Understanding Guanxi is a must while doing business in China. Guanxi, a Chinese word that means “relationships”, can play a very crucial role in the business etiquette in China. How? By allowing you to effectively build better relationships and network more efficiently. Chinese businessman typically have the “Scratch my back and I’ll scratch yours” mentality. So, you could say that the concept of Guanxi boils down to the exchange of favors, which should be done both voluntarily and regularly. For people who are undergoing business development in China, it’s a concept that can’t be overlooked.
Why is Guanxi Important?
When doing business in China, understanding the principles of the Guanxi can make all the difference when trying to run a successful company. By getting it right, your organization will be able to minimize disappointments, frustrations, and even risks- all while maintaining a competitive standing in the Chinese market. When you have the right Guanxi network setup, you’ll be able to build a solid network of people of whom you can exchange favors with.
Keep in mind: nurturing the Guanxi can take up a great deal of time and resources. But is it worth it? Absolutely. When you focus on establishing strong relationships, and you nurture them, your partners will be much more likely to help you in return. China business consultants recommend that you bring gifts (cigars, wine, etc.) to your partners, as well as spend time learning their culture and language. While these acts might seem miniscule, the truth is that they are extremely profound and respected in the Chinese culture.
Applying the Guanxi
To begin, pay more attention to the people in your Chinese network. Try to develop a solid Guanxi with them. Remember that these people can indirectly lead to new resources and acquaintances, thus helping propel your business in the right direction. China business consulting wants you to remember that the Chinese culture has distinguished itself from Western society in a variety of ways- including how business is conducted.
For example, Chinese businessman tend to only do business with people who they trust. At first glance, this may not seem like a huge difference when transitioning from the Western world. But the truth of the matter is that you’ll need to establish a strong bond with the other company before you can do business with them. And remember: don’t apply the Guanxi just to get a sale. This is something that you should be applying on an ongoing basis.
Establishing Relationships Isn’t About Money or Fancy Gifts
First and foremost, know that the Guanxi isn’t about the exchange of money or fancy gifts. Treating someone with decency is more important than what you buy them. For instance, business strategy consulting in China suggests that you always deliver on your promises. If a certain thing is promised by your company, then you’d better go above and beyond to ensure that this promise is fulfilled. Then they’ll be more inclined to do business with you.
Next, be reliable and dependable. These two qualities will definitely help strengthen your relationships when doing business in China. In short, act like a friend. Good friends can typically rely on one another when times are tough. Think back to the 1989 political instability in China. Back then, the companies that stuck together by applying the Guanxi were more likely to flourish. Finally, to truly build a strong tie with someone, you need to meet with them on a regular basis. This isn’t a one-time act.
Final Considerations to Keep in Mind
By now, you’ve come to learn about the business etiquette in China. While the Guanxi can take many forms, it really boils down to a handful of concepts:
- Trust: People are more likely to do business with someone they trust. It’s really that simple.
- Respect: When building a company in China, make sure that you respect the Chinese culture. Learn their language, customs, and ways of life. This will go a long way towards showing your business partners that you’re applying the Guanxi.
- Frequency: Once you’ve gotten the sale, don’t stop meeting with that person. This is really bad etiquette in Chinese business culture.
Remember that Chinese businessman make their friends first priority when it comes to doing business. If you can show them that you care, and that you’re a trustworthy businessman, there’s no doubt that your company will thrive in China.