Thanks But No Thanks: How to Escape the Guanxi Trap

By William R. Dodson

 

 

It’s a tricky thing, accepting favors from Chinese. Chinese by nature and by nurture are a hospitable people. Their natural inclination is to always consider the other person before they consider themselves in a relationship. However, if there is no relationship with someone – literally, no guanxi -- then it is every man for himself. Guanxi is the web of relationships of reciprocal obligation many Chinese rely on to get things done in China. So, you’re either in the web or you’re out of luck.

 

Foreigners love being in on the guanxi “thing.” It shows moxie. If a foreign business person says he has guanxi with Chinese, his foreign peers will think he is, well, peerless.

 

Foreign business people – and other Chinese, as well – sometimes get into trouble when they allow Chinese friends to “help them out.” It all sounds innocuous enough: “you’re my friend (or friend of my friend) and I want to do something for you.” The something’s at first blush always seem so innocent. Perhaps driving you to a destination; or fixing your computer; or doing some research for you; or arranging some meeting with someone you do not know who may benefit your business in the future.

 

The results in the end may be disastrous, though, calling an end to the relationship and perhaps even having knock-on effects that may be detrimental to the business the used-to-be friend had intended to help.

 

The Guanxi Trap

The pattern is always the same: some good friend or friend of a friend wants to, say, help you do business in the China market. This is a common approach for many American companies that want to gain entry to the China market on the cheap. They don’t want to use a firm with professional sources in China and with a research methodology: all of that costs money. Instead, they’ll use the old friend of a friend. They fall into what I call the “Guanxi Trap”.

 

The “Trap” is that when a Chinese friend does you a favor he believes he can do things any old way he pleases. That’s when the fun begins; because, of course, you as a businessperson have a schedule to keep. The Chinese friend – because he’s helping you out – has his own schedule: he’s fitting your needs into the greater swathe of requirements that other friends and associates of his have placed on him. So, likely, if you receive any results it will likely come at the eleventh hour, when you’re biting your nails over whether you will actually be able to meet your deadline.

 

When you receive the results of your request, the end-product will not be what you expected: perhaps the format of some document will be unworkable, fashioned in a hurry; or market information patchy; or an “introduction” untenable. Remember, this is all a favor to you, so you’re lucky to get whatever you’re given.

 

Likely, your own Face is at stake. Perhaps you’ve told your boss or your colleagues, “No problem, I’ve got Chinese connections working on this.” Having boasted about your insider-ness only worsens the pain of the results you’ll likely receive, since you’ll have to expose the debacle to the light of day sometime.

 

Unfortunately, quality and timeliness are suspended when Chinese do you favors. Instead, you as a foreigner need to understand that to the Chinese the most important value to realize is the EFFORT the friend put into the favor; not necessarily the results of the favor. That’s how he figures he gains Face with you and with others in his circle – prestige, honor, credibility through action.

 

The Price of Obligation

And that’s how you gain an Obligation. Now, of course, you’re obligated to your Chinese friend because he did something for you, even if the result was not what you expected or did not meet your requirements. And yet, to most Westerner’s suprise, that is how the Guanxi Game is played.

 

Now here’s The Catch: eight times out of ten Chinese will do you a favor because they expect obligatory compensation in the near-term. However, they never tell you at the outset they expect payback – that would be considered rude. They will see opportunity in the offer. They will see a deposit into their bank account of goodwill. And they will withdraw funds from that account when they see fit.

 

A Chinese friend once explained “the Chinese Way” to me as: “Chinese are terrible about being direct about their requirements or intentions. So they use a round-about way to get what they want. Of course, it can make a big mess in the process.”

 

The mess comes when Chinese call in their chips to capitalize on the favor they gave you. Typically, the favor they ask of you is weightier than what you had asked of them. If you haven’t concluded the relationship because they made such a hash of the results they had passed on to you from their favor to you, then you surely – as a Westerner – want to conclude it now. After all, in the West, a favor does not carry the same weight of obligation that Chinese guanxi requires.

 

How to Avoid the Guanxi Trap

All of this is NOT to say, “do not accept favors from Chinese.” Chinese are wonderful friends and will go to the ends of the earth to help the people for whom they care. It is to say, though, be very very specific about the kind of help you require from friends or – more precariously – from friends of friends. And stay on top of the developments as the friend unfurls the results. If early on you feel the result is not going to meet your requirements, cancel the request. But be delicate about it: Face is at stake here. And if you value the relationship with your friend, you may lose the friendship in a very painful sort of way for all involved.

 

The best course, however, is do not use friends to do professional work. If your friend insists on doing the favor for you, put them on the payroll and treat the relationship as you would any professional relationship. Set expectations early on in the transaction; put in place progress measures and standards; and make sure compensation is agreeable to all sides from the outset of the engagement.

 

If you are not able to adapt the relationship to fit the professional arena, do not be afraid to say when your Chinese friends offer to do you a favor, “Thanks. But no Thanks. You’re much too good a friend -- and much too busy -- to trouble over this small matter. Now, let’s eat!” And you’ll find yourself with a friend forever.

 

William R. Dodson is Managing Director of Silk Road Advisors, L.L.C., a market research and business development consultancy that positions companies for success in China. He is the contributing editor on international business to the American Management Association’s (AMA) MWorld Journal of Management, and writes the column “The Cultured Business”, found at www.silkrc.com. He can be reached at sradvisors@gmail.com or +1 (847)630-1271.