It’s All About Trust: How Business Relationships Differ in China and the US

Why do business relationships take longer to establish in China than in the United States? New research explores key differences between the American and Chinese approaches to building networks.

Are your relationships with your coworkers qualitatively different from your relationships with your friends? Are you more inclined to do a favor for a prospective client than for an acquaintance who has little to offer in return? If you are American, the answer to both questions is probably yes. If you are Chinese, however, it may be natural for you to seek emotional support from work colleagues, or to go out of your way to help someone who is not in a position to directly return the favor.

While Americans typically maintain some separation between their personal and professional lives, Chinese tend to establish almost family-like bonds with their business associates. Professor Michael Morris, who has conducted comparative studies of business relationships in different cultures since the 1990s, suggests that this is one reason that business relationships take longer to establish in China. “In China, if you’re going to do business with someone you start by forging a personal, affective bond — you exchange gifts, you have a series of meals together, you may be invited to meet their family. The personal bond paves the way toward a working relationship.”

Foreigners doing business in China learn two words that describe important aspects of Chinese business culture: guanxi, which means connections, and renqing, which means favor. “Though guanxi translates literally as connections, expatriates in China quickly figure out that you don’t build guanxi through the same kinds of networking that you could use to develop your connections in New York,” says Morris.

But how exactly do Chinese tendencies in networking and favor exchange differ from those in the West? In a series of studies, Morris, Professor Paul Ingram and doctoral student Roy Chua have used social network surveys to compare and contrast the Chinese concepts of guanxi and renqing with the American concepts of networking and reciprocity.

The researchers surveyed Executive MBA students in China and New York, asking them detailed questions about their networks. The executives identified each person in their network as a source of economic resources, emotional support or crucial information. They also indicated the degree to which they felt two kinds of trust — affective and cognitive — toward the other person. This distinction between trust from the heart and from the head turned out to be the key to understanding the difference between Chinese and American networks.

“Both types of trust involve a willingness to make oneself vulnerable to the other person,” says Morris, “yet cognitive trust is depending on them based on a judgment of their competence, whereas affective trust is confiding in them based on the feelings of liking them. Our hypothesis essentially was that these two forms of trust would be more interwined for Chinese managers than for Western managers.”

This hypothesis is consistent with Ingram’s experiences working with executives in both places. “Chinese executives accept that personal feelings co-mingle with business judgments,” he says. “Westerners are more likely to struggle to separate these, to keep business judgments impersonal.”

The studies’ findings confirmed that Chinese managers have extensive overlap between their personal and professional networks: the people they trust with their heads tend to be the same people they trust with their hearts. By contrast, American managers have a division of labor in their relationships: they tend to have cognitive trust in a circle of business associates and affective trust in a separate circle of friends and family members.

One study measured executives’ willingness to do time-consuming favors for each person in their network. The researchers found that the Americans were much more likely to do favors for people who were in a position to be of significant assistance to them. The Chinese executives, on the other hand, were willing to extend themselves to help people who had little to offer in return. The Chinese responses suggest a system of indirect reciprocity that is consistent with the concept of renqing.

“What renqing literally translates to is favor,” Morris says, “and in the way it’s used in Chinese, it’s very closely related with another term, mianzi, which means face. The idea is that if you do favors for people in your community, within the circle of people that you interact with, it increases your face — the esteem that the community collectively ascribes to you. This system of face functions much like a credit rating. If you have helped a lot of the others, you’ll be seen as high in face, and this makes it very hard for people to say no when you do ask for something.” Chinese executives did show a direct reciprocity pattern in their relationships to non-Chinese expatriates, whom they seemed to view as being outside of the indirect reciprocity system.

China’s collectivist history provides a partial explanation for the prevalence of guanxi and renqing in Chinese business culture. The lack of a strong legal system is another important factor. “Anywhere in the world where people have to do business without legal institutions,” Morris says, “you’ll see some form of building very close affective relationships with people that you have to trust.”

Read the original piece on Columbia Business School’s Ideas and Insights blog. 

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