Share:

Outsourcing: Travelling to China

Doing business (and eating well) in Chinese guanxi culture

July 11, 2018

Blue roofed buildings and several large warehouses dominate an aerial view of an industrial area.
A view from a plane outside of Beijing.

In North America, in the 1990s, traditional metal manufacturing was in shock. Labor costs were outstripping sales prices, and many businesses were shutting their doors. For Reliance Foundry to continue to be viable, it needed to outsource some of its production lines. It was then that Reliance Foundry’s vice president, Brad Done, made his first business trip to China to see if it were possible to work with contract manufacturers overseas.

This was big leap for the company, which had done all its own manufacturing as a family-owned ferrous foundry for the two generations before Brad and his brother, Brent took, over. Both men had grown up with stories from the foundry and had worked with the business as students. Brad took post-secondary schooling in management and metallurgy. To be comfortable leaving production in other hands, he knew they would not be satisfied without going and observing the overseas operations. There were standards to maintain—it was a big leap to go from manufacturing onsite to considering contract manufacturing. Would the quality be sufficient? Would trade be possible through cultural and language barriers?

Understanding guanxi in business travel to China

“My first business trip, things were very different in China then they are today.” Brad said. “Where we were traveling, visiting factories and manufacturing centers, I was often the first Westerner to arrive. People would stare and be openly curious. Now it’s different. There are lots of cars and industry everywhere. Sometimes they still giggle about me, and there are always lots of questions, but I’m not an oddity except in very small towns.”

What has remained unchanged in China over the subsequent decades is a deeply rooted cultural way of creating business relationships, called guanxi. This philosophy puts relational networks at the center of all trade. Rather than business being exclusively about economic relationship, guanxi is a practice of creating a web of relationship between businesses and their people. The philosophy shares the ethics of friendship, if not the intimacy.

A lot of business travelers would like to know what to do, say, or gift to their Chinese counterparts to make deals flow smoothly. Many websites and travel guides will suggest ways to approach these things, but even a well-informed traveler will get details and the nuances wrong. However, most people forgive errors of protocol if you’re judged to be making an honest attempt!

There is no one set of actions, gifts, or pleasantries that make friendships form. Trust, looking out for the other, and reciprocity in dealing—a sense of honor between people—is at the core of both friendship and business connection. In Chinese business networks, the reputation and behavior of all individuals in a network reflects everyone. Western culture doesn’t have a direct analogue, but guanxi can be thought of a little like a business association, where companies each reflect their profession. To maintain a good perception of the profession, people in an association work together as colleagues. The networks you create and maintain in China may have many different businesses within them, but the underlying behavior during negotiation and trading reflects on everyone within the network.

Two men smile and dip food with long chopsticks into central boiling pot to cook.
Brad Done enjoys dinner with vendors and other Reliance employees.

The concept of face is very important in these relationships, allowing for dignity and respect. Self-deprecation and reassurance are common ways of sharing this value. The graciousness of the guanxi culture therefore smooths out the bumps of missteps in culture.

For the Western business traveler, there are as many points of similarity as there are differences. Kindness and humility go a long way. As well, in almost every culture around the world, creating and maintaining community is done with shared meals. In China, corporate lunches and dinners form a good part of the process of making a business connection. Conversation over these meals is about getting to know each other, not talking trade: questions and sharing about family and children is at the center, with descriptions of the small details of daily lives. Chinese hosts usually invite the Western traveler back to the city, suggesting they should next time bring spouse and children. A tour of the city or other attractions might be offered.

Brad’s tips for creating business relationships at a Chinese banquet

  1. Pace yourself and eat slowly! Food will keep coming. We often eat food very quickly in North America; expect to spend at least an hour at lunch and longer for dinner.
  2. Let your host know what your spice tolerance level is, especially in the southern provinces where food is often spicier.
  3. Textures may take more adjustment time than flavors, but it’s all good food. There’s usually lots of sauce or broth!
  4. You’ll be offered báijiǔ, sometimes translated as “Chinese wine,” but which is a very strong liquor.
  5. Starting with the host, guests often offer toasts to the table over the course of the evening. It shows respect to try to clink the rim of your glass below that of the person you’re toasting.
  6. When someone calls ganbei, it means “bottoms up!” Drink your glass dry!
  7. If strong liquor makes you uncomfortable, you can ask for beer instead of the Chinese wine or stick to water or tea.
  8. Talk about family and the details of your lives over a meal. Leave talk of business to business venues.

