Business success with China requires understanding beyond culture
Posted : Thursday, September 27, 2012
Doing business with China is not just about understanding
culture or language; successful corporations tailor their product
to suit local markets, and Australian businesses need to adjust to
this model, Western Australian Chinese Chamber of
Commerce, President, Khoon Tan, told a
CEDA forum in Perth.
Mr Tan advised companies to build a team which understands the
concepts of Chinese culture and have them located in China to build
"Patience is a big part of Chinese culture. Businesses plan 10
years ahead, so you have to be patient, have money and you have to
invest a lot into the relationship," he said.
He said a major element of Chinese culture is etiquette, mutual
trust and friendships, and you should never underestimate the
importance of relationships.
"One aspect of Chinese culture is the concept of face. It is
critical that you keep face, save face and show face when doing
business," he said.
He describes face as public perception, a person's social
role and self-esteem, and it has the potential to destroy or help
As part of the process, when a CEO or Chairman comes or goes to
Australia or China, they have to be met by their counterpart CEO or
Chairman, he said.
"When doing business with China, seldom say no; it is seen a
sign of disrespect," he said.
"Gift giving is also important and always give it some thought.
Never reject gifts."
ANZ Bank, Global Institutional Relationship Banking,
Managing Director, and Institutional Australia, Managing
Director, Cathryn Carver, said there are
developments that will create opportunities for Australian
She said 70 per cent of Australia's exports to China are now
coming from WA, with 80 per cent of Chinese investment being spent
"China is Australia's largest trading partner, export market,
source of fee paying students and tourists, and one of the largest
sources of direct foreign investment," she said.
Hong Kong has a total of $40 billion invested in Australia, she
Ms Carver said she was optimistic that Chinese demand for iron
ore will remain large in the medium to long term.
"We believe a slower but more sustainable growth (path) will
continue to benefit the economy," she said.
Ms Carver said ANZ's Super Regional Strategy, provides
a differentiated proposition, offering products and services for
those people and businesses trading and investing in the Asia
Pacific, Australia and New Zealand.
"We were the first Australian bank to achieve
local incorporation in China. We have been in mainland China since
1986 and we are one of Australia's largest investors in China," she
To understand China and the Chinese economy, Australia
China Business Council, WA President and KPMG, China Business
Practice, Chairman, Duncan Calder, said Australia needs
- Evolve to accommodate the emergence of China; and
- Invest time and efforts into skills to embrace
Chinese investment can play a valuable role in developing
sectors of the Australian economy, especially in rural and regional
areas, he said.
He warned Australia is no longer the destination of choice for
China, with increasing pressure from overseas.
Of Chinese businesses investing in Australia, Mr Calder said
most companies are supervised by China's State Owned Asset
Supervision and Administration Council (SASAC) which operates state
owned enterprises (SOEs).
As part of the changing model in China, he said SOEs focus on
economic and commercial performance and are used to:
- Facilitate structural change in China's economy;
- Acquire technology from foreign firms; and
- Secure raw materials from beyond China's borders.
Based on the transaction value, 95 per cent of Chinese
investment into Australia in the last six years came through
He said in Australia, China still owns less than one per cent of
foreign direct investment, compared to the UK or the US which owns
well over 20 per cent.
He said Australia is a long way from being swamped by Chinese
capital, and we need to promote that Chinese investment offers a
great opportunity for Australia.
Department of State Development, China, WA Regional
Director, Nathan Backhouse, said we need to develop a
WA-China policy around key sectors highlighted by China as
requiring development such as IT, renewable energy and new
materials, to ensure WA's current and potential advantages are
He said the history of our relationship with China has been a
marriage of mutual convenience, with WA by chance having one of the
commodities that China needs (iron ore).
He outlined that China is and will continue to be systematic and
structured in their approach to development because business and
economics is a subset of society.
He told attendees that China at every level of government
prefers a government-to-government relationship at least initially,
as it believes government is trustworthy.
"China has a top down structure and if they say it (a business
deal) will happen, it will happen. When working with China, you
must accept you are dealing with China on China's cultural terms,"
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