Chinese Business Etiquette and Culture


Kevin B. Bucknall


This book is intended to make you and your organisation, whether it is a business company or a government department, more successful when dealing with Chinese institutions and people. Most of us learn about basic good manners and standard acceptable behaviour when very young and are taught by our parents, especially our mother. Other good manners are picked up by observation and, for a few, by reading magazine articles or books on approved etiquette. The problem is that good manners and the business etiquette we learn rarely apply in other countries.

When you commit a social gaffe abroad, virtually everyone is too embarrassed to tell you about it, so you cannot improve your behaviour. Left to yourself, if observant you may notice and learn a few polite ways of behaving -- but there is no way that you can notice the things that people avoid doing. Consequently, it is easy to visit a foreign country, or even spend many years living there, and unknowingly give offence. Your normal polite behaviour can lose you a sale, or prevent the signing of an agreement, and you may never understand why. There are many possible ways of offending someone or making them feel uneasy: even the colour of the clothing you wear or how you stand and sit can adversely affect your prospects.

You might question why it is necessary to bother to learn about another nation’s customs and manners, and feel that your normal business etiquette is sufficient. This sounds reasonable, but the proposition can cost you time and money. If you agree with any of the following statements, then you might be undermining your abilities and endangering your success rate. It would be a good idea to rethink your position.

"It is unnecessary to bother to learn about another nation’s habits, customs and manners; they should behave as I do".

"What worked successfully for me in the past in my country will also work well abroad".

"My good manners at home will take me anywhere".

"Why should I change a winning formula and alter my ways?"

Bear in mind that you do not negate or reject your own culture by learning about someone else’s. Nor is it obsequious or fawning to learn about someone else’s values and avoid violating them. True, it would be easier for you if foreigners learned your values and followed them. But it’s not going to happen!

Globalisation helps to raise living standards, but it involves more contact between those of different cultures; rather than leading to more tolerance, this increases the opportunity for people to annoy each other. Some individuals may already have a vague grievance against people of your nationality, perhaps for historical reasons. Their country might once have been at war with yours or been invaded by it; or at the individual level, possibly they or a friend of theirs was once insulted by one of your compatriots. Others may hold a grudge simply because your country is richer than theirs. Such attitudes make it easy for them to take offence at totally innocent actions or statements by you. Clearly, the more you behave in ways that they deem appropriate, the less you annoy people, the better you fit in, and the quicker you can succeed.

By following the advice below you should be able to make friends more easily, negotiate better, sell more goods or services, sign more agreements, achieve higher profits, and generally achieve whatever you want more quickly. At the very least, you will give yourself an edge over your competitors. You need not memorise all the points of advice at once, nor need you follow all of them scrupulously. You can learn some, then add to them over time as you gain experience. Nonetheless, the more you can use, the better you will be able to function.

Many existing books on doing business with people from other cultures fall into one of two groups. The first kind is written by a business person who has learned some practical things about doing business in a particular country, sometimes laboriously over several years, and is passing on the fruits of his or her wisdom, usually with anecdotes. While intrinsically interesting, such books are limited by the kind of business done, the anecdotes are often only of use when the circumstances you will face are similar, and one person’s experience can rarely if ever produce a full coverage of what might go wrong or what you should do.

The second kind of book is academic and designed for use in courses such as a Masters of Business Administration. Much space may be devoted to case studies, but rarely does the author supply a complete explanation of what went wrong. In some cases, no "answers" are supplied because the learning approach is based upon group discussion to ferret out solutions to the problems and then come up with suggestions for doing better. The main value of such books is to sensitise the reader to problems of cross-cultural communication, but they may not be of great practical assistance, especially to the individual facing practical problems out in the field.

This book is different from both the above types. How you can improve your behaviour to achieve greater success is explained in the context of Chinese culture. For ease of use, the information is practical and provided in a simple and direct way. Chapter One explains some of the basics of Chinese culture, then Chapter Two considers how you might modify your behaviour to do better in China. Chapter Three deals with ways of initiating contact and Chapter Four introduces the generalities of meetings. This is followed by a discussion of common Chinese approaches and negotiating tactics in Chapter Five. Chapter Six turns to your behaviour in meetings and deals with some possible responses you can make to their tactics. The important issue of socialising in China is covered in Chapter Seven and the rather neglected area of how to receive Chinese visitors to your city and company is dealt with in Chapter Eight. The last two chapters discuss practical problems of living and working in China. An appendix describes the history of China and recent changes in the political, economic, and social scene.

Two points of caution are necessary. First, you should beware of treating all Chinese as stereotypes who will always behave as described below. People are individuals and should be seen as such, even though they operate within the confines of their culture. You will find that not everyone you meet in China conforms exactly to the prevailing culture, just as not all people do in your hometown. Some people do not know how to behave and others simply do not care. This can be particularly true of relatively young, self-made entrepreneurs, and there are a lot of these in China. However, one tends to find relatively few successful people who regularly behave in ways considered to be grossly offensive in their own country. If you see behaviour in China that appears to conflict with the cultural norms described here, you can flatter yourself that you are able to recognise this fact.

Second, being adept at cross-cultural communication is valuable but it is not enough to solve all your problems. It is a supplement to other skills, not a replacement. You still need to be an experienced skilful manager, used to negotiating and relating to people, seeing opportunities, making good decisions, putting together deals and devising profitable alternatives.

While I believe that the information provided here is the best currently available, you should be aware that societies change, although culture does this more slowly than some facets of a nation, such as which are the best restaurants in town. Social change may mean that a piece of advice can slowly become less useful, especially when dealing with the younger generation. In recent years, many of the countries of East and South East Asia have undergone rapid economic growth that is placing pressure on traditional values and practices. I would be delighted to hear from you if you find any advice that may be going out of date, or your experience reveals new points that can be added.

Disclaimer: the information and advice in this book is believed to be accurate and
reliable. However, the publisher and author cannot accept responsibility for any losses, problems, or undesirable results that may occur from following any or all of the suggestions or advice. In return, the publisher and author promise that they will not claim any share of the profits that you might make!




The influence of tradition and Confucius

Confucius reigns
The ideas and values regarded as Confucian are still of paramount importance when trying to understand Chinese behaviour. Confucius (sixth to fifth century BC) wanted a political system where the emphasis was on properly ordered social relationships in society. Society was seen as pyramid shaped, with a paramount ruler at the top (the Emperor), a variety of officials administering the country in the middle, and families at the bottom. If everyone behaved properly one to another, then government would be stable, society would be well run, general harmony would prevail, and the nation would be prosperous and at peace.

In this Confucian system, the family played a central role. The male head of the family was responsible for the behaviour of the entire family and he, or in extreme cases the entire family, could be punished if a member of it committed a crime. Within the family, each person had a clearly defined relationship to the others and a person’s identity was in part established by his or her role within the group. Members were addressed as "Elder Daughter", or "Younger Brother" rather than by name, reinforcing the relationships. Anyone totally alone and without a family was generally pitied, while the state regarded them carefully and cautiously, as did people in general.

