Guanxi – How understanding Chinese business culture can improve your importation business
Doing business in china comes with a lot of benefits and risks. The global business environment suggests that business culture is fast becoming an integral strategy to winning in business.
It is no longer news that China produces 27% of the world’s global product. However, the biggest factor to China’s growth is largely due to the fact that not only did they open up to Foreign Direct Investment but China’s government is also cracking down on curruption and creating an enabling business environment.
The Asian gaint is the second-largest economy in the world and it is not stopping anytime soon. It keeps becoming an attractive market for investors all over the world.
Asides, these fascinating attributes, there is a particular ingredient that drives success when doing business in China and this is understanding of Chinese business culture.
Every culture has its own values, beliefs and systems. For the sake of this article, we will define what “culture” is.
According to Geert Hofstede, “culture” is the programming of the human mind by which one group of people distinguishes itself from another group. The Chinese culture boasts of rich values and traditions and they have not failed to make these an integral part of their business relationships.
To understand Chinese business culture is to understand the cultural dimensions of the Chinese people. Using Hofstede, culture dimension metric, we will quickly observe China’s cultural dimension. To save your time, we needn’t not to emphasize too much on these dimensions.
China’s cultural dimension metrics:
- China is a high powered-distance country- This means there is a practice of hierarchy in Chinese culture that applies to every sphere of the society.
- China is collectivist culture- Unlike western culture, the chinese value relationship with family and ingroups more than individual self. They put the family’s needs above their individual’s needs.
- China is a long term culture- Chinese think ahead and they are very futuristic. They have a culture of saving and investing for a long term.
- China is a masculine society- China values work a lot and success is a symbol for the value they put into work. The chinese culture is ambitious and very tough.
- China’s uncertainty avoidance is low- China takes big risks but they will rather take chances for situations they can control rather than one that is ambiguous.
- China practices a restraining culture- China is a very conservative culture and they delay gratification
It is important to point out this Chinese cultural metrics in order to grasp the most important point of this article. To understand these dimensions better, click here
What has these got to do with importation business?
There are many Chinese culture to observeif you want to succeed in business, including importation business. In order to succeed as an importer, you must be able to understand the culture of your business partner, in this case, your supplier and how it relates to the success of your importation business. Let’s point out some cultural mistakes that you should avoid when doing business in China or with a Chinese partner.
1. Being ethnocentric
Ethnocentrism is when you assume that your culture is better than another person’s culture. Don’t make this mistake of assuming that you have a better culture and hence, you undermine the values of a Chinese person or your supplier.
2. Rushing things
The chinese consider time as indefinite and they place value on building relationship more than being monochronic. They consider building relationship as an important part of business transaction. Hence, you must strive to build a healthy relationship with your Chinese partner
3. Referring to your supplier by name without the title
Respect is very crucial and adding titles to your supplier’s name will make them want to hear you out.
4. Making culturally sensitive jokes
5. Looking for shortcuts to do business
6. Breaking promises and contracts
7. Not having Guanxi
These are just a few mistakes business owners make when doing business in China. For the purpose of this article, we will focus on number 8 which is Not having guanxi
What is guanxi and why is it important?
Guanxi is an cultural phenomenon for having a personal network in China. This loosely translates to building a network of personal relationships that operates on trust, devotion and commitments between parties. For many years, this cultural phenomenon has shaped the way businesses are done in China and this is because the cultural values. Systems of the Chinese people are woven deep into how they do business. They consider business as lifestyle unlike the west where a person can have an individual personality and business personality. This is the opposite in China.
Building a successful business in China has a lot to do with having guanxi because guanxi is the manifestation of being able to build trust and getting Chinese suppliers to work with you. The Chinese consider trust and commitment to relationship as a key ingredient for successful business transaction. Hence, when considering getting deals in China, you must leverage the use of your guanxi or your partner’s guanxi in order to succeed.
Guanxi is the influence a person has in order to get favours from other people in Chinese culture. As an importer, especially, if you buy regularly and in bulk from China, it is best to start thinking big and learning about the Chinese culture to favour your business.
Building a healthy relationship will open more doors for you and help you navigate the business terrain of the Chinese environment better. It also helps you stay committed to business deals. Remember, the Chinese has a culture of thinking long term. How this translates to healthy relationship is that it helps you build trust and encourage mutual obligations between you and your Chinese suppliers.
How Naiyuan Mart comes in
Not every importer goes to China directly to source for goods. Many importers use the services of procurement companies like Naiyuan Mart to buy from China. However, not all procurement companies help importers to build a healthy relationship with their suppliers.
Naiyuan mart is exceptional, in that, we are registered in Hong Kong, Nigeria and Ghana. As it is, a specially dedicated team is permanently in China to make business easy for our customers.
With presence in mainland China, Naiyuan mart helps business owners to get the best out of Chinese supply chain and more importantly, they help business owners build rapport with these suppliers.
We can confidently say that Naiyuan Mart has a lot of guanxi that helps business owners get the best deals in China because we consider building trust and healthy relationship for the sake of our customers’ businesses.
We have some of the biggest suppliers in major industries. To create access for importers, we put together this verified suppliers lists whom we have guanxi with for business owners to do business with them.
To learn more about what we do, shoot us a WhatsApp message here
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References
Firas Kittaneh. (2017, July 13). 6 Tips for Doing Business in China. Entrepreneur; Entrepreneur. https://www.entrepreneur.com/article/297009
Hofstede Insights. (2020). What do we mean by “culture”? Hofstede-Insights.com. https://news.hofstede-insights.com/news/what-do-we-mean-by-culture
Wenderoth, M. C. (2018, May 16). How A Better Understanding Of Guanxi Can Improve Your Business In China. Forbes. https://www.forbes.com/sites/michaelcwenderoth/2018/05/16/how-a-better-understanding-of-guanxi-can-improve-your-business-in-china/?sh=478ed605d85b