China’s growth and
integration into the
world economy are
driving changes in
Building Effective Business
Relationships in China
China’s ways of doing business are becoming more Westernized.
But non-Chinese executives still must work hard at building
trust in relationships with their Chinese business partners.
BY ROY Y. J. CHUA
A GLOBAL AUTOMOTIVE COMPANY entered the mainland China market following
what it thought were the rules. Executives knew gifts were an important personal gesture and integral to Chinese business etiquette. They also knew that success in Chinese business culture was as
much about whom you know as what you know.
To make the right connections, the company sponsored events and hosted lavish dinner parties
to cultivate personal ties, including the all-important guanxi (commonly defined as personal connections between people doing business). Several years later, the company faced the fact that its
efforts were producing minimal results.
As they tried to discover why, executives learned that despite all their efforts, the company had
actually acquired a bad reputation among potential Chinese industry partners. The potential partners had come to view the company as a seeker of short-term transactional opportunities wrapped
in expensive entertainment.
How do you
business relationships in
culture is changing
as the country
opens up to global
need to start by
Chinese counterparts’ trust in their
in empathy and
rapport is also particularly important
in Chinese business
relationships — and
is more complex to
SUMMER 2012 MIT SLOAN MANAGEMENT REVIEW 27