Those of you trading in China will know the importance of Guanxi, (relationships) and its ability to open doors.
I do too, or so I thought, however lately I have come to realise just how powerful Guanxi really is.
Last year I began to negotiate the construction of my new factory. Chris Chan, my Chinese General Manager, conducted some exploratory investigations with Local Government officials and development teams and as things progressed I attended one of the meetings. The head of the local town was there and very fortunately we ‘got on’. It is obviously extremely difficult for Westerners to build a relationship with a Chinese as a fundamental disadvantage is the language barrier. Whilst I speak some Mandarin it is extremely basic and most Chinese Local Government Officials speak, at best, only rudimentary English. However we did ‘get on’ and this led to us doing business together.
Since that meeting our friend has made significant introductions to other businesses in the region. In some cases this has resulted in trade in others it may not have resulted in trade however it often results in further introductions which do. The weight that a mutual friend carries in Chinese business negotiations is immense and needs to be understood very clearly. A failed relationship in any part of this whole chain of people could result in a complete breakdown. A dangerous ‘house of cards’ situation if you like, which is often why Chinese, during negotiations and discussions, are very diplomatic, very cautious and very careful not to offend. It can be a little frustrating for Western ‘gunslingers’ but when you experience the enormously positive benefits of good Guanxi you understand the need to go to great lengths to preserve it.
In the UK we call it networking………………..something I have always been sceptical of and something I have never particularly taken part in. Why, because in the UK I think most ‘good’ networkers are not necessarily the kind of people you want to be around. They carry a ‘what’s in it for me’ mind set and whilst keen to feather their own nests are not necessarily keen to put themselves out for others. In China it is not so superficial and is fundamental to trade. Because of this and because of a belief and trust in reciprocal favours the Chinese are much more focused on trying to help the other party first. It is good for ‘face’ it is good for ‘trade’ and most importantly, it is good for ‘Guanxi’.
I read a book a long long time ago which had in it the line ‘help others to get what they want and you too will get whatever it is you want’. I liked it and adopted it as my own philosophy. In China they practise it as a business art and profit from it.
A word of caution. Whilst Guanxi works and is practised amongst indigenous Chinese it takes time to build and anybody looking to trade with China should apply the same caution as they would in any other business transaction. Remember the expression ‘a fool and his money are easily parted’, well the Chinese are extremely adept at parting lots of fools from lots of money.