This document summarizes a study on Chinese business people's views regarding engaging in business partnerships with foreign firms, particularly Australian firms. The study was conducted in two phases, with phase one involving in-depth interviews of 6 Chinese business people in managerial positions. Phase two surveyed 49 additional Chinese business people to further understand social, cultural, and institutional factors that may influence their decisions to engage in international business partnerships. Key factors examined included the importance of relationships and trust between partners, as well as differences between more impersonal Western styles of business versus more personal and long-term relationship-focused business in China.

1. Communicating through networks: Chinese business people's views on engaging in
business with foreign firms.
To open a shop is easy; to keep it open is an art.--Chinese Proverb proverb, short statement of
wisdom or advice that has passed into general use. More homely than aphorisms, proverbs
generally refer to common experience and are often expressed in metaphor, alliteration, or rhyme,
e.g.
Introduction
China is a country in which the forces of globalization globalization
Process by which the experience of everyday life, marked by the diffusion of commodities and
ideas, is becoming standardized around the world. Factors that have contributed to globalization
include increasingly sophisticated communications and transportation have
altered its economic fabric noticeably and have projected it into an era
of unprecedented growth and prosperity. With a growth rate of
approximately 8% in the 2009-2010 fiscal year, China is amongst the
fastest growing economies in Asia and forecasted to be the eighth
fastest growing economy worldwide in 2010 (The 12 fastest growing
economies, 2010). As a result of the globalization of production and of
markets, China is engaging in economic integration with the rest of the
world and its capacity to harness resources is positioning China to
potentially become the world's largest economy during this century.
The growing Chinese economy has attracted foreign ventures from around
the globe to engage in business partnerships with Chinese firms. This
can be seen in the increasing tendency of foreign firms to move their
offshore manufacturing activities into China, in order to capture the
advantages of its skilled workforce and the burgeoning Chinese market
(Doh doh or do
Noun
Music (in tonic sol-fa) the first note of any ascending major scale
Noun 1. doh - the syllable naming the first (tonic) note of any major scale in solmization
do, ut, 2005).
Despite the enormous opportunities for business engagement in
China, many foreign ventures have experienced setbacks because they have

2. expanded their scales of operation in China without fully understanding
the Chinese business culture in the localities in which they are
operating. Lack of culture-based knowledge prevents them from
communicating effectively and efficiently with Chinese business
partners. Some foreign companies have come to realize that China's
market is one that they cannot afford to stay in, rather than one that
they cannot afford to stay away from (Business infatuation, 1999). Thus,
the challenge for foreign businesses is a good understanding of the
social and cultural environment which is crucial to effective
communication between foreign businesses and their Chinese business
partners. Such understanding sheds light on how foreign businesses can
be competitive and sustainable in the Chinese market. An understanding
of Chinese business norms and practices will enable foreign ventures to
effectively communicate with Chinese partners and manage business
relationships with them, minimize the liability of foreignness, and
maximize the sustainability of these relationships (Zhou, Barnes, &
Lu, 2010). This is essential as substantial establishment costs are
incurred in winning entry to markets, particularly markets that are
culturally distant (Brewer, 2007).
This paper reports a study on how varied social and cultural
factors influence Chinese business people's communication with
foreign firms and their decisions to engage in business partnerships
with Australian firms. Australia and China enjoy a long-term
international trade relationship. China is now Australia's largest
source of imports and its second largest export market, and Australia is
China's ninth largest trade partner (Austrade Media Release, 2010).
In the long-run, the fundamental drivers of urbanization,
industrialization industrialization
Process of converting to a socioeconomic order in which industry is dominant. The changes that
took place in Britain during the Industrial Revolution of the late 18th and 19th century led the way
for the early industrializing nations of western Europe and, and population growth should continue
to stimulate
China's demand for Australian resources as China continues to
develop as the world's manufacturing
"factory"(Fredriksson & Jonsson, 2009).
Chinese Perspectives on Business Relationship Development

3. The debate over the differences in approaches to business exchange
and business relationships between Eastern and Western cultures is not
new. Scholars have been examining differences in Chinese negotiation
styles and personal characteristics that influence business
relationships for the past two decades. For example, based on their
20-year research on business relationships between the United States United States, officially
United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq
km), North America. The United States is the world's third largest country in population and the
fourth largest country in area. and
China, Graham and Lam (2003) claim that Western business people tend to
be task-oriented and use direct communication styles, whereas Chinese
business people are relationship-oriented and prefer indirect
communication styles. Differences in communication styles have been
found to be the root cause for a breakdown of a long-term business
relationship between Chinese and their US business partners. Although
the integration of China into the modern world economy since the
economic reform has brought the Chinese ways of doing business more in
line with their Western counterparts, the fundamental cultural belief in
Chinese relationship development (e.g., reliance on guanxi) remains and
is still reflected in international business exchange even today.
Moreover, the increasing globalization of markets and the development of
international business partnerships driven by strong economic growth in
China, Japan and Taiwan have reinvigorated re·in·vig·o·rate
tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates
To give new life or energy to.
re the examination of
culture-related factors that differentiate Eastern and Western
businesses in their approaches to successful business partnerships.
In her seminal seminal /sem·i·nal/ (sem´i-n'l) pertaining to semen or to a seed.
sem·i·nal
adj.
Of, relating to, containing, or conveying semen or seed. article on differences between East Asia
East Asia

