The document provides an overview of business culture and economic opportunities in China, emphasizing the importance of building trust and relationships before transactions. It highlights the transition of China's economy from low-cost manufacturing to consumer-oriented and service sectors, identifying sectors such as tourism, health services, and technology as rapidly growing. The text also outlines essential cultural considerations for foreign businesses, including the significance of 'face', indirect communication, and the importance of social relationships in negotiations.

1. Overview on China
Osvaldas Čiukšys
Director General of Lithuanian Confederation of Industrialists
Chairman of Lithuania – China Business Council
BMI
2016 04 19

3. China Moves Fast, But Some Things Take Time
• Building a 57 floor skyscraper in Changsha
only takes 19 day - building trust takes time
• There are two opposite ways of extending
trust
• To trust until given reason not to.
• To trust until there is enough evidence
of trustworthiness – which takes time.
• Relationship first, if successful, transaction
will follow
• The signing of the contract is the beginning
of negotiation
Mini Sky City in Changsha

4. • Economy in Transition
• Population Dividend is over
• Cheap Labour - no more
• Staffing challenges
• Manufacturing bifurcated
• Heavy manufacturing suffering from huge overcapacity & weak prices
• New consumer oriented, tech manufacturing, IT and automation are booming
• Service Sector now most dominant in GDP and employment
• Serving the needs of a new “middle class”
• Health, social services, safety net, quality of life, environment, entertainment, self
improvement
• Technology upgrade, Innovation, Consumption Oriented Sectors
• China growing exporter of capital/investment and technology
• China outgoing investment – seeks competitive advantages, technology,
brands, markets, resources and management teams
ECONOMY IN TRANSITION – OPPORTUNITIES EVOLVING
MACRO OVERVIEW

5. MACRO BACKGROUND: GDP GROWTH – SLOWING BUT STABLE
Expected annual GDP growth in 2016: 6 - 6.5 %

6. Infrastructure sectors are one of the main drivers of the growth:
investments into high speed train network 2016-2020: 538 billion $
6

7. GROWTH VERY DIFFERENT ACROSS REGIONS
SOME REGIONAL GROWTH RATES (%)
2015 H1201420132012
BEIJING HEBEI SHANXI LIAONING SHANGHAI JIANGSU ZHEJIANG ANHUI GUANGDONG CHONGQING GUIZHOU GANSU

8. LOOK AT WHAT CHINESE ENTREPRENEURS SEE AS OPPORTUNITIES
Elderly Services
Tourism Leisure
Web and IT Services
Pharmaceutical
New Energy
Environmental
Modern Logistics
High End Eqpt
New Materials
Biotech
Military Products
Education Training
Agriculture
Finance
New Energy Vehicles
Culture Creativity
Wealth Mgt Svc
Energy
Electric Eqpt
Auto
Instruments Gauges
13th FYP Entrepreneur Favored Sectors
SOURCE: DRC Enterprise Survey System

9. Fastest Growing Sectors
 Tourism – domestic and overseas
 Entertainment
 Health services and products
 Service for aging – assisted living
 Education – Self improvement services
 Delivery services
 IT Services
 Robotics – Automation
 Technology and Scientific services to industry
 New Energy
 New Energy vehicles
 Environmental services

10. Biggest Challenges
for foreign companies in China
10

11. The Government Way or the Highway
• Compliance with Chinese laws
and regulations is paramount.
• Pay attention to the Five Year
Plans. Companies that wish to do
business in China must
understand the government’s
priorities and modify their
strategies accordingly.
• Aligning with government
interest will benefit the business.
GlaxoSmithKline
September 2014, a Chinese court found the pharmaceutical company
GlaxoSmithKline (GSK) guilty of bribing hospitals and doctors to get their products on
hospital lists. GSK was fined $490 million.

12. China going abroad:
One Belt One Road initiative

13. TIP: Always offer your adversary a graceful way to bow out of a heated situation
NB! You make others loose face by making them
look stupid or being forced to back down in front
of others.
 For this reason, the Chinese will not directly
say ”no” to you. Instead, ambivalent answers such
as ”Perhaps”, ”I’ll think about it”, or ”We’ll see”
usually mean ”NO”.
Intercultural Awareness
The concept of ”Face”
”Face” is an extremely important concept to understand. Face
can be described as a person’s status or self-respect. Saving
face is crucial to Chinese people, and causing embarrassment
or loss of composure, even unintentionally, can be disastrous
for business negotiations.

