I've got quite a few things on this topic to offer. While this mainly goes for China it goes for most of the other Asian countries like Vietnam, etc.
1. if you are going there to negotiate with a Chinese party. Be prepared to "walk away" and/or say "No". Chinese negotiators are very skilled at spotting weaknesses or vulnerabilities in foreigners especially Americans (I'm an American). Common strategies might include waiting until very late to get down to business (e.g., your flight leaves at 8pm Thursday so the other side gets down to business at 2pm Thursday afternoon knowing that you can't return to the US and your boss "empty handed". So, in a rush you give away things you normally wouldn't).
2. In general, Chinese will enter into a contract and then try to re-negotiate it after you've started up the venture or project. This is really frustrating and most foreigners have experience with this. Just be aware that after you've agreed on a contract, etc. the other side might bring it up again to re-discuss.
3. If you plan to sell a product to the Chinese market, price it accordingly. Yes there are 1.3 billion Chinese but the vast majority can't afford a Starbuck's coffee much less a US$18 DVD (while I don't approve of piracy,I can certainly understand why a Chinese Dad earning $2500 per year whose kids are bombarded with advertising for the latest Disney movie chooses to buy a $2 pirated version of that movie rather than a legitimate $15 copy which is beyond his means. If you have kids you'll understand his reasoning!). You'll have to adjust your business model and probably need to focus more on high volume/low margin (large population, low income) rather than the US type model that focuses on attaining the higher margins.
4. The Chinese want technology regardless of your industry. During negotiations you will be hounded for technology/operational transfers of some sort.
5. China is out for China and China only. Don't get the false sense that doing business there and making money will be easy. If your venture begins to make money be prepared for difficulty because that money should be made a Chinese firm not yours. To be fair, Beijing is working on this much more now and unflattering stories showing up in the Wall Street Journal, etc. have made it an issue of sorts.
6. Don't worry too much about the language issue. I've worked all across China and Asia for 17 years and while I do speak Mandarin, I don't speak Bahasa, Vietnamese or Thai and I've never once had a problem with language during a business meeting. In fact, I generally choose not to use Mandarin for business while in China because one or both sides always seem to produce a young Chinese man/woman who's English is superb. The other side knows you're foreign, assumes you can't speak Mandarin and you'll be accommodated but you'll want to check into translators for hire (hotels often have such lists of people. You're law firm will also have suggestions, etc.).
7. There are loads of books on Chinese culture and customs, you can throw those in the trash as such books are full of useless crap that nobody will care about. You're not Chinese and the Chinese know it. Don't worry about it. Be polite and be professional and be open to new foods and drinks and that should be good enough. One word of caution though, Americans are generally very direct and confrontational. If you are like this, be less so. Getting angry, shouting or bullying will fail. Be polite but firm when disagreeing.
8. The whole Gaunxi thing is, I believe, largely overblown. I've never known of a foreign businessman with a good product/idea who was not able to meet with who he needs to meet with in China. I actually think guanxi is much more important for some Chinese guy from Xiamen going to Beijing for the first time than for a senior executive from Cleveland going to Shanghai for the first time. If you are a foreigner and you work for a "known" company, someone will take your calls or requests for meetings but you might want some help (your law firm, your local staff, etc.) to determine who is the appropriate person(s) that you should meet with. If you're a foreigner who works solo you'll have more trouble plus you'll need to go through the process of figuring out who is actually important for you to meet. A quick tip. It is often easier and more beneficial to meet with the target's "right hand man/woman". So rather than focusing on meeting with the Minister of Widgets for example you might want to try to meet with the Minister's senior adviser as the adviser will often have the Minister's ear.
9. This is a major one. Americans communicate so that if I am the one speaking it is up to me to make sure that my point is clear to the listener. It is my duty that my message is understood. Chinese communicate in a way so that if I am the listener, it is my duty to correctly interpret what the Chinese speaker is saying. So when talking with Chinese you'll often be told things that seem weird or out of place, listen to these things carefully as the real meaning will be delivered to you via such "hints", "observations", etc. This takes loads of practice but if you're there a lot you'll be able to determine the "noise" from the "meat" so to speak. In general, you won't be told anything directly you'll need to pay attention and rely on a Chinese friend to help you understand what is really going on.
10. That I initially only had 9 items has been bugging me; so here's number 10. Above I mention that I believe guanxi is overblown regarding its importance. However, when people discuss relationships (not necessarily guanxi/connections), I have found that building relationships does matter and it really doesn't take too long if you're personable. Some of the other comments point out the importance of dinners and drinking, etc. Such dinners are allow you and the other side time to build a relationship before getting down to business and satisfy the Chinese cultural need to be a good host. Eat and drink with the Chinese group, relax and enjoy the evening and conversation. You'll probably not discuss too much business at first but enjoy the conversations, questions, etc. Business will come later at a more appropriate time.
Good luck.
