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China standard of living has been levered up exponentially over the years that it’s now the one of the top few economies in the world. Through the decades, the standard living of China has been rising and consumers are changing their needs and wants. The Chinese no longer seek for basic needs such as food and shelter According to Maslow's hierarchy of needs, higher standard of living has fulfilled Biological and Physiological needs of the consumers thus the Chinese are moving up the level and demanding more compared to the past.

Hence, a lot of foreign investors in China are no longer just producing their goods in China. Most foreign companies are now marketing their products in China itself due to the large population demand. With a population of 1,313,973,713 (July 2006 est.), labor is not an issue in China. With a huge consumer base and increasing economy, many foreign investors are fighting for a piece of the China market.

Furthermore, the China government is encouraging more foreign companies to enter in the China market and certain regulations and procedures have been are no longer as stringent as before. With the government support, China received a total of 622.4 billion U.S. dollars in foreign direct investment from 1979 to 2005.

However, entering the China market is not an easy task. The government procedures in China are not easy to understand. Full of complexities and paperwork, many foreign investors are always so confused when dealing with the authorities. The Chinese have their own style of working which may irritate foreigners who are not familiar with the procedures here. Any complications with the government can lead to long delays with any business opportunities.

Therefore, the best way to prevent any complications with the Chinese government would be to engage a local party to help the foreign company with the administrative stuff. First of all, locals would not have any problems with any language barriers. Locals would be more familiar and comfortable dealing with the higher authorities. Furthermore, they would know the proper negotiation methods here in China.

The Chinese cherishes relationships among people. They believe that with good relationship comes trust which will lead to mutual success. Hence, the Chinese businessmen will ensure a strong and stable relationship with their business partners before carrying out any dealings with them. This way of doing business often causes conflicts among foreign investors and the locals. Foreign companies need to understand and familiarize themselves with the Chinese culture. If not, miscommunications can ruin any potential business deals and mess up the whole plan on China market entry.

Chinese uses the phrase “guan xi” to represent relationships of any kind. “Guan xi” is an important concept as the Chinese believe working with people whom you can trust can ensure a smoother business ride. Furthermore, it will be more relaxed and easier to communicate to business partners whom you have a close relationship with. The wonderful thing about “guan xi” is that even though the business parties involved are unable to continue working together, the parties will continue to maintain the relationship between them on a personal level. The Chinese do not believe that the end of a business contract ends a personal relationship. Thus, there are many companies in China who either have partners and employees whom they have a good relationship with.

However, many foreign companies do not understand why the Chinese would mix business with personal matters. One of the reasons could be that most foreign companies are from an individualist nation thus they are not used to mixing personal and business relations together. Hence, for foreign companies to invest in China, they would need to find either a local party or consulting firms to establish a network in China especially when negotiating with the locals and the government.

Alina Hoon is a consultant of Starmass International. Starmass provides professional consulting services to assist foreign companies in China market entry, China market research, competitor study and China market analysis till export to China. Visit more business resources at: www.starmass.com

Article Source: ArticlesBase.com - Understanding the Chinese Business Culture