While outsourcing to other countries has been an increasingly popular way of reducing costs for businesses, some companies fail to make that leap successfully simply because they don't know how to deal with individuals from other countries. As Westerners, it can be difficult to realize that business is not carried out the same way around the world, but that realization is critical for companies who want to source products or services in other countries. Doing business with China, for example, can be particularly challenging for a business that is not prepared to deal with a change in cultures and values.
One of the biggest obstacles to overcome is the introduction. In China and some other Asian countries, who a person knows can ensure that they receive the attention of their desired audience. However, getting those connections can be difficult. Some of the people who provide these introductions will do so only if they can also profit from the exchange. While many Westerners may see this behavior as unethical, in China it's simply the cost of doing business. For companies that don't wish to compromise their ethics, the alternative is to send a letter translated into Chinese to the head of the company they wish to do business with. Usually this approach is only effective when the Western company has an international reputation.
Of course doing business in China will eventually require a trip to the country. Timing and preparation are key to the success of the visit. For example, many Westerners do not realize that during the Chinese Spring Festival in late January and early February, business almost comes to a halt. A visit made during this time would most likely be doomed. Additionally, companies need to schedule their trip and accommodations at least two weeks in advance and should inform the potential business partners in China of their plans. The Chinese love to show their hospitality, and they will undoubtedly prepare many activities for their visitors.
Meetings are also different in China. While in America, people prefer to get right down to business, the Chinese would find that type of approach to be rude. They begin all meetings by exchanging business cards. The cards allow them to learn a great deal of information about the individual with whom they are meeting without requiring them to ask a lot of prying questions. Following this formality, most meetings begin with tea and some brief informal conversation. While to most American business people this activity may seem pointless and aggravating, particularly if they are on a tight schedule, the Chinese feel it is important to form a relationship of friendship and trust before discussing important topics. Without this foundation, the Western company's attempts to form a business relationship will fail.
Negotiations can also be difficult for Westerners to get used to. While most Americans, for example, have no trouble declining an offer, the Chinese try to avoid saying anything negative. Instead, they indirectly hint toward the fact that the proposition has been refused. First time negotiators in China may not pick up on the subtle hints unless they listen carefully. Also, many negotiators feel elated because the Chinese businessmen seem to say yes to almost everything, so they feel that everything is going smoothly. However, most of these affirmative responses have no real meaning. Furthermore, most of the negotiation proceedings will not take place in a stuffy boardroom or office but will be conducted over dinner or lunch. For the Chinese, entertainment and business go hand in hand.
The two biggest mistakes companies make when dealing with China is not using a translator and not sending their top people. Because details are important in business, a translator can ensure that everyone is on the same page with the arrangements and can prevent miscommunication from undermining lucrative deals. Plus, the Chinese place a great deal of importance on rank and seniority. For a company to be taken seriously, they need to send high level executives to handle the negotiations. By taking some of these steps and by being aware of the cultural differences, companies can more effectively source goods and services from China.