The international community has always regarded Asia as a unique cultural ground, but not many are aware of the ways in which this exceptional culture also plays an important role in business operations. When it comes to doing business with the Asian, especially the Chinese, there are two cultural and sociological factors that are critical to ensuring the success of negotiations, namely Mianzi 面子 (fame and face) and Guanxi关系 (relationship and network.)
Both of these concepts are deeply rooted in Chinese culture and carry potential implications for investors, so it’s important to understand how these two items come into play when considering business transactions.
Relationship-based (Guanxi关系) Business
Guanxi is related to building and maintaining deep, complex interpersonal relationships and bonds between individuals. For instance, Chinese businessmen usually partake in many social activities after work in order to connect with other people, as these activities provide potential opportunities for business.
While socializing with colleges and business associates is common in the west, it takes on a different dimension in China.
For example, when bidding for project opportunities, it is quite likely that Chinese clients will choose people with whom they get along and are familiar with, even if another company is a stronger competitor. Many businessmen new to China don’t stop to invest the time into building relationships until they are faced with a problem, and at this point they too often find that their efforts fall on deaf ears.
The explanation for this simple: the Chinese Guanxi principle dictates that relationships need to be cultivated on a daily basis. If you are not always in China, you can still give your Chinese clients a call on Chinese festivals, which shows that you care about them outside business.
Mianzi（面子） Saving-Face Social Norms
Similarly, the second factor that needs to be taken into account is Mianzi or “face.” Face is a sociological manifestation of the desire to retain social stability, hierarchy and respect, it represents the need to be respected by others and not be embarrassed in social interactions. Although the desire to save face is common in many business environments, it is of paramount importance in China.
Failing to cope with this issue can have significant consequences for your business in China. One example of causing a counterparty to lose face illustrates the issue:
Chinese businessmen usually use both hands when presenting their business cards, and they also make sure you hold it Chinese side up, facing your contact so that you can read it. However, foreigners often ignore this etiquette, which offends Chinese businessmen, who think their mianzi or face has been damaged.
What does this mean for doing business in Asia?
- Remember that business is conducted between individuals who share a very close bond or relationship. Many subsequent business opportunities will arise as a result of this formalized business relationship.
- Be patient. Initially you may think that the company’s resources are being squandered, with too much time and money being spent on developing a relationship and partnership with other people. Over time you will see that this investment brings more business to your company.
- Keep calm and carry on. Accepting the principle of face means you cannot challenge your clients even though they are inexperienced or unskilled. Avoid conflict and arguments when you deal with Chinese clients.