China’s entrepreneur network is an essential part of running a business, especially for startups.
For years, the Republic of China has become the hub for exciting innovation. Among its cities, Shanghai attracts more tourists because of its scenic beauty. Its vibrant business ecosystem also makes it a go-to-place for entrepreneurs, immigrants, innovative and tech startups, and digital nomads alike.
But for newcomers, breaking into the Chinese market can be quite a challenge.
Some challenges like communication, language, and cultural differences can easily be learned and overcome. Other challenges take longer time and much effort to break through. One of which is the business concept of guanxi 关系.
For a newcomer in the Chinese business landscape, it can be difficult to break into this tight-knit community. Most of the existing relationships within the Chinese businesses goes back generations. From grandparents to uncles, to friends and colleagues, guanxi 关系 takes a long time to build. It is also often inherited by family members, and intertwined with time and situations.
A business that doesn’t have the proper understanding of what guanxi 关系 is and how it goes will meet its doom early on.
Corporate Cultural Differences between the East and the West
There are stark differences between doing business in the East and the West. Because of this, it might be easy for people to get offended and affect the outcome of business opportunities.
Despite these differences, there are also similarities in the corporate cultures. And true enough, these similarities enable teamwork and camaraderie.
Here are some corporate cultural differences between the Asian companies and Westerners as told by graphic designer, Yang Liu.
It’s not What You Say, It’s How You Say It
Communication scientists, trainers, and coaches often talk about the Iceberg Model when it comes to the science of conversation.
It is believed that communication consists of two parts. 30% makes up the verbal aspect of what you say and the other 70% of your message is conveyed through body language, gestures, and tone of voice.
Because of this, it’s often possible for messages to get lost in translation. This is true when people encounter language barriers that inhibit them from conveying their true meaning.
When it comes to communication, most westerners tend to be upfront and frank. They mean what they say and say what they mean. They ask direct questions and expect direct responses. A ‘yes’ or a nod means complete agreement.
This may pose a problem for Asians, who often use ‘yes’ to acknowledge that they are listening to what is being said. Nodding doesn’t mean that they agree with you. Rather, it is a reflection that they respect other people’s opinions despite their own.
Being too direct may be seen as rude and disrespectful, so Asians deliver their thoughts and opinions with subtlety.
Managers from the west understand the importance of teamwork. They usually consider themselves as part of the team.
Western management styles are more horizontal, which means it’s much more fluid when it comes to making decisions. Team discussions are encouraged before deciding what is best for the group.
But for traditional Asian managers, it’s hierarchy that dictates authority.
In Asian homes, one’s age dictates how you should behave. Younger members should give high regard to adults and older family members. This structure extends to the workplace, where managers are expected to make decisions.
Subordinates often feel intimidated to share their ideas or ask clarifying questions. Most of them are afraid to challenge authority figures. They are also sensitive about ‘loss-of-face’.
It is often frowned upon in China and other countries to talk about success. The Chinese community value humility. To them, talking about yourself and your successes can be interpreted as bragging.
But it is often normal to talk about what you do and what you have achieved so far. Some may even consider humility as a sign of timidness.
Competition is encouraged in the west. Also, success is usually measured in professional achievements and wealth.
In the east, harmony between fellow workers is also put into consideration.
Addressing Concerns and Challenges
Like their communication style, Westerners prefer to addressing challenges head-on. It is best to solve problems immediately with little emotional fuss as possible. They also keep office relations within professional limits and not too personal.
Asians prefer to create closer personal relationships in the workplace. And often, they get offended if others don’t reciprocate.
Social interactions are very important to Asians. That’s why they tend to beat around the bush so as not to offend anyone in the process.
Guanxi 关系, A Business Culture in China
Guanxi 关系 is a concept that has a strong impact on the Chinese business culture.
For most, it is a concept of personalized networks of influence. But while its English translation relates to connections and relationships, guanxi 关系 needs to be experienced to be understood.
Guanxi 关系 deals with relationships that are deeper than business connections. It can also be defined as a network of contacts that you can depend on when you need to get something done. It has to do with knowing people on a personal level, and may even involve lifelong relationships and friendships.
It also deals with reciprocating favors, which are key factors in maintaining guanxi 关系 relationships and friendships. Failure to do so can result in an end to relationships and future dealings.
So in a sense, the more you ask for favors from your network, the more you owe them.
But how does guanxi 关系 work from a business perspective?
For businesses, the Chinese prefer dealing with people they know and trust. This is a challenge, especially if you are a newcomer who wants to enter the Chinese market.
