Partner Article

How to develop a ‘guanxi machine’

By Thalej Vasishta – Paragon Law; & Robert Avery-Phipps – Nottingham City Council (China Desk)

Talk to any business person who has done business with China and one word is certain to crop up and divide opinion every time ‘guanxi’. We don’t have a direct translation in English but in its broadest context it means ‘developing personal connections’. The power of guanxi is underestimated by so many businesses I speak with. In the UK we are lucky; we have a solid legal structure and business conventions that near enough everyone sticks to. This means we can parachute into a meeting, flick over our business card and start talking numbers. In China it is not so easy. Business is built around personal relationship. People would rather trade with their friends because they know what to expect. They are cautious about making business deals with new comers because the conventions we are privileged to enjoy in the UK, that of the hand shake and signing of deals, doesn’t carry much weight. In China, the best business is done between friends.

So how do you develop guanxi? In a perfect world you would A) be fluent in Mandarin B) split your time equally between China and the UK and C) be willing participate in activities that would be seen as ‘time wasting’ from a British perspective in order to develop stronger relationships with the people your dealing with.

Back to the real world, British businesses need to develop a ‘guanxi strategy’ in order to make the most of the opportunities China have to offer. It is a simple formula:

See me, like me, trust me, work with me

See me: Businesses need a China presence. This doesn’t have to be costly, social media is an incredible platform to reach the people you want to contact whilst still sat in the UK.

Although the percentage of China’s population which uses social media is less than the US, those that do are almost twice as engrossed and engaged. If a business can identify its target audience, be it one individual you plan to buy from or an entire demographic you want to sell to, make use of Chinese social media and get seen!

Like me: One potential spanner in the works is language barrier and not understanding how to use the social media platforms. There are a few decent consultancy companies who specialise on Chinese social media which could offer support. Alternatively, there are over 100,000 Chinese students in the UK many of whom communicate more in the world of social media than they do in ‘normal society’. Take on a student on a part time basis to manage your Chinese social media strategy and create posts that people will like!

Trust me: At the same time as developing your online platform, start sending feelers out in China. Don’t waste time, energy and money flying to and from China in a vain hope to find a suitable business partner and develop enough guanxi to start a trade dialog. Savvy businesses should tap into the Chinese student community in the UK. Most Chinese students come from affluent and powerful family backgrounds. Some will hold a network of contacts that would never be attainable by a British business. By identifying the right students and taking them on as interns, you can tap into their guanxi back in China. This allows you to sidestep all the ‘guanxi building’ that most companies have to do simply to be recognised as a trust worthy company in the eyes of the Chinese business. It also breaks down the language barrier and allows you to do business in Chinese which demonstrates that your company is set up and ready to trade with China.

Work with me: Once you have build up your guanxi using the previous steps you will be at a stage where you can fly to China and start having serious conversations about business. The ‘work with me’ stage should be the easiest of all stages if you have built a strong guanxi base and can maintain and build more and more support for the Chinese student community.

Maybe this is unconventional advice but if you have done business in China you will know it is an unconventional place. Developing a guanxi strategy is essential for success and the Chinese student community is a great asset we should make better use of!

This was posted in Bdaily's Members' News section by Laura Jones .