Recently updated on April 15th, 2021 at 03:00 am
— By Aimee Zhang
Jim Ruxin: How do you explain the differences? Most non-Chinese people would think trust to be more important than reported…or is it earned from the other factors like size and language?
Andre Wheeler: I agree Jim, it depends how one defines Trust i guess. My experiences in China suggest the Trust is far more prevalent than suggested, but this is within the context of building a relationship that takes account of culture, empathy etc.
Aimee Zhang: In my opinion, western people tend to separate business from family and other issues (make things simple) and Chinese people (or most Asian business managers) tend to mix business and life together (sometimes tend to deal with complex things and be more efficient in doing all the things together). They are different philosophy of solving problems. In the literature, none of them is superior than the other in terms of efficiency.
The costs of Trust is very high in China. Non-Chinese people tend to trust each other in the first collaboration. But in China or most Asian cultures, people built trust slowly through collaboration. “You have to be a friend to do business with me.” This is a qualitative interview results from my study in China and has been agreed by most managers in China (or from Chinese culture). More factors are taking into account when building this “Trust” or “Friendship” in China.
Jim Ruxin: So trust is just describing a way of measuring how far a relationship has developed after personal contact?
In the west, trust is achieved through referral of others as a first step, research into someone’s background and business history, talking with others who know the person and have done business with them. Trust also happens through repeated positive results in business transactions.
Could it be that we really mean two different things?
In China, can the thinking be, “Joe would never betray me in a transaction and would always attempt to serve our mutual agreement well to join satisfaction. because we are friends or close enough for us to know each other?” “We know each others families and would never disgrace them?”
In the west it may mean, “This person has a positive reputation for success among people I know or has done verified transactions with others established in this business.”
Would Chinese business people do business with someone they have not come to “trust” on a personal level? Is that the last requirement before doing the first business transaction?
Can this stem from different cultural factors? Such as a well legislated business system with laws and courts, letters of credit and escrow arrangements, as well as contracts that can be quite specific in terms of what happens when either party is in default or fails.
In the absence of a guarantee of results or consequences for failure and the difficulty of remediation in the courts, are the Chinese in business less willing to take a risk than someone from the west and therefore have a higher personal standard of “comfort level” to transact?
This is a very important distinction because, as the poll shows, the test results are extremely different. Is this a language difference or a real difference in attitude and process?
Clearing this up…defining the personal and business relationship required to do business, East and West, would go a long way towards understanding each other.
Andre Wheeler: Again all I can comment on is my experience within China. In western terms , I have found that we use the Contractual framework to determine and define the trust and relationships whereas within Chinese systems, it is the nature of the relationship ( holistic relationship incorporating business and social, external and internal ) that defines the business contracting. Once western business gets to grips with this, doing business in China becomes a whole lot more convenient and rewarding.
Jim Ruxin: I am trying to slice the onion a little thinner than that to get to the reasons why this is so and what it means. As a westerner, if I do something because I can be mechanically successful, I don’t really know how to do it. but if I understand the persons needs and reasons for the process, then I see and feel the person that much clearer than just the process.
Could it be that a Chinese will say if you can go through the process then you will know me?
The Italians have a saying, that it takes sharing a pound of salt to become a friend. Are we looking at the same need for intimacy through shared experience?
Bernhard Wessling: Aimee, only now I had the chance to look at your “imagestore” link. I don’t know where these figures for China with all these precise “3%” come from, but all of them (“size, location, experience, language culture, technology” etc) are simply only elements of TRUST and confidence in the supplier’s capability to fulfill the needs. (only, in other words, and more specific) All these “questions” (mainly without being directly asked so) I was asked when we started business in China (supplying some very special chemical process produced in Germany).
“Trust” has many facettes, and maybe the Austrials had simply been “too lazy” 🙂 (sorry, it’s not meant as an insult, but as a joke) to detail their “trust” specifications? or maybe, the Chinese had been much more aware of what is their trust requirement being composed of? Trust is not just “I believe this guy, I can trust him”, but what can they really deliver? and if you look into any product a Chinese company wants to buy, then all these questions will have to be REALIABLY andsered so that the Chinese business partner can develop confidence in what the suppliers tells them.
Aimee Zhang: Thanks a lot for the comments. The factor “Trust” in my study is a subjective value by different managers in Australia and China. So there may be some cognitive bias on this value. The other factors are measured as in the book (questionnaire attached in both English and Chinese):
http://www.springer.com/business+%26+management/business+for+professionals/book/978-3-642-40150-3
This book is modeling business collaboration with Ordered Probit (Econometrics) Method. While the figure above adopted Decision Tree (Computer tools) method as presented in an international conference in 2009.
Trust is a very complex and subjective factor in our study and may be correlated with many other factors. Our model have better prediction rate on Trust in the Chinese database than in the Australian database. Any comments and suggestions are very welcome!
Another important finding from my study is that the contact person (could be manager in the collaboration project or a third party outside both firms) is vital for the collaboration in both Australia and China. “When the contact person is changed, the result could be totally different. ”
Chinese firms usually target on longer-term returns (even associate with many uncertainties) and western firms usually target on tangible returns in short or long term. In my opinion, Chinese firms would like to take the risk to build relationships for unpredictable future, which is more like “risk-taker” in entrepreneurs’ literature.
Andre Wheeler: absolutely agree with you Aimee, and this where a number of Western Companies come undone. Because the western style relationship is based on contractual contexts, there is a believe that people within the contract are not so important – which can be a huge cost to the business. The good news is that many western businesses are looking more deeply at relationships and you now find more “relationship managers” in western business.
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