How to Maintain A Strong Business Connection with China

China is currently one of the strong players in the business world across several industries. Be it manufacturing, technology, or financial service, China is a powerhouse not to be underestimated. Because their strong success and international power do not lie solely on their industry billionaires or economic policy. The Chinese business culture is said to be one of the deciding factors that strongly influence China’s international economic power. 

In a previous article about money in Chinese culture, we discussed why Chinese culture is obsessed with money. Chinese business flourishes all around the world for similar reasons. Chinese businesses tend to focus on profits and the details of why and how they can earn more of it. Above all that, remains one significant cultural practice that you can still find today, 人际关系 (ren ji guan xi).

Age Old Relationships

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人际关系 (ren ji guan xi) is the business culture practice where you build and maintain relationships with clients. Getting to know clients is so important that this is the first thing they teach you from the first day you join the company. The relationship in this contact is more than just the formula contact you do during the period of transactions. This stretches to times outside of the transaction period in which companies try to stay on good terms. Good imagery for this would be maintaining the business relationship like that of family. These relationships can last years and years and are often continued by the generations after.

The question remains, how does this cultural practice affect business in China?

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In one simple sentence, ren ji guan xi helps build the strength of a company and in certain cases competitive advantage. There have been controversies surrounding the practice as many businesses use it to maintain questionable relationships with government officials. Nevertheless, it is still an important  part of the business culture that helps shape the economy of China. Let’s take a look at one industry example to give us an insight into how this cultural practice takes into effect. 

The Apparel Industry

Take for example the apparel industry of china. China is one of the world’s largest manufacturers for fashion. Be it the fast fashion for american brands like H&M or bigger brands like Chanel. However, the industry is also high in competition. With more and more brands looking to move their production to China to cut costs, manufacturers have to fight for the cost they can offer and the quality they can make.

With so much competition, players turn to information sharing for survival. To survive in this industry, information sharing. A manufacturer or factory owner can own many skills and resources, but information sharing is believed to be the best tools they can own. Without information sharing, you will not be able to meet the right person who can become a client that can support your business. Information sharing does not come easy on a high competition market and so this is where guan xi comes into play.

Making your connections, maintaining them and utilising your ressources well with the gathered information, will give  you a strong competitive advantage to survive in the industry especially if you are a new player in the industry. The key to making sure that your new business last in the long run is long-term relationship. Literally knowing the right person can give you new clients, prepare for what’s to come and build your name in the industry until you become a mature player once you’ve been long enough in the game.

The Important Values in Chinese Business

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Chinese value their relationship with business partners because it is a practice that’s embedded with the Confucian teachings which shaped China’s past and present.

In China, the value of family and collective community is quite strong in both society and business. The three key pillars of Chinese society include family, community, and status. 

Family and community are very important values as you can find them in several Chinese sayings, one of the most renowned being Ka Ki Lang (meaning: our own kind). This phrase is popularized in the film Crazy Rich Asian, a movie based on a book with the same name written by Kevin Kwan. Chinese businesspeople tend to do business with someone they know or are referred to by a trustworthy friend. The more familiar you are with the business owner, the more you are able to gain their trust and have more transactions with them. These relationships last over a long period of time instead of short ones. These relationships are then passed on to the younger generation where they help shape some of China’s businesses today.

The Starbucks Case

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This Chinese culture surprised many foreign brands that open their offices in China including Starbucks. Starbucks is a mega coffee store franchise that originated in the United States. They then spread their business internationally and made their way to open a store in China in 1999. Starbucks in China did not hit success when they first launched until several changes later. They named shareholders and company meetings “Partner Family Forum” where partners were employees and parents were the shareholders. They created large spaces for their stores to welcome crowds of customers. Following the three pillars, Starbucks made great changes and is currently quite successful in China. 

Making or Breaking the Relationship 

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So, how can you start and keep a relationship with a Chinese businessperson? In China, business people maintain their relationship differently than the rest of the world. These differences often went unnoticed by foreign employees. There are several things you can try to start building the relationship and not ruining any chances when you first try. However, keep in mind that these methods will take some time and effort to achieve the desired result. 

Understand The Depth

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Rather than just doing the normal business talk where you make an offer, negotiate the price or do cold calls, try and understand their depth. What are their values? What they look for and try to maintain that relationship for the long-term instead. Understanding your client like you would a friend is key. Similar to the practice of ren ji guan xi, it takes a long time but is very effective and great for the long-term. 

Take for example the trip that president obama took in November 2009 to Shanghai, During his speech with the shanghai youth and members of the Fudan university, he expressed genuine interest in the culture and heritage of ShangHai. He also apologized that “ I’m sorry that my Chinese is not as good as your English”. This simple move of giving consideration and respect is the first step to building a great relationship. Willingness to understand the person’s culture and where they came from will help you build a solid bond that will last a long time. 

