Building China/West Business Relations

Whatever the outcome of Brexit or the US/China trade talks thousands of Western companies will be seeking to do more business with China over the next decades and many Chinese multinationals will be doing business in the West. The extent to which Western and Chinese companies learn to understand each other’s business practices and approaches will determine how successful they will be.

Conducting successful business anywhere in the world depends on forming good relationships with clients, customers and business partners. In China understanding guanxi (关系), often translated as ‘relationships’, is key. Guanxi is derived from Confucian culture and has guided the social behaviour of the Chinese for more than two millennia. The difficulty from a Western business perspective is that its influence spans personal and work spheres, in contrast to Western relationships that are typically either personal or work-related.

In her new book, Guanxi in the Western Context, Barbara Xiaoyu Wang offers an in-depth explanation of guanxi and its significance in business relationships. For Western business people the book provides a guide to the guanxi mindset. And for Chinese executives, working in multinationals or across borders, it offers advice on how to operate effectively in a multi-cultural environment.

Wang is ideally placed to author this book having been personally involved developing relationship between Western and Chinese businesses since 1990. Before her current role as Associate Dean for China Initiatives at Hult Ashridge Executive Education, she was a Vice President for the Western Management Institute of Beijing, and worked in China as Retail Operations Director for CELINE of the Louis Vuitton group, and as Global Accounts Director for DHL.

Important for Westerner business people doing business in China, Wang’s insights on cross-cultural dynamics also have a wider significance at a time when Chinese multinationals are taking increasingly dominant positions in global markets and guanxi is shaping social relations in branches of these multinationals. The book is both for Western managers who seek a deeper understanding of how their Chinese counterparts operate and Chinese managers who want to increase their awareness of the culture they are immersed in.

Throughout the book Wang references a considerable depth of scholarly research as well as her own unique study and analysis. In the opening chapters she discusses the origin and fundamental role of guanxi as the ‘invisible hand’ shaping Chinese culture and society, and highlights three main aspects of guanxi: the basis of guanxi (pre-existing ties between two interacting parties), the quality of guanxi (different levels of trust, interdependence and obligation), and the dynamics of guanxi(strategies, practices, and processes).

She goes on to describe how executives in Chinese multinationals employ guanxi in the West, revealing that while they may actively practice guanxi with their homeland counterparts, they do not do so with host-country nationals or host-country Chinese. Using the example of expatriates in five European subsidiaries of large Chinese multinationals she investigates how they develop and use guanxi and how this affects their adjustment to the host culture. In the final chapter, Wang examines Chinese leadership practice and how leaders operate and exert influence in foreign branches of multinationals.

Having witnessed many failures in business due to misconceptions and cultural differences, Wang says she undertook her research to show how “Chinese and Westerners could appreciate each other and work together without unnecessary conflicts or compromising their own values.” This book is the invaluable result.

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'Guanxi in the Western Context: Intra-Firm Group Dynamics and Expatriate Adjustment' by Barbara Xiaoyu Wang. Published by Palgrave, 2019, ISBN 978-3-030-24000-4