4. A region of Asia coextensive with the Far East.
East Asian adj. & n. and the US
on interpersonal relations, Yum (1988) argues that the overlapping of
public and private relations characterizes East Asian perspectives on
interpersonal relationships. In the business context, this is translated
into the Chinese placing emphasis on establishing personal connections
with their business partners--Guanxi - the relationship capital upon
which an individual can draw to secure access to resources or advantages
when doing business, as well as in the course of social life (Gu, Hung,
& Tse, 2008). Guanxi rests on the notion of a continuing reciprocal
relationship over an indefinite time period and extends beyond the
relationship between two parties to include other parties within the
social network. Chinese business relations are frequently developed and
nurtured via personal connections, relationships, obligations, and
influence, which parties can use to obtain access to resources through
continual cooperation and the exchange of favors (Wang, Piron, &
Xuan, 2001). Developing networks of mutual dependence and creating a
sense of obligation and indebtedness often serve as a
"lubricant Lubricant
A gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reduce
friction and wear. In many machines, cooling by the lubricant is equally important. " for successful
business and business relations.
Although the term guanxi has been used in the Western business
literature, it is difficult for Westerners to capture fully its
operational dynamics in the Chinese context, and, as a result, it has
triggered a plethora plethora /pleth·o·ra/ (pleth´ah-rah)
1. an excess of blood.
2. by extension, a red florid complexion.pletho´ric
pleth·o·ra
n.
1. of research. Kiong and Kee (1998) conducted a study
on the social functions of guanxi in Chinese business firms, focusing on
the inclination to incorporate personal relationships in decision

5. making. The findings showed that a key aspect of personalism per·son·al·ism
n.
1. The quality of being characterized by purely personal modes of expression or behavior;
idiosyncrasy.
2. was
personal control effected largely through depending on people whom an
individual personally trusts, as this reduces risks in exchange via
broaching broaching: see quarrying. information asymmetries and facilitates better business
control. The key conclusion is that economic decisions in China are not
based solely on market considerations but rather are embedded Inserted into. See embedded
system. in the
context of larger social relations and institutional forces. Similarly,
Law and his colleagues (2000) examined the role of building and
maintaining good guanxi in the successful management of Chinese
subordinates by collecting data from 189 supervisor-subordinate dyads in
an organization in China. The findings revealed that
supervisor-subordinate guanxi was a strong predictor of relationship
quality. Although previous studies were conducted in different contexts,
one key element that consistently plays an important part in
establishing guanxi is trust.
Communicating trust in Chinese Businesses
Trust is present when one party has confidence in an exchange
partner's reliability and integrity, such that there is a
generalized expectancy held by an individual that the word of the other
person can be relied on (Rotter, 1967). In a business setting, trust can
be defined as one company's belief that another company will
perform actions that will result in positive outcomes for the mutual
business and will not take unexpected actions that could lead to
negative outcomes for the business (Anderson & Narus, 1990). Through
trust, the parties involved in a relationship can develop confidence
that allows any short-term inequities to be balanced and long-term
benefits to be yielded. Long-term business relationships are based on
the assumption that the stability and longevity of the relationship will
result in both parties achieving mutual benefits. Research has
consistently identified trust as an important factor in the development
of long-term business relationships (Das & Tend, 2004), a trend that

6. has been identified in China (Wang, Siu, & Barnes, 2008).
Trust is viewed as important in both Western and Chinese contexts,
however, there are differences between the two perspectives. Empirical
research Noun 1. empirical research - an empirical search for knowledge
inquiry, research, enquiry - a search for knowledge; "their pottery deserves more research than it
has received" suggests that Western and Eastern firms engaging in
international business are simply looking for different indicators of
business relationship success. In the West, trust is often related to
the system or organization in order to reduce the reliance on personal
integrity. Hence, when two business parties sign a written agreement,
they place emphasis on the law to bind the contract. Western
organizations rarely depend on personal trust or mutually agreed words
in business transactions because these are not legally binding and they
lack objectivity. Evidence from Western firms with foreign investment in
China shows that they do not seek to extend personal trust to their
Chinese joint venture counterparts to cover organizational risk or
resource sharing (Luo, 1997), but are motivated to generate "system
trust" within an organization, not trust in specific individuals.
This "trust" is more impersonal im·per·son·al
adj.
1. Lacking personality; not being a person: an impersonal force.
2.
a. Showing no emotion or personality: an aloof, impersonal manner. and supposedly increases
the
legitimacy of a transaction by incorporating procedural documentation
within the transaction.
In contrast, the Chinese emphasize personal trust instead of system
trust in business interactions, partially due to the imperfections
within China's legal system (Wong & Chan, 1999). Chinese
commercial practices do rely on the legal system in part, but they are
more dependent upon personal trust and personal relationships (guanxi)
for operationalization. Members of collectivist col·lec·tiv·ism
n.
The principles or system of ownership and control of the means of production and distribution by
the people collectively, usually under the supervision of a government. societies such as China
place greater emphasis on dealing with specific people in relationships,

