9.5.12

Doing bioscience business deals in China? Why ‘guanxi’ matters to you | MedCity News

rice, China, food

China presents life sciences opportunities, but to Western pharmaceutical and medical device companies seeking business deals, the Chinese business world can be a mystery.

To understand the Chinese way of thinking about business relationships, it might help to consider the experience of an American. Michael Batalia, director of technology asset management at the Wake Forest University School of Medicine, grew up in rural Illinois. Batalia recalls farmers who relied on each other based on relationships going back decades. Beyond the farm work, families knew each other well. It was a blending of work life and family life.

In the West, this way of life is mostly a relic, Batalia said. But in China, it is the centuries old practice of “guanxi.” The word refers to the network of relationships that is the backdrop of Chinese business. Batalia, who has traveled to China in his work with the Association of University Technology Managers, said that Chinese business relationships go beyond strict business deals. Without a more personal connection, deals don’t come easily.

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“It’s hard to distill relationships down to a contract when you barely know each other,” said Batalia, one of the speakers on a panel at China Bioscience Connect, a conference held last week in Winston-Salem, North Carolina on developing Chinese business relationships.

While many Americans prefer to keep a clear line between work life and personal life, in China that boundary is not well defined. Americans define themselves by their work, typically asking new acquaintances what they do for a living. In China, the first questions are never about business, said Shiqin Xu, director of the Global Training Initiative China Program at North Carolina State University. A Chinese person will ask about family, even hobbies. These questions might be considered too personal in the context of American business, but they are standard in Chinese relationships. Such details are important, Xu explained, because the Chinese view this personal information as the building blocks of a relationship. That relationship is what leads to business deals. But it takes time.

Creating one of these relationships is best done through an introduction, perhaps from a mutual friend, said Yin Chen, vice president of business development for the U.S. region for Shangai Medicilon, a preclinical contract research organization. As you build these relationships, expect to share many meals.

“In the Chinese tradition, we always prepare more than you can eat,” Chen said. “You don’t have to eat it all.”

Relationships are built on reciprocity, Batalia said. A favor done from someone creates the expectation that a favor will be returned. Business deals are negotiated to benefit both parties, rather than to put one party at a disadvantage. It’s a different approach than Western business practices, where Americans relish bargaining for advantage, said Dr. Joseph Molnar, a professor of plastic and reconstructive surgery and associate director of the burn center at the Wake Forest University School of Medicine. The Chinese view negotiating from a position of power as arrogance, Molnar said. The Chinese approach is negotiate with humility, which in the West is viewed as weakness.

“It’s one of the culture clashes that’s misunderstood on both sides,” said Molnar, who along with several Wake Forest colleagues is part of a faculty and physician exchange with Shanghai Changhai Hospital in Shanghai, China.

But well before the point of executing a business deal, much simpler exchanges take place as the relationship builds over time. Chen stressed that gift giving is considered an important part of guanxi. While the sentiment of the gift matters most, Chen offers one sage piece of advice: “You better not bring gifts made in China.”

[Photo from stock.xchng user yum]

Interesting post on the importance of 'guanxi', or personal relationships, when doing business in China. To be successful in the Middle Kingdom, US health tech companies will need to operate under a different, more conciliatory mentality than they do in Western markets.

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