The values of the Confucian system are still strong, although the training under communism and the modernisation now occurring has weakened them a little.

Superiors really are superior -- Confucius

This principle applied both outside the family and within it. Lower classes respected those above them. Listing from the top down, the classes were scholars, officials, farmers, artisans, and merchants. Scholars and officials made up the respected "Gentry". Despite these official values, there was, and still is, a tendency for urban Chinese to despise rural dwellers as yokels. At the very bottom of traditional society were the outcast groups, such as actors (!), prostitutes, boat people and slaves.

In the workplace, one’s superiors merited automatic respect by virtue of rank. People still automatically defer to those above them in their work place, as well as in society in general.

Respect your family elders -- Confucius
Within the family, the rule was "filial piety", which is the household equivalent of having to respect those who are superior in society. The family head had to be obeyed by all, but younger brothers had to respect and obey elder brothers, as younger sisters did elder sisters. Females generally deferred to males, although the chief wife of the head of the family had much power and in the worst cases could be a mean domestic tyrant. The widespread Chinese respect for age and seniority comes from Confucian values; an older person is often seen as more experienced, wiser, and in some not clearly defined way, superior to those younger.

The family comes first, but the group matters
It often helps if you think of a Chinese person as being part of his or her family and group, rather than as a single individual. The family has long been the basic building block of the state and the natural centre of an individual’s attention. Major personal decisions, such as a suitable career, that in the West would be made by the individual are often made on a family basis. The group tradition was reinforced by their experience of communism, where people were forced to participate in group discussions and any individual who stood out might later be punished. The group is seen as a source of strength and comfort, and business decisions are generally made on a consensus basis, within the framework dictated by the top person, be it a highly placed politician or public servant, the owner of the firm, or the chief executive officer (CEO).

This submergence in family and work-group means that many adult Chinese are reluctant to take decisions on their own. A seemingly one-person problem in a factory may eventually be solved by a decision taken only after extended discussion by the group; otherwise it might not be solved at all. If you find that a Chinese person’s attitude to a topic seems vague, it is often the result of the person knowing that the final decision must be made by a group or by some process higher up and out of sight. The views of this particular individual must be in line with that decision.

The work unit commands a strong loyalty for two main reasons. First, it was intrinsic to the job-for-life approach adopted by the communist government, as well as being the means of delivering limited social welfare, such as rudimentary health care or a little unemployment pay. This facet of the work unit is being rapidly eroded. Second, it is part of the Confucian deferential attitude towards authority that the unit represents.

The importance of belonging to and identifying with a group has a strong impact on the tolerance of humour and criticism. The Chinese do not find jokes about their country’s political leaders or policy funny; indeed such irreverence shocks them. You should make a point of not making jokes about these things, or even about your own government or its policies, which in Chinese eyes would demean you.

Until very recently, the group attitude dominated job allocation. Personal preferences counted for little and the needs of the country (the largest group of all) over-rode individual wishes, so that people were simply told what they would study at college, what job they would do, and where in China they would be sent. This has changed, and many can now choose where to seek employment.

"Keep us in our proper stations"
In both Confucian China and Nineteenth century England, people were educated and trained to know their place and to be content with it; deviations, criticisms and rebellious behaviour were not tolerated. One practical consequence is that in China you might find it hard to get someone to give you his or her personal opinion. The views of higher authority will automatically be followed and presented as not only correct but also the actual views of the speakers themselves. Dissent from the opinions of those above is uncommon.

Rank is beautiful
Chinese society is strongly hierarchical and a person’s rank counts for much. Every individual is slotted into a complex system of superior and subordinate beings. The person’s place is not fixed and he or she can rise or fall within the ranks, but the ranks themselves continue unchanged. For a foreign business person, this means that someone who provided valuable help a few years ago may by now be of little use -- or might possibly even more valuable! If they have gone up, it also means that you should treat them with more respect, as befits their new position.

The movement of others up and down the hierarchy can easily cause resentment and hurt feelings, so that office politics loom large in China. Most enterprises contain a variety of fluid factions. Because everyone lives within a rigid hierarchy and harmony must prevail in society, specific rules of conduct are laid down and strictly taught to all children. In contrast with a person’s position is society, within the family a person’s place is immutably fixed, so that the elder brother is always the elder brother, and treated accordingly.

Bureaucracy is an ancient Chinese art-form and the bureaucracy, like Chinese society, is strictly hierarchical in rank. The privileges of every level, and person, are clearly defined or recognised. The Chinese approach foreign visitors and residents in the same vein. Your particular status will be determined after careful scrutiny of your company and its national or international standing, and your position within the company. That is worked out by your ranking on any lists you may have sent them, your job title, and any letters appearing after your name on your business card. In China, like meets with like, consequently the higher your status, the higher the officials you can meet. In your company’s first approach, it should send someone with the greatest credentials, in order to gain entry as high as possible, and thereby meet more important people. They can ensure that more will be done for you by those lower down.

Despite being a communist country with an ideology that supposedly should emphasise egalitarianism and the workers, the demands of Confucian hierarchy easily dominate. Members of a foreign aristocracy are revered and this was true even in the extreme days of the Maoist left-wing period. Ex-heads of state are particularly well respected and treated because of their old position, irrespective of their current status, past behaviour, or even criminal record. Ex-President Nixon was always treated royally on his visits to China.

Learn your lessons well -- Confucius

"Memorise lessons" was an important value in traditional education and this still prevails in China as well as in the diaspora of Overseas Chinese families. A common criticism of the students produced by the education system in China, as well as in Taiwan, Japan and Korea, is that they merely learn by heart to the detriment of understanding and being able to apply the lesson to a practical problem.

Practise makes perfect -- Confucius
"Practise skills" was another old rule which is still current -- indeed some believe that it is even more strictly observed these days than it was in older times.

Guanxi, the secret of being successful in China
The Chinese tendency of dividing people into insiders and outsiders, together with the Marxist habit of controlling social institutions from the top down and preventing lateral contact between them, has always been a major barrier to communications. To get around this, people develop a network of contacts and personal relationships for whom they do favours and from whom they ask favours in return. This is called guanxi (pronounced "go-an-see" with stress on the "an") which means possessing influence, or "pull", that you can use with the contacts you have developed in the right places. Without guanxi it is difficult or even impossible to accomplish much, with it you can open doors and achieve a surprising number of things. You need to work on developing guanxi from the moment you arrive in China.

Guanxi is a powerful asset, something like a valuable bank account of favours owed and owing, and those with bigger networks tend to do better. However, the bank account is not unlimited so after receiving, say, two or three favours in a row, a person definitely must repay when approached for something, even if it might not be to their personal best advantage.

An example of the power of guanxi, is provided by Tang Jinsheng, who is the president of the Zhonghua Company which produces motor vehicles. Asiaweek pointed out that "the cars have an iffy reputation. Doors fly open, wheels go rolling off, and engines catch fire". About ten cars a day are made by hand without modern technology, they are of low quality and "are widely detested". Despite these obvious drawbacks, the firm has not gone bankrupt as one might expect. Mr. Tang happens to be the 45 year old son of a high-ranking officer in the People’s Liberation Army! This gives him immense status and contacts which he is able to use to stay in business. At one stage, he even managed to persuade the official Taxi Management Office in Beijing to encourage taxi operators to buy his product to use as their fleet car.