 

All this relationship building guides the work of the business being done. Anywhere a company does business, it must look carefully at the practices and character of the other organizations they engage with, as well as examining the contract, and laws governing the jurisdictions. Brad examined many factories, to make sure that castings made in China would meet Reliance Foundry’s exacting standards for those made at home.

Metallurgy has its own language, with unique standards specifications in every jurisdiction. Brad needed to tour and evaluate the production and quality assurance methods of the factories he was looking to hire. The business friendships guided this process rather than dictating it. As with every jurisdiction, there are factories doing consistently excellent work, as well as those operating more on a budget level. Brad visited dozens of factories to find those that would deliver castings of at least the same quality and consistency as were produced at home, in order to maintain our own relationships with North American clients—which are based on providing excellent quality products. Brad has also walked away from other vendors or connections. Guanxi is a way of creating business connection, but the room for evaluation and shrewd assessment is still vital to ensure quality.

However, once good connections were made, they grew stronger and more developed over time. “Working in China is not an in-and-out experience,” said Brad. “It’s an investment. After more than a decade of working together with certain vendors, the banquet halls at our business lunches are much bigger, with more of their company coming to meet us. The relationship has grown as the trust has been earned, both ways.”

Very practical differences in business contracts have manifested over the years. “When we first started working with some companies, we paid everything up front. Over time and trust in quality and sustained business, we earned longer terms from them in a slow, stepwise fashion. And they earned more orders from us!”

Building relationships over dinner

When Brad left for China the first time he hadn’t heard all these details, but he had been told one thing: be prepared to eat. A lot.

“I was a picky eater, as a kid,” said Brad, grinning. “Before I went to China I heard about all sorts of food I wasn’t sure I could handle.”

Of course, the last thing he wanted to do was cause offense, and so Brad was willing to try. The anticipation made the trip loom as a personal challenge, in addition to the already weighty business one.

Both personal and corporate challenges can yield growth for those with stomach enough to risk them. Brad was surprised to find he came through the experience with ease. “I didn’t need to worry so much,” he said. “My hosts were always gracious and wanted to give me food I would eat.”

“I was a little wary the first meal, but soon was thinking ‘hey, this is great!’ even with things I was worried about. I was able to relax. Sometimes the texture is a little challenging—sea cucumber is not my favorite texture. I just used extra sauce.”

In the intervening years, Brad has gone from being nervous to being willing to try almost everything. “Now I’m ready! Pigeon feet are just like chewy chicken wings. Duck livers, and so many other things I hadn’t eaten, are really quite delicious.”

He’s travelled in many different areas of China, which each have distinct cuisines.

“My favorite so far is the hot pots I’ve had in Chongqing. They’re spicy, and very good, and familiar.” Brad paused and smiled. “Well, there was one of the hot pot delicacies I wasn’t sure I’d like. They bring out a bowl of blood and add something, wait for coagulation, and then put that to cook. I was nervous about that one and thought it would taste like iron. Only after it cooked it was something a bit like tofu, not a strong flavor on its own, but with that tofu texture. It absorbed all the chili and other flavors of the hot pot.”

Congealed blood, the texture of soft tofu, is spooned from a bubbling hot-pot.
Hot-pots are common throughout China, but this spicy broth is a Chongqing speciality.

Hot pot is usually very spicy meal. Brad likes spice, so had no problem, but does warn others. It is not unusual for Western palates to be unable to handle the heat. Many Chinese hosts plan for and know how to find less fiery options.

“Sometimes a chili gets caught in your meat in the hot pot. You’ve got to be ready for that. I travelled with a co-worker once who got a chili in his meal, causing him to go bright red and mop his forehead for the rest of the meal.”

