Things to be aware of when doing business in China

Image Source: Blesbok
In the last 2 articles, I talked about specific characteristics of Chinese culture, namely “Face” and “Guanxi.”

In this article, I want to take a deeper look at face, guanxi, and your ability to succeed in China by knowing who to trust and who not to.

When you meet a Chinese person for the first time, they usually size you up, and if they like you in any way, at some point before the meeting is over, they will shake your hand and offer to “find some way to work together.”

Chinese people want to have a hand in every pie so they can possibly find 1 that pans out and makes them rich, especially when it involves “foreigners” (this is the term given anyone who is not Chinese).

This one statement has wasted countless years of my life in China, until I recognized the pattern and figured out how to stop it from happening.

So, let’s go back and look at face and how it relates to this situation.

In order to maintain their face, they want you to believe they have an ability to start some profitable venture with you (even if they CAN’T or simply have no DESIRE to do so).

You should treat this statement as something of interest, meaning they are open to working with you, but the way Chinese work is that they want to truly become your friend before they feel safe working with you (kind of like a woman wanting to feel safe with you before being willing to go back to your house).

In the end, there’s a high probability that nothing will ever happen between you and this “potential partner,” but they can save face by leaving the door open to the possibility.

Now, how does this relate to Guanxi?

Chinese culture revolves around Guanxi (relationships).

In their mind, the more relationships they have at their disposal (and yes, I mean it literally), the more likely they are to find a project to join and therefore be closer to reaching their ultimate goal of power and money.

So, why does it benefit them to make this bold offer of partnership?

By “becoming your friend” and “opening the door to possibly working with you,” they are gaining face by being in the presence and company of a foreigner, and adding you to their list of potential guanxi, therefore it’s a massive win for them, even if they only invested an hour or two to meet and get to know you and what options there are.

Where did I fail in this process?

I failed in that I took their offer literally, got excited at the prospect of putting together a project, and began immediately preparing what I could from my end.

I’d then arrange to meet them again within a few weeks to show them what I’ve done, and ask them what they’ve done to prepare, only to find they’d done nothing, because they weren’t actually serious about getting involved with me (without knowing me for months or years).

Chinese love to know people and build their guanxi networks, but are very slow to trust others because they (sorry, being honest here) have a habit of screwing other people over in order to make money in the short-term.

This contradicts our own method of doing business, which involves quickly building trust and comfort with each other, making a more solid arrangement of what the next step is and what we expect of each other as partners, and a plan to meet again soon to discuss what we’d found or prepared, and even be willing to put money on the table to invest in building the project out.

Before we end the article, I want to share a specific case of a British friend of mine who used to live in Wuhan (and is married to a Chinese woman from Wuhan).

Although this specific detail isn’t so important, I’d like to note that he never learned Mandarin during the almost 3 years he lived in China).

In 2010, he was connected to some high ranking city officials in Wuhan, and he began the process of making them their guanxi.

I don’t remember now what kind of business he wanted to start, but he needed their approval to make it happen.

In his mind, the best way to make it happen was to make them his partner.

In order to get their trust, he had to first become their friend.

For a 3 month period, he basically disappeared, as he was out getting drunk and eating lavish meals every night trying to court these officials.

At the end of the 3 months, he gave up and decided to stop spending time with them.

He had spent over 50,000rmb (that was considered a lot of money in Wuhan all those years ago) trying to get them to like him, and they still hadn’t even talked about the business!

He felt extremely frustrated because the business was actually simple to set up and do, and easy to generate a lot of money that they could all share.

All he needed was their signature, and they wouldn’t give it to him

In the end, he walked away from China because of his anger and frustration.

He felt like they used him to get free meals and alcohol, but they never really felt like friends to him.

What is the moral of the story here?

  • Go out and meet Chinese people while in China (or wherever you are).
  • Bring your business cards and show your value, but focus more on building a friendship with them.
  • Take every word they say at face value.
  • Don’t assume anything will happen.
  • Prepare to spend months or possibly years befriending them, getting drunk with them, eating meals with them, before anything might actually happen.
  • Enjoy Chinese culture for what it is.
  • Build your guanxi network with the highest quality people you possibly can.
  • Try to read their body language and facial expressions to determine their seriousness.
  • Don’t be fooled by appearances, as some rich people wear common clothes in order to pretend they aren’t rich, whereas some poor or common people spend a lot of money to make themselves appear to be rich (this can be a huge time waster if you are always meeting with low-class people who are desperate to use you to catapult themselves into the next highest class).