Doing business in China is not easy due to the immense cultural and social differences and nuances. With language being a huge barrier, which Chinese businessmen often use to their advantage, understanding business practices in China and the correct approach to take is an art in itself and it is indeed very crucial. Mastering how China works is of great importance to achieving the desired successes; it is much more complex than simply selling.
Time, patience and consistent follow ups are the key attributes required to succeed, and to truly master the art of doing business in Mainland China, you need to recognise the Chinese thought process, cultural behaviours, social origins, and what consists of the situational and contextual norm. Many companies fail due to the lack of understanding and operating under a Western mindset and reasoning that does not yield any expected results.
Relationships in China, like the rest of the world, are vital in doing business. However, it is vastly different in China and there are concepts of great importance that deserve a closer study; Guanxi, Mianzi, Youyi.
Confucianism, the dominant cultural belief in China, emphasises the interdependence of social connections. Business and social relationships depend more on networks of trust, honour, and long-term harmonious relationships.
There is no exact translation for Guanxi, it can be comprehended as, social connections and networks. It implies mutual trust and obligations between the parties and works on a personal, societal, family, business and government level. Having a positive, negative or non-existent Guanxi impacts the influence of people and the ability to achieve the desired objectives.
Having a good Guanxi is an indication that the relationship will be long and beneficial for both parties. A bad or non-existent Guanxi can negatively impact businesses, preventing sales or decisions made by senior executives.
To explain the concept further, think about a time when you tried to enter a private establishment or event by invitation. Who does not have the Guanxi simply cannot enter and be part of it. In the Chinese society, having a good Guanxi is not enough, it is about having the right Guanxi in the relevant context that is critical.
Guanxi in China differs from the Western world in some key respects:
- Guanxi is a necessity for doing business in China, but it varies according to industry sectors and geography.
- Guanxi must be considered on three levels; personal, corporate and government.
- The disadvantages of Guanxi must be understood and managed.
Establishing the right relationships and connections relies heavily on mutual trust, and building trust requires time and patience. This is where the second and third term comes in; Youyi and Mianzi.
The term Youyi refers to the friendship between different parties. In the Chinese business world, it is compared to having respect for the feelings and interests of the other person and thus allowing the relationship to flourish and endure a long time.
On the other hand, Mianzi is associated with honor. The honor for senior executives is highly valued and staining it can mean the end of their career. For this reason, when negotiating with senior executives, it is always important to allow them room for rectification, so that their Mianzi is not affected in front of their colleagues.
The above concepts are interconnected, and we simply cannot stress their importance enough. Understanding their correlation is crucial to succeed in starting and running a business in Mainland China.