Manufacturing Business Operations in Beijing China

Beijing

The population of Beijing is somewhat homogenous in that the people are almost entirely Han Chinese, but the city does act as a magnet for Chinese from around the country. There can be significant cultural and even linguistic differences between Chinese from different parts of the country. While the city is 96% Han, there are significant minorities of Manchu, Hui and Mongol (Beijing Welcome, 2012), in addition a foreigner population for which estimates vary significantly but is well over 100,000 (Sina.com, 2010). The primary language spoken in Mandarin. All Chinese are taught the Beijing dialect (Putonghua) in school, so even migrants from other parts of the country should be functional in Mandarin. Most long-term foreigners in Beijing also speak Mandarin.

In addition to being the political and cultural capital of China, Beijing is one of its most important economic cities. The city's economy is rapidly growing, and 71.3% of the city's GDP comes from tertiary (service) industries. The financial industry is one of the largest sectors, along with real estate, automobile production and sales, pharmaceuticals, IT, and outside the city there are some heavy industries as well (Beijing Travels.com, 2012).

Most businesses in Beijing are small and retail in nature. Among the larger firms, there is a split between public and government businesses. Even those businesses that trade on the stock exchange are often subject to strong regulation from the government, so private industry does not have the same freedom to practice its business as a Western company would have.

In general, workers' rights in China are poor. There are trade unions, but the government plays a strong role in the activities of the unions and in ensuring that conflict between union and business is minimal. For example, the government and one of the largest unions issued a new plan together to collect more funds from enterprise to go to a worker's reserve fund (Walsh & Lin, 2012). With weak enforcement of labor codes, there are no set rules with respect to hours or pay. A China Daily report showed that average pay outside of the private sector was •37,147 in 2010, which equates to $5,887 at current exchange rates (People's Daily, 2011). Workers in Beijing often make considerably more. The method of payment would be either in cash or to a bank account, not much different than back home. The method of pay would be different for a U.S. employees assigned to China. Such an employee would likely need to take pay at a U.S. bank and then withdraw it. A stipend could also be paid by the local Chinese operation so that the employee has some local money to cover living expenses.

The pace of technological change is rapid in China. In general, Beijing is one of the more developed cities in China, and China is closing the gap on the West quickly. That said, there still remains a gap between what Chinese companies are capable of and what Western companies are capable of. Beijing, as noted, is becoming something of an IT hub, and this is in part facilitated by the large number of creative people in the city.

There are a number of cultural considerations that come into play when doing business in China. Status is something that comes with seniority in Chinese society in general and in business in particular. Seniority puts people into leadership positions, with the attendant perks. The most important thing to know about seniority in Chinese business culture is that the senior people are the only ones who are empowered to make decisions. In addition, they expect that they will deal with people of equal stature. Thus, sending a junior executive to deal with a CEO in China will likely cause insult.

As with most East Asian countries, cooperation is prized over competition. The society is not particularly individualist, especially compared with American society, so it is important to remember that social order, balance and cooperation are more important than "winning" or personal glory. The discussions held at business meetings differ as well because of this. In general, Chinese engage in business meetings to gather information, then take that information back to achieve consensus. Thus, they are unlikely to make a deal at a meeting and sign that same deal. In general, the negotiation process in China is longer and more formal than in the U.S.

Gift-giving is also a part of Chinese business culture. It has been advised that gifts are for the organization, not specific individuals (Hays, 2008). In general, the gift should reflect the status of the business deal at hand, and should take into account other Chinese gift-giving customs like "refuse thrice" and using red wrapper. In addition to gift-giving, socializing is part of the business culture. The point of this is to build the relationship before engaging in business. There is expected to be some small talk, and perhaps even a meal and drinks. A foreign businessperson in Beijing can expect to be subjected to dinner nightly.