Hidden Dangers of Doing Business with China: Discover the Impact of Overlooking These Five Key Facts Enterchina.ru

Hidden Dangers of Doing Business with China: Discover the Impact of Overlooking These Five Key Facts

What You Need to Know About China to Successfully Conduct Business: Understanding the Cultural Differences and Avoiding Common Mistakes Made by Foreigners.

Money is important, of course. Chinese people like it too. But sometimes it’s not just about money, it’s about more essential things, without knowing which you cannot establish proper communication with Chinese business partners. We will tell you about some of these things now.

«Dragon Flight, Tiger Walk» — a Chinese idiom about greatness

Fact 1: China is Changing, But Its Cultural Code is Eternal

But is it really changing?

Certainly, if you step out on a busy square of a big Chinese city on a warm summer evening, you will see the same things that you see in other big cities of the world: abundance of advertisements; bright shop windows; people who love shopping and cafes, good food, and walks on evening streets; influencers shooting videos ready to do anything for viral content; widespread digitalization with street cameras and online delivery services; electric cars next to expensive European cars — here, not only everything is present, but also elevated to a higher degree. If you are in Beijing, Shanghai, or Shenzhen, you feel like you are in a city of the future. Globalization gradually but surely penetrates everywhere, through any borders — like water that always finds its way. Sometimes it seems that countries are closing off from each other — but this is just an illusion, from today’s brief historical moment.

It seems like we’re not that different after all. Well, except that «that» part of the world writes with letters, and «this» part writes with characters.

However, don’t take everything at face value. Cultural peculiarities have not been canceled and will never be canceled. Under all this external European influence lies the mysterious Chinese soul. They are very special. And the first thing you need to do is to accept this.

Fact 2. They behave as if they don’t want to trade with you. Why?

In the past ten years, China’s economy has greatly benefited from digital trading platforms where everything is bought and sold. As a result of their development, China’s foreign trade volume has more than tripled. It is evident that the People’s Republic of China is aiming for trade expansion and wants to trade with the entire world.

Now, let’s get down to reality. Here’s the actual scenario. You find yourself in China with a clear business objective: to visit local factories, monitor prices for equipment that interests you, and, so to speak, get a general overview. After all, on platforms like Alibaba, it’s not always easy to determine if you are dealing with a manufacturer or a middleman. And your goal is to establish direct contact with a supplier, learn about prices, and discounts.

You visit one manufacturer, then another, and a third, but when you ask about prices, you receive evasive and vague responses. It’s quite strange. No one wants to show you a price list or does so with great reluctance. Chinese manufacturers’ prices are not readily available. They are not posted on websites. They are kept hidden, almost like something intimate. What’s happening? They act as if you are not of interest to them as a trading partner.

What’s happening is this: Chinese manufacturers primarily cater to the domestic market, which is massive, so they are not lacking customers. Chinese people understand their own market and its laws when dealing with each other. But for a foreigner who has come to monitor prices, it’s a different story.

Firstly, you are an unfamiliar «overseas» entity to them. Do you have a genuine intention to make a purchase or not — who knows? Until the factory manager definitively determines this, they will evade giving a direct answer regarding the price.

Secondly, they simply do not know what price to quote you. Furthermore, you might consider that prices do not even exist until you provide a detailed explanation of your specific needs. What quantity of equipment do you require? What exact technical specifications? The factory can produce goods of any specification — but based on a specific request. Do you have this specific request? If yes, then a price will be provided.

In reality, prices in the Chinese market are highly flexible — especially for large contracts. They can easily be adjusted downwards if dealt with astutely.

But just handing out a price list to everyone — what’s the point in that? Everyone wants to avoid this aimless task. After all, a price list means very little. This is why Chinese factories value their fluctuating prices: they can manufacture the same type of equipment at vastly different costs and varying qualities.

Sometimes it goes like this: after prolonged — truly prolonged, spanning several weeks — negotiations where every tiny detail has been discussed, the price remains undisclosed. Then (at the final stage) they tell you: come with cash, and we will give you the price.

They never say no. However, that does not mean they are ready to collaborate. They do not mention discounts until they thoroughly analyze you, ensuring that the deal is absolutely, unequivocally secure — sometimes they literally need to feel real money in their hands for this assurance, and in China, that’s normal.

Let’s see the color of your money first

Fact 3. Chinese scammers exist. Myths and truths about them

Of course, they exist. Just like everywhere else.

But the truth is that widespread fraud on Chinese websites is a tale of ten to fifteen years ago.

Yes, there used to be all sorts of scams. The internet was full of people looking for easy money. One common scheme of fraudulent earnings was to lure a client willing to purchase a particular product into the «manufacturer’s office.» The office was fake — rented for a couple of days before the guest arrived, ready to part with their money. They even hired «extras» — supposed employees. All to deceive and show the solidity of the «company.» The client would sign a contract, where scammers would receive a fifty or even one hundred percent advance payment — and then disappear.

Today, the likelihood of such a «show» is practically reduced to zero. Perhaps in some remote small towns, it still exists as an atavism. But against the backdrop of tightened control by the Chinese government and the development of digital technologies that have permeated literally all areas of life, the risk of encountering such a «bright» deception in the 21st century is extremely low.

