Sample Essay on Conducting Business in China

Conducting Business in China

Tan Pan, means discuss and judge in Chinese language.  It is a word for negotiation, where the procedures in China involve three major stages including pre-negotiation, post negotiation and formal negotiation (Ghauri and Fang 5).


The pre-negotiation state involves lobbying before Chinese government. The process is very significant for all foreign companies. Secondly, there is making of presentations where foreign company provides informative and highly attractive presentations as a crucial step to securing a formal negotiation session.

Building of trust is the third component of pre-negotiation session and the people of china have high regard for trust building especially in business dealings. This is additionally a stage that involves engagement in informal discussions.

Formal negotiation

This is also a crucial stage where different parties engage in exchange of persuasions and information. Formal negotiations often end up with agreements and concessions by parties involved. Signing of final agreements and concessions also have to be carried out before senior officers (hierarchy is highly valued).

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Post Negotiation

This is a stage that not only involves implementation but also creates new negotiation rounds. This stage is also intended to clearly address any changing trend after signing of the deal.

Procedures for closing the deal

Chinese people unlike from the West tend to employ a different procedure in making a business deal. Business deals in the west are governed by commercial law and as such, with a standard contract, which is then amended to fit in changing circumstances as well as the revised version that is signed by the parties.

In China, a formal or legal contract is considered irrelevant and inappropriate because it does not bear any sense of commitment. To the Chinese people, a contract may also be used to form a very important agenda but obligations often arise from the relationships. To them, a signed contract is only used as evidence of progress.

As a result, the procedures that were used for closing the deal do not necessarily end with signing of the contract. Additional concessions can also be requested (‘’Doing Business in China. ‘’1).

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