Business the Chinese Way

About a year ago when we first learned that we would be moving to China, a friend in Seattle forwarded us a bizarre story from NPR (a public radio/ news station in the US) about the practice of Westerners being hired as a front in offices of Chinese companies or at certain events. At the time, I thought this was an unusual practice that was probably limited to men. We even joked that Derek could get a job filling in one of the offices of a Chinese company where he could get paid for being there and also get the necessary work done for his own company. But anyway, we figured it was only done in cities such as Beijing or Shanghai and we were not sure how we would be identified for such opportunities.
A couple of months after we arrived here in China, I was giving an “English corner” presentation at our university about Thanksgiving (the English Corner is a club on campus where English language enthusiasts can get together. The foreign teachers are required to give at least one presentation a year on topics related to life and culture in our countries). Afterwards, I was approached by Johnny, a student in his last year or study at NUFE who was helping a friend of a friend working for a wine company selling imported wine. Said company was going to be organizing an event in a small city two hours from Nanjing at which important local government officials and business people would be attending.  Johnny started aggressively recruiting me and Mechtthild, a friend of mine from Germany, to attend the event. We were told we would just have to dress professionally, show up and drink wine (sounded easy enough!). However, neither Mechtthild nor I could attend as we both had teaching commitments that day (which Johnny encouraged us to cancel but we couldn’t).
When Mecththild was first explained about the arrangement, she kept asking me on the side why they wanted us, random Western women, to attend. I explained from my own limited understanding that it was a status symbol for Westerners to attend such events and it brought a certain amount of prestige to a company.
Guanxi is also a very important concept in Chinese business. Roughly meaning “relationship” in English, the Pinyin (romanization of Chinese words) is increasingly being incorporated into English-language business practices here in China. Without Guanxi, many business transactions in China simply cannot take place. Quanxi describes an individual’s personal network and connection with other important individuals. At a certain time, an individual such as a businessman may need to reach out to a friend or family member for a favor. Take for example the wine company that Johnny’s friend’s friend, etc. owned. In order for that owner to successfully launch his business, garner clients and customers within the community, he needs to “scratch the back” of any friends and influential people in city that he knows. “Scratching the back” doesn’t necessarily imply giving money. Rather it can come in the form of respect and trust. Cultivating such relationships can take time and finesse.  Our wine owner has to show his appreciation for his local government official friends so that he can get necessary permits to open his store and garner customers. Local government officials take an active interest in the growth of companies which is tied in with economic growth of the community. Such local government officials may become major clients and accounts of the wine business and then help sell the wine to more individuals. Therefore, our friend the wine store owner must hold events such as banquets and fancy dinners in a hotel with entertainment and “important Western sales executives” to lavish and show appreciation to his sponsors and government officials.
I’m learning that a Quanxi network can be quite intricate. Take for example Johnny’s aggressiveness with recruiting me for opening of the wine store. Although Johnny didn’t work for the wine seller, he could potentially benefit from knowing and helping the friend of the friend opening the business. Down the road when Johnny graduates from college and needs a job, he will already have a couple of points in the Guanxi book for having successfully recruited Westerners for wine events. Looking at it from that point of view, it makes sense why he was persistent and aggressive. He is likely under pressure and working on garnering his relationships right now for future job prospects and no doubt wants to make a favorable impression.
At the end of the day, Quanxi may not seem vastly different from “networking” in the West or more crassly, the “Old boys club”. Some critics may think that it’s a dishonest and corrupt practice. Nevertheless, business practices and the long term success of a business in China depends on the very intricate personal relationship between individuals all the way down to the grassroots level. Although it may be seen as a time and cost-consuming practice, Chinese and foreign companies must practice it and it strengthens trust and relationships in the long run.
For more information on Chinese business practices and Guanxi
–          Chinese Business Culture
–         Guanxi according to Wikipedia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s