Frequently Asked Questions
Q: Why is it so difficult to do business in China?
A: Business in China is based on trust relationships
and that trust can only be achieved after many
meetings to get to know each other or through
connections in a guanxi. (see right column)
Q: How do we get to know the right people?
A: Use a consultant who has the guanxi through
which he/she can open the right doors and
introduce people to build the relationship with.
Q: How is business done in China?
A: Western people focus on negotiating a contract
and following that contract by the letter. In China a
contract is typically only an understanding of the
cooperation. Be prepared to be flexible in the
execution of the contract as many deviations from
the contract will take place. Trust that the intentions
of the Chinese partners are good and honest. Keep
a healthy critical eye on the situation and be
prepared to negotiate every deviation. Never forget
to communicate with your Chinese partner. A local
consultant like SIBCO can help in these situations.
Guanxi describes the basic dynamic in personalized networks
of influence, and is a central idea in Chinese society. At its
most basic, guanxi describes a personal connection between
two people in which one is able to prevail upon another to
perform a favor or service, or be prevailed upon. The two
people need not be of equal social status. Guanxi can also be
used to describe a network of contacts, which an individual
can call upon when something needs to be done, and through
which he or she can exert influence on behalf of another. In
addition, guanxi can describe a state of general understanding
between two people: "he/she is aware of my wants/needs and
will take them into account when deciding her/his course of
future actions which concern or could concern me without any
specific discussion or request".
Guanxi refers to the benefits gained from social connections
and usually extends from extended family, school friends,
workmates and members of common clubs or organizations.
It is custom for Chinese people to cultivate an intricate web of
guanxi relationships, which may expand in a huge number of
directions, and includes lifelong relationships. Staying in
contact with members of your network is not necessary to
bind reciprocal obligations. Reciprocal favors are the key
factor to maintaining one's guanxi web, failure to reciprocate is
considered an unforgivable offense. The more you ask of
someone the more you owe them. Guanxi can perpetuate a
never ending cycle of favors.
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