China

China has become one of the world’s fastest growing economies with a growth rate above 10%. In recent years, China has also become a trading giant and is now recognised as the world’s largest exporter of merchandise.

Doing business with China can seem rather daunting for those new to the market, but taking a strategic approach is key to make the process manageable. Firstly, there is the size of the country to contend with. China is complex and big, comparatively speaking and consists of 33 administrative provinces, each with their own character, languages, traditions and economic profiles. In order to keep things manageable, focus research on the geographical area you intend to visit.

China can be split into four regions, these are as follows:

Northern China – this region covers northern provinces centred around Beijing and those not covered but Consulates-General in Shanghai, Guangzhou and Chongqing.

Eastern China– this region covers the provinces centred around China’s commercial capital Shanghai and its neighbouring provinces of Jaingsu, Zhejiang and Anhui.

South China – this region focuses on the Pearl River Delta region of Guandong Province and the main coastal cities of Fujian Province, including Guangxi and Hainan.

South West China – this region is centred around China’s most populous city, Chongqing and includes the provinces of Sichuan, Yunnan and Guizhou.

Many large Chinese businesses remain in the State sector and, in addition, apparently private firms often turn out to have a significant influence on the way a company does business, so you should be aware of the wider political situation as this will give a greater understanding of the Chinese side. City mayors and other local officials in China often wield far more power than do their counterparts in the UK. Good personal relationships are key to successful business in China, and taking the time to get to know key officials is likely to make doing business much smoother.

When arranging a meeting, it is advisable to provide the Chinese company with details of the objectives of the meeting and specific areas of interest in advance. Business meetings start on time and it is good practice to arrive at the location early. Formal introductions are standard and it is usual to be introduced to the most senior person first, followed by the rest of the group in descending order of seniority. There maybe people from several organisations present at the meeting. If it is not immediately apparent who is the most senior person in the room, it is a good idea to try to discover this by asking about the relative roles. Another pointer is that the person opposite you at the meeting table will normally be the most senior Chinese person present.

Western business visitors are often deadline-driven and unwilling to slow down to the Chinese pace when doing business. But in China the pace can be fast and slow simultaneously.

Westerners normally build transactions and, if they are successful, a relationship will ensue. However, the Chinese believe that prospective business partners should build a relationship and, if successful, commercial transactions will follow. This difference underlies many misunderstandings arising from business negotiations. Virtually all successful transactions in China result from careful cultivation of the Chinese partner by the foreign one, until a relationship of trust evolves.

In order to communicate effectively in China it is essential to communicate in Chinese. Your translator or interpreter is therefore one of your key assets and should be selected with care. The national language of China, Putonghua, is commonly known in the UK as Mandarin Chinese and the characters used to write it are known as simplified Chinese. Traditional characters are still used in Hong Kong and Taiwan. While an increasing number of Chinese companies – particularly those with an international outlook – have English speaking staff, don’t assume every company does.

Once you have made contact with a Chinese company it is likely that your day to day phone and email communications will be in English with one of the company’s English-speaking members of staff. An important part of setting up arrangements in China is to ensure that communication issues are covered in detail. Most failures occur in relationships because of fractured communications and mutual misunderstandings. The Chinese do not like to say no. Doing so causes embarrassment and loss of face. If a request cannot be met, you might be told that it is inconvenient or under consideration. This might seem a positive response, but in reality means no.

You should address your counterpart by a title and their last name. You can address people by professional titles or alternatively if the person does not have a professional title, use Mr, Madame or Miss plus the last name.

Chinese import businesses often conduct transactions at FOB prices in consideration for using Chinese shipping companies. C&F and CIF terms are accepted only if the freight is proved to be cost effective. For Incoterms go to: www.nsa.com/incoterms Insurance – Chinese importers generally have “open insurance” for their import cargoes – i.e. importing companies submit notifications of import cargo shipments and other relevant documents which are then acknowledged by the insurance company as insurance orders and against which the insurance premium is settled with the insured.

