Basics Of Chinese Business: Guanxi

Chinese business has many different facets that the Western World could see as slightly strange. This is epitomised by Guanxi (关系). The literal translation of guanxi is relationship. The basic idea of guanxi is that business should never be conducted with someone that is not your personal friend or if there is no trust between the two parties.  With these formed relationships it is assumed that both parties will make every effort to aid one another when needed. If one party cannot help, then they may be able to introduce another friend who possibly will be able to. In summary it using a large and extensive network with close relationships to facilitate business and personal gains.

It is very likely in Shanghai to stroll down to your local restaurant and see a group of Chinese business men slouched around a table, each with a bottle of bai jiu (55%+ alcohol). On one hand, this is just friends gathering together to have a pleasurable time. On the other hand, this can be seen as a classic case of guanxi. No doubt the main topic of conversation will not be about their personal business ventures, but more casual chatting. However, at some point business will be discussed and deals could be completed. In a nutshell guanxi is the building of a relationship between two people with the opportunity to conduct business in the future.

A more specific example: Last weekend I helped my friends with at a business convention, and at lunch, found myself in a similar situation to the aforementioned businessmen . All the ten or so guys at the table were mid to high level management of commercial property companies. I sat next to a guy from Hong Kong  who addressed me in perfect English. We had the usual networking chat about what we’re doing here, how long we will stay, can I speak Chinese, can I use chopsticks etc. Then the drinks arrived . In China it is custom never to let someone pour their own drink. Two men from the other side of the table, one armed with a bottle of coca cola the other wielding a bottle of  beer, rushed towards the HK business man. He chose the coke leaving one businessman very happy.

Throughout the meal the HK business man was centre of attention. People would listen to him speaking, most notably about the price of high-end watches and which countries they were cheaper in,  then adamantly agree with his opinion (Even if it was wrong. I’m pretty sure that the cheapest place to buy is still in Dubai or Saudi and not Germany). When dishes arrived, one of the men already had his hand placed on the lazy susan ready to spin the fresh food straight to the HK guy. Business cards were continually presented to him (using the traditional two hands). It was obvious the other business men considered the HK guy as important, thus they were striving to gain his friendship to allow some sort of guanxi. The odd thing for Westerners,  is that instead of the business men trying to gain the HK guy’s attention by illustrating their business merits, they were more content in attempting to please him by  feeding and watering him, without even mentioning their accomplishments.

After the meal I was informed that HK guy is head of operations in mainland China for one of the largest commercial property firms.  The other businessmen at the table were trying to build a relationship with the HK guy with the potential to conduct business in the future. This can be seen as a typical example of business works in China.

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A slightly boring, but necessary introduction to my aim of blogging

My name is Nick and I am a University of Manchester graduate who has spent a total of around a year and a half working in Shanghai, China, on two separate occasions.

So far I have worked in two Chinese companies. One was an internship in a company of around a hundred people. This company specialised in real estate, property consulting, and the division I worked in, providing courses to leading industry professionals, who with the use of their practical experience, aimed to learn theories and share problems they may have tackled with other leaders of the industry. If compared to business, this property qualification could be compared to an MBA.

Secondly, my current place of work. A small electronics company with the intention of producing and marketing innovative products that go against the cliché that Chinese products suffer from low quality and poor customer service.

As both the companies I have worked in are relatively small, it has given me a lot of freedom to experience firsthand all components of the business. For example my official role at the small electronics company is “Marketing and sales” to international clients, however, due to the size I am often asked to voice opinions regarding matters at all levels of the company…… more on specifics later.

With these experiences fresh in my mind I decided to write a blog. My goal is to give people and insight into how a Chinese business works by using experiences and theoretical knowledge. Sometimes it will be very academic by using journals and theories learnt in my degree, and sometimes it will be very casual, such as using case studies from my personal and friends’ experiences.

So, I hope this sheds some light on the fascinatingly complex Chinese market.

My Business Life In China

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