them. A lot of valuable time can be lost this way.

Conclusion

So that’s how to do business in China.

There are still a lot of things to cover, because we can’t say everything in one single post. The legal environment in China is extremely complex, and it takes a lot of time and effort to note them all down.

You can check out our blog for more amazing insights about doing business in China. We don’t cover tips for international expansion to China only, but many other major countries, including Germany, France, Italy, Japan, Korea, and more!

Let us know what you think about doing business in China in the comments!

We would love to hear insights from those who have been through real challenges!

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