British PM misses the connection

Partnership selection and formation can only work well if key decision makers and influencers on each side establish a solid rapport. An all-expenses paid business trip to the UK and Europe could be seen as a crucial first step in any guanxi-building bond.

Once in the UK or mainland Europe, the leaders of any potential Chinese partner will be very conscious of gaining and losing "face". It is essential therefore that any European business hoping to tie up long-term deals with China make every possible effort to allow their potential Chinese business partners to gain "face". This will entail publicly praising their Chinese delegation, especially the leading figures, and displaying admiration of their business achievements and the spectacular growth of China generally.

Any visiting Chinese business delegation will be very interested in Western culture and will highly value information and trips that allow them to further their understanding. But an even greater value will be placed on any evidence of the host business' understanding of China and Chinese culture.

There is no easier or more tangible display of such an understanding than a meal at an authentic Chinese restaurant with a selection of genuine Chinese dishes. Chinese guests will not only be extremely happy with what will be considered "proper" food, but will regard this as a deep commitment to doing business with a Chinese partner. During the meal, frequent toasts will also be received warmly, which is always the case at a typical business meal in China.

However, it is the issue of market information where UK and European SMEs display not inconsiderable ignorance and most require clarification. A myriad of rules and regulations and frequent changes only causes concern and confusion to those with little or no understanding of China, especially Chinese business culture. Rules and regulations are of course important in China, but so is guanxi and "face", and often they are much more important.

Guanxi is a sufficient approximation of which initially requires identification and knowledge of the key decision makers inside a Chinese company.

Cameron's recent visit very much attempted to highlight business opportunities for UK and European SMEs with their Chinese counterparts, where the identification of key decision makers is often far easier than it is within China's many sprawling state-owned enterprises.

The development of guanxi within smaller Chinese companies should therefore be easier and quicker. Once established, it will then lead to the unraveling and understanding of any relevant trade rules and regulations. It will also lead to a deeper understanding of China's national and local business culture and all aspects of the local environment.

The key then to a better understanding of market information is not a detailed study of rules and regulations but the development of good relations and connections with key members of the Chinese business community.

UK and European businesses - SMEs in particular - require government-led education and training initiatives that put a detailed understanding of the Chinese business environment and business culture at the heart of their overseas expansion plans.

The author is a visiting professor at the University of International Business and Economics in Beijing and a senior lecturer on marketing at Southampton Solent University's School of Business. The views do not necessarily reflect those of China Daily.