In cases of dispute, the formal contract has a provision that a solution must be sought through friendly consultation. If this does not work, arbitration is then adopted to settle the dispute. Litigation is only used as a last resort. Face to face- Face is an essential component to the Chinese national psyche. Having face means having a high status, in the eyes of one’s peers, and as a mark of personal dignity. The Chinese are acutely sensitive to gaining and maintaining face in all aspects of social and business life.

Visas are required by most foreigners entering mainland China although, at this stage, visas are not required by Western nationals visiting Hong Kong and Macau. Visas are available from Chinese embassies and consulates in most countries.

Despite over 115 ports of entry and exit, most visitors to China travel via Hong Kong, Shanghai or Beijing. The national carrier is Air China, which also operates a company called Dragonair as a joint venture with the Hong Kong airline Cathay Pacific. If you are leaving China by air, there’s a departure tax of 90.00, payable only in local currency, so be sure you have enough Yuan to avoid a last-minute scramble at the airport money changing booth. However, there are plans to include this in the price of the air ticket so check before you fly.

For most travellers plastic should do the job, with ATM locations growing surely but steadily in the more sizeable cities. Credit cards are also gaining ground in China, with Visa, MasterCard, American Express (branches in Beijing, Shanghai, Guangzhou and Xiamen), JCB and Diners Club the most common. Cards can be used in most mid to top-range hotels, Friendship and department stores, but cannot be used to finance your transportation costs.

All four – and five-star hotels and some top-end restaurants add a tax or ‘service charge’ of 10% or 15%, which extends to the room and food; all other consumer taxes are included in the price tag.

Generally, eastern China is much more expensive than the western part of the country. Visitors to eastern China could get by on around US$50.00 a day, but it would be a challenge. Budget travellers in western China should be able to keep costs down to US$25.00 per day. The main drain on savings tends to be long train journeys. Food is cheap throughout China, and if you’re careful you won’t have to spend much more than US$7.00 a day on meals. However, the bottom line is that you’ll be charged the ‘tourist price’ a lot of the time.

Foreign currency and travellers cheques can be changed at the main branches of the Bank of China, the tourist hotels, Friendship Stores and some department stores. Hotels usually charge the official rate. You will need to keep your exchange receipts if you want to change any of your remaining RMB at the end of your trip.

Spring and autumn are the suggest times to visit China although due to the higher altitudes of Tibet, Qinghai and western Sichuan these regions are best visited in high summer.

Key facts:

Capital: Beijing (Peking)
Population: 1,418,238,473
Area: 9,640,821 km2
Currency: Renminbi (Yuan)
International Dialling Code: +86
Official Language: Modern Standard Mandarin
Main Exports: Machinery & electrical equipment, garments, high tech products, footwear, textile raw materials, Toys, plastic.
Ports: Dalian, Tianjin, Qingdao, Nantong, Jiangyin, Shanghai, Ningbo, Xiamen, Shenzhen.
Time Difference: Beijing is + 8 hours ahead of London.

Tops Tips:

Service Tipping is not really expected in mainland China.
Banquets have traditionally been an essential part of doing business in China, although practice varies depending on where you are and on who you are dealing with.
During a banquet table manners are a matter of fitting in. One gaffe to avoid – do not leave your chopsticks pointing into the bowl. Place them horizontally on the rest provided.
Safe topics of conversation are; culture, the Chinese landscape, hobbies and your own hometown. Refrain from discussing politics unless you know the individual well.
Business cards are essential. At the beginning of meetings where those present have not met before, it is customary to exchange business cards. It is advisable to take a good supply.
Chinese green tea is normally offered at business meetings and it is polite to partake however there is no need to take more than a couple of sips.
Chinese New Year (or Spring Festival) starts on the first day of the lunar calendar, which usually falls in February. Although it officially lasts only three days, many people take a week off.

Official Season Clarification:

Spring: March – May

Summer: June – September

Autumn: September – October

Winter: October – February

Please Note: The information detailed within the contents of this website is to the best of Neptune Shipping Agency’s Ltd knowledge at the time of inputting and should not under any circumstances be exclusively used in its entirety as fact in forming a decision.

Neptune Shipping Agency Ltd reserve the right to amend any information where they see fit without giving prior notice to its visitors.

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