It can pay to hire someone to work for you purely for the contacts they have. The person may in fact do little work but can add immense value to your company by the sheer amount of their guanxi. Powerful family members can provide guanxi possibilities to weaker ones. The Wall Street investment bank Credit Suisse First Boston Company took on Dennis Zhu, in the days when his father Zhu Rongji was a rising star in the economic area but before he became Premier. The company gained from this at the time but it is understood that Dennis became an even more valuable asset as his father rose to the top.

Getting along with harmony
Harmony is an important part of the Confucian heritage. It is believed that if everyone in society plays his or her proper role, then overall harmony will be preserved. For this reason, self-discipline and moderation are essential components of human behaviour, for without them harmony cannot prevail. For most foreigners, harmony is best preserved by avoiding confrontations, maintaining temper, not raising the voice, and smiling rather than looking angry. Not causing anyone to lose face is also an important part of preserving harmony.

The preference for harmony does not preclude the Chinese from suddenly becoming forthright and even turning downright rude in their dealings with you, but such a switch is almost always tactical and a part of their negotiating strategy. They may be searching for weakness to see if you can be easily dominated, or may already have decided you can be, and are now going for the jugular.

Superstitious -- me?
Most Chinese are superstitious and even well educated, apparently totally westernised people may cling to traditional beliefs. Most, perhaps all, important decisions may be deferred until what is seen as the optimal time. This might be quietly determined by fortune tellers or by the individual referring to traditional books that are readily available in China. Unexplained delays in negotiations may be due to such factors, as well as to the better-known bureaucratic ones.

Many superstitions exist, and they vary in different parts of China, so that it is not easy to know what a particular person will believe in. Homonyms abound in the Chinese language, which is essentially monosyllabic, so that one sound may stand for many different things and even a simple beginner’s Chinese-English dictionary will have perhaps fifty different meanings for the word "li". The large number of homonyms means that some words are regarded as lucky or unlucky simply because they happen to sound like a completely different word that possesses a good or bad meaning. Some people, for example, believe it is good to see a deer as it has a homonym which means "prosperous". With local variations in pronunciation and several different, if related, languages in China, there can be a huge number of words that have lucky or unlucky connotations to someone somewhere.

Some superstitious beliefs are geared to the old lunar calendar. The seventh lunar month is one that is particularly concerned with the dead. The Hungry Ghost Festival involves being kind to those spirits who lack descendants to make offerings to them, or who died a violent death. These ghosts are ill-natured and some people choose to leave out food, as well as to burn joss sticks and paper money, to propitiate them. It is regarded as a bad month for celebrations, so that weddings and birthday parties are best avoided. It might not be the most opportune time for you to conclude negotiations for a business deal and then hold the necessary celebration dinner. During this festival, trips to the countryside are best avoided, as many spirits are thought to lurk there.

The number superstitions
Numbers have a special significance to Chinese. Most Cantonese believe that numbers 4, 44, 444 and so on are very bad, as they are a homonym for death; they would not buy a motor car with such a licence plate or stay in a hotel room with such a number. Eight is however seen as good and the more eights the better. A good recent example is provided by Yaohan, a Japanese department store that opened in Beijing in 1992. More or less as a joke, the person in charge of the pens labelled a rather splendid 14-carat gold pen for sale at 88,888 yuan (approximately $11,000). The lucky numbers worked – he not only got that amount, but it was the first pen sold!

In traditional China, the odd numbers were traditionally seen as masculine and the even ones as feminine, which meant in a society with a strong preference for boys, odd numbers were generally preferred. Three is a good lucky number as is five, which is probably connected with an old belief in five elements, five grains and five tastes as well as the old Imperial ranking system of officials. Seven is also often seen as a lucky number, as are multiples of it such as 14, 21, or 35. Nine was an extremely lucky number, and 81, the square of nine particularly so; on your travels you might notice that almost all ancient gates in China have eighty-one stud heads on them. At weddings in some parts of China, as part of social custom the groom was forced to pay sums of money to the bridesmaids in order to get to see his bride. He handed it over in multiples of nine.

The meaning of colours
Colours play an important part in superstitions and can influence what you decide to wear. White is the colour of death and plain white, e.g., as a dress, a suit, or shirt and trousers, tends to give the appearance of traditional mourning garments and so is best avoided. Would you respond quickly and warmly to someone dressed in the sombre garb of a traditional undertaker? It is quite acceptable to wear a white shirt or blouse, but it is best to team it with a suit or skirt of a different colour. Red is considered a very "happy" colour, so that a red tie with a white shirt, or red buttons on a white dress, offsets the death image. Writing in red ink however is a bad idea as it suggests the friendship is in danger.

Death might also be suggested in China by blue and white or blue and yellow together. At a traditional funeral, the gift of money would often be placed in a yellow envelope with a blue stripe, so this combination of colours is best avoided. Blue trousers and white shirt should be fine, but you might choose to avoid a heavy blue and white, or blue and yellow, striped tie for example.

Yellow on its own can be connected with death, although a darkish yellow was also associated with the emperors of history (only they were allowed to have yellow roofs on buildings) and also with some monks. Because of the different traditions, there is no real problem with wearing yellow, and it might give you a useful talking point.

A green hat should definitely be avoided, as in some parts of China it suggests a cuckolded person. There is a story that one senior foreign negotiator presented a green baseball cap with the company logo on it to each member of the team with which he had negotiated – and then wondered why no one was actually prepared to wear it!

Red is a particularly good or happy colour in much of Asia, including Japan and Korea as well as China. In certain areas, such as in the city of Chengdu, white bread loaves always have a splash of edible red dye on them to make them look more attractive. At first glance, it rather looks to a Westerner as if the baker must have cut himself! Wearing too much red can look a bit silly however. For foreign women, it might look excessive to wear a totally bright red dress with matching shoes and handbag. This is the sort of thing that little girls wear for very special celebrations, when they are adorned with heavy adult makeup.

Paintings and scrolls
Traditional scrolls and painting often featured a scene with mountains and streams with usually a tiny figure of a human, possibly fishing. This was a reflection of the Taoist (pronounced dow-ist) world view of the importance of nature, the insignificance of humans, and perhaps the Confucian idea of the importance of how people fit in. Certain elements in a painting may represent specific things; for instance the dragon represents the Emperor, the phoenix the Empress. Particular animals had strong symbolism attached to them (see Table 1.1 below)

The value of knowing about traditional beliefs
If you can comment on traditional views about the significance of numbers, colours, a painting, or an animal, it can impress the Chinese – it demonstrates you have a genuine interest in their culture. It can be most useful when socialising and casting around for good and safe topics of conversation. Understanding traditional culture can impress. I once witnessed an Australian trained in classical Chinese reading aloud the inscription on a temple wall in Chengdu, Sichuan. It immediately attracted an impressed crowd of locals, most of whom could not understand a word of it – modern Chinese characters are totally different.

