Navigating China Guide (2012) - New Zealand Trade and Enterprise

WAIKATO UNIVERSITY
CASE STUDY
My customer, my partner – the importance
of relationships in China
Good relationships are important for success in any country, but
Waikato University’s Dr Ed Weymes has found that building and
maintaining strong personal relationships is a make or break
issue for the university’s education business in China.
The university’s Pro Vice Chancellor International manages the
university’s joint degree programmes in China. Under the
programmes, Chinese students do half their degree in China,
taught in part by Waikato staff, then come to New Zealand to
complete their study.
Weymes says the importance of personal relationships is
probably the key difference he’s experienced between doing
business in the West and in China. “Historically, China never had
a strong legal system, so business has been conducted on the
basis of relationships,” he says. “In the West a business
agreement is cemented with the contract. In China the contract
is less important and business is conducted first and foremost
between people.”
As a result, he’s had to develop more than just working
relationships with his Chinese counterparts; he’s had to develop
personal relationships with them. In China this concept of
working through personal relationships is called guanxi, which
represents the relationship and obligations between individuals.
While Westerners are unlikely to attain guanxi, a trusting
relationship is critical to any business venture.
Developing these relationships takes many visits and dinners
and is established over time. For example, it took two years
before Weymes’ counterpart in China – who spoke fluent English
– would speak anything other than Chinese during formal
meetings. When the switch finally came it was a sign that a
relationship of trust had finally developed.
Build relationships with senior staff
Weymes says you need a relationship with a senior member of
the Chinese organisation, otherwise your project might not get
noticed. “I maintain a relationship with the presidents of the
Chinese universities I am dealing with. I may not meet with them
on a regular basis but I have their cellphone numbers so if there
is a problem and I need to talk to a decision maker, I can actually
reach one.”
When dealing with problems protect the relationship by raising
the issue indirectly. Don’t accuse your partner outright or issue
threats. “Deal with it the Chinese way – quietly and indirectly.
Tell them there is an issue you are concerned about. Don’t insist
on an immediate response, but wait for them to deal with it,”
says Weymes.
Maintain your key relationships
To maintain essential relationships Weymes visits China four to
six times a year. “If an issue arises you can discuss it by email or
fax. But at the end of the day if you want to get it dealt with
quickly you need to jump on a plane.”
Relationships with government officials and State Owned
Enterprises tend to be more formal, while dealings with private
companies – particularly in the developed southern and eastern
regions – are becoming more like those in the West.
Because business is based on personal relationship rather than
contracts, you need a continuity plan for when key staff leave,
Weymes says. “We were about to sign a contract when there
was a change in senior personnel on the Chinese side and we
were asked to put things on hold until the new senior
administration got to know us. It took six months to get back
on track.”
Tips:
• In China it’s who you know, not what you know, that
sometimes counts.
• Don’t try to form a quick relationship because it won’t work.
• Accept that it will take time – two or three visits just to get
things started.
Use Chinese nationals to bridge the culture gap
Having a Chinese national as a mentor can be valuable. “When
I first started going to China 25 years ago we had a Chinese
history professor who would come on our visits and explain
the subtleties and nuances of what was being said in meetings.
He advised us on what we should and shouldn’t accept.”
A Chinese national on the staff also helps Weymes navigate
cultural differences. “Your Chinese counterpart may feel more
comfortable raising delicate or difficult issues with a Chinese
national than with a Westerner like you, because this will avoid
a loss of ‘face’ or embarrassment.”
He uses an interpreter rather than a translator to ensure he
understands what is really being said. “China is a country where
yes can mean no and no is never said. You need to understand
what level of yes is being expressed: ‘Yes I understand you’;
‘Yes I agree with you’; or ‘Yes we are committed to that’.
An interpreter who knows your organisation can explain
the nuances of the responses.”
Negotiations Chinese style
One of the best places to learn about negotiating in China is the
country’s local markets, Weymes says. “If the stallholder asks
you for RMB 700 for a nice shirt you should offer RMB 40 and
then walk away from the store at RMB 80. When you start
walking, nine times out of 10 you will hear the words ‘Come back
– okay, okay’.”
The Chinese are tenacious negotiators, so you need to have a
bottom line and you need to stick to it, Weymes advises. “If you
acquiesce to a request then another request will be made. If you
acquiesce to that, a third one will be made. While you keep
acquiescing your partners will keep pushing.”
When you reach your bottom line stick to your guns. “I had a
situation where I was meeting with my Chinese partners at 9am
to spend 45 minutes reviewing all the terms we had negotiated.
Well, 11 o’clock came and we cancelled our first train, 12 o’clock
came and we cancelled that train. When our partners tried to
renegotiate the financial aspects I just drew my line in the sand
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