• Australia
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• China
• India
• Japan
• Mexico
• Russia
• South Africa
• South Korea
• Spain
• United Kingdom

International Resources: Global Market Profile: China

As part of its commitment to providing its members with market analysis and insight, PMA has compiled the following information about China from Attaché Reports submitted by the U.S. Department of Agriculture’s Foreign Agricultural Service, as well as the CIA World Factbook, embassy sites, and business etiquette reference guides.

Entering the Chinese Market

It is important to build a good relationship with Chinese business people. Working through an intermediary is crucial if you do not have a contact within the company. Intermediaries will help build relationships, because the Chinese do not like working with companies they do not know. This liaison (individual or company) should make formal introductions and be able to vouch for your company’s reputation and products. Intermediaries are also used by your business counterpart to ask questions in which they are uncomfortable asking. It is a good idea to present your business associates with written information regarding your company (in Chinese) prior to your first visit.

Outlining agendas for business meetings is a useful tactic. Often times, your Chinese counterparts will try to sway meetings toward personal agendas. By outlining what you would like discussed during formal meetings, it will help you and your associates remain on track.

Businesses in China prefer face-to-face meetings rather than phone calls or e-mails. Multiple trips will be needed to conduct business and it is common to use initial trips to establish a good rapport. The Chinese view foreigners as representatives of their company, not as individuals. Meetings normally begin with small talk to help the Chinese form relationships. Good topics of conversation include sports, Chinese food, or places to visit. Do not discuss religion or politics. If attending a business or personal lunch or dinner, do not discuss business, because these meals are used to further relationships and getting to know one another.

Business hours vary with season and location, but are normally between 8:30 a.m. to 12:00 p.m. and 1:00 p.m. – 5:00 p.m. Food and meals are a central part of Chinese culture. Meals are normally anytime between 12:00 p.m. and 2:00 p.m. During this time, it is common for almost everything to shut down, including phone and message services.

Avoid planning business trips for the key Chinese holidays. Days or weeks to keep away from include October 1 (Chinese National Day or Golden Week), May 1 (International Labor Day or May Day) and the Spring Festival (Chinese New Year, which is based on a lunar calendar and falls in mid-January to mid-February, depending on the year). Chinese National Day and International Labor Day are both week-long holidays, and the Spring Festival lasts at least two weeks. During these times, much of the country shuts down and the transportation networks are overloaded with people heading for home or back to work. U.S. exporters are also discouraged from visiting Guangzhou during the biannual Canton Trade (Export) Fair (April 15-30, October 15-30), which features mostly light industrial export items. Hotel and restaurant prices double or triple during the fairs while traffic jams worsen. Meetings are difficult to arrange, and transportation in and out of the city is booked well in advance.

There is no gender bias in Chinese business culture. However, females do not drink at meals.

It is a good idea to learn about Chinese culture and a few phrases in Chinese. Not only does it show interest in China, but also it shows a commitment to your business relationship. Useful Chinese Expressions include:
Hello . . . . . . . . . . . . Nee Hao
Hello (honorific) . . . . .Nin hao
Thank you . . . . . . . . .Shay shay
Cheers (toast) . . . . . . .Gan pei
Goodbye (honorific) . . Jai jian

Gift giving is becoming more common in most business settings and expected (for the hostess) if invited to a Chinese home. Present gifts with both hands, and receive them with both hands. No gift should be overly expensive, because it can be perceived as a bribe.

Lucky numbers are six and eight (especially in a series, such as 66 or 888). Giving gifts in sets of 6 or 8 is always a good idea. Gifts are not opened when received. It is also a common practice to refuse a gift three times in Chinese culture. If your counterpart refuses the gift, offer it again. Once the gift is denied a fourth time, stop offering it, because there might be an undisclosed reason your counterpart cannot accept the gift.

It is a good idea to offer gifts on behalf of your company to your counterpart’s company. Doing so will eliminate hurt feelings, thoughts of bribery, and embarrassment. Giving gifts to individuals should always be done in private to avoid embarrassment. If you are giving gifts to multiple people, never give the same gift to individuals of differing status. Also, if there is a particular person you wish to give a gift to for helping you conduct business, do so in private and state it is a token of friendship. Good gift ideas include a nice pen and pencil set, a banquet in your counterpart’s honor, or something representing your company.

Never give a clock, handkerchief, umbrella, straw sandals, a stork or a crane or white flowers, specifically chrysanthemums as a gift. All of these signify tears and/or death. Do not give sharp objects such as knives, scissors, or cutting utensils; they would signify the cutting or severing of a relationship. The number four is an unlucky number, so avoid giving gifts in sets of four.

China is the world’s largest fresh fruit and vegetable producer. Half of all the world’s vegetables and melons and 19% of the world’s fruit (2005) are grown in China. According to data from Rabobank and the United Nations, China's fresh produce exports totaled $7.2 billion in 2006 and made up 7.2% of global trade in fruit and vegetables. These statistics make China third in global exported fresh produce.

China’s main vegetables commodities are asparagus, spinach, garlic, tomatoes, cucumbers, and gherkins. Major fruit commodities consist of watermelon, persimmons, pears, mandarins, apples and plums.

