Guanxi and Building Trust

The number one business rule in China is worth noting and understanding. It is called Guanxi. It is about the art of the relationship. No matter where you live chances are you know that relationships matter in business. So what is different? In China the relationships precede the transaction, in the west the transaction often comes first.

To thrive in China you must embrace Guanxi. It is the cultivation of business relationships- not superficial networking. One American business leader, an aerospace president, told me his approach to building Guanxi with his Chinese counterparts included long (5 or 6 hour) dinners often with several other people and lots of alcohol. He is also working to perfect his language skills to speak and understand Mandarin so he can have more personal conversations without an interpreter present. It will take him many months of this consistent behavior to start making inroads. But it is worth the investment of time and energy. After all China, despite the financial woes of the past year, is still an economic powerhouse.

In China you establish Guanxi first and then work on the deal. It doesn’t happen overnight- but by showing mutual respect and interest you can start to build Guanxi with a good first meeting.
Traveling with Drexel University’s LeBow College of Business Executive MBA program I spent two weeks learning about the business culture and climate in China. It was fascinating and there are so many other takeaways to share, but for those who want to do business with the amazing market that China is, it pays to take your time and start building some Guanxi. Whether you are looking to grow your customer base or expand your B2B network, this Chinese norm could be a useful tool for you.

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