If you want to know how easy it is to do business with China, then look no further than the Business Culture Complexity Index ™ (BCCI), a tool which provides some great insights for expanding businesses.
The BCCI uses a number of data comparisons to produce a single ‘ease of doing business’ score for the world’s largest 50 economies, culturally speaking that is.
Denmark is ranked the easiest business culture, whereas Nigeria is the most difficult.
So, with the BCCI tool as guidance, how easy is it for Westerners* to do business with China?
The BCCI ranks China in 20th position for business complexity and ease of doing business.
This means that, bar some challenges, it’s one of the easier countries to work with.
If we were to use a traffic light system to denote the level of ease, China would be categorised as amber.
Let’s break this ranking down by looking at some of the key metrics included in the index:
Trust in Others
China scores highly on trust in others. In fact, they rank at 5th place as one of the most trusting countries in the world.
From a business perspective, this is important as the more trusting a country is ranked, the more likely its people are to embrace the prospect of business relationships with people they do not know.
However, although there may be a general tendency to trust others, it’s important that Westerners planning to do business in China are aware that the Chinese rarely progress a business deal with people that they do not know well.
As such, if you visit the country then be prepared to spend much time meeting, dining, drinking and engaging in small talk with your Chinese counterparts.
You certainly shouldn’t rush the relationship as you may well give the impression that you are more interested in the business deal as opposed to the relationship which won’t go down well!
China ranks as one of the least religious countries in the world.
Although many Chinese follow Confucianism, Daoism and Buddhism, it is generally the case that religion and business are well segregated.
From a business perspective, levels of religiosity are important. Why?
Because, the more religious a country, the more likely people are to put their trust in other people of the same religion. In many ways, it can be more difficult to penetrate highly religious business settings and to gain trust.
Of course, this isn’t always the case however, – take for example the UAE, where despite religion being hugely important to the local Emiratis, the country is a multicultural hub.
On measures of ‘happiness’, China doesn’t do so well; ranking 43rd out of the 50 countries on the index.
When it comes to China’s overall ease of doing business score, this poor ranking certainly has a negative impact.
Why? Because, although at face value this measure may appear innocuous, it is important on many levels.
The happiness of a country says a great deal about key factors such as citizens’ general wellbeing, health, rights and the country infrastructure. Citizens of unhappy countries are more likely to experience poverty, poor health, limited social mobility and to have reduced rights.
Some of the underlying contributors to a lack of happiness may well influence ease of business on a broad range of levels. For example, those relocating to China for business, may find some elements of Chinese society are rather challenging or that they conflict with the home experience.
Depending on the nature of recruitment, this score may also have a significant influence on the mentality and engagement of potential workers / employees.
Predictably, countries that score low on happiness, also tend to score low on Human Development (HD) which measures factors such as standard of living, education and life expectancy.
As anticipated, China scores low on this measure (ranking in 38th position out of the 50 countries on the index).
However, although this score is low, China is a huge country and relocating expats / visiting business personnel, will experience significant discrepancies in levels of HD between the major cities versus rural areas and rich versus poor.
It’s fair to say that individuals visiting China on short business trips are unlikely to experience the more negative side of HD.
Another measure impacting China’s ease of doing business score relates to Corruption.
China scores fairly highly on corruption measures, meaning that corruption is more prevalent in Chinese business culture.
In many ways, this behaviour is expressed in the form of ‘I scratch your back, you scratch mine.’
Those venturing into Chinese markets, may, for example, find that they are expected to perform favours to get traction on their business efforts.
They may also find that the business environment is not always be transparent.
China ranks as the least egalitarian country in the index. This expresses itself in the strict hierarchy observed in Chinese business culture.
Whether the family, workplace or community, it’s fair to say that in Chinese culture everyone occupies a particular position within the hierarchy and has defined objectives and purpose.
It’s essential that those considering expanding into China appreciate this cultural nuance and take the time to understand the hierarchy and positions of those with whom they will be interacting.
The hierarchy will dictate the business setting greatly, such as the speed of decisions, based on the role of those with whom you meet, seating arrangements and the seniority of counterparts assigned to a meeting.
It’s also worth including at this point, that the multiple layers of hierarchy can also feed into high levels of bureaucracy.
It’s not always straight forward to get things done in Chinese business culture and there may be a number of people involved at different stages of a process.
It’s important however, that foreigners go with the flow and don’t become frustrated with what might seem like needless delays.
So, China - Easy or Difficult to Do Business With?
To summarise, we can observe that China is one of the easiest countries to do business with but it’s not without its challenges.
Although the Chinese are likely to be trusting and happy to entertain the prospect of international relationships, the country is less egalitarian than many Western countries, meaning that business structures and formalities should be observed if a good impression is to be made.
Those travelling to China should understand practices such as ‘favours’ and appreciate the way in which they might manage situations if confronted with this practice.
Individuals travelling or relocating to China should also be aware that the infrastructure and quality of life may vary greatly outside of the large cities with an obvious display of the ‘haves’ and ‘have nots’ which will greatly impact the traveller experience.
If you want to find out more about the BCCI data then click here.
Want to learn more about living and working in China?
Click here to see a preview of our China cultural training course which is aimed at business professionals travelling to China, or, communicating remotely with Chinese counterparts. If you would prefer live webinar training, customised to meet your needs, with one of our China training specialists then click here.
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*The data assumptions take a western centric position. Countries neighbouring China, or countries which share common cultural characteristics and preferences are likely to find China culture and business far easier to navigate than someone from the West.