Guanxi 关系 doesn’t have to be based on money, but rather in knowing that you are someone who can get the job done.
The good thing is, this kind of relationship is an ongoing process. As a newcomer, you have the chance to prove yourself to potential business partners. You also need to work hard to maintain these relationships if you want to create lasting relationships with Chinese businesses.
Real Stories from Real Entrepreneurs
Networking is vital, and the great entrepreneurs know it.
Check out these inspiring stories from awesome entrepreneurs who successfully connected with China’s entrepreneur network.
“As a newcomer, I don’t know a soul in the city. I had to start from scratch. It took time but it was a key success factor.”- Sebastien Aumaitre, co-founder of Pushtalents
I’m Sebastien and I co-founded Pushtalents, a B2B company that helps companies improve employee engagement and human resources performance. We are currently releasing our first product: a mobile referral system, in which employees are engaged — through game mechanics — to hunt and refer external talents for their own organization.
In 2014, I came to Shanghai with my family after spending more than 10 years in a leading consulting firm in Paris. Shanghai’s overflowing energy left me in awe. I quickly embraced its spirit and creativity.
But my entrepreneurial spirit faced some big challenges: as a newcomer, I didn’t know a soul in the city. I literally had no network.
The big question was: how do I build my own Guanxi 关系?
The only solution for me to start my business was to meet people. Lots of people. So I began to network.
Networking opened plenty of doors for me. I was able to meet a wide range of profiles–students, entrepreneurs, advisors, and experts from various fields. I also met some top executives in Shanghai with whom it would be highly complicated to have a coffee in Paris!
Networking is vital if you want to succeed in the Chinese business scene. Go out and meet people. Speak freely about your project, and always be humble and listen to every person you meet. Remember, some of them have been in China for more than 10 years. They have many stories and experiences to share.
“If I can go back to the past, I would definitely build a larger network before launching my business. That’s how important networking is here in China.”
— Joe Constanty, Serial Entrepreneur and Director International for Niu
I’m Joe, an American. I currently run international sales for Niu, the largest smart scooter company in the world.
When I came to Shanghai to start my own business, I noticed the startling difference between the business culture in US and China. It’s very easy to set up a business in the US especially in Nevada. But here in China, guanxi and relationships play crucial roles in business.
To be honest, I strongly believe that our lack of network was the reason why my first business failed. If I can go back to the past, I would definitely build a larger network before launching my business. That’s how important networking is here in China.
But on the other hand, we’re grateful for our mistakes. Our failures inspired us to create NextStep. We built events for like-minded entrepreneurs in order to create larger networks. Clearly, it has worked, and I’m very proud of it.
To those who wish to enter the Chinese market, get connected. You’re probably not the first person with the idea you have for a business, so get out and talk to others about it. Shanghai is full of great opportunities and the entrepreneur energy is high. I found awesome friends here, and I’m sure you’ll find great people too.
“The culture of guanxi can be challenging for foreign entrepreneurs. In my opinion, guanxi is played by the rules. And you have to prove yourself that you’re capable of playing by their rules.” -Maria Laletina, founder of SHP
I’m Maria Laletina. I started and manage a talent agency representing international filmmakers for China’s advertising market. I now also run an online magazine reporting on Chinese advertising, creativity and film craft.
The core of both businesses is relationships – we are a middleman whose success depends entirely on reputation and clients’ trust.
I’m originally from a small coal town in Siberia, Russia. I was a good student and got a scholarship to study in US high school.
Later I got a diploma from the National Institute of Political Science in Paris.
I started to work in a national Gas de France company. At that time France was buying 40% of its gas from Russia so I helped develop this French company’s geopolitical strategy with a particular focus on Russia. Then
I joined a business intelligence consulting firm which served top International clients. During this time a personal opportunity brought me to Shanghai.
It was love at first sight with Shanghai. The high energy and constant movement of the city drew me in. A few months into my first visit I decided to resign from my consulting job at the time and move to Shanghai. It turned out my current boss was thrilled with the decision too and asked me to help establish an office for the company in China. I started this process in November 2005.
I eventually stopped working for this French Company and planned on joining one of the international corporations that used to be my clients. My husband convinced me, however, that I was capable of starting my own company. He already had his business in Los Angeles and had worked in Hollywood.
He had also fallen in love with Shanghai (where we met on my first visit to China) and we moved here together. He became one of the first foreigners to open a commercial production house in China, called PIG CHINA.
My husband suggested I open a company with services for production companies like his. The idea was to become a talent agency, representing individuals in the international film industry such as directors, cinematographers, production designers, offline and online editors – all the key people that work on commercial films.
