Literature on Chinese business
The literature on Chinese business emphasizes the importance of relationships. The academic literature talks about guanxi and the importance of it when it comes to doing business between westerners and Chinese executives. It is common practice for western companies who enter china in order to do business there. The reality is that business relationships are just as important in any other country throughout the world.
Let’s have a look first at how to establish a business in Ireland or the UK. In these countries if you have a business you can advertise your business, go to trade fairs and even in some instances cold call with your pitch. If you are a business owner and someone has offered a pitch to do business with, most likely you will ask those in your circle if they have done business with or heard of that business. On the basis of the suggestions of your peers you may consider or indeed refuse the business proposition.
Business relationships are key in China
In China, business relationships are very important to succeed in business. China however takes time. Findings from my own research on doing business in China outline that business in China will take a considerable length of time. Some have reported that in China, as a foreign company, it can take up to 4 years to make a business relationship profitable.
How do you cultivate a relationship in China?
Relationships begin with business meetings, going to dinner and getting to know the business executives personally. Some have suggested it can take 3 years to get a business contract from a Chinese business.
So why then does it take so long?
Culturally the Chinese are risk adverse. This cultural characteristic has roots from Confucianism and the Confucian origins in the Chinese education system. In the international and cross-cultural management literature, there has been much written on time orientation. The Confucian countries however, would rather to take time over business decisions unlike western business cultures where decisions are made quickly as time is money.
The rise of the Chinese business
In the 80’s and 90′ when China was at the start of its development, a simple business relationship would suffice to earn a contract as a foreign company doing business in China. However China in 2013 a foreign company must have more than a business relationship to be able to do business with another Chinese company. You need to have a competitive advantage in your area. You need competitive and financial strength to impress a top Chinese company because they are now global competitors. Take for example Huawei.
The cost of doing business in China
So can you afford to travel over and back to China from the UK, Ireland or the USA, numerous times a year for business meetings for between 2-4 years? It takes substantial investment to pay one of your employees, for flights for a hotel, transport and maintenance for several times a year. However if the efforts end in success the rewards will be huge. Relationships in China last long compared to cultures such as the USA or the UK. In those cultures suppliers can be easily dropped if other better offers arise. As I mentioned, in China, relationships last long, as a result business contracts will also be long lasting in nature.
Eastern And Western Online Differences
The difference between Chinese and European Social Media
Chinese business cultures
As I mentioned in a previous post, if you are a business who usually go to various firms and offer your pitch, more than likely you will fail miserably with the same tactic in China. However you can begin to cultivate relationships at Chinese enterprise events or trade fairs in China. There you can start talking to those from various firms, only when you get to know them and they get to know you will you be able to offer a pitch for your business. However it must be emphasized that the Chinese are most unlikely to seal an immediate deal.
Chinese time orientations
The Chinese rather to take time and deliberate over an offer and to figure out whether or not it will benefit them in the long term future. The Chinese will do business with you once they are certain they can trust you, that your business means a lot to you and that you see yourself doing business in China into the future.
Networks are key in China
Once you attain links in China it is important you keep communicating with those at the top of Chinese companies and to speak to business partners and their business partners to get more business in China. Guanxi and Trust are important but it is networking skills on the ground that will win clients in China.