Guanxi

This is something in China that they called “Guanxi” and basically its major relationships and everything there and the whole theory of this is that the way the do business is based on relationships. Call calling will never ever, ever work in a thousands years in China because the boss, the decision maker you need to get to is not going to see you or talk to you and that is true whether you are selling to him or whether you are buying from him. He is only going to see you through his subordinates or his network of friends.

So once you are in the one factory the best way to get in another factory is through that one factory owner. You want to make contact with him and let him contact the other factory for you and don’t worry so much that he is going to make money of you. The relationship he is going to have between him and the other factory owner is going to be so strong but if he makes a little bit money off of you. It is going to save you a great deal of money so if he makes a little let it and chances are he wont he is going to do it as a favor to his other friend.

Everything works in China based on favors. One person does another a favor. And reciprocity there is not like a reciprocity that is first point of Guanxi its reciprocity. Gifts, respect and kindness it’s not always giving back right away. As a matter of fact it is almost considered rude if you give a gift to a Chinese person, for them they turn around and give another gift to right back. Almost seems rude, they are going to take your gift they are going to appreciate it. And then at sometime later they are going to return the favor to you.

Whether it be in a gift form or if it be in an act of kindness or reference or what have you. But the reciprocity is really important and it starts with the passing of the business card. When you pass the business card to a person you are doing business with in China, pass it forward with respect and they are going to pass one back to you with respect. And you want to show them that same level of caring when they are dealing with you, you want a slight bow and let them know that you have respect for them.

A saving FACE

If you heard, most people heard that before but that is about embarrassment and just never embarrassing anyone that you are negotiating within China under any circumstances. If you are upset with the subordinate because they are not getting the point or getting something done and you want to go around them somehow do it to the proper channel and do it with calm and a great deal of respect and just ask to speak to someone else that might say “You know I am having a hard time understanding can you please, is there anyone else that might be able help me to understand this?”.

And put it all back on you of not being able to understand don’t embarrass them and your thinking right now, ”Well that is fine, I can do that”. When you get to China it can be a very frustrating place because everything seems to be slow and difficult and you know “Give me a glass of ice water” it takes 30 people talking about it for 20 minutes – it seems that way. In negotiation it particularly is that way. They are trained that way. They do not jump to conclusions, they don’t do things quickly, if they do they get reprimanded by their bosses and they have an indirect way of doing business and it is very slow.

And that is just something that if you don’t want to be indirect and slow you will probably don’t want to do business in China because if you are direct and fast they are going to treat you poorly and you are going to pay a ridiculous price. If you show a lot of respect and you can take the time with them to get them know them and understand their business and see their strengths and their weaknesses and you appear to them to be a wise business person then they are going to show you lot of respect and one way they are going to show you that respect as by giving you a quality product at a decent price.

Social Hierarchy

You have to work up to the ladder, have your assistants deal with their assistants. Do not ever try to deal directly with one of the assistants in a trade booth or in a factory. Set back and let your assistant deal with them. It shows the point of power and if you start dealing with their assistant, they are going to assume that you are at the same level as their assistant. And it is going to be difficult for you to get a meeting or to be able to actually talk the primary or the principal director of the company if you have been talking to the assistant.

Let your assistant talk to the assistant and when you guys get to a crossroads have your assistant, ask respectfully if it would be possible for the 2 principals, you and the principal of their company to meet and say hello. And do not necessarily ask for a particular outcome to come out with that. Just say that it would be a good idea for them to meet and then you would be very honored to be able to meet someone who would built such a great company. Be very complimentary. Cheesy compliments actually worked pretty well in China.

Demands or frustration and particular insults don’t work it all. They will absolutely shut you out. And they still sell to you but they are going to absolutely rape you when it comes down to the time of taking them money, if they feel like you belittled them or embarrassed them in any way.

Age, rank, title is very important. The older the more respect. The rank is very important. And your title and their title they need to match. You need if you are dealing with an assistant then she needs to do it. They need to be dealing with the one your assistant. So if you have a manager with you, that manager should be dealing with the one of their managers. And if you are the principal owner of you company then you should be dealing with the principal owner of the company. And you are going to establish those things up the ladder.

You can not get that done in 5 minutes it is going to take a while so when you go to one of these factories I have never been to a factory tour that lasted less than 4 hours. So be prepared to spend the half a day at the factory if not longer. And typically going to take you to lunch after that. So just be prepared and talk about family and things you like and trips and hobbies and anything you can think about to be as indirect as possible.

Touching occasionally on business the more that you try to push them for a price or push them for delivery they have to push them for whatever. You going to notice them become indirect very quickly and switch to another subject or talk amongst themselves and leave you out of the conversation completely. Just be as indirect as they are and you will really come out much better.

The business will get settled toward the end and I have this happen a few times or you will talk for 4 hours, I think I got nowhere and at the end they will be one moment of clarity.

And the principal of the company will look at you and say “Okay I will sell to you for $12” and that is the end of the conversation its all got settled in 3 seconds at the end of the conversation if you talk about fishing and travel and children in college and everything else. But that is the way that they do business and you absolutely have to respect that or you shouldn’t try to do business there.

It sort of like that but their establishment is social class is lot different than ours. It is not based around what kind of car you drive. I mean this is a country that a lot of the people better in position of power there because they were placed there by political party. And it is a very different environment and you can get a decent understanding out of it from reading this book the “China Now” book but to be honest with you I do not even pretend that I will ever totally understand the culture, all I can try to do is be respectful of it.

What drives them is very different to what drives us. And a lot of people better in positions of power there have been placed there because their uncles or their fathers or their grandfathers were political leaders in the past. Some have just busted their butt to earned their way to there. But there is almost a limit in China as to what you can earn. How far up the ladder you can earn your way.

Typically speaking, when you get to certain point of the top of the ladder, you are sort of placed up so many wrongs to start with. I do not guess that is always true I do not really know but most everybody I have ever met in the position of real power there had been placed there one time or another.

Be harmonious

Never lose your cool even if the conversation seems long and way off base. They may get upset with one another but in the end they have a united front.

If you are going to get upset with anybody, you get upset with one of your subordinates not one of theirs, it shows a great deal of weakness and you really should just remain harmonious and calm and very cool. Again it just goes to your persona as a good business person.

Hotheaded, yappy, yelling business people are perceived as foolish there. They are not. You think you are going to come in and prove that you are a tough business person and they are going to look at you just in the opposite.

If you will notice the top leaders in this companies when you meet them are very, very quiet. They are not real chatty catty types. And even if you are, you need to try to contain yourself because they just see that as kind of kiddish and foolish. They are for the most part. When you get to the top of the ladder – people of few words. They don’t say a great deal. And you can communicate with them fine but just being real high energy and yappy kind of throws them off .

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