Understanding Chinese Business Culture

From introductions to negotiating tactics, the business culture in China, the world’s largest market, is different from European business culture. Being aware of cultural details is vital for commercial success, says Tamás Nádasi, President of the Chinese Committee established by the Hungarian Chamber of Commerce and Industry. Nádasi stresses that cooperation among Hungarian businesses and thorough market research are the prerequisites to a successful market entry in China.

The aims of the Committee, set up in 2005, include promoting Hungarian-Chinese relations and advisory services to China-bound Hungarian enterprises on how to do business in the most populous country of the world. “This body suited the Chamber’s efforts to help Hungarian small and medium-sized enterprises establish a presence in markets that are difficult to reach because of large distances and where the business culture and philosophy greatly differ from those in Europe. China is such a market. There is a six-hour time zone difference and their business mentality could also make it difficult for Hungarians to orientate themselves,” Nádasi says.

Sharing the details
Seminars organized on a regular basis and consultations with entrepreneurs seeking assistance are among the core activities of the Committee. “Enterprises receive tailor-made advice from our members and members of the board who have personal experience in this field. We have a comprehensive set of information about the country ranging from negotiating tactics to customs processes or the protection of intellectual property. If special information is needed, we can suggest who to turn to for assistance.” Nádasi stresses that it is important for Hungarian entrepreneurs to be aware of differences in business culture. “For instance, you hand over your business card with two hands, with a slight bow, looking into the eyes of the business partner – we share many little details like this.” He notes that negotiating tactics in China are built on patience since several rounds of talks may be necessary. “One should not expect a deal on their first trip to China. First you need to establish trust and then pay attention to signing a deal with much attention to details,” he adds.

It’s all about quantity
The President stresses that the reason Hungarian wineries are not very successful in China is because they can’t produce the quantity necessary for the Chinese market. He notes that Hungarian wine producers would enjoy greater commercial success if they joined forces regionally and entered the Chinese market together – similarly to the French, the Australians or the Chileans. “We always emphasize that cooperation and a sufficient quantity of goods are key to entering – or staying on – the Chinese market. Hungarian firms should not see each other as rivals because China is an immense market: even ‘smaller’ Chinese cities have as many people (ten million) as Hungary’s entire population. China is a country of 1.4 billion people with insufficient land for agricultural production. Hungarian agricultural and food industry could basically sell to China their entire production volume.”
Another consideration is looking for lesser-known markets within China, Nádasi says. Although, the eastern coastal area of the country, with Beijing or Tianjin, and the large cities in the south like Shanghai, Guangzhou or Hong Kong are well covered, inner China offers more opportunities. Infrastructure is quite developed; the highway network is excellent, domestic flights are readily available and China has a super-fast train network. “There is immense technical development taking place in the country and I believe we should jump on that band wagon. Even though bilateral relations are excellent, this in itself is not enough to do business, you need to have well-founded feasibility studies to get a mutually beneficial deal. If you go to China, you have to conform to their customs to a certain extent. Knowledge of the language is also important. More and more people learn Chinese in Hungary. When establishing a business in China, it is wise to have a Hungarian manager with sufficient Chinese language skills for the interests of the company to be properly observed.”

Not strictly business
The Committee maintains relations with a range of organizations in China with the aim of enhancing bilateral relations, but its services also include assistance in cases of emergency, like the help it offered to a Hungarian delegation during their recent trip in Hong Kong. Representatives of Chinese firms like Wanhua-BorsodChem, Huawei or the Bank of China sit on the board of the Chinese Committee and provide guidance to Hungarian entrepreneurs about Chinese business culture. “We try to be everywhere because we think business opportunities may come from various fields like culture or sports and we have to cherish those ties, as well,” Nádasi says. In that vein, the Committee helped establish sister city relations between the Hungarian spa town of Hévíz and Guilin, a city in southern China. The proportions differ widely – there are 5,000 inhabitants in Hévíz vs. two million in Guilin – but the difference is also great between Budapest (two million inhabitants) and its sister city Shanghai (25 million).

Recognizing Hungarian talent
The Chinese Committee is also involved in receiving business delegations from China, organizing business meetings and trips to events like exhibitions and conferences in China, Hong Kong, Macau. Only recently, the Committee’s delegation attended a ‘Belt and Road’ conference in Hong Kong and visited Macau to meet the leaders of the local chamber of commerce. “In fact, we happened to be the very first Hungarian chamber of commerce delegation to that city state,” Nádasi says. Committee members also offer their assistance if a Hungarian company wishes to find a Chinese partner on the Hungarian market. “The Chinese are aware of Hungarian intellectual skills, they know about the large number of Hungarian Nobel Prize recipients, inventors, etc. They know that we are a very innovative and creative people with great ideas and suggestions,” the President concludes.