When we advise our clients on how to run their China business, I always talk about the concept of “Guanxi.” It is integral to doing business in China but its principals also applies for other Asian countries.
What is Guanxi? Fundamentally it is building a network of mutually beneficial relationships which can be used for personal and business purposes. Roughly translated as “relationships” or “social connections”, it is a crucial part of life in China. Having good Guanxi means you have a wide network of mutually beneficial relationships and social connections. These are developed outside the formal work setting, for instance at evening meals or over drinks. It is often the secret to securing a business deal.
Guanxi can loosely be compared with an “old boy’s network” that we are all familiar with in western countries. In the western culture it is fairly simple. You meet someone through a mutual contact or friend, you start dealing with them professionally, you play golf or have drinks occasionally then a trusted relationship develops mainly through a familiarisation with that person at more than a business level. This process does not always take a long time. You become friendly, but generally do not become close friends. Guanxi takes much longer to establish. It is like an “old boys’ network” but has a much deeper level of trust.
Let us say that you are the CEO of a company and a colleague from another company has a personal relationship knows an important businessman or government contact who you have been wanting to meet. In the “old boys’ network”, your colleague would likely not think twice about setting up an introductory meeting, lunch or a game of golf to make an introduction. Then they will leave you to meet up again to have private discussions.
It would not happen this way in China. It is far more complex. To your Asian colleague, it is far more than a simple introduction. It is the personal endorsement of you and your business to his colleague or friend. Your Asian colleague does not want to lose face if the relationship or business dealing with their contact does not work.
Our recommendation is that before you ask an Asian colleague for an introduction, you assess how much trust they have in you. Fundamentally you do not want to hurt your relationship with your Asian colleague because it was not yet the right time to ask for this introduction.
There are some basic questions you need to ask yourself to make the assessment if the timing is right. How much time have you put into developing the relationship both socially and business wise? Is this person comfortable with you? Have you met your Asian colleague’s family and close friends? If your assessment is that you have not met this criteria my advice is not to ask for this introduction. Spend more time developing the relationship and earning your Asian colleagues trust.
In summary, Guanxi is extremely important to doing business in China and other Asian countries. It is not much different to having than having a strong old boy’s network but the relationship is far deeper and more complex. It is critical to take your time in developing these relationships and trust before asking for introductions. In addition it may be helpful to have a native-born Chinese person to help you develop these relationships.