WHAT DOES TRUST AND FRIENDSHIP MEAN IN CHINESE BUSINESS ?

           Many authors included the notion of trust in the feature of Guanxi as mutual trust is a must in building relationships, however, Woo and Prud’homme (1999) considered trust as another cultural trait, because the character of a trustworthy negotiator should be direct, honest, and no hidden agendas must appear in the negotiation process. Nevertheless, J. Sebanius and C.Qian (2008) proposed three images to transform a preliminary business relationship into a warm, cooperative, and fruitful one, the first image is that of a polite, respectful, face-giving individual, the second one is that of a trustworthy negotiator, the third one is that of a caring-friend. Trust building is a difficult process and consumes too much time, but the Chinese will not do business with strangers or untrustworthy people (P. Herbig, D.Martin, 1998).

          Trust is very important when doing business in China because the Chinese do not conduct business with someone they are not familiar with. You want to understand each other on a personal level and that is crucial if an agreement is to be reached. The fact that you want to trust your business counterpart is, most likely, very common in every major business deal around the world. A basic trust between two companies is a good foundation, but these activities, Chinese partners say, are more common in the Northern provinces of China, while the south is more business-oriented. When it comes to MNCs, an expatriate manager explains that one has to remember that he have worked with his customers for about ten years, thus, they know them and the customers know the company. If a new company wants to establish business in China, it will probably take a while before any negotiations can start. A major part of the trust and friendship building activities take place long before the actual negotiation begins. 

        It is very important to MNCs to have a long-term vision and to be “a good corporate citizen”, meaning that the company gives something back to the community. For example: treating its Chinese personnel well and giving them possibilities of improving their competence to be promoted for management positions. Other ways for companies to be socially responsible are by: sponsoring different events in China, donating money to schools and even building schools, donations to support environmental projects. Therefore, showing that the company cares about China and that it wants to be part of the development of the country is a very good and important way of generating trust. In return, the Chinese understand that the company is not here to trick them, or to do things they will regret. Moreover, if you give the impression that you are in China to make fast money and do not show any interest in operating in China for years to come, then you will not gain the trust that is necessary when negotiating.

WHAT DOES GUANXI MEAN IN CHINESE BUSINESS ?

         Guanxi or the expectation of reciprocity is also a widely written-about cultural feature of doing business in China, as its importance has proven to be radical in business negotiations with the Chinese, it actually means relationship or connection in Chinese, but the concept of Guanxi is not only about relationships, it is also about maintaining them, through the exchange of favors rather than through expressions of friendship and sympathy. It implies reciprocity in a way that business negotiations are influenced by these favors to be yielded anytime and anywhere it is requested by a connection. And if it is refused, the relationship will be jeopardised as the other party will lose face and the whole guanxi network might collapse (Woo, Prud’homme, 1999). These favours are almost always remembered and reciprocated even during a long time, it is believed to endure personal relationships for long-term (Graham and Lam, 2003). The Chinese usually acknowledge two types of relationships: warm friendship, and impersonal relationships which are short-time, whereas warm friendship constitutes the Guanxi which is a long-term reciprocal social investment with stakeholders (J. Sebanius, C.Qian, 2008). As long as a business negotiator is building relationships, he is also gaining a higher social status.

           Having mutual acquaintances facilitates matters greatly due to the fact that it is a shortcut for creating trust. Expatriate managers illustrated that if one’s previous boss knows one’s client’s brother or a high-level politician in the province since many years, then it immediately creates a sense of trust. Hence, Guanxi is very important, it does not mean that it is impossible to contact the client directly and create the contact on one's own, though it takes longer time.

         What the connection is depends entirely on the context between the company and the client; sometimes the connection can be on a completely private level, for example a colleague who knows someone in the province where the client lives, this colleague might have done military service with the client in question. There is no simple answer to what the connections looks like. You need skills like relational ease, in order to find, create and then utilise these connections in a positive way.

          Chinese negotiators state that the need for a Guanxi-network varies depending on where in China you negotiate, however, they believe that the further to the south of China you get, the less important Guanxi becomes. This is due to the fact that there are heavy influences from Hong Kong and the cantonese business culture that is more based on a judicial system. Although, Guanxi is still substantial in Hong Kong, but not to the same degree as in the Northern parts of China.

            Eventually, it is not admitted that the side that can assemble more Guanxi will be more formidable than the other, this implies that it is possible to succeed in China without an intermediary; however, it will take longer time before an agreement can be settled with a new counterpart.