“But during another trip,” Brad continued, “I traveled with a US client. He told a story about a co-worker that was so nervous in China he brought his own food along. He missed the opportunity to try so much good food you can’t get at home!”

The best meal Brad has ever had in China was in a very small, out-of-the-way restaurant one final night in the Northeastern coastal city Ningbo. After a week of solid travel, he and his travel companions were exhausted. They hadn’t had the time to fully recover from jet lag, having jumped right into a series of 12-to-15-hour days on the go after a grueling 24-hour flight-and-stopover journey to China.

“We were both glad we went out that night,” Brad says. Their host brought them into a non-descript back alley, where tanks full of live seafood were stacked along one wall. “That was the best seafood I’ve ever had, anywhere. We picked what we wanted for dinner, pointed it out, and then went and sat down and had it served to us.”

To this day, the one food Brad can’t bring himself to eat is the delicacy of duck brain, reserved for the guest of honor, and eaten right from the duck’s skull. “The last time I was offered it I again had to decline. I’m sure it would have been fine,” said Brad. “But there was something about it, I just couldn’t bring myself to. I apologized and said I couldn’t. It ended up being fine. The wife of my host loved the delicacy and was thrilled to be able to have it!”

Shiny stainless-steel trays in a glass display hold many types of cooked meat.
In a busy market, a vendor sells many types of meat.

China’s regional similarities

China is huge. The municipality of Chongqing has nearly the same number of people as the country of Canada. The many threads spread of geography, history, and people in each area are woven into a diverse textured pattern of language, culture, and food made up of 1.2 billion people.

Regional customs are evident in all the places Brad has travelled. Yet there are a few things that seem similar throughout the country.

“Our hosts are working to make us comfortable and show that they’re doing well. Everywhere I’ve gone, the banquets they put on are bountiful,” Brad says. “There’s so much food. You have to pace yourself, because if your plate empties, someone will put more food on it!”

In many locations, business meals happen in private rooms. There might be several such private rooms on each corridor, each with their own party. A round table sits in the center of the room. “The tables have lazy-Susans, so that shared dishes can be easily circled around. I try everything and figure out what I like, and if I’m not feeling adventurous I just watch for my favorites to come around again.”

A round table surrounded by plush chairs with a lazy-Susan in the middle shows the remains of a large meal.
Shared meals are a universal way of building relationships.

Regardless of the types of food, the focus on relationship around a generous table is the same.

Another consistent part of the business meal is the tradition of drinking. This is not quite the same as the pub culture of the UK or the cocktail culture of North America. Alcohol is brought out as a way of celebrating and creating connection. New Years, weddings, and business meals all have traditions associated with alcohol.

“There’s a high-test Chinese wine that’s been offered everywhere I go. You sip it over the evening, but there is also a toasting tradition of drinking it all it all at once, offering the salut of ‘ganbei!’ along with your hosts. This is like saying ‘bottom’s up!’ It’s probably 120-proof. Very potent. You’ll have a driver who isn’t drinking, and they’ll usually toast with water: if you don’t want to drink, you can toast with water, too.”

Brad shakes his head with some wonder. “In several of the restaurants our waitress has also come around and had these drinks—one with each of us!”

Creating connections across the globe

Over the past two decades, Reliance Foundry has moved entirely to contract manufacture with partners in many jurisdictions all over the world. Brad still travels to vendors to continue to keep an eye on quality and consistency, and although the long days are sometimes a challenge, the transition between cultures is not.

Reliance Foundry has a long tradition locally, with almost a century of good relationships between other foundry owners and client groups. As a small family manufacturer, something similar to guanxi underwrote those networks: getting to know each other, and working together, over the years. Learning how to make those connections across the globe and across language barriers in the end was a lot less foreign, and a lot less nerve-wracking for Brad, than it first seemed it would be. Building a mutually-beneficial business relationship based on honor, reciprocity, and good practice made him feel right at home.

JOIN OUR MAILING LIST

Social Feeds