Making friends and influencing people
Ideas are nothing without the smarts to build the key relationships you need to succeed
There’s no way of even starting to do business in Asia without building strong, meaningful and long-lasting partnerships with local people that go way beyond the contractual and legal obligations that also need to be in place. The people there understand the people there, they understand the bureaucracy, the culture and the economy better than you, so you need to make friends with them.
If New Zealand businesses are going to fail in Asia, this is almost always the point at which they do. Why do they fail? Because they completely miss or misunderstand the nature of business relationships in this region.
“You’ve got to remember this is a culture where people rely on knowing and trusting, through kinship – being from the same village or province,” says Enderwick. “If you’re an outsider it takes a long time to build a similar relationship.”
In China this process and its results has a name: guanxi. It’s a complex and almost enigmatic term that takes in many different aspects of human relationships, particularly the intimate intertwinement of personal and business connections.
As Tim White, lead partner for KPMG’s China Business practice explains, at its most basic level a person’s guanxi is his or her network of relationships, but it’s also a measure of the depth of those relationships and the extent to which a person is bound or obligated by them.
He warns that many Kiwi businesspeople are used to establishing trust relationships in business by working directly towards the creation of deals, contractual obligations and other legal paperwork. This can mean they become confused by the way in
A person’s guanxi is his or her network of relationships, but it’s also a measure of the depth of those relationships and how much
someone is bound by them
Tim White, lead partner for KPMG’s China Business practice
which, in China, this process remains largely subordinate to the establishment of the gaunxi, or personal relationships between the parties.
Foreign businesses that fail in Asia tend to fall into two camps on this. Some are wildly optimistic about how soon this can be developed, and so believe they have forged these relationships when they have not. Others may be cynical about it or unconvinced of its importance and so do not put in the required effort, focus and time to make it happen, relying instead on more familiar contractual arrangements and expensive legal devices which, as we shall see in the next chapter, may not be as secure as you might think.
Gestro advises taking the time, to avoid feeling sorry later. In fact, that commitment in time, resources and personnel is both the practical means by which you will build your connections, and also a powerful signal to those you would like to connect with that you, literally, mean business. You simply can’t do that by flying in for a couple of weeks and trying to get some people to sign bits of paper.
It’s also easy to forget that this is as much about whether they trust you, as about whether you trust them. It’s about ‘deep diving ’ into networks, rather than just collecting business cards of the people you meet on your travels to build your own particular supply chain.
“It’s about finding out who your competitors are, who their suppliers are, who your suppliers are, who their competitors are, who else they supply,” Gestro says. “The deeper you understand this the more likely you are to have success. Use the people who are living and breathing it day by day. Use local offices of the various support agencies and companies to get as much advice as possible.”