Originally I thought I knew nothing about the industry but I quickly realized simply being married to a producer who loved his work and shared it with his family had given me an extensive network and deep knowledge of China’s production industry.
We have a name on paper Shanghai Premium Limited but abbreviated it to SHP.tv to make it fit better with our services. This kind of representation agency already exists in Europe and the USA in a different way, so I took this core idea and applied a model that would work in China.
Breaking into any new market is difficult, and China comes with its unique set of challenges. It doesn’t matter how big or popular a brand is, in a new market everyone needs to be humble and open to a different way of working.
A lot of companies originally viewed China as its secondary market and did not take is serious, because of this attitude many individuals and companies missed the opportunity to slowly establish themselves in order to occupy a solid place in the market today.
What’s important for setting up a business in China is to understand how your ideas can be adapted to China and not how can China adapt to your model, no matter how well something is working in the West.
The concept of guanxi 关系 (relationships) is very important for working in China, no matter how cliche it sounds. This culture of guanxi 关系 can be challenging for foreign entrepreneurs. In my opinion, guanxi 关系 is playing by the local rules. You have to prove your capability to play by their rules and even more than just be able to understand the rules you have to succeed at them.
This culture wears a lot of foreigners out though and they cannot last long in China’s work environment. A lot of American and European companies come here to try for a year or two, but they leave because they do not understand the rationale of the Chinese rules, it seems very illogic to them and in the end not worth the effort.
I am sure there have been other people who have tried to open similar representations before us but we are the first to actually get off the ground and we are the biggest agency in China to date.
About two years ago we also started the only bilingual online magazine, covering production craft and creativity in Chinese advertising, a niche that nobody has yet explored. www.shpplus.com
To survive here you need to have grit as well as humility. The Chinese market will test you for sure, but it’s worth it if you can survive. It’s an exciting market but it’s also particularly tricky, even after you think you’ve seen it all it has a way of still throwing you a curveball. That’s actually why I like China, it’s never dull, it never stops surprising you! You have to love working in China but love back is never guaranteed.
It’s just like with a married couple, you have to put in the effort but that’s the rewarding and terrifying thing about it, the result is never for sure.
“From my experience, I could say that starting a business in Shanghai is quite a challenge for new entrepreneurs in the market, due to the highly competitive environment and constant regulatory changes within its legal framework.” — Wei Hsu, founder, and CEO of INS Consulting
My name is Wei. I founded INS consulting in 2007. Our company focuses on helping foreign companies establish and develop their commercial operations in Greater China via our tailored solutions.
I came from a native Taiwanese family who immigrated to Spain. I was born and raised in Madrid, though I spent most of my educational period abroad in Europe, Latin America, and Asia.
I arrived in Shanghai in 2006 while the city was becoming Asia’s business capital. China was increasingly opening its doors business-wise, making room for many new opportunities in such a fresh and attractive market.
Like any other entrepreneur launching a business, challenges are constantly present. From my experience, I could say that starting a business in Shanghai is quite a challenge for new entrepreneurs in the market, due to the highly competitive environment and constant regulatory changes within its legal framework.
I began to connect with people and grow my personal network by being socially active. I used to attend many conferences and networking events, looking to meet the most relevant individuals according to my business’ needs. INS was founded on guanxi 关系.
In the initial stages, INS focused on assisting expatriates through different HR and administrative matters such as visas, insurance, and invoicing. Therefore, the necessity of having strong guanxi 关系 in these areas was crucial for the growth of the company.
For newcomers to the Shanghai business scene, don’t get caught up in an opportunistic market. Try to understand and adapt your business to the local needs. Taking the time to understand your surrounding will save you time in the future.
Secondly, don’t think that the strategy applied to other foreign markets will also be effective in China. Your plan in the Mainland should be tailor-made to your target.
Building a company is never simple and the chances of failure are always high. To achieve success, you must go through a repetitive process of trying, testing, making mistakes, learning from them, and improving the way you do things. No amount of planning can replace actual field experience.
Keep going on. Be happy to encounter any adversities, recognize your errors and make them yours, so that they finally become a part of yourself. This is the only way to achieve success.
“I learned that networking is a process and every relationship should be nurtured. People have to like you and your product before they can help you.” -Ildiko Kissimonova, co-founder of Upbeing.
My name is Ildiko Kissimonova. I’m a social entrepreneur and one of the founders of Upbeing. It was built together with friends, a company that empowers students through social innovation. We also focus on cultivating sustainability and doer mindset and creating positive social impact.
