David ThomasExpert on trading with China and Asia

There is a story about a traveller who found that, in order to be welcomed into an eastern family, he would be asked to take three cups of tea. The first cup was taken as a stranger, the second cup as a friend and, if he was offered a third cup, he would then become part of their family. A place where trust was given freely and unconditionally, and from which he would forever be looked after.

I often use the “three cups of tea” metaphor to describe the journey that foreigners have to take to be truly accepted in China.  Unfortunately, many westerners who are used to relying on legal contracts to do business with strangers (or even friends) often don’t have the time, patience and emotional intelligence to invest in building the deep, trusted and binding relationships that are necessary to succeed in China.

It must be remembered that, only 30 years ago, China didn’t have a legal system (the oldest law firm in China, King & Wood, is only 23 years old!) and I often ask my clients to imagine a business environment where you are unable to rely on the rule of law and the courts to resolve disputes between different parties. China managed for hundreds of years without a legal system largely because of the focus on trusted relationships and networks (often referred to in Chinese as “guanxi”) which allowed old friends, families, villages and tribes to do business together knowing that maintaining relationships, “face” and trust was more important and valuable than doing a deal.

As a foreigner doing business in China you are a stranger, no matter how much they appear to like you, trust you and respect you. The Chinese are gracious, generous and flattering hosts and often give the appearance of welcoming you as friends and business partners (usually accompanied by lovely wine, sumptuous food and big talk!) but you will never gain their real trust until you have invested deeply in the relationship. This requires patience, endless meals, going out of your way to support and understand them, and occasionally making a “leap of faith” to help them with something that they highly value (eg acquiring a foreign passport, opening a door for their child to attend a foreign university or welcoming them into your family) which takes the relationship to a deeper level where you might one day be regarded as part of their family (ie the third cup of tea)

Unfortunately, westerners don’t often appreciate the time and investment required to achieve this, and baulk at the suggestion that they might go out of their way to pick their Chinese visitors up from the airport or buy them a dinner. The western world has become so litigious, transactional and time poor that even some of the most simple common courtesies have been abandoned in chasing the dollar! It wasn’t always this way but the reality now is that you don’t even have to like someone to negotiate a business deal, as long as you’re supported by a watertight contract prepared by a hotshot lawyer who can take the other side to court if they default or mess you around.

From my experience, you will be lucky if you are ever able to achieve one trusted and binding relationship in China, no matter more than one. The time, effort and commitment required to make this work can be all consuming and even then you can find that you come across complexities and situations that are hard to understand and resolve.

There are no hard and fast rules about how to do this, except to say that you will require lots of patience, emotional intelligence and a deep and genuine respect of Chinese culture to get anywhere near that elusive third cup of tea.