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Patience, time and relationship building essential to dealing in China

After three years of doing business with two Chinese companies, Ian Cavanagh has yet to land any deals for his Saint John-based information communications technology firm.

The CEO of Ambir is patiently fostering partnerships and operating at the seemingly glacial pace required by the axiom of "guanxi-" the idea of building a relationship - which has wide-ranging cultural significance in China.

He is convinced his front-end work hosting visits here in New Brunswick with a leading Chinese customer relationship management software company and an information technology consulting firm and his trip to China on a recent trade mission will cement relationships that will bring Ambir some serious contracts down the road.

"We go over, thinking, 'OK, gotta do a deal,' when the Chinese are thinking, 'OK, what could we potentially do with this company in the next 10 years, 20 years, 30 years?' " Cavanagh said.

Ambir was one of 13 New Brunswick companies that had representatives travel to three cities in China on a week-long trade mission in early November, joined by Premier Shawn Graham and leaders and businesses from four other Canadian provinces.

New Brunswick companies signed contracts worth nearly $90 million in China during the government-bolstered visit.

But experts say persistence and long-term work by individual companies with their Chinese counterparts will help businesspeople break into that foreign market.

Many of the deals actually inked on trade missions are typically in the works long before government officials touch ground in a foreign country, said international trade and competitiveness professor and economist Daniel Trefler of the University of Toronto's Joseph L. Rotman School of Business Management.

"The way you guarantee success on a trade mission is to have many of the most important contracts arranged in advance of the mission," Trefler said.

CEOs who visit a country for the first time should walk away planning to return and maintain contact with Chinese companies for years before they reap financial rewards, Trefler said.

"It requires a lot more patience and time and relationship-building when dealing in China."

Sean Hu, the Chinese executive director of the Chinese Business Chamber of Canada, works on a daily basis to help Mandarin businesspeople in Canada do work here.

Hu said "the guanxi factor" is one of the key concepts in Chinese society right now.

"In the West, you may do business, you may accomplish transactions before becoming friends, but in China, you have to become friends before doing business together," Hu said.

Canadian businesses should be careful, though, to ensure that friendship does not get in the way of protecting intellectual copyright.

"As an IT company, I would be concerned about loss of my intellectual property. In developing these relationships, you don't want to give away the baby," Trefler said.

Cavanagh said traditional language barriers to doing business in China have improved greatly.

When he began working with Chinese companies three years ago, he needed a translator at almost every meeting;

On Cavanagh's visit this year, he had eight meetings and did not require a single translator.