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Three Cups of Tea

September 29, 2017 

In today’s fast paced world of instant communication, short deadlines, e-mail, text, online chat, social media, speed networking and deal-making, I think we can all agree that the old fashioned art of relationship-building has been somewhat diminished in its importance, if not lost altogether?

It wasn’t always this way. When I started work in the City of London in the late 1970s, the senior partners would regularly disappear for lunch with clients at around 12 noon and, more often than not, wouldn’t be seen again until the next morning.  And when I worked in Hong Kong in the late 1980s, I remember the most respected networkers were those who typically blocked out their lunchtimes every day to meet with people who, if not now, might be useful connections in the future. 

Despite how this might sound now, this investment in relationship-building usually paid off in terms of acquiring new clients, generating more revenue and increased profitability, and the expenses involved were regarded as the acceptable “cost of doing business”. To prove the point, most Governments around the world regarded these expenses as fully tax deductible, as long as you could find the receipts!

Without doubt, the long business lunch, if not a quick chat over a sandwich at your desk in between meetings, is definitely a casualty of the online age, and is now regarded as an extravagance, if not a disgraceful indulgence reminiscent of a bygone era!

These days we do business with people we hardly know, and possibly don’t even like, assuming we can get them to sign up to a water tight contract drafted by a highly paid lawyer and do as we promise.  In this post industrial age, with an ever-expanding army of lawyers and standard contracts at your disposal, you can simply sit behind your computer and do business with anyone you want, almost anywhere in the world, with an electronic signature and the click of a mouse!

Until now, that is…

Despite the significant changes that have taken place during my working life in the western world, there is still one country that does business the old fashioned way, and that is the People’s Republic of China.

We are now all impacted by the rise of China, a country which lay dormant until only thirty years ago, but is now the second largest economy in the world and, growing at over 6% per annum, will soon overtake the USA as the largest economy with a population over 1.3 billion and a rapidly growing number of cashed up middle class consumers (currently 300 million and expected to triple in size by the end of the next decade).

In the past 10 years, since the Global Financial Crisis of 2007, China has launched an army of new corporate names on to the global scene, including Alibaba, Huawei, Tencent and Haier who are already disrupting e-commerce industries around the world and, among many other names which we haven’t even heard of yet, will be the brands to watch in the next 10 years as they take on some of the bastions of traditional western institutions in financial services, healthcare, education, agriculture, real estate and others. As we approach the end of the beginning of the Asian Century, the next decade will be dominated by Chinese entrepreneurs, investors and private enterprises with deep pockets as they reach out and grasp the opportunities that were denied to their parents, grandparents and ancestors.

Faced with threats of new competition, disruption and unfamiliar business practices, Western leaders need to decide how they’re going to respond to the rise of China as a global force. One option is to ignore it altogether and hope it goes away, a tactic that worked well in the face of similar threats posed by the rise of Japan in the 1980s. Another option, and one which I would recommend as a starting point, is to embrace this opportunity and engage with Chinese investors and entrepreneurs while they are going through their ‘learning phase’ and upgrading their systems, processes, products and governance to compete on a global scale against established western institutions. This presents a once-in-a-lifetime opportunity for western entrepreneurs, SMEs and business leaders to jump on a train which has well and truly left the station.

However, despite some of China’s significant economic advances in recent times, their approach to doing business remains refreshingly similar to the way they’ve done business over the past one thousand years i.e they only do business with people they know, like and trust. There are no short cuts. If you want to business in or with the Chinese, it needs to be more than just a transaction.

There is a story about a traveller who found that, in order to be welcomed into an eastern family, he would be asked to take three cups of tea. The first cup was taken as a stranger, the second cup as a friend and, if he was offered a third cup, he would then become part of their family. A place where trust was given freely and unconditionally, and from which he would forever be looked after.

I often use the “three cups of tea” metaphor to describe the journey that westerners have to take to be truly accepted in China.  As a foreigner doing business with Chinese people you are a stranger, no matter how much they appear to like you, trust you and respect you. The Chinese are gracious, generous and flattering hosts and often give the appearance of welcoming you as friends and business partners but you will never gain their real trust until you have invested deeply in the relationship. This requires some old fashioned relationship-building skills and etiquette which, as mentioned above, we seem to have lost, forgotten or ignored in recent times.

So, next time you get presented with an opportunity to do business with a Chinese company, investor or entrepreneur, think of it as an opportunity to build a relationship not a transaction. Ask open questions, listen carefully to the answers and think about how you can progress the relationship to another level (the second cup of tea). Leave the quote, proposal or contract in the drawer, take your Chinese guests out for lunch, exchange gifts, tell stories and laugh a lot. You’ll be surprised how old fashioned relationship-building can lead to real business opportunities. But only if you’re willing to take the three cups of tea!

Posted on October 3, 2017

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