As a general rule, when you are dealing with Chinese business people it is best to hire someone with some sort of ties to them so that you can gain some leverage into their social network. A large part of the Chinese society is centered around guanxi, which is the concept of building personal relationship with people that you can give and receive special favors from. As an outsider you are immediately at a disadvantage unless you can increase the level of trust which is ultimately at the heart of this issue.
Cultivating guanxi with your potential business partners in China can be helped along by hiring people that are already close to them as part of your team, or by developing relationships with some of their key contacts. This is not uncommon to the way that business is conducted throughout the world but in China the intensity of this practice is greater. The sense of guanxi is a powerful tool that you can leverage by spending time cultivating the key relationships with all of the business people that you need to know.
The normal business practices aside, the Chinese will trust you more once you have cultivated the relationship with them rather than just signing a binding contract. This method continues due to the fact that China?s legal system in underdeveloped and under-enforced. Once you have gained the trust through guanxi your business interactions will become a lot easier as they will go above and beyond to help you and your business. Don?t forget that they will also expect something in return for any favors that they provide for you.
Just as the trust of a handshake has been replaced with a mountain of paperwork in the western business world, China?s legal system is improving. But the speed at which they are improving will leave plenty of time for the concept of guanxi to infiltrate another generation or two. Until the legal reform makes this kind of inner circle business relationships more flexible and open, you have to play by the rules that are dictated. Trust is the lynch pin that can expedite and alleviate all of your business transactions throughout the world, but in China you need to manage your network and ensure that you have multiple guanxi links to your business partners to maintain a close bond. Keep in mind that any favors that you receive, even if you didn?t ask for them, have to be reciprocated to maintain the relationships.
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Source: http://china-business-connect.com/the-importance-of-relationship-building-negotiating-in-china.htm
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