I was born in Slovakia but I consider myself a Hungarian because I spent most of life in Hungary. Five years ago, a friend invited me to China. He already owns a business in Shanghai and he keeps gushing on how vibrant the city is, telling me about the awesome opportunities for me there.
And so, I got interested and went to Shanghai to explore.
My friend wasn’t lying. Shanghai is beautiful and I instantly fell in love with it. The city is like a big playground with lots of untapped opportunities.
I studied the Chinese language immediately and got very good at it. I also pursued my master of business administration degree at Shanghai Jiaotong University. I met a friend with years of experience in social projects and NGOs, and the concept for Upbeing came from her.
I liked her plans because they were similar to mine. I’ve always been passionate about education and creating a positive impact, so I partnered with her and together, we launched Upbeing.
Networking is incredibly important in the Chinese business landscape, and without one, it might get difficult for you to succeed.
To help grow our network and learn more about how to run a business along the way, we attended and applied for incubators in China. One of which is NPI, an incubator which helps nurture NGOs and social enterprises.
We were already clear about our intentions, but getting connected to these people definitely helped us be better at what we do. We also got in touch with mentors and people who we can learn from and also help us along the way.
One of the key challenges that we still encounter today is finding schools which can support our products. It can be difficult to talk to educators about what we do. But thankfully I met friends who helped us get introduced to the right people who helped support our cause.
I learned that networking is a process and every relationship should be nurtured. People have to like you and your product before they can help you.
For entrepreneurs who want to jump into the Chinese business scene, it’s best to identify the industry you want to be part of. Being crystal clear about your goals is also important. This will serve as your guide in navigating through the broad network of people you’ll meet, and also help you decide what to look for in people who can bring out the best in your business.
Events such as networking and workshops can also widen your connections and networks. It’s a good way to speed up your learning process and also gain new friends. You also get to meet like-minded individuals that you can collaborate with in the future.
It is also best to be involved with organizations that can help you find supportive and influential people like IPWS and GGI.
And most importantly, listen to your guts and connect with people you genuinely like.
The value of China’s entrepreneur network is unparalleled. This is why every entrepreneur should connect and nurture their networks.
How to Build your Own Guanxi 关系
Bridge the Gap
If you are a newcomer to China, it is best to start reaching out to your own network. Or better yet, build your own community.
You can use technology to reach out to online communities such WeChat groups.
Here you can crowdsource information, get feedback and opinions, and even learn about news and updates that you need to know. It’s also a great way of connecting with new people and finding possible prospects and clients for your business.
Pay attention to favors and know how to respond accordingly
It is vital for you to know when a Chinese person does you a favor.
Most of the time, these actions are subtle and can be easily missed. Because of this, you need to learn and understand the cues and stay alert.
Food plays an important role in business, and oftentimes, it presents a great opportunity to create connections. When you get an invite, it is proper to give gifts. It is also polite to invite them over for dinner or take them to a show in the future, as a sign of reciprocity.
One mistake you can easily make is to throw lavish parties or give expensive gifts. This can easily be misinterpreted as bragging or even an unwanted display of wealth. It might also be interpreted as seeking short-term opportunities instead.
Connect with like-minded people
Connecting with like-minded people can be extremely beneficial if you want to get in the local network. But know that it is not enough for you to collect business cards and emails. You must learn how to create lasting relationships and nurture them in time.
One way of nurturing these networks is to come from a place of help.
If you have skills and talents that you can share, don’t be scared to volunteer and do favors for other people in the network. Remember that guanxi 关系 is heavily based on relationships and knowing that you can be trusted. And helping others achieve their goals and tasks is a great way of letting people know that you are someone that can be depended on.
Where do you find these like-minded people?
Networking events, startup weekends, communities, forums, workshops and online groups like those in WeChat are a great way to connect with like-minded individuals.
It’s can also be a pool of potential partnerships and clients.
These venues also expose you to local culture and etiquette. By observing how people go about and introduce themselves to others, you’ll easily pick up a thing or two on how to create connections better. The experience will definitely be beneficial to you in the future.
Of course, there’s also the discussion of new ideas. Meeting new people through workshops and forums not only give you additional knowledge. It also introduces you to best practices, tips, and techniques that you can apply to your business.
Build your brand’s voice, reach out to your market, and create a strong online presence through online marketing!
NextStep will help you extend your brand’s reach to China through WeChat and Weibo Marketing. Go local with content in Chinese, English, and French.
Contact us today and get to know more about our services!