1. WHEN DOING BUSINESS IN
CHINA, WHAT'S TRUST GOT
TO DO WITH IT
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If you are considering doing business in China you are probably aware
that there are fundamental differences to consider, as compared to the
western world. Being aware of these differences and working within the
system will allow you to make the most of your opportunity, versus just
trying to do it the same way and going against the culture.
As soon as you start to do business in China you will become aware of
“Guanxi” (relationships), if you are not already familiar with this
concept. But what you may not know is that there is a right way and a
wrong way to work within this framework, and the faster that you can
adapt the better chances of success that you will have.
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Guanxi and Xinren
Where Guanxi is the basis of relationships, which are based on either
your cultivated relationships or bought relationships, Xinren is the basis
for trust. This is a core business principle that is the same across the
world, trust is what makes business relationships, but the difference lies
in how the Chinese business culture builds this trust. All of the trust in
business relationships in China are built on personal relationships.
Therefore, building up your Xinren, or business trust, relies on your
ability to connect outside of the boardroom and get to know the man
behind the business.
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The main logic behind this thinking is that the Chinese business people
don’t trust the legal system. Because of this, they are less likely to take
a chance with the trust that they extend and need to make sure that
you develop a proper personal relationship first. The legal system is
simply too inadequate for the pace of business innovation and
development, and therefore most Chinese business people avoid all of
these legal hassles and only deal with companies after they develop the
Xinren.
There are 5 main reasons that, in China, it may take a bit longer to
develop the trust, which has to be earned and is not given freely.
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Broken Legal System – the amount of time that its legal system has had
to try and adjust to the sudden explosion in business, makes it difficult
to get new laws passed fast enough.
Chinese Culture – the abrupt changes in government and retention of
the wartime attitude shapes the outcome of most negotiations before
they begin. They can frame these interactions as combat, and instead of
working together to find the best benefit for each party they defend
their position.
Bureaucracy and Corruption – the structure of government, with the
officials being loyal to their superiors above anything else, leads to
corruption when one of the superiors sees an opportunity.
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Materialism - with the Chinese just beginning to covet money in the
same way as the western world has been for the past century, the
values of honesty and business integrity may not be as firmly rooted
There are however a few things that you can do to increase your
chances of connecting with your Chinese counterparts, which will lead
to an easier time doing business.
Contracts - make sure that you use a contract. You may get caught up in
the personal-business blurring of lines and think that just because the
legal system isn’t optimal that you don’t need one, but you do, and you
need more than just a contract.
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Connect with Right People – All companies are made up of a group of
people so spend time connecting on a personal level, especially outside
of the business setting, to develop trust and lasting relationships.
Use a Process – make sure that you have a process that outlines the
expectations so that you can avoid misinterpretation for the basis of
unfair business practices. Get all of the rules on the table so that
anyone in your organization or your Chinese partner’s is clearly adhere
to these rules; or not.
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8. For additional information about Business with China
please visit www.China-Business-Connect.com