Thursday, May 8, 2014

Chinese Guan-xi and business relationships with factories in china.

Doing business in China is a completely different story to doing business in the west. It is very easy to make a simple mistake if you are not used to Chinese customs, and although many Chinese businessman will pass it off as a westerner having different customs it may be considered very rude.

For example handing your business card over in the wrong way could be considered disrespectful – in the same way it would be considered rude if your Chinese business relation was to come to your country and spit in the hall of your office (something that would be much accepted in china)
Guanxi is a term describing relationships. Sometimes it is a result of favours or building connections with people.
Guanxi involves three major things;
·       describes a personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon.
·       used to describe a network of contacts, which an individual can call upon when something needs to be done
·         can describe a state of general understanding between two people: "he/she is aware of my wants/needs and will take them into account when deciding her/his course of future actions which concern or could concern me without any specific discussion or request".

 Guanxi has a major influence on the management of businesses based in China

We know how important it is to maintain a close relationship with our suppliers and we make sure to maintain regular contact by using suppliers that are local so we can meet with them

Last week I travelled to one of our factories to meet with one of our suppliers again to discuss in person our requirements for QC.
One of the main issues with our product being mass manufactured was the tightness of the lid fitment on a metal case. The fitment was very tight, which made it very difficult to be removed. This is a point that is almost impossible to discuss over email, or even on a skype call, as it is such a matter that must be tested. After testing a batch of cases I had a meeting with the factory boss about the tight fitments. We then agreed the tolerance for the tightness by testing and comparing how hard it is to open and close.
It is so important to make the effort to visit factories about issues because not only can you have a more clear understanding of each other but you can also discuss points about the product with the product right infront of you.
Having a bit of knowledge about basic Chinese business etiquette before mixing with Chinese suppliers is a definite necessity for building up guanxi.

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