How Experient tapped into the growing, but hard-to-crack, Chinese market
Guanxi. It's more important to U.S-based meeting planners looking to book meetings in China than return on investment, room rates, or site selection. It means connections and, without it, international meetings in China are hard to accomplish.
Experient has discovered the concept of guanxi and is using it to serve its clients, thanks in large part to Ping He, director, international market development at the Twinsburg, Ohio-based meeting planning company. He, who was born in Shanghai and moved to the U.S. in 1989, made the connections that have enabled Experient to form a strategic partnership with a leading Chinese destination management company. “To be successful in China, you have to team up with a very reputable local partner that has a good track record and a direct connection with the government,” she says. “When your guanxi network is working for you, the inevitable risks, barriers, and bureaucracy of doing business are minimized.”
With a growing economy, rapidly developing hospitality infrastructure, and desire to do business with the West, China is seen as the next great frontier for association globalization. But tapping into the vast potential of the Chinese market is not easy.
That's where guanxi comes in.
Acquiring the right guanxi with the relevant Chinese authorities is critical because China is a communist country and decision-making is top down — starting with the government. Even associations, which are called non-governmental organizations or NGOs, are government-sponsored.
But the importance of guanxi runs even deeper. The Chinese way of doing business stems from Confucianism, which speaks of the importance of hierarchy and top-down decision-making. “For thousands of years, this is how Chinese society has operated and some people say guanxi is the lubricant oil that keeps the Chinese society going,” says He.
When you develop a relationship with a government official or entity, it improves your competitive standing, acceptability, and access, explains He. For example, mailing lists, publications, and e-mail databases, which generally cannot be obtained without Chinese government approval and involvement, are accessible with government connections. This is critical to attracting Chinese attendees to an event. Access to historical sites, venues, and attractions is easier with connections.
The best way to establish a connection with the government, He found, is to do it through a well-known local supplier.
Since she started working with Experient 14 years ago, He has maintained relationships in China, visiting at least once a year, preparing for the day that China would become part of theeconomy. That happened in 2001 when China joined the World Trade Organization. “That was the turning point,” she says. “With [China] entering the WTO, everything was possible. Before that, it was hard to do business over there.”
He, who had been a meeting planner at Conferon (now Experient) at the time, went to the CEO and said “use me, put me in the right spot, and I can help the company.”
A Local Partner
Through her local network in China, He established a relationship with a company called FESCO — the Beijing Foreign Enterprise Service Provider. It's one of the largest, most successful companies in China, and it owns and operates a. She got to know the managing director at FESCO DMC, who, in turn, has a connection within the Department of Commerce. Subsequently, Experient was able to form a partnership with FESCO DMC to service its existing customers who would like to hold events in China. In return, FESCO gets Experient's business.
“We wanted to provide an infrastructure so our customers can experience a kind of meeting experience like they do at home here in the U.S., but this kind of experience cannot be achieved without a good partner,” He says.
She spent a lot of time working locally with the DMC to train its staff on Western culture so that they know the details on how American associations and companies conduct meetings. He handles the planning — booking hotels and activities, negotiating, etc. — while the DMC serves as the project manager, using its local expertise to execute the plans on the ground. In addition, FESCO DMC has credibility among and is endorsed by the locals, which is critical in attracting Chinese attendees to the event.
In 2007, Experient planned a very successful meeting in Shanghai for Miami-based Terralex, a global association of law firms. This year, it is planning an event for Caterpillar during the 2008 Beijing Olympics.
It's not only important to have guanxi, it's also critical to understand the Chinese culture. Brad Weaber, chief customer officer and executive vice president at Experient, got a taste of the cultural differences when meeting his counterpart at FESCO for the first time. As Weaber explained at a session at the 2007 American Society of Association Executives annual meeting, the Chinese executive was upset because he initially thought that Weaber was too young and not his equal at the company. Once it was explained that Weaber was indeed an executive at the company, the meeting went well. “Title-to-title exchange is critical,” says He. “It's all part of Confucianism: Decision-making is top down.”
Another no-no is to discuss business at a dinner, says He. “Dinner is for enjoyment and relationship-building, so don't talk about business,” she says. “If we are friends, if we really get along, you will get the business.” If you don't get along, chances are you won't.
It's also customary to offer gifts upon meeting clients and partners. Gifts don't have to be too expensive, but they should be thoughtful and come from your home country, not China. It should be something uniquely American, explains He — anything but knives or clocks. “Any gifts with sharp edges, like knives, are considered to be rude and unlucky,” she says. “And never give a clock,” she adds, because in Chinese, the word clock has the same pronunciation as death.
For Experient, the path to success in China is to form strategic alliances with culturally savvy and experienced partners to serve the meeting planning company's existing customers. Others may decide to open a local office and try to grow their business in China. Either way, guanxi is paramount to expanding into this rapidly developing destination.
Guanxi, Confucian Tenets, and Lucky Numbers
Here are some tips for American meeting planners on holding events in China.
The Chinese dislike doing business with strangers; it's helpful to be introduced by an intermediary known to both sides. Alternatively, if you make an independent initial approach, you should provide references and as much information as possible about your company and what you hope to accomplish.
The Confucian system of ethics and morals governs much of the way Chinese interact with one another, even today. It emphasizes duty, loyalty, sincerity, and respect for age and seniority. It also explains China's bureaucracy — strictly hierarchical, with well-defined ranks and privileges. Decision-making is top-down.
All foreigners need to have visas when entering China.
More than 10 air carriers operate more than 100 flights every week between China and North America. Event planners have many choices for air services, and capacity is expected to expand in the coming five years.
The meeting industry is still in its infancy, so facilities and services might not be at the level expected in the U.S. However, you can find all the international hotel chains in China, even luxury properties, particularly in big cities like Beijing, Shanghai, and Guangzhou.
China has many spectacular attractions, such as Forbidden City and the Great Wall. These historic destinations can be reserved as an event venue or for a side trip; however, it does take some advanced planning and effort to get approval from the local authorities.
Food is an important part of Chinese culture. The vast array of dining experiences will enhance the appeal of your events.
When meeting with a potential partner or client in China, add a line on your business card written in Chinese, whether it's your name or title. It's a good icebreaker and shows an interest in and knowledge of China.
The number 8 is lucky in China, so anything with that digit makes a good gift. Talk about a good luck omen: The 2008 Beijing Olympics on 08/08/2008 at 8 p.m.