Good Guanxi, the Key to Success in China

If you are a frequent traveler to China or are engaged in business with Chinese companies, you may have experienced seeing the “two faces” of Chinese people; their “public” (公) and “private” (私) faces. In public, Chinese people can be seen as self-centered, rude and insensitive. A good example of this is the scores of people you can see pushing and shoving mercilessly to get on trains in Chinese cities. 

On the other hand, when it comes to their private lives, Chinese people show deep humility and affection towards their family, relatives and friends. In particular, filial piety—respect for one’s parents, elders and ancestors—has been a central value in China for millennia. The reverse is also true; parents in China are willing to sacrifice enormous amounts to raise their children. 

In May this year I had the opportunity to go to Shanghai with GLOBIS University’s CEIBS Visit Program (China Europe International Business School). This was a good opportunity to examine the Chinese way of thinking firsthand. This experience helped me to understand how Japanese (and other foreign) companies need to consider cultural differences before doing business in China. 

Previously, I worked for a typical Chinese family-owned company in Japan, where everybody except me was related to the president or vice president. In the first few months, I noticed that everyone was treating me as an “outsider” (外人—wairen in Chinese), wearing their public faces when dealing with me. 

However, after a few months of working together and building trust, I experienced a gradual shift in their attitude and communication style and I was asked to do many personal chores for the president, totally unrelated to my job. 

In Japan, this may be seen as crossing the line or even “power harassment” but in Chinese culture, this is simply a sign of trust. I followed orders without complaining and was eventually accepted as an “insider” (自己人—zijiren in Chinese). 

Instead of being treated as a stranger—they accepted me as part of the family. By building a good relationship and connections with the family, my work experience improved dramatically, as I could always count on their full support when I needed it. 

The concept of building personal relationships, or guanxi (关系), is extremely important in Chinese culture and crucial when doing business. In one of our study visits to a leading online real estate company, the co-founder explained how he and the CEO had already established a relationship during their time on the CEIBS’ MBA program and how they shared the same dream of revolutionizing China’s real estate market. 

He told us of their time walking across the Gobi Desert together before starting their company. Their shared personal experiences and strong bonds are a classic example of good guanxi. 

The idea of understanding Chinese business via guanxi is nothing new. Taking a look at the past, Matsushita Konosuke (founder of Panasonic) cultivated a strong relationship with China’s leader Deng Xiaoping, demonstrating successful Japanese-Chinese guanxi. 

Deng, China’s then leader, personally visited Matsushita’s Osaka factory in 1978 to ask for his help in modernizing his country’s industry. Seeing Deng’s humbleness and sincerity, Matsushita did not hesitate in promising to help. Until his death in 1989, Matsushita and Deng maintained and built on their special guanxi. Matsushita made significant contributions to China’s economic growth and helped to improve Chinese people’s lifestyles dramatically. In return, Matsushita earned the Chinese government’s respect and goodwill and gained unprecedented expertise in manufacturing and operations in China. 

The concept of guanxi is deeply rooted in the Chinese philosophy of Confucian harmony, which is achieved through good human relationships and connections. Of course, good relationships cannot be built in a day. Building guanxi requires a substantial amount of time and effort from both sides. It is critical for foreign people to understand the mechanisms of Chinese interpersonal relationships, and work tactfully to develop them. Once your Chinese counterparts accept you as an “insider,” doing business in China will be easier than you can imagine. 
 

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