Literally translated, Guanxi means Relationships, but a more appropriate translation would be mutually beneficial relationships. Chinese business people value greatly the mutually trust between two parties and will often spend a great deal of time establishing this trust and building the relationship before ever committing to business. The easiest way to garner this trust and establish Guanxi is to be introduced by a mutually trusted friend. This introduction carries more weight than can ever be understood by Westerners accustomed to straight talking and shooting from the hip .
An introduction should not be underestimated. It can save enormous amounts of time and will undoubtedly save money in that the Chinese party will want to return the Guanxi favour to the introducer and therefore be keen to price the contract or products in such a way as to enable a deal to take place. The deal and eventual supply is much more likely to be as expected and to contract if it comes as a result of a Guanxi introduction. How many times do you hear you can not trust the Chinese? Everytime I hear this statement, it sickens me. Would you expect, as a foreigner, to walk into any American or European city and be met with genuine, honest and fair business people on every occasion you tried to do business. No! However when people jump on a plane, fly out to China with a wad full of money, looking for an fast buck is it any surprise they don’t always get what they expected. The old saying, A fool and his money are easily parted, is just as true in any city, in any country the world over. The Chinese have been inundated with offers and promises of riches by Western traders for the last ten years, it is little wonder they treat newcomers with skepticism. Guanxi works. Do not under-estimate its power.
About Richard Kaye
Richard Mark Kaye is CEO of the Fired Up Group, which has manufacturing and distribution facilities both in China and the UK.
Richard has a long history of doing business in China and is ideally placed to lead the "For Sale in China" initiative.
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