With its immense potential as both a market and a resource provider China is on the strategic map for most multinational companies. The unique challenges of the market cannot be underestimated, however, and a cultural understanding will be essential to relationship building, which is fundamental to long-term successful business.
There is a plethora of companies providing expert market entry consulting services, but there are also some basic concepts which, can be understood and adopted to greatly reduce the barriers you will face, and better position you to reach your goals.
Chief among these is Guanxi ( pronounced Gwan Shi ). Guanxi basically means building relationships and trust and is similar in many ways to the Western idea of networking. Developing this network to win cooperation and support and gain credibility will be vital to your business in China.
Many foreign companies tend to see business relationships as purely pragmatic engagements ruled by price and contract terms, which by simple logic could simply transcend national or cultural differences. Unfortunately, in some countries, things are not so simple, and China is an example of a place where cultural sensitivity is central to successful business relationships.
The emphasis of human relations and respect in China goes back thousands of years to the days of Confucius, and while that may seem a long way from the modern business world, his teachings still influence Chinese culture on a daily basis.
The custom of Guanxi dictates that to be successful you need to build trust with your business partners, and also understand the relationships they have with other parties. On a simple level, you can boil it down to 4 key elements –
Reciprocal Favors – By asking and giving favors, a bond can be built up between you and your counterpart. Its important to understand that if you ask favor, it must be returned or the relationship can be damaged. The more you ask, the more you owe, and this generates a never-ending cycle, binding the parties ever closer.
Harmony – Make sure you “read the room” and choose the right moment and the best way to raise topics and issues. Failure to do this – for example by entering a meeting with an agenda which is hammered through without gauging the reaction and temperament of your counterparts – can damage the harmony, and your Guanxi will suffer as a result.
Relationships – Business is not just business in China. Spending time to get to know your clients is important to show genuine commitment– conversing before and after business discussions, sharing tea and meals, etc will demonstrate sincerity. WeChat, the most popular app for communication in China, can be an invaluable tool in this: learning whether your client is married, has children, etc, and showing interest by liking or sharing posts can build a personal relationship which can make all the difference in winning a project when price and quality alone do not make you stand out.
“ Mianzu”, or “Face” – Most people have heard the term, but its meaning is not always understood. The basic concept is close to that of honour, or reputation. You can gain or lose face based on how you behave and treat others. This will define your position in the social network and can affect people’s willingness to work closely with you.
There are many ways you can gain or lose face.
Show Respect in your speech and behaviour, taking into account the other parties’ age, seniority, job title, etc. This might entail showing deference to the oldest attendee at a dinner for example or directing your attentions to the most senior of your clients over dinner. Chinese culture is very hierarchical, and awareness of this is very important.
Avoid Open Expression of Emotion. Whilst it is often acceptable in other countries, showing emotion in a business context in China is less common. In some cases showing anger or annoyance in the West might show dominance, but in China, it is sometimes considered a demonstration of lack of control, which can cause you to lose face.
Avoid Embarrassing Yourself or Others, or causing confrontation. Its important to avoid direct criticism or apparent disrespect to your counterparts in your discussions and pointing out mistakes or failings, particularly in front of others is also taboo. By helping others to avoid losing face, it will also improve your own, and help to build your Guanxi.
Note that the guidelines outlined above will also vary based on your position in the relationship – the more senior or dominant the person’s position, the more they may feel free to be direct in their expression of dissatisfaction, criticism, etc.
When dealing with Chinese colleagues you may notice the impact of this concept of Face in many ways. For example, when given a compliment, the recipient is likely to remain humble and respond in a self-deprecating way. ( “wow you did a great job !” “Not at all, my team did most of the work, and I was lucky with the outcome” ) Reversely, when someone makes a humble statement, the other party is likely to respond with praise. ( “Our company is one of the smaller ones in the industry”. “Headcount isn’t as important as expertise and your team is the most experienced we know” )
People tend to carry their Guanxi with them throughout their life – from school, university, or previous jobs, the relationships built will be maintained and leveraged for decades. It is common for adults returning to their hometown to pay respects to their old teachers, or for people to help their old school alumni with favors and introductions many years after graduation. Relations you build in China can therefore help you for many years to come if properly built and maintained.
What does this mean for you? The more time and effort you spend in building long-term relationships, the higher your chances of success in China. Sending representatives to China a few times a year for a short series of meetings, without taking the time to chat or build personal relationships with their clients is unlikely to achieve the results you need. With enough time and effort invested, however, the potential rewards are great. Also bear this in mind when hiring local staff – the guanxi they have generated, and relationships they can leverage may be just as vital to their role as their education and work experience.
The Eos team have over 2 decades of experience in helping clients overcome the obstacles in expansion into China and the rest of Asia. Our PEO/EOR employment solutions also enable companies to avoid many of the pitfalls they might otherwise face. Learn more about our services at eosglobalexpansion.com or contact us at [email protected].
