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1. When Yes Means No (or Yes or Maybe) Understanding Chinese culture and the implications for doing business there

2. Agenda History Language Society Education Food / Dining Core Concepts Differences Practical Tips

3. A Quick History Lesson Ancient civilization - over 5000 years of history Ruled by successive dynasties until 1912 Made many great discoveries in science Constructed amazing landmarks Torn apart by foreign occupation and civil war Reunited by Mao Zedong in 1949 Mass disruption in 50’s and 60’s which crippled education system and economy Reformed by Deng Xiaoping who founded SZ Economic growth began 1990s

4. Language Chinese is the most widely spoke language in the world (and arguably the most hard to master) Many regional dialects, official one is Mandarin (Cantonese used in HK & south) Chinese characters evolved from hieroglyphs Over 40,000 in total. An educated person knows ~ 6,000 Leads people to think in terms of big picture Spoken Mandarin has 4 tones which give a word completely different meaning (Cantonese has 9!) Chinese pay more attention to the way something is said rather than what is being said (subtext)

5. Society China contains 56 distinct ethnic minorities Han Chinese make 92% of 1.3 billion population Officially atheist but roots lie in Confucianism, Buddhism and Taoism. Christianity rising. Family is the basic unit of Chinese society Both parent work, grandparents bring up children Children look after parents in old age People should show deference to elders

6. One Child Policy Introduced 1978 to curb massive growth Widely supported by population Prevented over 300 million births Punished through fines & loss of benefits Implicated in forced abortion & female infanticide “Little Emperor” condition has emerged Sons generally preferred over daughters 120 boys born for every 100 girls. Big problem.

7. “Harmony” Hu Jintao promotes the creation of a “harmonious society” = middle class society News & internet still heavily censored by Chinese government - no freedom of speech To say "my website has been harmonized" is to say "my website has been censored“ online Chinese websites directly censored. Many foreign websites blocked (e.g. YouTube…)

8. Education Until 1905 Confucianism was the educational doctrine and > 80% population was illiterate After 1905 new system was introduced and today literacy rate > 90% In 1977 fiercely competitive College Entrance Exam re-introduced - about 20% of students go to university More than 5 million students graduate each year! Chinese education focuses heavily on passing exams Students can memorize huge amounts of information but often lack the ability to critically think, develop their own opinions, and engage in creative activities Facts are learnt, but rarely questioned

9. Food / Dining Dining is a key component of Chinese culture Each region has its own distinct local cuisines Dining table is round allowing everyone to engage in equal conversation Specific foods have different meanings and must be eaten on various occasions, such as festivals, weddings, or to welcome a guest Heavy drinking is often a part of doing business. Chinese spirits are very strong!

10. Mianzi Concept meaning “face” or “self image” Similar to social status or reputation Integral to personal and business dealings Maintained and enhance by giving to and receiving from others in words and actions Extends from individual to families and even entire nation To make someone loose face is big dishonor

11. Guanxi Meaning “connections” or “relationship” Basically “you scratch my back, I’ll scratch yours”, similar to networking but goes further A persons identity in a group is very important – rarely are people treated on individual level Relationships should be developed and nurtured over the long term Favors must be repaid at greater value in time

12. Spheres of Trust Extended Family (Most Trusted) Strangers Relationships between family, friends and business associates are often closely interwoven. Anyone outside is considered a stranger.

13. Zhong Yong Known as “Doctrine of the Mean” or “Golden Rule” – applied to all areas of life Involves balancing ones position in a group to maintain conformity or sense of harmony Considered ideal way of living In the workplace one should be seen to be neither too ambitious or lazy At home one should respect their parents and keep their spouse/children happy

14. Yin Yang Shows how opposing forces are interconnected and interdependent in the natural world E.g. Dark and light, female and male, honor and dishonor, good and bad, strong and weak The ever turning symbol underlines the belief that things can change and always will Explains why seemingly contradictory theories and principles are able to coexist in harmony In traditional Chinese medicine, health is also represented as a balance of Yin and Yang (anatomy and physiology)

15. Differences 1

16. Difference 2 Remember that the above are general impressions to keep in mind, there will always be exceptions to the rule.

17. Practical Tips 1 Spend as much time as you can in China to learn and form relationships. Remember that western logic does not apply and a long-term patient approach will be required. Never openly criticize, ignore or make fun of a person in front of others (even jokingly). When discussing individual performance, emphasize good points before bad ones. Be very specific when assigning tasks, defining schedules, and setting expectations. Any ambiguity could be used as an excuse for inaction or misinterpretation. Incentives of compensation (money), promotion, or the potential to gain face (mianzi) are all good motivators. Encourage and reward the type of behavior you wish to build (e.g. creative thinking, delegating decision making etc.). Hiring good local people is often the key to success as they will know best how to operate within the local environment, but be sure that they are trustworthy before entering into any partnership. The Chinese don't consider contracts as seriously as in the west, so be very explicit about the terms of your engagement.

19. Chinese may ask you personal questions or make observations about your age, income, religion or appearance but don't take it personally. Likewise Chinese rarely say "please" or "thank you" as this is seen as unnecessary formality between friends.

20. Dining is about showing respect and hospitality for the guests and is often used as an extension of the boardroom. The host should propose the first toast and this should be reciprocated later on by the guest. Seating may be arranged in order of seniority also.

21. Be aware that some colors have different meanings in China, the most obvious being red which symbolizes prosperity/luck in China but warning/danger in the west. This is important to take into account when publishing or designing products.