Posted by: changholt | October 13, 2015

Avoid misunderstanding in doing business with China

avoid misunderstanding

The false promise of guanxi, or special relationships, has crippled Western firms entering China. The path through the backdoor inevitably leads companies away from real progress that is grounded in hard work and a logical business plan.

When your business goes overseas, many questions will appear. And to clarify these doubts, in our video below, we will talk about strategic questions that will guide you in this project.

It is one thing when someone with “special relationships” is an industry professional with the proper training, exposure and track record in a field. But when guanxi is defined as having abstract political and family ties, this is no guarantee that a company will gain access to the right decision makers in the public and private sector. It is more likely a path to a longer, more expensive and often failed journey through a series of back doors and trap doors. As a foreign company’s China market experience matures, it discovers that using the front door is faster and cheaper.

Reliance on the personal relationships of a consultant or agent is potentially destructive in two ways. First, it avoids a professional analysis of the market, because the guanxi broker only speaks to people he or she already knows. Second, it sets up a situation where a company may be abused by its own doorkeeper or expose itself to violations of the Foreign Corrupt Practices Act.

There is only one thing worse than relying on the myth of guanxi for a business strategy in China, and that is overly relying on a definition of business culture based on Chinese philosophers. Countless business books and articles quote Sun Tse and The Art of War as if it is something that every Chinese executive reads on his or her way to the negotiating room.

It is facile to assume that over one billion Chinese all negotiate using the same formula. This is the dated legacy of the respected scholar Lucian Pye. His book, Chinese Negotiating Style: Commercial Approaches and Cultural Principles, created the unfortunate Chinese archetype and lumped a diverse and rich people and culture into a simplified, but limited set of cultural stereotypes.

via Business without Borders | Guanxi and The Art of War: Two tall China myths.


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