Ni Hao: Doing business with Chinese investors 11 May 2016

Introduction

We’ve all seen the headlines about growing Chinese investment around the world and New Zealand is certainly no exception.  Although you may already have been in business for years and have a great deal of experience, if you want to be truly successful with a Chinese counterparty then there are some key cultural differences which you should take on board. With that in mind we have set out some points to be aware of when you’re dealing with Chinese investors.

Key cultural differences

Many Asian cultures emphasise indirect communication, particularly if there is a problem. This can be frustrating for Westerners who would prefer just to “get it on the table” and discuss.  An email worded to state, ‘. . . we value the fact that we are equal partners . . .’ may be phrased that way because they are not feeling like an equal partner and are hoping the situation will improve. That subtlety may well be completely lost on the Western recipient who may be later surprised to find out that all is not as it seemed.

You can deal with a situation such as this by spending time asking questions of the other side and seeking to really understand what they are thinking.  If you get a response which seems indirect then that’s a signal that you should follow up with other questions.

This cultural difference also flows into the next point which is that a good relationship should be worked on before closing a business deal.  You may have an agreement and already popped the cork.  While having a signature on the page is important, you also need to really work hard to understand each other and ensure there’s clear communication.  If the potential business justifies it, a trip to China to meet with people on their home turf will go a long way towards establishing that trust.

Clear communication

We often see people stumble as they forget that it is important to speak more slowly and more clearly than you may do when speaking with your friends at home.

Our Kiwi accent can throw foreigners as, for better or worse, most people from overseas grew up watching American TV and movies. Imagine if you were learning Chinese how hard it would be if people spoke quickly: that may alter your perspective.

As well, we tend to litter our speech with slang expressions which totally mystify foreigners. Keep your speech simple and straightforward without being too stilted.  However, don’t throw the baby out with the bathwater (as it were!) on this one; a unique way of expressing a concept may make everyone laugh and lighten the mood.

Is it necessary to start studying Chinese?  Not really, but if you can say ‘hello’ at least, it at least shows that you have made an effort to learn some phrases. (Hello is ni hao). No one will expect you to be fluent in Chinese and, even if you were, they may prefer to speak in English.

While Chinese language skills are not essential, having some understanding of China will also make you a more sensitive business partner and earn you respect.  If you presume that a Beijing investor is the same as someone from Southern China, this will reveal your ignorance pretty quickly. Someone from Southern China may be a Cantonese speaker as that language is more common there.  Having said that, asking open questions about where your business partner is from will be a good way to get to understand their background and they will very likely be happy to tell you more.

A little geography

Referring to ‘Asia’ when working with a Chinese investor, for example, is not appropriate. Asia is a vast region brimming with diverse histories and cultural backgrounds. Taking some time to research your counterparty and their origins will definitely pay dividends.

All of this boils down to the fact that if you’re working with a Chinese investor, clear communication is vital and assumptions can lead to misunderstandings developing.

It’s important to speak and write as clearly as you can and really listen closely to the messages you are receiving.  If these simple steps are followed then you will likely find a lot more success in your dealings with Chinese investors.

Steven Moe

If you would like to discuss this further with us, please do not hesitate to contact Kris Morrison at krismorrison@parryfield.com, Steven Moe at stevenmoe@parryfield.com, Viv Zhang at vivzhang@parryfield.com or Doris Tu at doristu@parryfield.com.