Global Sources
SmartChinaSourcing.com
Ready to import from China? Find verified suppliers on Global Sources.
Share / Recommend:

Western negotiators in China must know the difference between guanxi and corruption

by Andrew Hupert

If you are arranging business deals in China, it is just a matter of time before someone tells you that A) everyone does it, and B) it is the only way to get things done in China. How can negotiators in China draw the line between cordial relationships and graft?

Guanxi and negotiation – build relationships, but state your goals and your limits early

When the baijiu is flowing and the conversation is still light-hearted, do like the Chinese do. Know your goals, steer the conversation where you want it to go, and establish a framework for the negotiation. In China small talk is not empty talk. A good Chinese negotiator starts staking out positions, assessing your assets and maneuvering for advantage from the very first meeting. You have to do the same. Use your guanxi-building time to declare your goals, inventory their resources and capabilities, and establish limits.

Conversation in China is never as light or casual as it seems. When they ask about your family, reciprocate – and find out where their child is going to school. When they talk about travel, find out where they spend time. If someone is a civil servants but his child goes to school in California and summers in France with Mom, then you have to do the math and draw conclusions about his source of income. Make judgments about potential partners and associates early – and stick to your decision. No one gets more honest when the amount of money on the table goes up.  Westerners frequently let promises of quick riches in China cloud their judgement and put them into bed with wrong counter-parties  (both literally and figuratively).

It is only guanxi until you get caught

If you do not know what the FCPA (Foreign Corrupt Practices Act) is, get up to speed right away. When you get caught paying bribes, either in the PRC or the US, saying, “but the Chinese middleman I just met in Beijing told me it was OK” is an admission of guilt – not a legal justification. You may not get caught, but if you do the results can be devastating to your company and to you personally. If your company has a policy on gift-giving and bribery, it is your responsibility to know it and abide by it. If your company does not have a policy, then you need to clarify your position with the relevant people at the headquarter BEFORE you get into trouble. This is a conversation to have with your own people early.

Good guanxi and bad guanxi

Guanxi translates as relationships or networks – not corruption. It is possible to build strong connections without bribes. The key is to select the right partners early, and communicate honestly and thoroughly. The wrong Chinese partner is going to get you into trouble by soliciting or facilitating bribes and graft. The right partner will steer you away from individuals and transactions that will cause problems.

China is much more relationship-oriented negotiating culture than the West, and it is difficult to do normal business without getting to know your counterparty on a personal level. But there is a big difference between paying for dinner and paying a bribe. All corruption in China starts as a guanxi relationship – but not all guanxi ends up as corruption. You have to know what you are getting into and establish boundaries.

Guanxi may not help, but getting it wrong definitely hurts

Should honest businessmen avoid guanxi and personal relationships completely? Some experienced expats have recently started suggesting that Westerners in China are better off dispensing with guanxi and relationship-building efforts since foreigners do not get the same benefits as Chinese do, but can run into more problems. While this may be true, it is still a bad idea to ignore the importance of establishing cordial business relations. Good guanxi may not help you – but failing to establish a solid guanxi foundation will definitely hurt you.


Andrew Hupert runs ChinaSolved.com, an online platform that helps the international business community achieve greater success when doing business in China. He also writes ChineseNegotiation.com. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Comments   

 
0#icra avukatı ankara2014-12-27 13:38
Thanks for sharing your thoughts about how to import from China.
Regards
Reply | Reply with quote | Quote
 
 
0#rumah dijual murah2014-04-20 13:05
Thanks for the auspicious writeup. It actually was once a leisure account it.
Glance complicated to more added agreeable from you! However,
how can we keep in touch?
Reply | Reply with quote | Quote
 
 
0#plantation florida2014-04-10 07:49
Highly energetic blog, I liked that a lot. Will there be a part 2?


Here is my website: plantation florida townhomes: http://www.jungull.com/great-luxury-apartments-in-plantation-florida/
Reply | Reply with quote | Quote
 
 
0#forex robot2014-04-10 05:11
Incredible! This blog looks just like my old one! It's on a totally different subject but it has pretty much the same layout and design.
Great choice of colors!

Feel free to visit my webpage: forex robot: http://www.christmastop50.com/index.php?a=stats&u=kerri2918oxsww
Reply | Reply with quote | Quote
 
 
0#Nusuno Karya2014-04-06 02:02
Somebody essentially assist to make significantly posts I would state.
That is the first time I frequented your web page and so far?
I amazed with the research you made to create this
particular publish incredible. Magnificent activity!
Reply | Reply with quote | Quote
 
 
0#the forex trading2014-03-30 21:42
Hey I know this is off topic but I was wondering if you knew of any widgets I could
add to my blog that automatically tweet my newest twitter
updates. I've been looking for a plug-in like this for quite
some time and was hoping maybe you would have some experience with something like this.
Please let me know if you run into anything. I truly enjoy
reading your blog and I look forward to your new updates.
Reply | Reply with quote | Quote
 
 
0#pikavipit2014-03-28 07:19
Only filling registration form once, you can apply multiple times:
. Documents such as driving licenses, identity cards, military,
etc. Investing in a loan would mean instant money but then
it might just aggravate your financial condition.
Reply | Reply with quote | Quote
 
 
0#google adwords login2014-03-18 19:29
hi!,I really like your writing very much! percentage we keep up a correspondence more about your article on AOL?
I need a specialist in this house to solve my problem.
Maybe that is you! Looking ahead to look you.
Reply | Reply with quote | Quote
 
 
0#gillette2014-03-07 06:46
gillette venus samples
Reply | Reply with quote | Quote
 
 
0#gillette free2014-03-07 04:54
gillette aveeno professional samples
Reply | Reply with quote | Quote
 
 
0#venus gillette2014-03-07 00:35
gillette zyrtec professional samples
Reply | Reply with quote | Quote
 
 
0#TAOBAO2014-02-19 22:06
Hi there, I wish for to subscribe for this weblog to obtain most recent updates, so where can i do it please assist.
Reply | Reply with quote | Quote
 

Add comment


Security code
Refresh

Stay Connected

Get Import from China Headlines by E-mail

Attend the Global Sources Summit


  • For online & Amazon sellers
  • Interactive training led by sourcing & Amazon experts
  • Learn how to source profitably, avoid pitfalls
  • October 17 - 19, 2016 in Hong Kong
  • Co-located with Mobile Electronics and
    Gifts & Home shows


Learn More

Join the Smart China Sourcing Facebook Group
  • Connect with other buyers
  • Ask questions
  • Get advice from experts


Join Group

Join Global Sources on Facebook

Be our fan now for the latest sourcing news, practical sourcing guides and expert advice.

Follow Global Sources on Twitter

We'll keep you updated with tweets on sourcing news, trade resources & more.