Guanxi. Not a word I know well. Nonetheless, a word, and a concept, one could not avoid hearing about during our Breakbulk China conference in Shanghai.
As I understand it, guanxi is the pinyin approximation of a Chinese word that refers to one’s relationships, one’s networks of influence. In traditional China, all happens through guanxi. And without guanxi, little happens indeed. What that means for outsiders who would like to do business in or with China is complicated. Western assumptions about the desirability of transparency, of clear and fair regulations, of the rule of law, of the same rules applying to everyone – well, my friend, these are not the same assumptions that underlie the concept of guanxi.
There was no subject we could discuss in our conference panels where we did not run up on the complications caused by this cultural difference. Do contracts signal the end of negotiations, or just the beginning? What matters most, the contract itself, or the person you are doing business with? How do westerners deeply concerned – and with good reason – about running afoul of the UK Bribery Act or the U.S.’s Department of Justice’s compliance laws deal with a culture in which gift-giving and using influence are the ancient norm?
In our panels we heard tales of Chinese exporters to Australia who were stunned they could not use influence to avoid quarantine when they did not have proper import documentation. We heard tales of skullduggery on the Yangtze River. We also heard about forwarders’ subcontractors who absolutely will not sign a compliance agreement – but who will nonetheless bend over backwards, and go above and beyond the original contract requirements, to cope with an unexpected problem. We heard about young companies determined to adapt an ancient mindset, and making progress doing just that.
I am always surprised and pleased at the way so many of our breakbulk industry executives are willing to speak frankly and openly about some of their most serious concerns during our panels. In China, some of these men and women were taking on political as well as business risk. But our industry experts want to share. They want, almost invariably, to teach. The best panels, to my mind, create an opportunity for our Breakbulk audience to listen to a group of ‘old hands’ (even though sometimes they are startlingly young!) speak their minds. This always happens, and China was no exception.
Every region has its own complicated set of business challenges, its own ‘guanxi,’ if you will. As we expand Breakbulk’s events, Breakbulk’s reach, we learn more about what matters where.