MIT Sloan Management Review

Building Effective Business Relationships in China

June 19, 2012 | Roy Y. J. Chua

As China’s growth and integration into the world economy continue, many companies are looking for ways to build effective business relationships with Chinese companies. China’s ways of doing business are becoming more Westernized, but non-Chinese executives must still work hard to build trust in relationships with their Chinese business partners.

Many Western companies are familiar with the idea of guanxi, or the importance of relationships in doing business. But developing trust between Chinese and Western executives takes time. The author and his colleagues identified two foundational types of trust. The first they term “trust from the head” or cognitive trust. That emanates from the confidence one has in another’s accomplishments, skills and reliability. The second type is trust from the heart (affective trust), which arises from feelings of emotional closeness, empathy and rapport and is more complex to develop.

Western executives who have mastered the art of building affective trust do so by developing a deep cultural knowledge, one that goes beyond the mastery of social customs and etiquette. This deep knowledge can help bridge the trust deficit by approximating the basis of common ties and values that individuals from the same culture enjoy.

The author’s research into building affective trust found that the habit of constantly testing cultural assumptions in the context of actual experiences helps build rapport by making people feel understood rather than stereotyped. Executive who have mastered this cultural “metacognition” do four things consistently. First, they remain aware of their own cultural assumptions. Second, they test these assumptions against reality — that is, do the assumptions help them understand motivations and predict behaviors? Third, they revise the assumptions if they see that they don’t apply. And finally, they plan how to integrate this knowledge into upcoming interactions.