The importance of ‘guanxi’ in doing business in China

President Moon repeatedly called his Chinatrip a monumental undertaking to mend soured ties.

especially on economic cooperation.

Many experts point out however.

Instantlyvisible progress is unlikely as Beijing is more about slow, steadfast and steady.

Won Jung-hwan explains the core differencein building business relations.

we should first expect small steps taken inthat direction.

Following a year-long standoff over the deploymentof THAAD on the Korean peninsula, Seoul and Beijing are rapidly getting their relationsback on track.

Highlighted by President Moon jae-in's statevisit to China this week, efforts to normalize ties are seen on all fronts, raising expectationsthat economic exchanges between the two sides will get a much needed boost.

However, many Korean companies stress thatdoing business in China takes not only time, but also understanding of the country's uniqueconcept of trust.

NMC cosmetics first entered the Chinese market5 years ago.

The company has managed to gain popularityamong Chinese customers, and it has expanded to several cities across China.

However, it wasn't an easy road, accordingto its CEO, as the way of doing business in China is a learning experience of its own.

(KOREAN) "It takes time to build mutual trust.

In my experience, you need to interact withChinese business partners for at least 5 years to gain their trust.

I realized that the concept of relationshipsin China is very different from ours.

" Chinese society has many unique traditions,and building sound networks and relationships is key in the business sector.

(STANDUP) "It pays to put in the effort building andnurturing strong business networks in China as… 'Guanxi', or 'relationships', has a big impacton business in the country.

" Guanxi is a concept that describes connection,networking, and the basic dynamics in relationships.

Although Korea also regards human relationshipsas an important factor when doing businesses, China's concept of relationships or guanxiis slightly different than Korea's,… and many Korean business people fail to embracethe full meaning of guanxi (KOREAN) "Nothing is decided on the table.

The Chinese way of doing business is not spontaneousnor rushed.

In order to make a decision, they look atthe history of that deal, including the people were involved in the deal from the beginning.

That's why it is very unlikely that a decisionis made right away when doing business with a Chinese partner.

This is why we need to know their system first" In Korea, seminars and classes have openedfor people wishing to learn and understand the concept and its application in businesspractices.

Incheon University is one example, where anacademy of Chinese studies opened in 2015.

(KOREAN) "Ahead of the Korea-China summit, and withnormalization of economic ties in progress, business with China will soon surge again.

As such, we opened these classes because wethought many people will be interested in learning about practical ways to do businessin China.

" The program is held every year , and the business-centeredcurriculum involves Chinese culture and humanities.

(KOREAN) "The concept of guanxi is simply put, thegolden rule when doing business China.

And it will continue to be so as the conceptis deeply rooted in Chinese society.

" Ahead of his state visit to China, PresidentMoon Jae-in said during an exclusive interview for China Central Television that trust isthe main objective of his third bilateral summit with his Chinese counterpart Xi Jinping.


""Mutual trust between the two nations has been damaged over the past years.

I believe mutual trust is of great significanceto the development of bilateral relations.

It will be crucial if my visit to China thistime will help restore mutual trust and deepen the friendship between the people in the twocountries.

" Although establishing trust can take longerthan expected, hopes are high that Korea and China can soon cement mutual trust, especiallyin the business front.

A prime example would be the planned FTA talksbetween Seoul and Beijing, seen as a stepping stone in strengthening economic guanxi betweenthe two countries.

Won Jung-hwan, Arirang News.

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