Head of APAC Paolo Tavolato delves into the concept and history of the unique way Asia does business relationships: trust over legal contract, mixing business with personal.
If you were doing business in Asia, there is one Chinese word that you would probably hear more often than anything else: Guanxi.
Although it is an age-old business practice in the region, guanxi is much misunderstood by the rest of the world. Global business people can’t seem to get the gist of combining business networking with personal relationships. They also find it hard to understand the concept of a commitment founded on trust instead of the legal system.
In this briefing paper, I examine the concept of guanxi, from its origin to misinterpretations that clash with the principles and practices of global business management. I also speak with some colleagues from around the world, each with exensive experience in Asia and working with Asian businesses; their insights are truly fascinating.
The idea that relationships and “face” are important in Asia does seem to be known by most in the west. However, in my short time in Asia it seems most people from the west keep on applying their norms which are based on transactional and short term thinking because they think doing business applying those principles is more effective.
When it comes to doing business in Asia, there is nothing more wrong than that.
You can be incredibly successful if you focus on relationships; it just takes more time and patience. I believe we’ll see a future where more companies in the west apply those principles coming from the east.
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