The author, Sean Upton-McLaughlin, is a China-focused business consultant with over five years of experience living and working in Mainland China. He consults on strategy, marketing, and cross-cultural issues. For more of Sean’s insights into Chinese culture, please visit http://chinaculturecorner.com/.
UPDATE (10/30/2013): An expanded version of this article can be viewed HERE.
Many Western businessmen new to China are advised of the importance of gift giving to Chinese culture, business or otherwise. But why is this so important to Chinese people? How does one give a gift? And how is this different from corruption or bribery?
China possesses an ancient culture steeped in Confucianism, which is based largely on respect, relationships and rituals with the intent on maintaining societal and familial harmony. To maintain their relationships with their Family(家庭), friends and coworkers, Chinese feel the need to demonstrate their care and respect. This can take the form of giving a gift when invited to someone’s house or company, as well as picking up the bill when dining with friends. Additionally, outside of one’s immediate circle of friends and family, this practice is also used as a way of requesting or giving thanks for favors done. For example when a teacher takes on a new student, it is thought of as customary for the student to present a gift to the instructor. The gift in question may be as simple as a pack of cigarettes or a bottle of liquor, with the student having to make an initial estimate of how expensive a gift is required. Giving a gift also has a strong connection with giving someone face, or Mianzi (面子). When dining with friends or business contacts, the act of picking picking up the tab allows a person to demonstrate their respect and enthusiasm – this not only creates face, but also acts to strengthen the relationship between the two or more parties. Note: Giving gifts is simply giving gifts; “Li Shang Wang Lai (礼尚往来)” is how you give a gift.
Energy Technology Industry
Giving a gift is necessary to maintain relationships with clients and to maintain influence with government officials, otherwise it is very hard to sustain those relationships.
At this point it is important to observe a key difference between this type of gift giving, and the traditional bribe. The goal of a regular gift is to demonstrate your respect for an individual and your comittment to creating or maintaining a relationship with them. Giving the gift will not “seal the deal,” however not presenting a gift may make you appear impolite, uncultured, and lacking of “Suzhi(素质).” In contrast, a bribe in China is often a specific sum of hard currency within a red envelope, known throughout China as a “Hong Bao.” Other common forms of bribery within China take the form of company stock, cuts of profits, and expensive gifts, such as cars, and high-end electronics. In the case of an actual bribe, an individual may demand (directly or indirectly) that something be given in order to ensure a certain outcome. However, the exact difference between a “gift” and a “bribe” can remain unclear within the somewhat murky Chinese business environment, and it is not uncommon for companies to set limits on the value of gifts that can be given or received.
Deputy General Manager
You need to be careful when using “Li Shang Wang Lai” in the workplace to ensure that it does not become bribery. If someone gives me a gift, but I feel that the value is too high, then I will refuse it. In my personal life, I always try to give more than is given, only thus being able to maintain consistent and harmonious relationships.
There is also the potential for the concepts of “Li Shang Wang Lai” and gift giving to cause worry and stress for the Chinese, and even hold the potential to damage relationships. Think about it like this: every Chinese person is running a tab within their mind for every one of their important friends or contacts. When someone is treated to dinner, it is expected that the kindness will be returned at some point in the future. When a Chinese couple receives a gift from a friend for their child, not only will they feel compelled to buy a gift for their friend’s child, but they will also take care to give a gift of at least an equal value to the one received. If a professor or business client feels to have not received an appropriate gift, or of no gift is given, then this has the potential to damage the relationship, or Guanxi (关系).
For the Westerner doing business in China, while it is not necessary to observe these practices as strictly as local Chinese may feel the need to, it is recommended to pay more attention to close Chinese friends, important business contacts, and anyone within the government bureaucracy that has the power to make your life or business difficult. Remember, giving a gift it not always a bribe, most of the time it is a method for building and maintaining a strong and mutually beneficial relationship.