Guest post by Jonathan Poston, M.E., Editor-in-Chief, LearnChinesebusiness.com

When the topic of China comes up these days, the first thing that comes to mind is a question as to when they’ll be the world’s number one economy. Then, as mere after-thoughts, are concerns over how China managed to win from the West the coveted crown of economic superiority. Was it intellectual property theft, corporate spy rings, communist government military-sponsored hacking, or some other furtive measure of social deviance which lent an advantage in a zero-sum game of supply and demand? Spy novel fodder aside, maybe it was because the Chinese know the value of “intelligence” and how to safeguard and exploit it. But this article isn’t about that: it’s about how the Chinese, as a cultural phenomenon, evolved a culture of business secrecy without ever considering how it might be leveraged in the business world.

In order to avoid approaching the subject with Western ethnocentricity or undo prejudice to write an article that could easily become more conjecture and presumption than fact, four mainland Chinese were interviewed to gain a more balanced and accurate view. The responses (which are combined in anonymous compilation below) indicate there are a number of societal triggers that actively nurtures a nation of secretive business leaders.

Lack of Trust

From a very young age Chinese people are taught not to trust others. It’s very common for Chinese to have to bribe officials or doctors just to ensure proper service.

“There is an old Chinese saying that we learned when we were young: we shouldn’t have bad intentions to hurt other people and their interest, but we should have protective intentions to protect ourselves from being hurt by other people, especially strangers. In our culture, interacting with people or making relations is an approval process. That means we presume any strangers that approach us have intentions that are detrimental to our interest. But once we get to know the person more and gradually find we can trust him/her, we would open up our heart. This is kinda typical in the Chinese business world. We become friends first then we talk about business. Americans are direct and open to whoever is interested in their business and is willing to collaborate, but once one side breaks his/her creditability, it will be very troublesome for him/her in the future – disapproval process [credit will be destroyed, etc.] In China, if you break your credit with one client, you just go to the next one and no one will ever know.”

Open Dialog Discouraged

It’s even been reported that students who speak out in an educational environment are considered strange or weird, and even punished by the teacher when they do it. This presumably stems from the teacher’s own fear of being challenged in class by his or her students, which may cause a loss of face when questions are asked that the teacher can’t answer. This dynamic also repeats itself in other situations where the authority figure (i.e. supervisors, investors, officials, etc.) discourages open dialog, the Chinese people have become very careful about talking when they shouldn’t.

Guan Xi

“No one gets inside without a strong relationship. First, in our culture, when you want to do business with someone, you have to make friends with him or her. We called it Guan Xi. It can be translated as personal connection. So eating and drinking multiple times before talking about business is a way to build up the initial relations — to prove you are someone I feel comfortable to do business with.”

Obtaining relational trust often means a great amount of drinking for both men and women.

“If you are willing to drink whatever amount of alcohol I want you to, you are a “good friend” and I feel like doing business with you. It might sound stupid, but that just seems the way it is in our culture. Unfortunately, women have to do the same…if you want to do the business.”

How long does it take to get Guan Xi?

“It all depends on how the business person you want to do business with feels during the interaction. It could be long, could be short. That’s probably the most frustrating part for a lot of western business people who want to do business with Chinese people.”

Authoritarian Government

Because strangers aren’t trusted (which includes people and organizations) and working relationships take so long to form, the western concept of transparency is a fantasy in China.

“But [we also have] no transparency because of the government too. We are pretty angry at them about covering everything too. Maybe [we’re] used to hiding things from authority, worried [that] those things [will] be punished by government, secretly.“

Naturally, the above factors (which don’t represent a comprehensive list) create a complex business environment for the Chinese and anyone working with them, while welcoming corruption at all levels. As Chinese business people become more educated, especially under Western educational models, the mental “bamboo curtain” is allowing exceptions to the conventional ways of doing business, thereby reducing the need for drinking to prove trustworthiness, bribery, etc. But the operative word to remember among this optimism is “exception.” Even so, every system is different, and for foreigners interested in doing business in China, it’s best to go in knowing the situation, and with a competent Chinese cultural expert close at hand to provide guidance as necessary.