Unlike western countries with a relatively “low context” culture, China is of a typical “high context” culture. While low context cultures tend to be explicit, individualistic and goal-oriented, high context cultures are more implicit, group-oriented and relationship-building. They also use face-saving techniques to avoid embarrassing overt capitulations. Therefore, foreign party should pay special attention to the non-verbal communications given by the Chinese party when their attitudes appear to be ambiguous, which may indicate that they have other concerns that cannot be discussed on the table (e.g., political concerns, internal conflicts, etc.). Under this circumstance, foreign party should refrain from pushing Chinese party to give a clear answer on certain questions in the meeting; instead, they should rather hold the questions to a private discussion.
High context culture also prefers a structure agreement with general principles and some key business terms rather than a bunch of specified provisions. Chinese people’s mindset is to concentrate on key business terms such as price and payment, and not to spend much time on minor issues (it is reasonable to some extent). They are usually reluctant to review a contract of more than 15 pages; while a standard western style Share Purchase Agreement may have many more pages. Therefore, it is important for both parties to make some concessions on the contract formality issues. Practical experience shows that a contract of 20-30 pages may be more acceptable to both parties.
In addition, as Chinese people prefer building a long-lasting relationship before doing transactions, foreign party should be patient with the process of the deal. In western business mindset, time and efficiency is vital in transactions; but in Chinese business mindset, time is a testing water of faith and trust, and “patience” is valued as a good characteristic. As such, foreign parties sometimes do not need to insist on a rigid deadline, or to express too much concerns about the timing pressure, which may become leverage to Chinese party.