The Philosophy Behind Chinese Business Culture

We have previously discussed the specific actions that Western executives can take to guarantee business success in China. But what informs these strategies? What is the philosophy behind them? Knowing the reasons why we suggest such tactics will give you a deeper understanding of the business landscape in China.

For this reason, we have accumulated the core beliefs and ideologies that inform such recommended actions like nurturing the business relationship, respecting the hierarchical flow of information, or simply practising patience when you feel the urge to work faster.

Confucian Philosophy and Chinese Management Styles

Chinese people are generally low on the individualism scale and often do not feel comfortable making decisions on their own, which contrasts with the Western style of decision making which can often be done by one person.

This is because in Chinese firms and government agencies, a lot of interactions and processes are still hinged on Confucian philosophy. In Confucian thought, the idea of social harmony is paramount with relationships in society deemed to be distinctly unequal. Thus, for example, older people should be respected by younger people, and seniors by subordinates etc.

In Confucian thought, the society reflects every individual knowing his or her place in the social order and each member playing his or her part well. In this context, Western executives need to assess where their counterparties fit into the hierarchy in their counterpart’s organizations and pay attention to their role and function.

Therefore, the simplest actions require finding group consensus. And Western firms often need to recalibrate their thinking particularly about the value of independence motivating people.

See how our cultural awareness programme on China can improve communication between your teams.

Relationships, Guanxi and saving face:

Relationships between business partners are undoubtedly more important to Chinese companies than they are to Western ones. In fact, only Japan and Korea are possibly ahead of China in terms of relationship-orientation. Therefore, the development and maintenance of strong, long-term ties is vital.

What Is Guanxi?

You will often hear the word Guanxi used when people talk about Chinese business culture. Putting it simply, Guanxi describes the relationship between two individuals. It codifies the way in which they interact together, and their ‘right’ to prevail upon each other to ask for favors or services. Guanxi relationships need not be between individuals of the same hierarchical status (but often are) and when you are in a Guanxi relationship it is virtually impossible to refuse to agree to do something you have been asked to do – regardless of how difficult it might be. Favors done must always be repaid which results in people entering life-long cycles of obligation and repayment.

Guanxi not only relates to a person-to-person relationship but can be used to describe a spider’s web of relationships between extended groups of people who are, in some way or another, linked to each other. These Guanxi relationships can include connections with family, school and university peers, members of common clubs or organizations (the largest of which is the Communist Party) and work colleagues.

Interestingly, these Guanxi relationships are personal and cannot be transferred. This is of considerable interest when considering lateral hires into organizations in China as they can often bring with them considerable Guanxi networks – the problem is that these networks will probably leave with them if they move on at a later date.

Limitations of Guanxi for Foreigners

The truth is that a foreigner can probably never have real Guanxi relationships simply because they are not Chinese – or more accurately that it would take a lifetime of effort to develop such a deep network of functioning relationships if you are not Chinese to begin with. Having said that, some foreigners develop better relationships with the Chinese than others and those who work hard to develop and crucially maintain those relationships over long periods of time are the ones who will probably succeed in China.

As has often been said, “in China if you don’t have guanxi, you don’t have anything”. These relationships are pivotal and need to be continuously refreshed and developed. But bear in mind that due to concern for other people’s ‘face’, people are unlikely to take advantage of Guanxi to ask for things which cannot be delivered. The concept of ‘saving face’ is a fundamental element of business culture in China and Westerners need to keep this front and centre in their interactions. In the business culture in China, ‘face’, or ‘Mianzi’ is the core of a person’s being. Westerners need to ask themselves how to extend face in all situations. When challenges arise, the focus should be on resolving issues and processes not on addressing the views or actions of individuals. Authentic positive feedback is very helpful, but Westerners should also be mindful of overdone compliments.

Long-term Attitudes:

Keep in mind that China is also an ancient civilization and the Chinese think in millennia not decades or single years. Thus, taking a long-term perspective when working in the China market is an absolute imperative. Be patient and expect things to take longer to come to fruition. Plan on making several relationship-building trips before you see any tangible progress made or deals won. (This is not always the case but any ‘quick wins’ are best seen as an exception rather than the rule).

Rushing doesn’t work, so don’t show impatience if lots of time is spent talking about non-business or seemingly trivial issues. Small talk is a key ingredient in the relationship development process. And always emphasise your long-term commitment to any Chinese counterparty, their organization and to China itself. Try to work out why working with you would be good for China and the development of China – this may seem irrelevant to you, but it definitely is not to the Chinese.

Find out more about our China cultural awareness training services here.