Collaborate With a Local

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If you want to start your business in China, it would be better if you have a  local company help you out. The more familiar you “look” familiar to your potential client in China, the more they are willing to do business with you and create that relationship for the long term. Collaborating with locals also go beyond than just achieving “The Familiar” look. Local companies or manufacturers have their own set of connections that they have mastered. This conenctions will give you a great step up compared to starting all the connections from scrath.

Take for example Coca Cola. They decided that they will be collaborating with COFCO corporation back in 2016. The collaboration not only brought efficiencycy, but also created a more market oriented product for Coca Cola in China. Tailoring a product takes a lot of work. Receiving help from an insider who is more familiar with the market is more strategic and efficient than doing it yourself.

Learn the Language

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You can always do it yourself, although it is not the easy way. Putting the effot, gives you off as a person that cares deeper than the transactions. Learning the language can be a great investment for you and your business. This will not only give you a great sense that you respect your partner, but your partners can also have a better sense of trust towards you as a business partner.

Conclusion

Family and community are very important in Chinese culture and also in business. You have to adapt to the environment and make necessary changes to succeed in this market. There are things you can do to start building a business relationship with a Chinese business person. However, keep in mind that it all takes effort and time. The effort and time you put in will definitely carve a path for you to follow.

5 Proven Unique Chinese Business Cultures Need To Know

What Is Business Culture? 

Business culture is related to behaviour, ethics, etiquette, and more. A business culture will encompass the organization’s values, visions, working style, beliefs, and habits. Culture is a key component in business and has an impact on the strategic direction of the business. Culture influences management, decisions, and all business functions from accounting to production. You may now be thinking predominantly about national culture but this is only one aspect, business culture is its own unique dimension that includes getting off on the right foot, meetings, negotiation, formalities, social media use, internships and work placements, and other elements。

How Chinese Business Culture Different From Other Cultures?

Here are the top 5 business culture differences you should know before you do business with the Chinese or run a business in China.

Chinese Business Partners Don’t Like Direct Instructions

People in Chinese culture are not strict when it comes to detail. This can be potentially problematic when instructions need to be followed clearly. Western cultures embrace clear and direct instructions. It requires no memorization, little thinking, and less room for misinterpretation or mistakes.

In China, however, people often take offense to being given instructions and feel micromanaged. It is not uncommon that people will begin working on a project before they understand the details or complexities.

Pushing people to read a workflow or checklist can be difficult. They may take it as a message of unintelligence.

Give Notice When Things Change

It is quite common that a project does not start as you originally planned, since last-minute changes happened. If your Chinese vendor found out about the delay, they would be quite frustrated.

As a western-style businessman, you are used to a fast and dynamic environment. You plan ahead, try to work out the best schedule, and develop a smooth process. But no amount of preparation or experience can mitigate all obstacles. Sometimes unexpected changes arise and the game plan suddenly changes.

However, it seems like a natural part of doing business that you may cause significant stress to your non-western vendors that are not used to a fast-paced work environment. It’s a good idea to warn your Chinese partners (vendors) ahead of time if your project is dynamic or at risk of sudden change.

Lunch Isn’t 30 Minutes

Traditionally, lunch in China is almost as sophisticated as dinner. People have a big meal and it takes time. In the past, people even took naps after their lunch. Schools and businesses typically have a noon break for around 1.5 hours to 2 hours.

This is slowly changing as western lifestyle is influencing Chinese culture. In smaller cities, however, lunch breaks will still take much longer than what we’re accustomed to in North America. This should be considered when recruiting and preparing schedules. If employees are required to work with a shorter lunch break, overtime pay might need to be paid.

Beware Of Political, Legal & Economic Differences

You prepared a carnet to ensure that your computers could be shipped into China without trouble, but as it turned out, a signature was missed on one of the carnet forms when the package left the U.S.

What is the lesson here? The lesson is to ALWAYS, ALWAYS, ALWAYS double-check your paperwork.

Clearing a package through Chinese customs isn’t as simple as it is in Western countries. We consulted a couple of clearance agencies that prepared documents and letters for Customs of China. Unfortunately, all the paperwork in the world couldn’t be released to our computers in time.

This really didn’t surprise me. 

Since China started becoming open to Western countries relatively recently. Although it is a big and actively developing country, it still has unique political and economic systems. Don’t be surprised if what works smoothly in western countries is a bit of a bumpy road in China.

Listen To Your Chinese Business Partners

As one of our business members told us about his experience. That his company didn’t officially start recruiting until they finalized their location and had a starting date. At first, he didn’t understand why, because that’s what they did in Canada after all. Then his Chinese partner explained that there are many fraudulent job postings in China.

The most rampant ones in South China are multi-level marketing scams, which are illegal. Consequently, people are very hesitant when applying for part-time jobs. His Chinese partner mentioned that if they changed the location or time after an initial job post, people would likely suspect it as some illegal group trying to avoid the police. If they were to be flagged, it would be very difficult to clarify and convince participants that this is a legitimate job opportunity.

This is something I never would have thought about and probably not applicable in other countries.

Even though you might not understand their logic at first, be open to your Chinese partner’s advice.