Influence, favour keys to good guanxi: study

Influence, favour keys to good guanxi: study

Thu, 19/04/2018 - 12:02
Guanxi Shanghai

CONNECTION Research from Macquarie University has uncovered four key factors for western companies to look for in finding a gatekeeper to unlock Chinese networks. Photo: Shutterstock

Often one of the first pieces of advice a western businessperson hears when they seek to do business in China is to have a strong network, more commonly known in the People’s Republic as a guanxi.

However, what is not as commonly known is how to select the right person to develop guanxi.

A recent Macquarie University study has highlighted the importance of the role of the ‘gatekeeper’ in business relationships in China, focusing on the skills needed when dealing with Chinese insider networks.

The study, which involved interviews with more than 40 businesses in Australia and China and research spanning the past five years, endeavoured to provide guidance for western companies seeking to engage third parties, or gatekeepers, to help penetrate lucrative Chinese markets.

Macquarie University marketing and management lecturer Monica Ren told Australia China Business Review the key role of the gatekeeper was to help westerners become part of closed Chinese networks.

“If you’re an outsider, resources and opportunities will not be shared with you,” Dr Ren said.

“Like yin yang, a business relationship is not strictly black or white – it can be both, with trade-offs from both sides at different times.

“Gatekeepers can play a critical role in balancing these two opposing sides, by viewing obstacles through a yin yang lens and approaching them as opportunities in disguise.

Dr Ren said the study found it was the gatekeeper’s mianzi (status) and renqing (favour) that were the key traits westerners should look for in finding the right partner to pursue business opportunities in China.

“It is very hard for the gatekeeper to practise or exercise any kind of gatekeeping role with only a few connections in a market like China,” Dr Ren said.

“We recommend that for any new foreign entrant in China, no matter if they are buyers or sellers, they can recruit someone who already has experiences, is well connected and you can actually measure that through mianzi and renqing.”

Dr Ren said many western businesses fell into the trap of thinking that their gatekeeper just needed to know the language and have access to business networks to succeed.

“On the practical side, different companies would have different aims of what they want to achieve, through those gatekeepers,” she said.

“Do you want to have more market knowledge, or do you want to get into any particular business network in China, do you want to attract Chinese investors, or do you want to get Chinese government support?

“There are all sorts of reasons why people want gatekeepers to perform either internal or external roles.

“In terms of understanding who would be that perfect person, I think people fall into the trap that as long as they can speak Chinese and they know a few people, then that means they can be the gatekeeper.

“That’s not the case, like if you can speak English, it doesn’t mean that you’re a good businessman. Language shouldn’t be the only selection criteria, of course it’s important, but it is at the low level of the basic skills that a gatekeeper needs to have.”

Once a company has selected an appropriate gatekeeper based on influence and favour, Dr Ren said the next step would be to assess their ability to build favourable momentum in difficult circumstances, known in China as zao shi, while also leveraging favourable situational momentum, known as ying shi.

“Timing is everything, because it’s dynamic, and those capabilities are important qualities that help really differentiate different gatekeepers,” Dr Ren said.

“Some people have very good mianzi and social status, but they don’t know how to manage difficult situations.

“For outsiders like Australian companies, they need to look at both sides as well as to manage and motivate the gatekeepers the right way by providing them financial knowledge and to reward their contribution.

“That kind of recognition also enhances their mianzi in general. It doesn’t have to be money but that recognition or those rewards are important for gatekeepers.”