When doing business in Taiwan, if there is one Chinese word an American business person will come to know, it is kuan-hsi. Its most basic English translation is “connections.” However, Kuan-hsi (pronounced “gwon-she”), like most Chinese words, has a much deeper meaning.
Traditional Chinese culture stresses the importance of human interaction. The essence of this interaction is kuan-hsi. It goes far beyond the American concept of networking. Kuan-hsi is developed over a long time period. It reaches down into every aspect of Chinese society, influencing social, political, and commercial relations.
Establishing Kuan-Hsi
A business person’s kuan-hsi building begins with the initial contact. Since the Chinese place heavy emphasis on personal relationships, it is important for the American business person to realize that his/her Chinese counterpart will first want to be on a closer personal basis before actually doing business. Therefore, it is mandatory that American firms take the long-term approach. Before actually looking for business deals Americans should look for a business counterpart in Taiwan.
Americans should seek out the representative of the company with which they want to cooperate. Introductions through a mutual friend, through the American Institute in Taiwan (AIT), or through international Commercial and social groups provide a necessary human touch. In the United States, business is often conducted through an impersonal advertisement, catalog, or telephone inquiry. Many U.S. manufacturers have no personal knowledge of their customers. In Taiwan, this is not the case. Chinese prefer to do business with people they know. In Taiwan, a human connection will open many doors. The American firm should then follow the personal introduction with an official letter, fax, or telex to arrange a meeting.
During the initial contact period, one way to make a good first impression is to show respect for the Chinese language. As in most Asian societies, the business card has become essential. Although many professionals in Taiwan speak English, an American business person interested in Taiwan should take the time to have bilingual business cards printed. It must be made clear to the printer that complex characters are used in Taiwan. In addition, businesses in Taiwan greatly appreciate foreign business literature translated into Chinese. Making this effort paves the way for a successful initial contact and creates the proper atmosphere for the important first meeting.
The first meeting might take place over a meal at the invitation of the Chinese. This generosity is essential to Chinese business contacts. Sharing a dinner can be important in building friendships that will foster the needed trust for doing business in Taiwan. A final hint about your first banquet is to show appreciation for the food. The Chinese take great pride in their cuisine. Also, plan to reciprocate. Chinese are both gracious hosts and guests.
Effectively Using Your Kuan-Hsi
As your business dealings develop in Taiwan, kuan-hsi becomes ever more important. Businesses in Taiwan understand commercial relationships as a cooperative effort, rather than a series of black and white contracts. U.S. companies must realize that flexibility is the sign of a healthy business relationship and is mandatory to succeed in Taiwan. The reason that flexibility is so important is the type of firms most Americans deal with in Taiwan. Businesses in Taiwan are generally small- to medium-sized operations managed by an extended family. These businesses survive by exploiting niches in the market; therefore, they need to be able to adapt rapidly to the ever changing market situation. Successful American companies must adjust their products, procedures, and services to the current market situation.
The best way to strengthen and utilize your kuan-hsi is by an on-island presence. If your company is looking for a long-term commercial relationship in Taiwan, consider opening an office on the island. If that is not feasible, develop a strong working relationship with your agent. Also, senior company officials should visit Taiwan often and invite their counterparts to the United States. This expense is a good investment. Actions such as these show commitment, sincerity, and respect for your Chinese counterpart.
Although kuan-hsi can open many doors in Taiwan, it is not a substitute for quality, price, and service. Businesses in Taiwan are astute buyers and are increasingly aware of what is available on the world market. American firms must realistically price their products and services. They should realize that their prices need to be competitive with those from Japan and Europe.
American companies also need to make an effort in their after-sales service. If the firm can afford it, have service people on the island to answer clients’ needs. At the very least, be prompt in answering telex, fax, and written correspondence. There is a Taiwan joke which American businesses need to overcome to make their after-sales service more attractive to Taiwan businesses: “When something goes wrong, the Japanese send engineers. The Americans send faxes.” Paying close attention to pricing and service establishes a good reputation and builds strong kuan-hsi in Taiwan.
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