There is a popular (mis)conception that heavy drinking involving Moutai is an essential part of doing business in China. It is certainly true that during some parts of a business negotiation, Moutai will almost inevitably appear. In some provinces, partaking is more critical to concluding a deal, but Moutai is rarely the start of a business discussion.
Many of my most important business conversations started not with drinks or a meal, but with a cup of tea. These were often discussions initiated by the China side. If discussions proceeded well, then an invitation to a meal followed.
Drinking tea in Japan can be a ritual with a ceremonial structure. In China, it is less formal, more relaxed and pays greater attention to the quality of the tea than to the ceremony associated with tea-drinking.
That’s not to say it is a slapdash approach in China. As any tea seller or tea shop in China will attest, there are important courtesies involved in more formal tea occasions, such as those you might experience in a CEO's office in Beijing.
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There, you are usually invited to be seated on a large sofa or armchair clustered around the tea table adorned with small cups, perhaps a purple clay teapot, a temperature-controlled jug and other implements.
The offer to drink tea is actually very strategic. Tea creates space for curiosity, for conversation rather than pressure. This is where relationships begin because it builds trust between you as a guest and a potential partner. The tea table becomes a platform for an authentic connection and not just the numbers of a business arrangement.
The invitation to drink tea in this environment signals sincerity. When a Chinese counterpart personally serves you tea, it’s not for some small talk. This is serious business hospitality, so it is worth being prepared rather than surprised by this apparently casual invitation.
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Do some research so you know the basics of tea varieties found in China. These are white, green, yellow, oolong, black and post-fermented pu-erh teas. Within these categories, like the varieties of wine, are teas of exceptional quality. You give your host, and yourself, “face” by showing at least a passing knowledge of the varieties.
If you are able, comment on the colour (particularly the deep ruby red of high-quality pu-erh), aroma and taste of the tea, which will show you have some understanding of the typically good quality of the tea being served. If your counterpart is sophisticated enough to serve you such tea, they will also appreciate your knowledge. It provides a great start to long-term business relationships.
Next time you are offered tea in this type of environment, make sure you do not reply, “No, thanks, I’ll have a coffee or water.” But also remember that sometimes, tea is just tea.
Technical outlook for the Shanghai market
The unfolding situation in the Middle East impacts all markets. Currently, the Shanghai Index is clustered around the value of the uptrend line B. Nearby support comes from the long-term group of averages in the Guppy Multiple Moving Average (GMMA) indicator.
Global markets seem unperturbed by the Iran-Israel conflict. If this attitude persists, we would expect the Shanghai Index to continue on its current path, using the trend line and the GMMA as support features defining a slow uptrend rise.
A cessation of hostilities would be bullish for global markets. In this environment, the Shanghai Index has a strong probability of rising towards resistance near 3,435. This is the important resistance level for any rally. It is also the resistance feature for a slow continuation of the uptrend shown with trend line B.
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An acceleration of the war, potentially with US involvement, would be bearish. This is most likely to send the Shanghai Index below the lower edge of the long-term GMMA group of averages. The downside support is around 3,275. This is a minor historical support level. The stronger historical support is near 3,160 at the lower edge of the broad trading band.
In the current environment, the upside is limited for the Shanghai Index, but the downside is substantial. This is a situation where global forces are more important than domestic forces. Chart and technical analysis provides no clues as to how US President Donald Trump is thinking, so traders need to be prepared to move quickly.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a former national board member of the Australia-China Business Council. The writer owns China stock and index ETFs
