The challenges associated with building relationships and trust with local business partners, clients and customers, and with government officials can be a challenging aspect of doing business in China. While establishing a business presence in China has become more straightforward in recent years the problems associated with identifying key contacts in partner, client and government organisations, establishing mutually beneficial and trustful working relationships with them, and developing meaningful channels of communication have now become more pronounced.
All of this does make it difficult for some firms, especially smaller ones, to build their business in China. Again, an awareness of the particular conditions offered by individual regional cities will be needed if companies are to successfully build the relationships and contacts required to effectively transfer their business model there.
Building relationships is by some distance the best way to overcome many of the obstacles to doing business in China. In a highly competitive business environment, it is more important than ever for us to understand the business culture of our target markets. Understanding business culture helps us understand, anticipate and respond to unexpected behaviour. It also enables us to behave in an acceptable way and avoid misunderstandings. As the Chinese saying goes: ru jing sui su – "When you enter a region, follow its customs".
However, knowledge of business culture – especially in a country as vast as China, where sub-cultures and practices differ from place to place and where every Chinese person is an individual shaped by different experiences – must be exercised with caution. A little knowledge is dangerous. But do not worry if you find the complexities of Chinese business culture daunting.
Just behaving modestly, patiently and politely, while not suspending one's business judgement, is certain to provide a good foundation for successful business in China.
In China, getting to know someone face-to-face is often regarded as the only way of finding out whether a person is trustworthy. In general, the Chinese set great store on building personal relationships before entering into a business partnership, often saying, "Let's first become friends, then do business".
You can expect your first, and possibly your second, visit to China to achieve nothing other than getting to know several possible candidates for business partnerships. This may seem a slow and costly way of getting started, but it is worth remembering that taking time to cultivate personal connections as the Chinese do is an excellent opportunity to get to know the people you will be working with. Introductions via a trusted intermediary can play a valuable role in opening doors, but there are no short cuts to relationship building.
You will undoubtedly encounter delays and frustrations when doing business in China. Keeping your temper (equated in Chinese terms with maintaining "face"), even when things go wrong, can pay disproportionate dividends. If you are not sure what to do in any given situation, it is best to err on the side of patience and politeness. Do not be afraid to ask a Chinese colleague for advice on how to handle matters.
Understanding and being responsive to the demands, requirements and perspectives of clients and government agencies are fundamental to business success in China. You will need to be patient, committed and flexible when dedicating managerial time and resources to China – and persistence, resilience, realism, and attention to detail best describe the managerial traits required!
Westerners normally build transactions and, if they are successful, a relationship will ensue. However, the Chinese believe that prospective business partners should build a relationship and, if successful, commercial transactions will follow.
This difference underlies many misunderstandings arising from business negotiations. Virtually all successful transactions in China result from careful cultivation of the Chinese partner by the foreign one, until a relationship of trust evolves.
Both Chinese and foreign companies will often attribute their business success to having good guanxi.
The objective of developing close relationships is to build what the Chinese call guanxi (pronounced gwan shee), which are essentially social or business connections based on mutual interest and benefit.
In a centralised and bureaucratic state, reliance on personal contacts is often seen as the only way to get things done. And in a place like China where the legal system is still relatively weak, the need to rely on guanxi remains strong.
In business, guanxi must be regarded as a two-way relationship. We are all familiar with the expression "You scratch my back, and I'll scratch yours". But in guanxi, the obligation does not cease with the second scratch, and the other side will have expectations that the relationship will continue. It is not about making fair-weather friends. If you expect guanxi to deliver, relationships must be maintained through regular contact.
Both Chinese and foreign companies will often attribute their business success to having good guanxi. But the obligations of guanxi are very real. In the wrong place, at an inappropriate time, with unsuitable people, the obligations can become a trap which is hard to escape.
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