Table 1.1 Some traditional beliefs about animal symbolism

Tortoise: Long life.
White cockerel: Good; it can ward off evil spirits.
Red cockerel: Good; it might ward off house fires.
Bats: Lucky; homonym with happiness.
Foxes: Really a spirit and sly; can change into human form; it specialises in helping you to find lost documents.
Tiger Male, fierce; king of the land (in China it is not the lion).
Horse: Speed, endurance.
One wild goose: Masculinity; the spirit of yang.
Two geese: Symbol of the married state.
Fish: Symbol of wealth.
Deer: Longevity; wealth
Pair of Mandarin ducks Happily married life

You should be careful when demonstrating your knowledge not to sound arrogant. You should also take care not to ask bluntly if someone fully understands a traditional issue: if they do not it can make them lose face. Many younger Chinese missed out on the traditional value training and know relatively little about China’s past and the old beliefs, so that it is particularly easy to embarrass them. If you demonstrate an immense knowledge, it just might on occasion backfire on you -- it is widely felt that foreigners should be interested in China but not actually know more than a Chinese! The classically-trained Australian above had no problem as he benefited from the immense Chinese respect for education and scholarship.

Change is constant and rapid

China keeps on changing rapidly
China is in a state of transition from poverty to riches, from centrally-planned Communism to the market mechanism, and from a pre-modern to modern economy. The changes that have occurred are great and they continue. The traditional culture was placed under heavy pressure, as long ago as 1840, from initial contact and then later war with Britain. The pressure continued through the Nineteenth Century with the partial colonisation of China and the beginnings of industrialisation. The Twentieth Century added to the pressures, with the collapse of the Imperial system in 1911, civil war (1928-37 and 1946-49), invasion and occupation by Japan (1931-45), decades of Marxist education, and Western-oriented market policies (1978-). Once cut off from contact with the outside world, among ordinary people there is now an awareness of the world and its values. This is the result of meeting and talking with foreigners, seeing foreign films, TV and videos, and talking with those who have returned from travelling or studying abroad.

Many traditional manners persist, and old superstitions and even witchcraft have reappeared, particularly in rural areas, after decades of being attacked or banned by the Party. Nonetheless, values are changing, especially among the young city dwellers. Of the people with whom you are likely to deal, the older might tend to be more traditional, while the younger ones may have adopted more modern or Western standards. You will recognise some excellent modern Western management types but be on guard, as they are often closely imitated by the growing ranks of crooks and con artists.

Some Chinese who are actually still traditional have adopted modern "foreign" ways when dealing with Westerners (e.g., using one hand not two to pass things to another person), but remain traditional when dealing among themselves. Although they seem to you as modern or normal in a Western sense, they will immediately notice and appreciate your sensitivity if you follow a traditional practice.
Very strong values are still attached to

- the Chinese family;
- group loyalty;
- respect for hierarchy; and
- the preference for harmony.

Old ways persist in that:

- the traditional bureaucratic ways continue;
- personal ties and obligations are still stressed; and
- manual workers are often held in low esteem, although not as much as peasants.

The values have weakened but are still present for:

- female subordination;
- kinship commitment (people sharing the same surname); and
- a vague allegiance to individuals from the same city or province.

The traditional low esteem for soldiers has been raised by constant propaganda over the years. The devastating floods of 1998, the worst since 1954, were turned to good use by the government: the people were bombarded with constant stories of heroism by the People’s Liberation Army (PLA) soldiers and television shots of them in action on the dikes and in the water.

Things are getting better
Facilities in China have improved immensely since trade and investment opened up in the 1980s and things continue to get better. Hotels are much more comfortable, telephones work better, direct dialling is now possible, and a night life now exists, including Western-style discotheques, Karaoke bars and night clubs. The variety and quality of consumer goods have improved remarkably since the early 1980s.

Rapid change, high stress
The rapid improvements come at a cost. The speed of change has caused high stress levels to many urban Chinese as well as to the flood of migrants from rural areas to the cities. In communist China, changes have always come abruptly in unpredictable fashion. What was correct one day could be totally wrong the next; even this new state of affairs could suddenly be reversed again if there were changes in the power structure. Many people were tense whenever forced to discuss social, political or economic issues in compulsory meetings; in private they would either refused to do so or else would rigidly parrot the Party line.

The introduction of market mechanisms has encouraged the emergence of a new breed of young, entrepreneurial Chinese, who have little memory of the past and no interest in communism or its ethics. The middle aged and elderly find it hard to cope with the new policies and values, and suffer spiritually, especially those people who still believe in communism, traditional Buddhism, or Confucianism. People on fixed incomes have suffered materially owing to inflation, and feel irked as they watch income distributions widen and the nouveau riche flaunt their newly-gained wealth in gauche and offensive ways.

Chinese attitudes to themselves and to others

Patriotism looms large
Dr. Johnson referred scathingly to patriotism as the last refuge of a scoundrel; this is not the case in China where people are intensely patriotic. There is a deep and unquestioned belief in China’s historical and cultural greatness and the name for China, "Middle Kingdom", indicates that the world revolves around China. All Chinese are proud of their nation-race, and regard others as definite unfortunates if not absolute barbarians. Minority peoples within China are despised and not accepted as proper Chinese by the dominant Han group. The official policy of course promotes a friendship line.

A schizophrenic attitude towards foreigners
Many Chinese are a little ambivalent about foreigners. On the one hand, they admire and respect foreigners for their achievements and particularly for their advanced technology, which they believe, can be of great assistance to China. On the other hand, they feel that foreigners are inferior, lack culture and manners, and may be nationals of some country that treated China badly in the past. You can encounter individuals who are fascinated by foreigners and others who may be repelled.

The things about foreigners that most upset many Chinese are greed and profit seeking, overly sharp business practices, rowdy unseemly behaviour, loud foreign pop music, and anything connected with sex and drugs. The up and coming young entrepreneurs tend to be less critical of these things and might engage in them themselves but it is best not to demonstrate you are like that.

It is common for a Chinese person to feel that he or she can learn much from foreign technology but little or nothing from foreign social or philosophical teachings, which are often regarded as trite or barbarically incorrect. Even the sort of communism that emerged in China was very "Chinese", and until Liberation in 1949, many top-ranking communist leaders knew surprisingly little of world Marxist thought. I recall raising names like Rosa Luxemburg, Karl Kautsky, and Herbert Marcuse, with a specialist Marxist philosophy professor at a Chinese university in 1967, only to discover he had never heard of any of them. Indeed, he seemed to know only about Marx, Engels, Lenin, Stalin and Mao.

You might find that rural Chinese expect more Chinese-style manners and behaviour from you than the urban ones, as the latter are both more tolerant and used to dealing with "big noses", an old and vulgar slang word for "foreign barbarians".

