You have probably already heard of Guanxi, the Chinese version of using and maintaining “connections.” It is one of the central concepts driving interpersonal and business relations alike here in China. The rapid modernization with all its advantages and shortcomings that China has experienced in the past decades has not changed the influence of that fundamental idea. Quite the opposite: in times when the official motto is to become rich (by whatever means possible), the Guanxi factor looms large.
So what does that mean for you as a foreigner who is trying to establish his own business in China? Well, first of all, there are clearly some disadvantages to overcome: you are not on your home turf and that will never change (with the possible exception of when you are marrying into a powerful Chinese family).
Remember: you will always stay a “Laowai”
Even though you may be able to grow your business and are interacting successfully with Chinese customers and employees, you will always remain a laowai – a foreigner. Even if you have lived here for decades and your mandarin is impeccable, this will still hold true. And as is the case for most people, it is easier to establish close personal connections with people from your own home country. Hence, you may very well find yourself at the short end of the stick – you just couldn’t match the connections of your Chinese competitor.
But there is no reason to despair. What you need to do is develop your own form of relationships and connections. We call it the “Western Guanxi.” Essentially, what you want to do is follow a two-fold approach: first, you should try and use the tight-nit expatriate community to your advantage by cultivating close personal and business relationships with other Westerners.
This will happen quite naturally as expatriates in China (as in other countries) tend to stick together and are often willing to provide extremely useful advice and (more) connections. Second, you will want to try to establish your own network of Chinese friends. This is much harder – or rather, it is easy to neglect that part, especially if you do not speak the language.
However, even if your Chinese skills are limited, it is possible to make great Chinese friends. If you are lucky, you will be able to get your own “da ge” or elder brother, someone who protects you and steps in for you when the going gets tough.
Consider, for example, a recent case from one of my friends from the creative industry. My friend had managed to win a major contract with a large Chinese television network but had failed to pay close attention to the legal small print of the contract. The contract stipulated that he provide the client with a special fapiao (Chinese invoice) that only large companies are able to issue.
After weeks of back and forth, he decided to call his da ge (a Chinese businessman and friend whom he had know for years) and ask for a favor. His da ge couldn’t provide the fapiao himself but had his own Guanxi to rely on. After a couple of phone calls, a Chinese company had been found in whose name the fapiao could be processed. Welcome to the wonderful world of Guanxi.
Building your own “Western Guanxi”
Of course, building your own “Western Guanxi” takes time and energy. But if you do it well, it will surely pay off sooner than you think. Here are a couple of things to remember when establishing your network:
Don’t only get in touch with people when you want something from them. Stop by for a coffee or tea just to chitchat – and, especially when it is a client or business partner, deliberately do not mention business.
Ask the people in your network how their families are doing. Chinese people love that!
See how you can proactively help others (Westerners and Chinese). It’s a good investment!
Try not to hang out with the same group of people all the time. Be open and try tapping into new networks.
Bring back small presents when you go abroad. While people will feel compelled to give you something in return, it also shows that you are a thoughtful person who remembered his/her friends.
Spend time with your network. It doesn’t work if they feel that you scheduled a five minute slot in your calendar.
While this list is by no means exhaustive, it should give you a couple of guidelines to start with. Happy networking!