Language is the key in establishing good government relations in China, writes Paul Glasson.
At an AustCham Shanghai industry working group in June, I was asked to present on the topic of good government relations in China.
Discussing this topic over breakfast with an intimate group of about 20 members in the Chamber’s board room was a great setting to really share experiences and concerns within the Australian community of that difficult topic: establishing much sought after guanxi with Chinese government and company officials.
Added to the dynamics of the discussion, I had been strongly instructed not to come prepared! That the working group was exactly that – a working group and a great opportunity for all of us to share in a Q&A style format of how Australians are building their businesses here in China.
I arrived in China in1998, starting out as a glorified English corrector at CCTV.
But by 2001 I had established Satori Investments to focus on outbound investment from China because I saw early that China had advantages in their manufacturing and would also have strong demand for resources.
Timing of course was important in success, as too was the commitment to becoming part of the local culture. Establishing relationships with people locally whether they are government or business is the foundation.
And in establishing those relationships, there are three key areas I consider to be crucial to success.
Those are: Language. Spending time with people. And leaving meetings with, what I call, “a good feeling”. This really is important. Trust and the feeling of connection are very important in China.
This is why I can’t emphasise enough, the value of being able to speak Chinese. Being able to interact with people with the nuances of the Chinese language and taking time to really know people is the best way of achieving the business of “good feelings”.
This third point might sound clichéd, but unlike western countries where people often go into business with people they may not necessarily like, the reality in China is that if people don’t like you, they absolutely won’t do business with you, because it means they can’t trust you.
In China, it’s all about intimacy and managing people’s trust.
Formal vs informal
It’s also important to note, that in China, much of the business is done in an informal context and that 90 percent of the outcome of a business meeting will have already been decided prior to that meeting. In many instances the initial meeting is an “ice breaker” – then the real work starts, back and forth informally thereafter.
It’s important not to make the mistake in thinking that relationships in China are made at the meeting table – that might account for about 20 percent of it, but the other 80 percent is made up of things like communication, eating a meal together, helping someone out and sharing information, and those elements that go to making up a relationship.
I would say in my experience, that a large part of my job is just listening to what government and company officials want, understanding the view points of what they want.
If everything is official – you’ll get nothing, and in this context if you don’t speak Chinese you really have no way of having the informal conversations, everything goes through an interpreter and that makes it difficult. Of course, you can empower a number of people in your team but you need to have confidence in them.
Strategy
Other areas that require strategic consideration when starting up relationships in China is knowing who to speak to. You need to be strategic about who the people are who influence your business cycle. And then sometimes approach them through peripheral or mutual contacts.
Business motivation for SOEs is driven by the individual and the greater Party context and is of course industry specific. So it’s important to be targeting key Chinese stakeholders in your industry.
Timing is also important. A change of government means a change of people across the municipal level as well as SOEs. So it’s important to be managing relationships with that in mind.
I also think there is some value in employing staff who already have developed a network.
Gifts and Socialising
I don’t advise any of my clients to give gifts unless it is for a signing ceremony.
At the AustCham Shanghai breakfast there was a lot of discussion about what is acceptable in terms of socialising – how much Bai Jiu are you expected to drink? Do you have to go on to mid-night Karaoke or is it OK to leave that part of the socialising to your Chinese staff?
In my opinion, socialising together is all about providing context. It is a balance between getting to know each other without always focussing on business. One-way focus on business does note build trust. ■
*Paul Glasson is the Chairman of Satori Investments Greater China and is based in Shanghai. He is also the National Vice President of the Australia China Business and the Council’s representative in China. Paul has played a leading role in providing corporate advisory services in some of China’s largest investments into Australia as well as leading high-level dialogues with key departments in China including SASAC, MOFCOM and the NDRC on policies surrounding the investment of Chinese funds abroad. Paul is originally from Melbourne.