How the Chinese see various nationalities
The Chinese have a view of other nationalities that is often based on an unpleasant historical relationship. The lessons and experience of history are most important to educated Chinese who are well versed in their own history and often refer to it for relevant examples and analogies for the present circumstances. They have been taught about the actions of a few foreign nations that have hurt China, especially by invasions, colonisation, and forced unfair treaties. Rather like the Irish, the Chinese are very history-aware and much bitterness persists. As a result, the natural suspicion of foreigners, common it seems to all nations and races, is reinforced in China. Please do not feel insulted by the portrait of any of the nationalities that follow – these are common Chinese attitudes, not held by all, and certainly are not intended as a description of reality.

The Japanese tend to be seen as hard working, efficient, successful, and extremely loyal to their firm and to Japan. Japanese success at coping with Western impact during and after the nineteenth century is admired. On the negative side they are often seen as cruel (the legacy of occupation and Japanese behaviour during the 1930s and 1940s); too dominating and hegemonic; and essentially untrustworthy. The lack of trust is reinforced by the excessively refined Japanese politeness, which causes them to be easily seen as two-faced, i.e., they are extremely polite to your face, but are still planning to take advantage. They are frequently believed to be self-serving and not truly interested in helping China, which many Chinese think they should; Japan is seen as owing a debt because of its past behaviour, as well as being wealthy in its own right and able to do more. The Japanese are also seen as being willing to take advantage of Chinese weakness or ignorance and not behaving as friends should. Privately, some Chinese still refer to Japanese as "poisonous dwarves" or "Japanese monsters", common terms of political abuse during the Maoist era.

Americans are often seen as open, warm, friendly and trusting. A few Chinese see them as possibly a little child-like and naive as a result. The society is considered to be essentially shallow, with little history and culture of which to boast. As a consequence of cultural differences, Americans all too often come across as tending to the brash, arrogant, boastful and pushy, as well as being impatient and lacking in proper self-discipline. A few are seen as uncouth loud-mouthed bullies. The attitude of some old New England families towards newly oil-rich Texans is perhaps similar!

The Koreans are regarded as a stubborn people, and more hard working than the Chinese. These perceived traits mean that they are not liked, but they are usually preferred to the Japanese. After all, China successfully invaded Korea on occasion, which kept them in their place; in contrast, Japan invaded China and occupied all the important coastal areas. This is keenly felt to be a failing of China and a downright insult into the bargain.

The British are reasonably well regarded, especially considering the rather sad history of their colonial occupation of China. The English are seen as clever and even reasonably sophisticated, especially considering they are foreigners. On the negative side, they are felt to possess an unfortunate tendency to be cold, hold themselves aloof, and never really become involved much. They are seen as deliberately holding others at arms’ length and not a people with whom it is easy to develop a close personal relationship.

Australians are seen as acceptable, but often brash, slightly abrasive, and virtually totally lacking in sophistication. They are known to be uncultured, a little like strong but rather dumb farm hands. Australians tend however to be trusted, as the Chinese have discovered that they say what they think and mean what they say. As a consequence, individual Chinese can sometimes develop a closer relationship with an Australian, than is possible with the English. The boisterous, somewhat larrikin, Australian behaviour when drinking is not admired or understood.

The Chinese are different from the Japanese
You might have experience of dealing with Japanese business people or officials. This can serve you in good stead, in that you have learned something about Asia’s rich cultures. Although the Japanese culture shares some things in common with the Chinese -- such as regarding the group as important, acting cautiously in the early stages, and looking for long term relationships -- they are different in many other ways. This means you cannot duplicate the behaviour learned from your Japanese experience and expect it to work perfectly in China.

The Chinese tend to base their loyalties on family, but the Japanese on the nation. The Chinese never bow and find Japanese politeness excessive and misleadingly false. Many Chinese were taught as children to hate the Japanese for invading China and particularly for "the Rape of Nanjing" (1937), when Japanese troops ran amok, reportedly slaughtering hundreds of thousands in cruel ways. At an early age, most urban children will have been shown a movie that graphically and harshly depicts this incident. China itself is different from Japan: it is poor, lacks infrastructure, skilled labour, and modern technology, and still has relatively little awareness of the need for quality. The Japanese tend to be more formally behaved and dressed, more traditional in attitude, quite racist, and more group minded. These are just a few of the differences, and it is important not to blindly reproduce in China some things you may have learned from doing business with the Japanese, or indeed vice-versa.

China is one country but all Chinese are not the same

- Many countries have stereotype views of certain groups of foreigners, e.g., French women are always chic and French men are sexy and constantly involved in amorous pursuits. Regional differences exist in probably every nation. In China, the people recognise their existence and many individuals have strong stereotype expectations about their compatriots from other parts of the country.

- Southerners see Northerners from around Beijing as phlegmatic and stolid people, who are cold and hold themselves aloof. They have a tendency to be bookish, ivory-towered, or dilettantes.

-Those coming from the province of Hunan and Sichuan are regarded as being fiery, rebellious, and quick to lose their temper. This is probably based on the local preference for hot, spicy foods.

-Those coming from Shanghai are thought of as devious city slickers, the kind of people who enter a revolving door behind you and come out in front. They are seen as being ultra stylish, caring much about their appearance, and prone to spend money easily on fine clothes and good living. Hairdressers and tailors from Shanghai are well-regarded in the rest of China. "Elegant sophistication" sums up Shanghainese in the minds of many.

- Southerners, especially the Cantonese from Guangdong province, are felt by Northerners to be noisy, boisterous, and a bit earthy. They are seen as a definite distraction when gathered in numbers in restaurants chattering loudly and are best avoided. Some Northerners see the Cantonese as not being fully Chinese or totally civilised. They are considered in much the same way some Northern Europeans regard the inhabitants of rural southern Italy.

Ironically, the Cantonese themselves tend to pride themselves, probably correctly, as being the descendants of the "true" Chinese who were pushed south by northern invaders. In turn, they may feel that Northerners are not quite "proper" Chinese but the mixed-blood descendants of barbaric hordes.

Naturally, each group does not normally subscribe to the stereotype of itself! Individuals might easily be hurt if they were to be accused of being like their stereotype. Should you get talking about regional differences, be careful first to ascertain the person’s native province as well as where he or she has lived the longest. If you point out the stereotype of their hometown, not knowing it is where they come from, the individual could easily feel hurt and suffer a loss of face.

Two broad types of Chinese you might meet
Most older Chinese officials and business people are old fashioned, conservative in manner and traditional in approach. Because age and rank often go together, they may be the really powerful people: most officials are in this group. The interior of China is full of such people. The advice contained in this book is perfect for dealing with them.

The second type you will meet is younger, more Westernised and has often thrown off traditions in an effort to be trendy and modern. The young bustling entrepreneur is often like this. They are largely confined to big cities in the coastal region -- Hong Kong has a lot and Shanghai is striving to catch up. They recognise the traditional ways if you follow them, but are themselves dropping the old-fashioned, self-effacing, polite manners. A clear generational gap has emerged. If one of the young tearaways tells you that "no one does that anymore", he is wrong, but it is a strong signal that you can relax your efforts to fit in, and return to your more normal business approach when you are alone with him.