Even though China is the largest fruit and vegetable producer, only 2% of China’s fresh produce is exported. China is still one of the top exporting countries of fresh fruits and vegetables due to the quantity of fresh produce grown yearly. Japan, Russia, South Korea, Indonesia, and the U.S. are China’s largest produce export markets; whereas the European Union is one of China’s main export competitors. Countries in the Southern Hemisphere have an advantage exporting to China due to counter-seasonal produce. Thailand, the U.S. and the Philippines are the top countries that import to China.

Currently agriculture counts for 11.9% of China’s GDP and 45% of the country’s labor.

Doing Business in the Chinese Market

First impressions are very important. Some differences are simply due to the language barrier; while others are due to differences in deeply held traditions and practices. If you maintain a polite, patient and professional manner, the likelihood of committing a serious faux pas will be greatly diminished. To help bridge the gaps, we suggest that you:

• Dress professionally and conservatively. Women should wear a suit, but avoid high heels and short sleeves. The Chinese frown on women revealing too much.
• Prior appointments for meetings are necessary and should be made far in advance and preferably in writing.
• Punctuality is required at all meetings. It is common to arrive on time if not early for all functions in China.
• Status is important in China, so when entering a meeting, the individual with the highest rank should enter first followed by the next highest and so on. This is also how you will be seated during meetings.
• Provide written material of all presentations in both English and Chinese. Be sure to have enough copies, because everyone involved in the meetings will want a copy.
• In China, a nod or bow is often the most common from of greeting; however, your counterpart might offer his or her hand for a handshake. If a Chinese businessperson does not look you in the eyes, it is not a sign of weakness, but rather due to the fact they are unaccustomed to shaking hands.
• You greet the highest ranking person first, and use honorific titles where applicable.
• Business cards are exchanged at the very start of a meeting. Try and have one side translated into Chinese and printed in gold ink, because it is a promising color. Keep cards in good condition – a tattered card will reflect badly on you.
• Cards are presented with the text facing your counterpart and with both hands; they are also received with both hands. Never write on anyone’s business card.
• Look at all business cards when they are handed to you. It is common to leave cards out on the table in front of you during a meeting, but be sure to collect all cards before departure. It is considered proper to carry business cards in a card holder, not your wallet.
• Pay attention to body gestures, tone of voice and facial expressions because communication styles tend to be tuned to people’s s feelings.
• Confrontation is generally avoided in order not to jeopardize another’s honor or dignity (face) – it may therefore be necessary to read between the lines in order to fully understand what is really meant.
• In China, face is extremely important. Face means honor, good reputation, or respect.
• You can either give face or lose face. It is critical you avoid losing face or causing the loss of face at all times, because losing face can result in an immediate termination of relationships.
•  There are four types of ‘face’:
  1) Diu-mian-zi: this is when one’s actions or deeds have been exposed to people.
  2) Gei-mian-zi: involves the giving of face to others through showing respect.
  3) Liu-mian-zi: this is developed by avoiding mistakes and showing wisdom in action.
  4) Jiang-mian-zi: this is when face is increased through others, i.e. someone complementing you to an associate.
• The decision making process is slow, so be patient.
• It is a good idea to bring your own translator to meetings, especially if you wish to discuss technical or legal matters. Always brief your translator prior to meetings.
• Meetings allow for all parties to dominate the floor, and discussion might seem irrelevant. However, pay attention because your counterpart may be expressing fears.
• During meetings, cell phones ring often, but do not ask your counterpart to silence their phone, as this will cause a loss of face.
• Presentations are a good medium for meetings; however, avoid color, because in China, colors have important meanings, which can hurt a presentation/business relationship.
• During negotiations, only the most senior members talk.
• Negotiations are extremely slow and you should never lose your temper. It will cause a loss of face and the end of your relationship.
• During all meals (business or personal), you are not to discuss business, but rather become more acquainted with one another.
• While attending a business meal or a meal at your counterpart’s home, which is a great honor, you should remove your shoes before entering the house.
• Wait to begin to drink and eat until the host starts.
• The host will give the first toast, after which you will normally toast them back.
• It is customary and considered polite to taste all dishes offered to you. Never take the last piece on a serving plate. Also, you should leave some food on your plate when you are finished to show you have had enough.
• If using chopsticks, never place them standing straight up it reminds the Chinese of a funeral. Do not drop chopsticks either, it is considered bad luck. 
• The Chinese point at objects with an open hand instead of the index finger. It is considered rude to point while speaking.
• You beckon someone with your palm facing down. Avoid beckoning with your index finger facing up.

Consumer Preferences, Tastes, and Traditions

Chinese consumers are conservative and price sensitive. Cost is not an issue if money is being spent on children or gifts. Food aimed to be used as gifts, such as fresh fruits can be sold at higher costs. Higher income families look for brand names and food from reputable venues. China’s middle class grows larger every year, and so does the population’s disposable income. The urbanization of Chinese consumers is the main reason quality food, luxury goods, modern retailing, and modern logistics are becoming more important in China.