Yes, scammers exist now. They still operate actively in various chat rooms and can still disappear with other people’s money. Moreover, it is precisely Chinese criminal syndicates that control the so-called «Golden Triangle.» Haven’t heard of the «Golden Triangle»? It is a region in the Mekong River valley where three states — Myanmar, Thailand, and Laos — converge. Opium cultivation and drug trafficking thrive here, tourists are kidnapped for organs, slavery (including child slavery) is widespread, and call centers where tens of thousands of Chinese engage in cybercrime and extortion of money operate here. The largest center of the «Golden Triangle,» KK Park, is a whole city where almost all residents (Chinese by nationality) work in huge call centers, where cyber fraud is a routine operation.

The Golden Triangle area is highlighted in red.

The criminal syndicates from the «Golden Triangle» in China Mainland are affecting the entire region. However, within the Mainland, crime… as loud as it sounds… is nearly eradicated. For instance, the intentional homicide rate in China is less than one person per 100,000 residents (compare: over 5 individuals in the US, and over 15 in Russia).

The decrease in crime rates is largely attributed to the high level of digitization in China Mainland and the widespread installation of surveillance cameras (which are interconnected in a single global hyperspace network managed by artificial intelligence). At the level of digitization observed in China, there’s no issue in verifying every supplier and understanding who you are dealing with. Is it a legitimate company? Are they a manufacturer or a middleman engaging in marked-up trading? Just use your common sense and verify the information.

The only risk you might face is in terms of the product itself. You agreed on one thing, but received something else. Yet, this is precisely a tale of the challenges in intercultural interactions. When saying «chair,» everyone envisions something different. That Russian might picture a childhood stool from their mother’s kitchen (with those metallic legs and slightly peeling paint). And what does the Chinese envision? Who knows?

In reality, it’s quite simple: the manager of a Chinese factory can imagine anything. Name one price — and he envisions a luxurious wooden chair with carved armrests, but name another — and the chair in his mind immediately transforms into something much less appealing.

This occurs when you attempt to aggressively push the supplier on price, emphasizing that cost is your priority. The factory will produce anything at any price, but won’t drop below the cost price, still making a profit (in this case — at the expense of quality, of course).

This is why the least risky option is to first find a licensed agency with expertise in all things related to import-export and communications with Chinese suppliers, rather than just a supplier. It’s just a safety measure.

Overall, let’s put it this way: yes, working with China has its difficulties related to intercultural communication. But there is no serious danger of encountering fraudulent schemes when dealing with Chinese factories today.

Fact 4: Violating business etiquette rules is a serious mistake. What major error do many Russians make?

So, you’ve finally arranged a business meeting with your Chinese partner. A lot depends on this meeting. And so, you want to relax and get some rest before the business meeting tomorrow. But then the phone rings — the Chinese partners invite you to dinner. You’ve just arrived from the airport and you’re tired as hell. A quick shower, a snack — and hitting the sack. Normal Russian behavior, what’s the big deal? You politely decline, citing fatigue.

Know this — this is the moment when you’ve made an irreparable mistake.

Firstly, you didn’t take into account the main thing — all the most important decisions in China are made over food, during lunch or dinner, not in the official setting of an office. That’s the tradition. It’s sacrosanct and fundamental.

Secondly, you’ve offended the hosting party. And you’ve offended them quite seriously. Well, to the extent that it’s even unclear if your further negotiations have any real chance of success.

For the Chinese, these seemingly «trivial» matters are extremely important. For them, the rule is to warmly welcome the client. Very often, they themselves choose a hotel for you, pay for it, and feel very disappointed (without showing it) if you refuse, expressing a desire to stay elsewhere: «Oh, don’t worry, I’ve already sorted everything out in this regard, I have a place for you to stay.»

Don’t act like that, you eccentric laowai. It’s better to graciously accept the invitation and check into the room that has already been paid for you. By doing this, you will show that you appreciated the hospitality of the hosting party. Ten points to your credit.

Even if your Chinese business partners understand that you may not make purchases from them, they will still spend on your reception. For them, this is an investment in the client.

Fact 5: Direct communication shocks Chinese people

Yes, they are not used to communicating straightforwardly. Questions are not typically asked directly, and clear responses to such questions are not common. Everything is too subtle — you will have to guess a lot based on some nuances. To understand these people, you need to live in China for more than one year, get used to the local cultural peculiarities, and accept them.

All the things listed, including the special sensitivity in matters of hospitality, are part of the unique code of Chinese business etiquette. Following them means «saving face,» taking care of your company’s image. Image plays a crucial role for a self-respecting Chinese factory. That is why the Chinese market has been rapidly growing over the past decade.

Due to ignorance, you may make a blunder and not even realize that your Chinese counterpart feels as if you have hurt their image, causing them to «lose face.» This can affect business interactions.

So, it is not worth skimping on hiring qualified professionals for conducting high-level negotiations, translating technical documentation, and interacting with entities involved in the business chain — such as Chinese banks, logistics companies, etc. This helps to smooth out the complexities of intercultural communication and eliminates possible negative consequences.