Incorp China

Some life lessons are best conveyed through a story. This one is about never underestimating what power an extensive guanxi holds in China.

Guanxi is the mandarin term for the network, the connection people form privately and in business relation to one another over a long period of time. Other than in Western cultures, China doesn’t differentiate between personal and professional relationships. Upholding one’s ‘face’, one’s reputation, making new connections and maintaining them becomes an omnipresent necessity.

There hasn’t been a single client for whom we didn’t need to make good use of our extensive guanxi network.

One particularly interesting case was a logistics project for a multinational oil company we worked on a few years back. Construction parts had to be delivered to an off shore oil platform over night or else the 400 employees working on the platform would have had to be evacuated via helicopter. Six government officials ranging from police over inspection to immigration officers would have to be convinced to keep the border open long past their regular hours to ship the cargo across – and we had only one day to do exactly that.

The negotiations started at the Hong Kong airport with the customs director. He needed to agree to wave the goods through customs clearance prioritizing it to other shipments. While in the Western business world a simple call from an insider might be the correct approach, our CEO personally sat down with the customs director for tea. Slowly guiding the conversation from personal exchange to business affairs our CEO’s excellent knowledge of the Cantonese language helped form common ground and resulted in a successful endeavor.

With the cargo out of the airport ahead of time the next hurdle were the borders. What proved to be problematic were the border’s operating hours between Hong Kong and China preventing the construction parts to be passed through before the deadline. Keeping open a border beyond scheduled times requires, firstly, the border officials of both countries to be in agreement and, secondly, a trail of legal documents permitting such an inconvenience. In wise foresight, Mr. Fisch, our CEO, had already payed the Chinese border commander a visit on his way to Hong Kong. Usually, these types of high-ranking officials would never accept the visit of a foreigner. Mr. Fisch, however, instead of attempting to make an appointment, walked through the government building as if he belonged there, straight into the commander’s office. He immediately started conversing in Mandarin. Stunned by an American speaking fluent Chinese and being this straightforward, the officer invited our CEO to enjoy tea together.

After, again, a very private conversation about their backgrounds, families and commonalities guanxi was established and one could move on to business affairs. The Chinese border commander helped Incorp China not only to acquire the approval of the police, customs and immigration but even agreed to organize a chopper waiting nearby the border to transport the cargo directly from behind the Chinese frontier to the company’s offshore platform.

It was an achievement comparable to a miracle. Never before had the border been left open without the time consuming effort of preparing the legal documents required. The vital construction parts passed customs, inspection, and the boarder without problems and were delivered on time for the platform to undergo repairs. Our client was able to keep his business in operation and none of the employees had to be evacuated. With no representatives on Chinese ground who could have personally convinced Chinese officials in their native languages to help this company, huge financial losses couldn’t have been prevented. Establishing and maintaining a strong guanxi is vital and simply cannot be done form afar or by someone not in touch with Chinese customs and manners.