The urban Chinese consumer is more aware of food safety, and will spend more to ensure their food meets international standards. Quality and price have always been the main selling points for the Chinese, but slowly price is decreasing in importance due to desire for higher quality or healthier foods. In China, there is a taste for fine foods and uniqueness. Product consistency is also important to the Chinese buyer. In addition, freshness is always a major component in Chinese food preferences.

China’s youth is more willing to accept Western foods and styles due to more exposure to Western society. Also the market sector is shifting from mom and pop shops to supermarkets and hypermarkets. Vegetables are still overwhelmingly purchased at wet markets (comparable to a farmers market) while fresh fruit is increasingly being purchased at supermarkets. Supermarkets that sell fresh produce are leading to a high increase in the consumption and circulation of fruits and vegetables.

Income levels affect fresh fruit and vegetable consumption. According to statistics collected by Rabobank, the higher the income the more fresh fruits and vegetables are purchased. It was also found that lower income households purchase more vegetables than fruit, and as income levels rise so does fruit purchases.

Export Business Reminders

• Before coming to China, use the many sources of information, for example, the Foreign Agricultural Service, state agricultural offices, and state/regional trade organizations.
• Build at least a minimum team within your company to help in the Chinese market.
• Use metric terms.
• Ensure that all sales documentation is correct.
• Be patient regarding requests for documentation, ingredients lists, production process, and quality assurance.
• Respond to such requests with diligence and in a timely fashion.
• Use letters of credit to reduce risk.
• Hedge export values with your U.S. bank if you are concerned about exchange rate risk.
• Set up wire transfers for payments.

Food Standards and Regulations

All imported goods must be labeled in Chinese. The food labeling regulations are located in the GAIN Report CH1043. You can find a brief summary on page 2 of the report. Chapters 5 and 6 cover marketing and labeling, while chapter 8 discusses the requirements.

Food labeling must be verified and approved with a “Certificate of Import-Export Food Labeling” by the State Administration for Entry-Exit Inspection and Quarantine of the People's Republic of China (SAIQ) headquarters. SAIQ’s main functions are to check the import licenses of civil-use imports subject to the import license system, take responsibility for entry/exit animal and plant quarantine and the inspection of the sanitation and quality of foodstuff being exported or imported, to implement statutory inspection of imports and exports, and to control GSP Form A and certificate of origin.

Advantages/Disadvantages to doing business in China

Information: Import/Export

Agricultural imports from all countries (2004, in millions): $1,166, U.S. market share: 14%.

Fresh vegetable imports from all countries (2004, in millions): $4,048, U.S. market share: 4%.

Fresh fruit imports from all countries (2004, in millions) $6,189, U.S. market share: 16%

U.S. Exports to China

*Calendar Year and Year-to-Date Comparison (In Thousands of Dollars)

U.S. Imports from China

Trade Agreements

The United States and China do not currently have a free trade agreement. Both countries are members of the World Trade Organization, which is one of the main trade mediums between the U.S. and China. China joined the World Trade Organization (WTO) in 2001. After China’s entrance into the WTO, trade barriers were reduced between the U.S. and China. Prior to 2001, China had quarantine restrictions on U.S. apples, plums, and other stone fruits. However, after China joined the WTO, these restrictions were evaluated, and in 2005, China began allowing U.S. plums, apples and stone fruit to enter the country without quarantine restrictions imposed on the fruit.

China's policies on agriculture and agricultural trade have changed dramatically during the past 20 years, reducing the role of government intervention and centralized planning while increasing the role of market forces. China has become the U.S.’s fourth largest agricultural trade partner in recent years due to policy changes and WTO members.

Visit http://www.fas.usda.gov/itp/china/us-China.asp to listen to various U.S.-China trade discussions.

Annual Exporter Guide for China (2005)

http://www.fas.usda.gov/gainfiles/200511/146131505.pdf

Information Regarding:
a) export business tips available on pages 7-8 of the guide
b) market sector trends available on pages 8-11 of the guide

Chinese Related Links and Resources

Currency - the currency of China is the Yuan. Use the free currency converter to compare to dollars, British Pound, etc.

Weather - visit Yahoo!'s up to date Weather for China.

News - check out all the latest Google news on China.

Intercultural Know-How - use the Intercultural Business Communication tool or read doing business in China.

Dialing Code - the international dialing code for China is +86.

Time - China is +8 hours GMT. Get the time in China now.

History - read about the long and rich history of China.

Government Resources

• Chinese Ministry of Agriculture: www.agri.gov.cn (available here in English)
• US Embassy and Consulates in China:
  http://beijing.usembassy-china.org.cn/contact_us.html
• U.S. Missions in China (see Contact Us link at bottom of page):
  Chengdu
  Guangzhou
  Shanghai
  Shenyang
  VPP Zhengzhou
• China does not have one definitive food safety board or regulations committee. The problem with food safety regulations for the Chinese government is matrix muddle. There are about half-a-dozen bureaus in China that are responsible for food safety. The overlapping responsibilities mean that there is no one agency accountable; therefore, no agency can take concrete action if and when a problem occurs.
• Background Notes on China