Foreigners’ attitudes to regional differences
Experience in China has persuaded some foreigners that in contract negotiations, the Beijing people are straightforward and easy to deal with; the Shanghainese are cunning but are well-versed in Western business practice, which makes doing business easier; and the Cantonese are sometimes devious or unscrupulous and more care must be taken when doing business with them. Whether these views are true is hard to say. As a rule of thumb, the south does seem to contain more crooks and con artists than the north, and the coastal areas more than the interior, but this is where the dynamism and opportunities exist. Things may change as more foreigners penetrate the less accessible areas and they too may become more unrestrained. Shenzhen and Guangdong in particular have a reputation for lawlessness and being something of a "Wild West" area.

It is not difficult to get gypped or robbed in China, even for large Western firms. A company as large and well-known as Compaq Computers was ripped off. In 1995, several of their distributors did not pay for the computers they had already received; one of them, Cheflink Computers that had worked with Compaq for almost three years, owed $32 million and would not pay. Compaq’s total loss is unknown but industry rumours at the time suggested that perhaps $100 million might be close.

What should you be especially on guard against? A survey of credit ratings of enterprises in China done in 1997 reported the following were the main risks that foreign investors in China should guard against.

- Firms using fraudulent business licences;
- companies that fail to implement a production plan or have no money to pay for equipment;
- enterprises that produce unmarketable products and cannot pay for raw materials; and-
- co-operative projects that are halted because of a change in government industrial policy or environmental protection measures.

The bossy, interfering, middle-aged woman
Do not be surprised if occasionally you encounter a noisy, inquisitive, rather assertive older woman, who might approach you on the street or in a store. Such people were once important in the Street Committees and had great power over their neighbours. When Maoism ended after 1976, they lost their influence and function, and some are now bored busybodies with a strong sense of frustration. If they speak some English and bustle up to you, they can be helpful if you want to know something like the correct way back to your hotel, although their level of English is normally not high.

Insider-outsider: do you belong?
The Chinese have a cultural tendency to see people as essentially either "insiders", who are members of the group or organisation, or "outsiders", who are strangers. They behave quite differently with each of these informal classifications. Outsiders are often treated with an indifference that can easily border on contempt and no one feels the slightest obligation to look after them or deal with a simple request. Trying to get assistance from another organisation can be a hassle, as the people there feel no responsibility to assist the outsider, indeed quite often they seem to feel a compulsion to frustrate them. If you should ever require co-operation from another organisation, you might find you have to get a higher official to step in and instruct them to help you. Even if you succeed in getting their help, the other unit may prove to be rather antagonistic and might try to gouge you with a high price or take other uncooperative action as an act of petty revenge.

Insiders on the other hand have to be cosseted and assisted in every way possible. The definition or nature of the insider group is however fluid and varies with the context or the issue. Everyone within an organisation is a member of several insider groups – the work team, the section, the department, the division and the business itself, as well as perhaps a table tennis team or similar social club. Co-operation between members of the same work group is high, but between different work groups it may be competitive. It is similar for sections and departments.

The strongest insider group in China is the family, but there are other powerful network groups to which a person can belong; within the group there is a feeling of special relationship and guanxi may develop between members. These network groups can include people who attended the same school or university (particularly in the same year), or worked for the same organisation, served in the same military unit, or were members of the same delegation e.g., to a different city or country. As a last resort, people coming from the same city or province may share some insider feelings and may help each other a little.

This insider feeling can break down when there are members of different rival factions within the organisation. Virtually all Chinese organisations are riven with such factions, each with its own head person who leads a set of people underneath. The use of guanxi (in this case calling in favours) is the way most Chinese try to get around the outsider and the rival faction problems.

"Give me the latest!"
The Chinese tend to go for the best, which is identified as being the most prestigious product. This is partly the result of the Confucian heritage and the hierarchical view of the world. It is much safer for a Chinese purchasing agent to buy the best known product, for a superior is unlikely to criticise him for this. The situation is not unlike that of many purchasing officers in Western firms in the 1980s who preferred to buy IBM personal computers at a high price rather than perfectly satisfactory and substantially cheaper clones. The Chinese also like to deal with the "best" firm where they can and may gain kudos from this. In part, it is because of lingering fears that foreigners may cheat them, and internationally-known companies are felt to be safer.

In technology, the latest "cutting edge" method is almost always preferred. Rarely will the most appropriate be chosen over the most prestigious, which means that sales pitches along the lines of being suitable for Chinese conditions may fall on deaf ears. It might even be seen as mildly insulting. If you are trying to sell, the Chinese will automatically compare your product or technology with what else can be bought internationally, to see if anything better is available. However, once they have made their minds up and bought the item, they are often brand-loyal. They do not seem to like having to make new purchasing decisions among the wide variety of choices offered by the international market system. Eventually, when a product which is really superior to yours appears, despite the verbal emphasis on "old friends", they will often be willing to dump you, particularly if your company is small and the new product is from a major international player.

Laughter, a defence mechanism
You cannot assume that the laughter you hear always means happiness. It can be genuine, but the laugh may indicate embarrassment and uncertainty about how to react. If someone trips and falls over, or hurts themselves seriously, you might encounter laughter rather than obvious sympathy. In this case, the laughter suggests that the person is in a dilemma about what to do. If someone seriously offends an important canon of behaviour, maybe losing their temper and screaming abuse at an official, those around might laugh for the same reason. The announcement of a personal tragedy may also cause laughter, apparently acting as a tension-releasing device, but does not imply callousness.

If you are unfortunate enough to trip and fall over, you might find that people will stand and watch but no one will help you. The Chinese often fear to take individual responsibility for anything, and as a foreigner you are something of an unknown quantity. Do not get angry at anyone who laughs at your predicament, it probably does not reflect amusement. If you lose your temper, it is likely to make things worse; others will probably join in the laughter out of acute embarrassment.

Chinese people often do not smile when introduced, but this does not mean they are unfriendly, they merely have different social customs. A smile is not always friendly, and like laughter it can indicate embarrassment, especially if it is rather fixed and occurs in response to a statement by you. A smile may conceal anger, again usually in response to something that has just been said or done. Smiles can also be just like Western ones, indicating friendship and enjoyment. It is simply a complex culture and can take a bit of understanding.

Look at me when you’re talking to me!

You are probably used to making and seeking eye contact when negotiating in your own country. In China, frequent eye contact when addressing someone is similarly desirable. Many Chinese become worried if they are talking and the listener, although concentrating, persistently stares away. They begin to wonder what you are up to and what message you are signalling that they do not understand. However, some Chinese find constant eye contact to be aggressive or challenging, so that it is better to glance away regularly rather than hold their gaze.

You should be aware, however, that traditionally it is bad manners to gaze into the eyes of a total stranger, so do not be alarmed if on introduction a person does not look straight at you. Guard against your instinct that might tell you the person you are meeting is shifty and untrustworthy; it is merely a different cultural body language. If you have a habit of pondering what is being said to you by staring at the ceiling or out of the window, it is best not to do this in China. It might suggest that you are treating the person who is talking as a total stranger, and this would interfere with building up mutual trust.

