Guanxi is great to have and China holds the promise of tremendous opportunities – just as long as you never lose focus.
Successful managers in China have to balance hard-headed business analysis with relationship building and networking. Your challenge when doing business in China is to know how to manage the new opportunities and approaches that your local associates recommend. On the one hand, you must leverage the knowledge and advice of experts to succeed in the Chinese market. On the other hand, if you scrap your existing strategy and reallocate assets, manpower and managerial bandwidth every time someone pitches a new opportunity or method, then you will never execute your real plan.
That’s why #4 on ChinaSolved’s Least Wanted List is “letting the tail wag the dog”. Chinese partners, consultants and key hires will lead you around by the nose if you let them. It’s great to work with well-connected professionals, but deals are always driven by fundamentals – not guanxi relationships. You’ll get plenty of exciting offers, bolt-from-the-blue opportunities and convenient work-arounds to bureaucratic bottlenecks, but if they don’t fit with your business plan then they are just expensive distractions.
Remedy: Knowing the difference between flexibility and flakiness is always hard in a strange business environment — especially in China where everyone seems to value connections and informal methods. Work with local experts, consultants and key hires to develop appropriate business plan, and check and reconfirm often. But be aware that Chinese associates are going to offer you new deals, insider opportunities and ground floor bargains as a matter of course. Never invest in a business you can’t run (or at least understand), never put your money in town you can’t find on a map — and make sure they have a very good answer to the question — “why haven’t you offered this wonderful, once in a lifetime opportunity to someone you’ve known for 20 years?”
Five root causes of “Tail Wagging the Dog” in China:
1. Relationships lead to opportunity. Guanxi and Face are important in China, and your local counterparts feel that they add value by connecting you with new people and new opportunities. Chinese partners and consultants define their role by who they know – not what they can do themselves. The irony of managing in China is the more progress you make the more distractions and blind alleys you’ll encounter. It’s hard to reject an offer without insulting the contact making the offer.
2. They know you want it. Western managers are their own worst enemy in China, because we seem to have bought into the whole “guanxi is the key to success” more than our cynical Chinese counterparts. Western managers have been conditioned (correctly or not) into believing that there is always a cheaper, easier, quicker way of accomplishing things in China – and that our counterparts are storehouses of secret wisdom and arcane tricks. Sometimes we are willing participants in questionable schemes – and other times we drive the process.
3. Monochronic vs. Polychronic. Westerners – particularly Americans and Northern Europeans are monochronic or synchronous when it comes to time and tasks. We like to complete one task, and then move on to another. Chinese managers tend to be polychromic and do several jobs simultaneously. Chinese don’t drop everything to pursue a single new approach, and they have the ability to start a few tasks at once and then shelve them for a while. If you are compulsive about checking boxes and being obsessively efficient, China may drive you nuts – and broke.
4. Like a desert mirage from the movies, completion always seems to be just beyond your reach. It’s always a matter of one more approval, one more meeting or one final application. Schedules and timetables don’t mean as much in China as they do in western business centers – and the further you go out in the countryside the more unpredictable timing becomes. Sometimes this is an unfortunate reality – but it can be a negotiating tactic to pressure you into accepting unattractive deal terms.
5. They’ve got their eyes on your prize – if you get broke, tired and late, then they may be able to cash in after you go home. A tried & true Chinese negotiating tactic is waiting out foreign interlopers. Many western negotiators have been killed with kindness – offered so many opportunities and connections that they lose focus and never complete their critical strategy. They end up with lots of business cards, hundreds of digital photos from banquets and a huge expense report. What they don’t have is a functional China business. By the time they get recalled to the home office, they have explained in meticulous detail to dozens of local professionals just how their plan or product works.
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