Over the past decade, Shanghai’s relentless energy and progressive business environment have helped fuel double-digit growth. The cosmopolitan city’s prime location (equidistant to Hong Kong and Beijing) and daily nonstop flights from several U.S. cities have made it an irresistible launch pad into the Chinese market for multinationals; more than 300 of the Fortune 500 have investments in Shanghai.
“Our members feel very optimistic in the long-term about doing business here,” says Brenda Foster, president of the American Chamber of Commerce in Shanghai, which boasts 4,035 members from 1,700 companies. “They cite Shanghai’s strong track record of growth, the welcoming attitude of the government, the growing financial sophistication and ongoing infrastructure improvements.”
Shanghai has long been the Middle Kingdom’s most international city. A glimpse at its bustling riverfront provides a quick primer on Shanghai’s role as China’s historic center of commerce. The city is divided by the Huangpu River, a vital tributary of the Yangtze River and the conduit for billions of dollars in cargo that pass through the city’s ports. On the western shore lie the stately buildings of the Bund, Shanghai’s Wall Street of a century ago, where Western tycoons dominated commerce in this open port city until World War II. To the east lies the Pudong New Area, where the rice fields from decades past have been replaced by futuristic skyscrapers that serve as Asia’s headquarters for scores of multinational corporations.
Yet appearances can be deceiving. “Shanghai is one of the most dynamic, exciting cities in the world,” Foster says. “It has a cosmopolitan feel, but that can be misleading. Although many Westerners are doing business here, they still must operate within the context of the Chinese culture.”
Making the Connection
In the Chinese culture, guanxi—which translates as “connections” or relationships”—is crucial for success. Westerners must invest the necessary time to build trust, open lines of communication and develop long-term relationships with their Chinese business partners.
“Be patient—that is the hardest thing for Westerners,” says Diane Long, director of ALC Advisors and a 20-year Shanghai resident. “Don’t come in with three days to make a decision; you’ll feel under pressure to make decisions that you may not be comfortable with and regret later. Ensure the person you’re talking to has the real power.”
Business meals are vital in building guanxi, so take every opportunity to socialize with your Chinese counterparts. The Chinese are generous hosts, and they consider it their duty to care for visitors. “Eating with your Chinese business compatriots is very important,” Long says. “It will be a topic of conversation in the office if a visitor doesn’t make time for any personal connections.”
In many Shanghai offices, Mandarin will be the default language. English might be spoken at multinationals, but you may need a translator for local vendor and factory visits, so inquire beforehand. Don’t overschedule your day, as business meals run long and Shanghai’s horrendous traffic can confound the best-laid plans. Book your hotel close to your clients’ offices to minimize commuting woes.
Office dress is typically formal, with a suit and tie for men, a skirt or slacks for women. Expect to exchange business cards immediately upon meeting someone. Accept the card with both hands and treat it respectfully.
Respect is another cornerstone of the Chinese culture. If your Chinese partner can’t answer your question or has a problem, he or she is unlikely to tell you in order to save face. So it’s common to hear mei wenti (“no problem”), even when there are problems. Be prepared to ask detailed questions until you’re satisfied that an understanding has been achieved. Then follow up in writing with an email or memo to confirm that both sides heard and understood precisely the same terms.
“If you rush through things, or if you just go with the flow, you’ll make a lot of mistakes,” says John Hutton, a retired partner at PriceWaterhouse-Coopers who spent 15 years in Shanghai. “It takes a lot of inquiring, asking and thinking things through. People underestimate the work it takes to get things done and how diffiult it can be.”
Fortunately, it’s easier to tackle these common cultural challenges in Shanghai than elsewhere in China. What was an untested, unregulated market for pioneers like Hutton and Long now has precedent and established procedures to steer newcomers in the right direction. Organizations such as the American Chamber of Commerce (amcham-shanghai.org), the U.S. China Business Council (uschina.org) and the U.S. Commercial Service of the Department of Commerce (buyusa.gov/china/en) all have extremely active offices in Shanghai and are great networking resources.
As befits a city so focused on commerce, Shanghai’s top tourist activity is shopping. Nanjing Road is Shanghai’s version of Fifth Avenue, with many luxury retailers—Gucci, Dior, Cartier—occupying the gleaming shopping centers. Sprawling knockoff markets, such as the one in the Shanghai Science Museum subway station in Pudong, do a steady trade in fake designer handbags, watches and golf clubs. The Fabric Market on Lujiabang Lu is always packed with expats and locals alike, ordering custom-tailored clothing. At Yu Garden (Yu-Yuan), visitors shop for such traditional Chinese souvenirs as pearls and reproductions of antiques.
Shanghai’s dining is just as vibrant as its retail: The Chinese Web site baidu.com lists 20,000 restaurants in town. Westerners tend to congregate at a few favorite places: Xintiandi, or New Heaven and Earth, is an upscale dining and shopping complex carved out of century-old lane houses. In the French Concession neighborhood, Hengshan Road is another popular bar-and-restaurant district, with great gems like Azul tapas bar, located just a block or two off the main drag.
The Bund has the highest wattage of chef power. Four Michelin-rated chefs—including celebrity chef Jean-Georges Vongerichten, of Jean-Georges—hang their toques in riverfront restaurants. Their stars add to Shanghai’s glow, which grows ever brighter as World Expo 2010 approaches and more corporations come to call.
KRISTIN BAIRD RATTINI is a freelance writer who lived in Shanghai for five years. She currently lives in New Jersey.