The biggest question people ask in regards to doing business in China is why the Chinese feel it is so necessary to drink when conducting transactions.
For starters, business transactions at large are done outside of the office. Business owners believe that in order to show their politeness and gratitude to the other during a business transaction that they treat them to a nice meal accompanied with drink, as food and alcohol in China traditionally has a highly social connotation that used to be only done through close friends. Alcohol also represents comfort in this sense, both as a representation of the connection between individuals and groups, as well as to the biological effect it produces when drunk.
Drinking alcohol in the West has been a much more integral part of life in a different way in that people have been going to bars/pubs for social experiences for many years. The concept of bars/pubs in China really didn’t exist until the 19th-20th century whereas in the West they extend back much further. That’s not to say that such drinking facilities didn’t exist in China throughout the last thousand years. Facilities serving wine have been well documented far back in Chinese culture where people bought and drank alcohol, but they were not prevalent to the masses in the way they have been in the West, What this means is that alcohol holds a more special meaning under the circumstances in which it is drunk in China, as it traditionally was taken under more special events.
Famous Chinese poet Li Bai was well known for his liking of alcohol consumption and glorified the effects it produced between individuals socially. For him and traditionally Chinese officials and merchants alike, setting aside one’s worries and being able to enjoy a cast of wine was regarded as a high state of living and hence could be associated with producing relaxation between people and building relationships.
The emphasis of comfort and how it relates to socializing and politeness is important in Chinese culture, and has extended to modern day business affairs where a drink establishes a relationship.
As individuals in the business setting begin to drink there is also something else that occurs, which is rarely talked about. That is, Chinese are seeing how well their potential partner can hold their drink, as it represents strength and most of all trust.
While intoxicated it is easy for people to babble secrets, talk incoherently and make irrational decisions. For many Chinese businessmen, not all, but for many drinking is also a test to see what their potential business partner will or more accurately will not reveal while under the influence. What comes about during drinking for the Chinese determines what they can expect to see from that person in the future, so if the person starts to reveal information about competitors that seems private and otherwise inappropriate, albeit it may be beneficial in the moment, such an incident reveals that person is not worthy of keeping a client’s secrets or their trust when it comes to reliability.
The trust between Chinese is very important in whatever actions they do, so that is why it is also important for them to know a potential business partner through means that extend beyond the office. This is also why there is such an emphasis on guanxi or relationships, as Chinese are more likely to engage further in business with someone if they have an established connection with someone else they already trust who introduced this new potential partnership. If such guanxi has not been established, increased efforts need to be made through multiple dinners and drinking engagements but those nevertheless still exist more out of politeness rather than establishing trust.
It should be noted that in terms of government officials a lot of this applies yet at the same time doesn’t, as officials often abuse their power and simply like to get drunk for the entertainment aspect.
If you make it through a business dinner engagement without talking inappropriately, causing a scene, or better yet puking then you have made a statement for yourself and your company. Being able not to puke is more a personal statement of strength whereas the other aspects mentioned are more about trust, so don’t worry if you puke, as this should not determine whether you land a business agreement; rather, you will just be proven in front of everyone else that you are somehow weaker and will have less face. That may seem hard to wrap your head around but it’s true.
Many Westerners go to China and are not familiar with these customs. If some of what is mentioned here may seem odd or offensive, is best not to think of it as morally wrong, rather that this is just the way it is due to cultural reasons, just as it is a certain way in Western cultures.
If you do not like engaging in drinking, especially if it conflicts with your moral or religious views, then you need to be cleverer about how you decline. Most people will make an excuse such as recently having had surgery or prepare something ahead of time in exchange for alcohol such as high-end tea, which is also socially acceptable, but if you just show up and say no it doesn’t look good.
So then when do these rules apply?
The above-mentioned definitely applies if you are a Westerner in China doing business but if you have Chinese clients on your turf you will be at an advantage, as you can mention how there needs to be someone sober to drive as taxis aren’t as prevalent as they are in China etc. or something along those lines. If you are in a big city such as New York or London where taxis are obviously in sight you better be ready to engage in drinking. Hard alcohol and wine are the liquors of choice whereas beer is more for local socializing.
Drinking alcohol and doing business in China is a very prominent thing so if you are a drinker already you are already at an advantage! If not, you need to be clever about how you decline to drink or better yet, make the initiative in planning where your business meeting will occur, such as a tea house or somewhere where drinking can be avoided. If you are trying to make an arrangement of sorts you need to be the first to arrange the location otherwise Chinese will jump ahead at it first both out of politeness and to save face. They also do so at times to get better deals with set contacts but this isn’t a major issue other than them trying to save some money.