East and West - A Business Perspective

The first thing to note about Chinese society is the importance of family. The Chinese place a much greater importance on family in the context of business than Western nations do. This leads to a more close-knit organization, and one more reliant on networking. When family and business are joined in the West, the primary motive is to create wealth. In China, however, given that business roles are often passed down through family (Chen) it is seen as upholding a familial responsibility.

There are four main characteristics of Chinese business run by families. Firstly, the head of the family is often the head of the business (usually is a patriarchal or matriarchal figure) or is the founder. Important positions are occupied by sons, daughters, or other family members. Sometimes extended families may link together to form a network of organizations.

Secondly, this dominant figure usually will have authority such that lower-ranking managers or supervisors will circumvent the normal channels of command and go directly to the family head for a decision. Often, important decisions will be made in an informal, relaxed setting, such as a family dinner. In contrast, American businesses make decisions usually in board meetings or on-site.

When the time comes for power to be transferred in business, whereas American organizations will seek out professionals with the necessary expertise, Chinese ones will hand down the position to the next of kin to keep the business strictly controlled by the family. Assets are divided amongst the sons, who can use those assets to diversify their market niche.

Finally, to Chinese businesspeople, personal recommendations and reputations are more important than achievements in determining whether or not to hire someone.

With the globalization of business and industry, China is moving more toward the Western way of doing business. Factors such as education, experience and knowledge play as much a part in personnel acquisition as does personal reputation. Even so, the traditional model holds strong. In international business dealings, an important concept to remember is called guanxi.

Guanxi means 'connections' approximately. Usually, this will involve mutually shared experience, obligation and affection (Chen) Western business is based on exchange of transactions, whereas Chinese business is based on this concept of guanxi.