Smokers’ paradise
You will probably observe a lot of cigarette smoking when in China. Cigarettes are cheap and readily available. Most of us are aware of the dangers of smoking, but until relatively recently the information was concealed from the people of China. The government of the day had total control of the media, and news from the outside world was heavily censored. Many people developed the smoking habit in ignorance of the health dangers involved. The problem was that the paramount leader, Mao Zedong, was both a dictator and a chain smoker. No publicity about the ill effects of smoking was allowed during his life time; he lived until 1976. In 1998 it was estimated that of the 300 million males aged under 29 years, at least 100 million will eventually be killed by a tobacco-related disease and about 2,000 people, mostly male, die every day in China as a result of smoking.

Because they have grown up surrounded by smokers, few Chinese realise that these days smoking is offensive to many foreigners. Unless you really cannot bear cigarette smoke and have an allergy to it, you are advised to ignore the smoke and try not to look concerned. If on the other hand you are still an unreconstructed smoker, try the local brands for yourself. You will be surprised how cheap they are but will probably decide they taste unpleasantly coarse and strong.

Things to take in with you
Many visitors to China find it useful to buy any medicines they might need either before leaving home or else in Hong Kong. Even if you are in good health, you may fall ill, especially with minor ailments like colds and upper respiratory tract infections. Take with you what you might need. When you have a cold, it is amazing how a lemon-flavoured aspirin hot drink in your hotel room can improve the way you feel. A supply of your preferred painkillers, throat lozenges, antibiotics and anti-diarrhoea tablets is essential. In winter, you will probably need a lip salve and perhaps a good skin cream.

It is a good idea to take a good portable short-wave radio with you to keep in touch with world events. China is simply different from other countries, it is easy to feel cut off and isolated, and many visitors suffer from a mild version of culture shock, especially if travelling or living alone. A small radio-cassette player can make a lot of difference, especially if you are on a long train journey and have brought some of your favourite tapes with you. Chinese batteries are pretty hopeless, so take lots in with you.

A Swiss army knife is useful, especially the corkscrew, bottle opener, and can opener attachments. I personally find if staying for more than a week or two, a cheap plastic juice squeezer that sits on a mug is useful and allows me to buy cheap fruit in the market and spoil myself with fresh juice of my choice. Most fresh fruit juices seems to mix well with duty-free gin, which is useful when travelling!

Should your visit be in late December, remember to take lots of Christmas cards with you, preferably not ones with a Chinese motif. You should avoid any that contain jokes or innuendo and look for those that are serious, old-fashioned and look really impressive. Send one to every important contact you make, for they enjoy receiving them; it will help to develop your relationships further.

They don’t "do lunch" but they take long breaks
It is common to find people take a long lunch break. In China, many people start work early in the morning and then stop for a long lunch break of perhaps two or even two and a half hours. After eating lunch, many Chinese take a siesta, then wake up refreshed for the afternoon work. One reason why state enterprise managers do not take you to their office to talk is that it is probably poorly furnished and decorated – and it might well have a small bed in it! As noon approaches, if you find you are being hurried back to the hotel, or the meeting you are in is showing signs of being suddenly brought to a close, this is probably the reason. If you are tempted to indulge in a few beers before or with lunch, remember that they might make you sleepy and you will shortly be facing negotiators who have just had a refreshing nap and are in peak form. Proper wine is incredibly expensive in China, so if you must indulge, beer is often the preferred tipple.

It is mostly a waste of time trying to contact Chinese colleagues or your contact person or the members of their team between noon and two-thirty: they are often asleep and cannot be located. If your telephone call wakes them up, it will not endear you. As a result of not taking a siesta, as well as being kept on the go visiting museums and the like, Western visitors often get surprisingly tired in China.

Names and titles
Most Chinese have three names, with the surname coming first on their business card. A few Chinese have only two names, and a very few have as many as four. In all cases, the surname will come first on a card or list of those present, so that Peng Lian is "Mr. Peng". If he or she has a title such as Director of an Institute it is polite to address him or her by the title, and you should certainly do so. Their title pins them down in the hierarchy and using it gives them definite face, since it points out that they are senior people. You should always say "Director Peng" or "Vice-Chairman Wang" rather than plain Mr. or Madame. "Madame" is often used for women rather than "Mrs.", as it sounds more imposing. A second reason is that for many years in Mao’s China, "Mrs." had a derogatory feel about it and usually referred to a woman who was wealthy, but empty, selfish and uncaring. The Party, and the majority of the people, regarded such people with antipathy at the time.

Noisy laughter
China can be a noisy place and you might encounter shouting or rowdy behaviour. In part it is inherent in the society and language: two Cantonese friends who are getting along famously and really enjoying themselves often sound as if they are arguing and about to come to blows. Sometimes it is sheer exuberant high spirits. In noisy restaurants, it is usually the result of the large number of people, each trying to be heard.

Some not so nice things

The local environment and housing might not impress you
Apart from the obviously new building work, many Chinese cities look old, worn down, poverty-stricken, and often downright ugly. In the north especially, the predominant appearance is a dusty grey, with usually a blanket of smoke or smog. Air pollution, severe under the earlier communist policy of industrialisation at all costs, worsened dramatically during the 1990s with the advent of private motor vehicles. Most cities suffer from mile after mile of grey concrete buildings that look as if they might stretch forever and look particularly uninspiring. The large endless grey buildings have been thrown up since the Revolution in 1949 and cheapness, not aesthetics, was the preference. Socialist architecture seems particularly uninspiring the world over.

You should not be surprised at the run-down state of the buildings. China is poor, and for decades the housing stock was allowed to deteriorate badly, largely because rents were set at levels much too low to allow for maintenance. Housing maintenance was always a low priority for the planners and if more money became available to the government, housing was not the sort of area that received any. The state wants to get out of the business of supplying cheap housing. In July 1 1998, the State tried to stop doing this, and hoped to turn the provision of accommodation over to the private sector. The attempt seems to have been postponed because the task was too difficult to implement as rapidly as had been hoped.

Benevolent dictatorship -- mostly
The government is autocratic and unpredictable and although generally benign, it can be ruthless if it feels that the interests of the Party or China are seriously threatened. The Tiananmen massacre of June 1989 is an example of the extent to which the government will go if pressed.

The Party controls the government and is itself divided into four loose factions. The ruling group is a reformist pro-market moderate one, currently led by Jiang Zemin, President of China (the heir of Deng Xiaoping who was the midwife of the reformist policies in 1978), and Zhu Rongji, the Premier. This faction is opposed by three others: a somewhat old fashioned Stalinist central planning faction who merely want to put the clock back to central planning; another group which is happy to use some market mechanism (but perhaps less than now in force) and keep some central planning; and a small rump of extreme Maoist leftists. There is no sign that any of these opposing factions have the numbers to seize power. The stance of the People’s Liberation Army is critical; so far, the generals have supported the ruling pro-market faction.

