In honour of the visit of Hu Jintao, the Chinese President, to the United States, we are publishing an excerpt on building business relationships with the Chinese, from one of our very first titles, “The Lowdown: Business Etiquette – China,” by Florian Loloum.
Generally speaking, the Chinese tend to seek long-term relationships. In practice, you will find the Chinese very open and welcoming - as long as you do your best to save face – both theirs and yours!
Q: How do you build one of these long term relationships?
A: Remember - the Chinese are more interested in the person you are, than the company you work for. To help build a relationship, and thus enhance your own guanxi, spend as much time as you can with your Chinese colleagues. Eating out, cultural outings, sharing common hobbies, karaoke and so on, are all good.
Let’s talk about that a little more:
There are four key steps to building a business relationship in China.
First is the exploratory phase. This is where you should focus on laying foundations. You should be open and patient. Accept your client’s invitations, try to avoid refusing requests as much as possible and meet with as many of his contacts as you can. This stage can last for up to several months, which can be frustrating. The Chinese strategist Sun Zi states, in the Art of War, that ‘to weaken an opponent, it is vital to wear him out.’ You may feel like that sometimes.
At this stage it’s important to help your Chinese counterpart to understand you. Share past experiences, invite him to show you his country - but be sure to offer to pay for it. Take an interest in his interests. Chinese culture is the best subject to focus on at this stage. Let him take the lead.
Let’s call the second phase ‘developing.’ Here is where you work on deepening the relationship. You may feel a shift – your colleague will become more open and may ask more direct questions. He may share more information with you and introduce you to more people.
This is when you can take the lead a little, and reciprocate. Invite your counterpart to the places you like, let him meet some of your colleagues, friends - and even relatives. These activities and introductions don’t necessarily have to be related to your business objectives. If you can, invite him to visit your business headquarters – that’s something he might not be able to do without your intervention. In other words, start to contribute more to the relationship.
When you’ve gotten to know each other better, the third phase - let’s call it ‘movement’ - kicks in. If you’re doing a deal, this is usually the right time to discuss terms pertaining to transparency and confidentiality, to make specific proposals, offers and counter-offers, exchange of concessions and so on, all of which will lead to an agreement – in other words, laying the foundation of your future business relationship.
The last phase is finalizing the agreement. The start of this phase may not be obvious, as the final stage of an agreement in China usually involves giving only a broad outline of an agreed project. The details are usually left to be worked out later. You’re headed for the finish line now. Your flexibility and patience will be challenged even more as the conclusion of an agreement approaches.
It’s useful to remember that the contract is not the most important thing - relationships are. In China, the success of a business transaction depends on how relationships have been cultivated between the various parties. And relationships need to be nurtured carefully by way of multiple gifts and shared activities.
From “The Lowdown: Business Etiquette – China” by Florian Loloum.