Good faith means more than agreements

Attempting to "muddle through" in China with superficial rules of behaviour is not the way to seek long-term success in its markets.

No fewer than 60 exhibition sites with international and supraregional relevance in China provide an interesting platform for German companies both to support existing business relations and establish new ones. According to figures published by AUMA, the Association of the German Trade Fair Industry, Berlin, in the period 1997 to 2003 alone, the number of trade fairs in China tripled to around 2600 a year, and continues to rise. The high performance figures of the country are also impressive. However, complex structures mean that not everything is plain sailing: Sweeping changes mean that it can be difficult for German companies to establish themselves. The difficulties are boundless: legal grey areas, a very complex environment but also inflexible state structures which are often intertwined with the entrepreneurial activities of authorities and ministries. What's more: to exhibit successfully at a trade fair it is not enough just to hire a stand or - even cheaper - to participate in a collective stand. Exhibitors are increasingly turning to the services of professional fair contractors, who, in turn, no longer confine themselves to conventional tasks such as stand construction, but offer everything from a single source, starting from individual service modules to full service packages. These include advertising, PR, communications, events and courses to accompany trade fairs, all of which are aimed at both regional and national target groups.Service innovations and extending the value chain will permanently affect future developments. The Munich exhibition contractor Meplan has just established a sophisticated lead management system that efficiently manages the appointment co-ordination of client visits to the stand while also proving a useful tool for co-ordinating marketing activities before, during and after the trade fair. The Live Communications agency Uniplan from Kerpen is having success in China with a mixture of event marketing and trade fair contracting - which is appreciated by its clients.Perfect coordination of exhibition appearances in China is the recipe for building long-term business relations with Chinese partners. But the first step in this process must be to consider which trade fair and which location is appropriate and whether it makes sense to launch a market presence with trade fair activities. Of course, any trade fair activity is an important building block of market success, but this should not close participants eyes to the fact that a prior market analysis, in particular an analysis of the trade fair spectrum, is of paramount importance.Many exhibitions lack professionalism and it takes a very experienced foreign business manager to distinguish the good from the bad. Even the Chinese military co-ordinates its own trade fair events - a very interesting experience during a consultancy project for a German manufacturer of medical projects. This is the only trade fair at which the military complex procures. The standard pitfalls are insufficient preparation and neglected instruction of stand personnel. It is therefore a particularly important part of developing (successful) business relations to achieve lasting optimisation of potential and existing client relation management and implement it with professional training in the company.Chinese personnel take a wholly different view of these issues. Behaviour at a trade fair is dictated by the situation. Politeness and non-committal conversations predominate. This means that well-prepared in-depth trade-fair discussions are rare. Quite understandable from a Chinese point of view, if you are familiar with the cultural differences.Unlike Germany, where a business relationship exists until trust is damaged, in China you first have to gain trust before a deal is struck. Appointments with business partners who bring other business acquaintances along are helpful at trade fairs. But in no way is that the recipe for quick success. Trade fair visits rarely, with the exception of standard supplies, result in direct business deals. As soon as interest in a company is awakened, the Chinese way is to establish contact through a social event, a personal (return) visit or a banquet.The socialisation phase plays a much bigger role than it does in European culture and can take weeks or even months. It's a circular process rather than a linear one: instead of ticking off the to-dos one after the other, all aspects are dealt with simultaneously in several rounds. After several rounds of negotiation, once the socialisation and risk phase has been successfully mastered, the growth phase starts with the signing of the business deal. But don't sit back yet: contrary points of view regarding production and supply conditions can soon ensue; good faith usually means more than just a signed contract. The conflicts seen in so many joint ventures speak volumes.It's important not to lose sight of the human factor in a business relationship; otherwise the degeneration phase will set in more quickly than expected. It is particularly important for the Chinese to establish a long-term business relationship and so avoid the cancellation and abstinence phase. Investment in guanxi, i.e. personal contact, is well worth the effort. Granting Chinese business partners skilfully considered concessions creates mutual obligations.China is well on the way to becoming a global power if it has not already happened. Globalisation also means "globalising" intercultural values: Not every rule applied in the past will still be relevant in the future. To give an example: To mark the first (sales) talks, the chairman of a large optics company in Shanghai was paid a visit. In the correct "intercultural" manner, the business card was handed over with both hands. Chuckling, the Chinese CEO said: "Oh, how quaint, but you can give me your business card quite normally, we are no longer in ancient China …".The development of customer relations must be carefully planned and is subject to a life cycle. It's worth asking what marketing measures can be used to support the individual phases. Careful exploration of the environment is imperative. Not everything sold as "intercultural management" in seminars can be taken at face value. If the management takes this on board in the run up to a trade fair participation, they are already half way to a successful business involvement in China. Erwin Seitz, Markus Bayrle

m+a report Nr.8 / 2006 vom 08.12.2006
m+a report vom 8. Dezember 2006