Quite possibly the most important possession to have in China is guanxi: connections or the connectedness that helps open closed doors. While the Chinese legal system is maturing, its cultural milieu is still largely relational rather than legalistic. Most people place deeper trust in human relations than in the abstract law. Having the proper connections is essential for getting things done in China. Trying to navigate the Chinese bureaucracy without them can be excruciatingly slow, and often fruitless if you're trying to make a deal.
Introducers or go-betweens can play several important roles in a business deal. Besides getting you in the door, they can also help smooth the way by acting as a back-channel for information. Additionally, they can often apply pressure through "back scratching," calling in favors, and other "back door" methods.
Alliances and connections are often made through intentional acts as part of a strategy; reciprocal obligation binds the parties. The concept of reciprocal obligation dictates that one must reciprocate favors, gifts, dinners, information, influence, introductions, etc. This obligation can become a valuable commodity: Depending on who the person is, just knowing that he or she "owes you one" can provide more peace of mind than a good insurance policy. Companies and government agencies can also incur obligation, and decisions may be made based on the need to fulfill outstanding obligation. When dealing with a Chinese company or agency, try to find out if it has unfulfilled obligation that could affect your proposal.
Compared to most Western societies, and especially the American society, Chinese are very group-oriented. Consequently, they tend to want to find protection in numbers and strive to make decisions based on a consensus. Once a consensus has been reached, however, individuals are usually expected to show loyalty to the group decision and fall in line.
The Chinese also like to feel connected by interdependent relationships, the sort that reciprocal obligation brings. Having an interdependent relationship with someone, however, makes you somewhat vulnerable, so being able to trust the other party becomes a critical issue. Therefore, building the right relationship, both with the right person and in the right way, is vital. Taking time to build a solid relationship before trying to do business is critical. And showing loyalty to those with whom you have a relationship is imperative.
A legacy of Confucianism is the Chinese devotion to the hierarchical system. Everyone has a social rank, and all are expected to know where they fit into the hierarchy and to behave accordingly. There are numerous ways that hierarchy is continually reaffirmed. For example, in a family of many children, younger siblings can never call their older siblings by name; rather they must address them as big brother, second big sister, third big brother, etc. Introductions in meetings, entry into a room, and seating arrangements are all determined by the hierarchy.
This means that it is important for you to find out where your counterparts fit into his or her hierarchy. Likewise you need to understand your position within your hierarchy and your status relative to your Chinese counterparts. If you are in a lower status in relationship to the person you are seeing, keep in mind that you will be expected to show some deference or respect to the person of higher status. If you are in a higher position than those around you, you are expected to live up to your status by being more reserved.
There is an Asian saying: Losing face is like dropping something down a well -- the only way you can get it back is to go down after it. This means that if you cause someone to lose face, you must somehow humble yourself to retrieve it. If you do not, the only way that person can regain his or her respect is to force you down. Therefore, an incredible amount of time and effort are put into making sure no one loses face. A decision, for example, might be affected by the need to save face for an important person. Someone might stretch the truth as a face-saving measure. Disagreements are expected to be handled in private so that no one is publicly embarrassed. Even direct rejections are avoided in front of others, as a way of protecting face. This means that if you do not have a go-between, or a close relationship with the people with whom you are working, you will have no means by which to receive and deliver the "real" truth.
Embarrassment can mean a loss of face, and to avoid any loss of face, the Chinese desire the sort of predictability that an emphasis on formalities can bring. This means there is a prescribed way for doing everything. At a banquet, guests are met at the door and escorted to the banquet room or to their seats. People are then seated according to their rank. A formal banquet always begins with a toast by the host.
Giving face" is also very important in China. This is a way of elevating a person in the eyes of others. Protocol rituals often exist not only to save face, but to give face to the other party. You use both hands to proffer your business card, for example, as a way of elevating the other party. Addressing others by their titles rather than by their given names shows respect and acknowledges their status within the group. During banquets, toasts are continually offered and reciprocated as a way of honoring and "giving face" to others.