Five Challenges Facing Entry into the Asian Markets

Five challenges facing entry into the Asian markets

PART ONE: RELATIONSHIPS

The following part relates to relationships between people. It focuses on the differences in how Western and Asian business people approach relationships, how these relationships are developed and how various cultures have an effect on such relationships. The issues discussed are mainly threefold and are divided into: (1) Guanxi relationships; (2) Individualism, Collectivism and Confucianism; and (3) Westerners in China.

1: Guanxi Relationships

Having watched a fare share of Hollywood movies one is bound to have noticed the different methods of doing business in Asia. In more than one Hollywood movie a group of American businessmen try to set up a deal with some Chinese businessmen. Before any deal can take place the businessmen first have to meet with the Chinese businessmen and do what seems like anything BUT negotiate a deal. They go to a karaoke bar, out dinner, get drunk, play golf, and exchange gifts. This practice is commonly referred to as developing guanxi (a connection or relationship) and is a fundamental issue in the Chinese business culture. Understanding the way in which to develop guanxi, and eventually guanxiwang (a web of guanxi networks), is vital for anyone thinking about doing business in China.

Developing guanxi is the process by which two persons, or parties, do something for each other (a sort of favour) which develops a bond between the two, and a feeling of mutual obligation. Eventually, a series of such exchanges may lead to the formation of a guanxi based relationship. Yamagishi and Yamagishi (1994) believe that trust is not the main issue in guanxi but rather the assurance that one has created a feeling of mutual obligation towards the other party. In fact, guanxi doesn’t even have to involve two people that like each other, as long as both parties continue to follow through with the obligations involved in the relationship.3

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