Business Cultural Differences Affecting China and India
(Part two of a five part series)

By Chris Devonshire-Ellis

Jun. 10 – Importing a business into another country is never easy, and this is especially so in the case of China and India. The countries have different administrative systems, ways of doing things and separate cultural habits and idiosyncrasies. If these are not recognized, embarrassment and even criminal action can follow. As my practice Dezan Shira & Associates has found out, care needs to be paid when replanting a subsidiary root of a business from one country to another. Not all systems or points of reference are the same. Dezan Shira & Associates first moved to establish operations in India four years ago (after 14 years extant only in China) and we found many surprising cases where what we thought we knew from a cultural perspective needed additional work and attention to detail. That said, we are also aware of aspects of China that may not be familiar to Indian or other overseas based businesses. Here are some more examples:

Religion
Mao famously declared, “Religion is poison!” to the Dalai Lama, and still today the country is officially atheist. While Buddhism is making a (well monitored) comeback, the pragmatism of the Chinese sees them pray more to gods of money and wealth than for wisdom and spiritual enlightenment. India, meanwhile, is multi-religious, with Hinduism dominating, although most Indian cities have substantial Muslim populations also. Muslims also predominate in several business sectors, and it is common to be in meetings with Muslim businessmen. As in all religions, some are more devout than others, and Indians with a permanent bruise on their foreheads mark a devout follower of the faith. Business meetings may be interrupted at certain times of the day to pray (usually a small room set aside for the purpose) and your meeting may be delayed for 15 minutes while the rituals take place, only to restart at exactly the conversational point they were temporarily postponed. Other than usual pleasantries, it is probably a good idea to avoid much in-depth discussion about religion unless you are well versed in the subject. Tensions can rise to the surface quickly and it is best a subject avoided.

Media
China’s media is censored and largely controlled by the state, and much incoming foreign media is routinely banned, both in print, TV and internet. Consequently, China’s media is rather bland and follows an organized framework. Exciting it is not. India’s media is open and is largely driven by sensationalism that can come as a bit of a shock to the newly initiated. It is sometimes difficult to determine which is the lesser of the two evils: China’s censors or India’s sensationalists. India TV media especially is very loud and driven by ramping up the “shock horror” headlines for maximum effect. Favorite subjects for Indian media do include China issues, and China is often portrayed as being a threat to India. While the TV may blare unsavory stories, usually they remain taken with a pinch of salt. Far better balanced are newspapers such as the Times of India, the Economic Times, and The Hindu. All major international newspapers are commonly found, with many also being produced in India. International TV channels are routinely available.

The heat
India is hot. And in the summer, really hot. Our Delhi office today records temperatures of 45 degrees Celsius. Beijing by comparison is 24. India therefore is sweaty, roasting, and on the coast in cities such as Mumbai, very humid. It’s important to dress appropriately, and in India during such times it is not necessary to wear a jacket and tie. A formal shirt and trousers will suffice. The monsoon kicks in during June and brings rains, and plenty of them, but although it may pour, it’ll usually be just for a few hours. The rains are gone come September, when the country begins to cool down. Winter time can be balmy in Mumbai, and positively chilly in Delhi, where it can get down to just above freezing. India very definitely is a country that needs to be examined for its weather conditions. China too is the same. Summer brings heat, especially in the south where Hong Kong, Shenzhen and Guangzhou can become oppressively humid. Beijing’s winters, and the rest of northern China, can become very cold, as fronts from Siberia can and do turn south and bring freezing temperatures. But to cope with India’s heat, it’s wise to pack a bottle of chilled water, especially if you’re walking outside. It’s unwise to buy cold prepared drinks from street vendors unless they are canned or bottled – you need to be sure the contents are good.

Food
Chinese restaurants in India are quite common, a legacy of the coolies often brought over by the British in the colonial days. Most of these restaurants therefore tend to be based on southern Chinese cuisine, being Hakka or Fukien in origin. Indian restaurants in China are more uncommon, but are increasing in numbers, especially in the larger cities. Generally speaking, Indian curries get hotter the further north you go, while to the southeast and in cities such as Chennai, the food becomes not dissimilar to Thai cuisine with the use of coconuts predominating. As I mentioned yesterday, it can be very difficult to find pure vegetarian food in China as animal fats are used in many (even vegetarian) dishes. We’ll compile a list of authentic Indian restaurants in China and Chinese restaurants in India in a later article.

Invoicing
Unfortunately, although Chinese businesses are starting to migrate overseas, unlike their Indian counterparts, Chinese businesses can be tardy to the extreme when being asked to meet the final payment for goods and especially services. Our experience shows that the majority of Indian businesses will meet their financial and contractual obligations. A higher proportion of Chinese businesses will renege on the final payment, often in what can appear to be a calculated mechanism designed to exploit the fact that the cost of recovery to your business is likely to be more than the amount due. We believe this is a sign of immaturity on the evolution of Chinese businesses and will improve, however the problem does exist. For services contracts in particular, we recommend structuring payments so that as much as possible is paid prior to the end of the service and final settlement. Our experience dictates that unless this is done, an average of 50 percent of Chinese businesses fail to make final settlements or be highly tardy in doing so. If known, this then becomes a structuring issue over payment terms. In these instances, our advice is to be aware of a potential need to mitigate against this unfortunate habit or be prepared to have to deal with potentially unrecoverable receivables and debt. Contractual terms should be solid and supported by good business practice concerning payment terms.

Chris Devonshire-Ellis is the principal of Dezan Shira & Associates and its founding partner. He established the firm’s China operations in 1992 and its India practice in 2006. He regularly commutes between China and India. Contact: chinaindia@dezshira.com.

Chris also contributes to Asia Briefing’s other titles, India Briefing, China Briefing and Vietnam Briefing.

Related Reading
Indianizing a China Business (Part One)
Indianizing a China Business (Part Three)