14. Intercultural Awareness
Business equals pleasure
Forming a personal relationship in your business dealings
is a crucial aspect of Chinese business culture. Part of this
involves in participating in social events, such as evening
banquets. Understanding the correct etiquette at such
events is important in order to impress your host.
Eating ONE person orders, ONE person pays.. The host!
Often, the host will try to impress you by ordering plenty of food - sometimes more
than 20 courses! The best policy is to lightly sample each dish, and leave some left on
your plate once you are finished (to indicate that the host has ordered enough food).
Although some Chinese dishes (such as dog, stomach, pig or chicken feet) may
seem ”unappetizing” to us, the Chinese people very much identify with their food,
and take great offence to signs of disliking from foreigners.
Drinking Toasting, usually with beer, is an important part of any Chinese business dinner.
The more you drink together, the closer the relationship.
The Chinese very much enjoy testing the ability of foreigners to handle their alcohol.

15. Intercultural Awareness
Business equals pleasure
Forming a personal relationship in your business dealings
is a crucial aspect of Chinese business culture. Part of this
involves in participating in social events, such as evening
banquets. Understanding the correct etiquette at such
events is important in order to impress your host.
Seating Wait to be seated, as there is a seating etiquette based on hierarchy in chinese
business culture.
Generally, the seat in the middle of the table, facing the door, is reserved for the
guest of honour. The host sits directly to the left. Everyone else is seated in
descending order of status.
Venue Generally, the chinese are not great experimenters when it comes to their diet.
Better to take your guests to a good Chinese restaurant rather than, for example,
the latest French restaurant opening. They’ll appreciate it.

16. Intercultural Awareness
Informal conversation
• Do not use terms such as ”Red China”, ”Mainland China” or ”Communist China”.
• Avoid mentioning Taiwan. If the subject comes up, never refer to this country as ”the republic
of China” or ”Nationalist China”. The most appreciated term is ”Taiwan Province”.
• Chinese people enjoy facts and figures. You can expect to be met with questions about
statistics/facts about your home country.. – Perhaps a good idea to brush up on this beforehand!
• Finally, before your visit, it will be a good idea to prepare yourself by...
Studying aspects of Chinese culture, history, art, and geography
Learning a few words in Chinese
... your initiative will be noticed and appreciated!

17. • Trust is low in society but high within family and group.
• People are reluctant to do business with strangers. Direct approaches yield little
results.
• Relationship first, if successful, transaction will follow.
• Family or group oriented; Self seldom exists; relationship does.
• Prefer implicit, indirect, or high-context communication.
• “Face”, harmony and avoiding confrontation is more important than honesty and
frankness.
• Yes may not mean yes.
• Effective communication and problem-solving require frequent face-to-face
contacts.
• The signing of the contract is the beginning of negotiation.
• Lawyers seldom show up during face-to-face negotiations.
• A reliance on interpersonal relationship rather than contracts to resolve
disagreements. Important to maintain harmony.
Relationship-focused Culture

18. A B
A
B
 Flexibility, not scheduling, is key
 Doing many things at a time
 A network-based business style
 Always find a way and never give up
 Planning and scheduling
 Focusing on one thing at a time
 A project-based business style
 Admit if something does not work
P-Time (polychronic) M-Time (monochronic)

19. Other cultural differences...
VS.

20. ME

21. Lifestyle

22. Problem Solving

23. The Boss

24. Anger

25. At a Party

26. At the restaurant

27. Contacts (guanxi)

28. The Child

29. Queuing

30. Sunday at the street

31. • Only senior members of the negotiating team will speak. Designate
the most senior person in your group as your spokesman for the
introductory functions.
• Business negotiations occur at a slow pace.
• Be prepared for the agenda to become a jumping off point for other
discussions
• Chinese are non-confrontational. They will not overtly say 'no', they
will say 'they will think about it' or 'they will see'.

32. • Chinese negotiations are process oriented. They want to determine if
relationships can develop to a stage where both parties are comfortable
doing business with the other
• Decisions may take a long time, as they require careful review and
consideration
• Under no circumstances should you lose your temper or you will lose
face and irrevocably damage your relationship
• Chinese are shrewd negotiators
• Your starting price should leave room for negotiation.

33. LITHUANIA – CHINA BUSINESS COUNCIL UNDER THE AUSPICIES OF LPK
Web-site: www.lt-cn.org
Address: Vienuolio str. 8, Vilnius
Chairman of the Council Osvaldas Ciuksys
mob. +370 610 60771, E-mail: osvaldas.ciuksys@lpk.lt
Director for Business Councils Zilvinas Abaravicius
mob. +370 616 38619, E-mail: zilvinas.abaravicius@lpk.lt

34. Xie Xie