Do you want to know a secret?
China is a secretive society. The Chinese have long seen information about their country and society as a matter for themselves alone. If you notice a scuffle in the street or see criminals being paraded around town on lorries with placards hanging around their necks and ask what it is about, you may be told "This is not a matter for foreigners" and you are unlikely to receive an answer. The tendency to secrecy is so endemic that even at universities one can find that economics books are only made available to economics students, law books to law students, and so on! Wide ranging investigation and creative thinking is actively discouraged in this way. The problem goes back to the cultural habit of making the distinction between insiders and outsiders, which permeates the Chinese way of thinking. Unlike in most developed countries, the Chinese are quite used to not getting any information from institutions or their government and are equally accustomed to refusing to pass information to others.

The pursuit of secrecy can be taken to extremes. One ethnic Chinese employee of a multinational oil company was imprisoned in 1996 for the crime of "obtaining state secrets". His company had merely asked him to find out the stage reached in the approval process for their intended project, and if there was any way of speeding up the approval. His efforts to do so proved too much for the Chinese authorities to bear and he was arrested.

Hawking and spitting
You will encounter spitting or and noisy throat clearing, with or without expectoration. Some locals believe that the flatter Chinese nasal system encourages sinus problems and blockages, others that the dust blowing in from the inland deserts in the north of China, and the bad air pollution of most Chinese cities, create and exacerbate sinus problems. Certainly spitting in China has a long history and spittoons are often provided (and well used!) in many institutions, as well as along some streets. Spitting is regarded as a natural body function, even if a trifle unrefined. When you encounter it, try not to let it bother you, do not look disgusted, and never complain. Should you encounter someone breaking wind, he is probably of low class, as this is definitely considered impolite in company. The common term for it (pronounced "fang pee") is a very minor swear word that street urchins might use.

Racist attitudes
It is best not to express surprise if you encounter racist attitudes; political correctness has not yet made deep inroads. Traditionally, China simply saw itself as the best and this applied to skin colour too. A well-known folk story refers to God baking the first people in the oven of life: the first batch were underdone and turned out white and pasty (occidentals), the next batch were overdone and burnt black (Negroes) but the third time God got it right and they came out a perfect golden brown -- the Chinese.

Between white and black, white is preferred. Women from Suzhou are often regarded as the prettiest in China, in part because they are traditionally very pale skinned. You will probably observe people, women especially, holding up an umbrella or newspaper when crossing a sunny street, even for a few short yards, in order to stay as pale as possible. Sunbathing is generally not popular because it darkens the skin. Many years of Marxist propaganda against racism fell on willingly deaf ears.

The lure of the huge market
It is best not to expect an enormous market that will instantly earn you large profits. The lure of the vast China market has been around since the middle of the Nineteenth Century when a British industrialist pondered how much more cloth could be profitably sold if each Chinese man could be persuaded to add one inch to his shirt-tail. The optimism resurfaced when China began to open up after 1978; so far it has been something of an illusion for many foreign companies. This does not only apply to Western ones: even the Japanese, who are regarded in the West as being able to understand China and adept at dealing there, have had their problems. The electronic giant Matsushita set up a joint venture to produce videocassette recorders and initially planned to sell eighty percent of them within the Chinese market, which it believed was large. Subsequently, Matsushita found that the market was not that big and it was unable to meet its target.

It is in China’s interests to promote the idea of a huge market that can quickly make you rich because it strengthens their negotiating position. As one example of many, towards the end of 1997, a Deputy Division Chief of the People’s Bank of China published an article about foreign insurance companies and their prospects in China. This was entitled "Massive market lures insurers" and contained the words "Foreign insurance companies are banging on the door of the Chinese market, lured by the huge potential for insurance business…" Shades of the Nineteenth Century shirt tails…!

During the early negotiations, you might find the team opposite dangling the lure in an attempt to make you bite. In reality, China provides a good and steadily expanding market, it enjoyed high growth rates of about 8-12 percent p.a. in the 1990s before the Asian financial crash of 1997. These rates are expected eventually to resume, after possibly staying around 5-8 percent for a year or two. By the end of 1997, the population had reached 1.243 billion (including Hong Kong) and it is expected to increase to 1.6 billion by the year 2030. Despite the large number, the majority of the people are poor and one has to bear in mind that it needs a high disposable income to make a good market. Making money in China requires hard work and patience, as it does in most areas of the world.

Crime generally is on the increase
Embezzlement and misappropriation are frequently reported crimes. Vice-premier Wu Bangguo told provincial officials in charge of the nation's employment and welfare system that some $987 million (8.2 billion yuan) had been misappropriated from pension funds established to pay those forced into retirement during the reforms at State Operated enterprises (SOEs) which caused delayed payments to over one million workers.

It must be admitted that compatriots from Hong Kong and Taiwan are often not widely liked: they frequently do not really understand Chinese culture, especially as it has developed in China over the past half century, they have too much money, they flaunt it, and they behave in ways that insult the locals. Many Overseas Chinese have reported that antagonism towards them has increased since the mid 1990s. Local criminal gangs, pickpockets, and robbers usually target them (as well as other locals) rather than Westerners. A number of Overseas Chinese have been kidnapped and held for ransom. Where Westerners are targeted, the crime usually takes place in upmarket four and five star hotels, and robbery is the motive.

The increase in crime is particularly noticeable in coastal regions, especially in the south of China, but the problem can easily be overstated. The crime rate used to be exceedingly low, the result of ruthlessly tight social control, and the recent increase still leaves China as one of the safest places in the world to visit or live. Pickpockets rather than violent criminals are the most that foreigners might expect to encounter.

Crime can even present opportunities for legitimate profit. Safe Car, a small Texas-based company specialising in bullet-proof armoured vehicles, spent three years in China before receiving orders for 4,000 vehicles for 1997 alone. They are shipped to China in completely knocked down form and assembled locally. Richard Medlin, the President of Safe Car, anticipated that sales of up to 10,000 a year were possible: crime, it seems, does pay -- as long as your business is selling things to prevent it.

Human rights and the death penalty
The government has little interest in promoting human rights and regularly promotes the view that they are a luxury that wealthier nations can afford but not less-developed ones. It argues that a poor country like China has too many immediate problems, such as housing, clothing and feeding the people, to worry about. Later, as the country becomes richer, human rights can be moved up the agenda.

In China, unfair trials, arbitrary arrests, police brutality and torture are regularly reported by organizations such as Amnesty International. China routinely uses the death penalty for what would elsewhere be regarded as minor crimes, such as petty theft, smuggling, or embezzlement. Amnesty’s annual report for 1998 revealed that a minimum of 1,876 people were reported executed in 1997, more than in the rest of the world combined, and the true figure could well be higher. Many American companies regret these events but relatively few have taken action. The normal response is to quote former American President Coolidge that "The business of America is business", not politics. Most also point out that if they were to take action, it would disadvantage them against companies from Europe and elsewhere. A few have done something: the companies Timberland and Levi-Strauss have withdrawn from China until the human rights’ situation improves. In addition, Reebok International Ltd. has made determined efforts not to buy goods produced with prison labour and has also introduced various human rights practices in its factories, including fair wages and a safe, healthy work environment. The company maintains a special interest in avoiding the exploitation of child labour.




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