doing business with china 25


Chinese trade: the importance of relationships


In the first of a two-part series on business culture, Keith Warburton, expert on how to do business in international markets, discusses the importance of relationships in Chinese trade


Cultural approaches to business obviously vary enormously around the world but probably the single biggest difference which can be found would be with regard to the relative importance placed upon relationship-building and relationship maintenance.


Some cultures tend to put business before relationships whereas other cultures very strongly place relationships before business. If you are from a culture which places business before relationships then you will do business with people provided their product is right, their delivery is right and their price is right – but any personal relationships are secondary to the harder commercial issues. (US, UK, Germany etc would be in this camp). If, however you place relationships before business, then you are loathe to do business with people until you have decided that they are the type of people you would be happy and comfortable to do business with in long-run – the relationship has to come first and only then, may some business follow. This does not mean that product, price and delivery are unimportant; it means that those issues are looked at later in the business cycle after the relationship has been built (Japan, Middle East, Brazil etc).


China is strongly on the relationship first model – in fact the research places only Japan ahead of it in terms of relationship orientation – and therefore the development and maintenance of strong, long-term ties are vital. You will often hear the word Quannxi used when people discuss Chinese business culture and it is worth taking a minute to explore the concept.


What is Quanxi?


Simply put Quanxi describes the relationship between two individuals which codifies the way in which they interact with each other and their ‘right’ to prevail


upon each other to ask for favours or services to be undertaken on their behalf. Quanxi relationships need not be between individuals of equal hierarchical status (but might be) and when you are in this kind of Quanxi relationship it is virtually impossible to refuse to agree to do what you are asked – regardless of how difficult it might be. (However, concern for other people’s face means that people are unlikely to ask for something that cannot be delivered.) Favours done must always be repaid which can mean people enter into a life-long cycle of obligation and repayment.


An interesting question is whether or not a foreigner can ever really have Quanxi relationships and experts differ in their response to this. The truth is that a foreigner can probably never have real Quanxi relationships simply because they are not Chinese – or that it would take a lifetime of effort to develop such relationships. However, some foreigners can develop better relationships with the Chinese than others and those who work hard to develop and crucially maintain those relationships over long periods of time are the ones who will probably succeed in the local China market or in their interactions with the Chinese.


What does this mean in terms of day-to-day business dealings?


Quanxi also extends beyond person-to-person relationships and can be used to describe an inter-connected web of relationships between extended groups of people who are, in some way or another, linked to each other. These Quanxi relationships can refer to connections with family, school and university peers, members of common clubs or organizations (the largest of which would be the Communist Party) and work colleagues.


Interestingly, the Quanxi relationships are personal and non-transferable. This is of considerable interest when considering lateral hires into organisations in China as they can often bring with them considerable Quanxi networks – the downside is that it will probably go with them if they leave at a later date.


THE BUSINESS MAGAZINE – THAMES VALLEY – JULY/AUGUST 2015


Taking time: Small talk should never be viewed as time wasting or irrelevant as it is a vital ingredient in the relationship development process. Do not become impatient if a lot of time is spent talking about non-business or seemingly inconsequential issues.


Continuity of contact: On the whole, people from relationship oriented cultures do not like frequent (indeed any) changes in key contact people within supplier organisations and partners. They do not want to have to continually go through the relationship building process. Therefore, continuity of contact is crucial. Key contact people should be selected carefully and kept in place over long periods of time. This can be both a blessing and a curse from a corporate risk perspective. Do you want to be overly dependent on one person? On the other hand, without the right key person with the right relationships things can be difficult.


Contracts: Less emphasis is generally placed on the over-arching importance of


contracts as the basis of the business relationship – after all, the relationship itself is far more important than anything written in a formal contract. In China a contract is often viewed as a statement of the best set of circumstances at a specific point in time but that, should circumstances change, it would be unreasonable for reasonable men with good relations to abide by the original terms of the contract. A contract is seen more as a statement of intent that work will be done together.


Availability: As business is relationship driven, business contacts are friends and friends should be available when I need to speak to them or when I need to meet with them. I expect you to drop what you are doing and deal with me and I expect you to answer my phone calls even if you are in another meeting.


Responsiveness: Our relationship means I expect you to respond immediately to requests – even if these requests are last minute or seemingly unreasonable. A common complaint made by people working in China is that they wait an age for a response to a question but when a response does appear everything is expected to be completed by yesterday.


Entertaining: A great deal of the relationship-building process is done through informal and formal entertainment events. Again, never view an invitation to a function as dead time – it is a key part of the relationship-building process and often more important (at a senior level) than the actual business meeting you may attend.


• Next month Keith Warburton discusses “face” (Mianzi) and the importance of it when doing business with China.


Keith Warburton is CEO of Global Business Culture, a Hampshire- based world-leading cultural awareness organisation which helps companies to work more effectively and profitably in the global arena.


Details: keith@globalbusinessculture.com www.globalbusinessculture.com


www.businessmag.co.uk


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