8. Understand Networking and Contracts

This is a tough one. Networking isn't the same in China. It's a much deeper and more complex phenomenon, with implications that we westerners cannot easily fathom. The potential for misunderstanding is enormous.

It can be simplied a little. Think again of a pre-market society. How would a pre-market society organize themselves without benefit of the marketplace? They organize themselves into trusted circles of family and friends, and they exchange favours. The rules are strict – if someone offers you a favour, you owe an equal favour in return. These circles overlap and interconnect into complex networks. Over time some of these circles become more important than others, and if you find yourself linked into an important circle, you have "connections". The Chinese call it "guanxi" (pronounced gwan-shee), and there are two main rules as far as you're concerned. One, any favour or gift is a debt which must be repaid in full measure, or more if the giver belongs to a more important circle. And two, people with the right guanxi can accomplish anything for you, but it won't be free. And it's not guaranteed. Do him a favour and he will owe you something. But don't count on him to spend his guanxi capital to repay you.

Connected with that is an attitude toward contracts. The guanxi circle is a relationship of trust among colleagues. To overstate the argument a little – it's a western aberration to demand that all relationships be reduced to an impersonal rats-nest of contracts, as if no one can be trusted. For civilized people, your word is your bond. While in the modern Chinese business centres they've come to appreciate the value of a contract, and will even initiate it, there are still some who will try to convince you to make a commitment (and transfer your money) without one. They may play the trust card, so know how to deal with it.

Recognize that a westerner like you will never become a full member of any Chinese guanxi circle. You will always be an outsider, and a second-class citizen, with no rights and no recourse. "My guanxi is your guanxi – don't worry, I can get it for you" is not in the slightest degree a commitment you can take to the bank. You need it explicitly detailed in black and white, no matter how much that may brand you as a western barbarian. But I hasten to repeat that, the more progressive Chinese managers are on the same page as you and I, fully appreciating the need for a water-tight contract. Those are the ones you should look for. But if you're in a more traditional centre, you may have to fight for it.

9. Understand Indirectness and Face

China is a relationship based society, developed long before the market turned our European ancestors into disjointed individuals competing with each other in the marketplace. Again to overstate for the sake of argument – we have no need for relationships. Market contracts regulate our lives and how we interact with each other. But for the Chinese, relationships are everything.

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