7. and personal networks of mutual assurance play a more prominent role.
This general expectancy is normally associated with such qualities as
consistency, honesty, fairness, responsibility, helpfulness, and
benevolent be·nev·o·lent
adj.
1. Characterized by or suggestive of doing good.
2. Of, concerned with, or organized for the benefit of charity. behavior. Research conducted in
China consistently indicates
that the Chinese rely more on personal trust than contractual arm's
length exchange to conduct business. Good business is conducted on the
basis of honesty and integrity of individuals, a "gentleman's
word" or "personal guarantee", rather than a legal
contract between firms (Xu, 2006).
Consequently, Chinese business relationships are frequently
long-term oriented, as members in the network are tied together through
an invisible and unwritten LAW, UNWRITTEN, or lex non scripta. All the laws which do not come
under the definition of written law; it is composed, principally, of the law of nature, the law of
nations, the common law, and customs. code of reciprocity reciprocity
In international trade, the granting of mutual concessions on tariffs, quotas, or other commercial
restrictions. Reciprocity implies that these concessions are neither intended nor expected to be
generalized to other countries with which the contracting parties, which extends
indefinitely. While enjoying the benefits of a relationship, business
partners are bound by a reciprocal obligation that must be
"repaid" in the future. Disregarding this obligation can
seriously damage one's social reputation and lead to loss of
prestige or face (Yau, 1988). Long-term trading partnerships have become
a preferred business arrangement between Chinese business people and
their foreign counterparts in international business, as this form of
exchange retains sufficient flexibility to adjust to contingencies, but
yet retains the basis for the fundamental guanxi orientation (Phan,
Styles, & Patterson, 2005). Therefore, as the world turns
increasingly to international trade to support economic growth, an
understanding of the factors that affect long-term trading and business
partnerships becomes an ever more valuable endeavour. It is important
for foreign firms seeking to enter the Chinese market to have a clear
understanding of the dynamics of trust and guanxi in business exchange.
To this end, we conducted field research to elicit e·lic·it

8. tr.v. e·lic·it·ed, e·lic·it·ing, e·lic·its
1.
a. To bring or draw out (something latent); educe.
b. To arrive at (a truth, for example) by logic.
2. Chinese business
people's views on the social, cultural and institutional factors
underpinning un·der·pin·ning
n.
1. Material or masonry used to support a structure, such as a wall.
2. A support or foundation. Often used in the plural.
3. Informal The human legs. Often used in the plural. their decisions to engage in international
business with
Australian firms.
The Present Study
The present study was conducted in two phases. In Phase 1, in-depth
interviews were conducted with six Chinese business people, who held
senior management positions in China. Phase 1 functioned as a pilot
study to solicit attitudes and opinions of Chinese senior managers in
regard to their international business experience, intentions to engage
in business with Australian firms and the potential factors that might
influence their business decisions. Data obtained from Phase 1 informed
the design of the questionnaire for Phase 2 of the study.
In Phase 2, a survey was administered to 49 Chinese business
people, predominantly in managerial positions. This phase aimed to test
the extent to which the views and factors identified in Phase 1 were
representative of a more diverse sample. Similar to Phase 1, the survey
covered areas such as business experience, intentions to engage in
business with Australian firms, social, institutional and cultural
factors that may potentially influence business engagement with foreign
firms.

9. Phase 1: Participants and procedures
The six participants were selected through the researchers'
personal contacts in China. Their ages ranged from 30 to over 50 years
old; one participant was female. The six firms represented were located
in Beijing, Tianjin, Guangzhou and Zhejiang province, covering
industries including textile manufacturing, import and export trading,
media and consumer research, and agricultural and food production. All
six firms had foreign business partners in the USA, UK, EU nations and
East Asian countries. Their reported annual sales ranged from US$670,000
to US$13 million.
The interview protocol consisted of 30 open-ended questions,
canvassing topics related to participants' business experience
(e.g., What do you see as major challenges and difficulties in doing
business with foreign firms?), intentions to engage in business with
Australian firms (e.g., Does your firm intend to do business with
Australian firms in the near future?), attitudes to doing business with
Australian firms (e.g., What do you see as the advantages of your
engaging in business with Australian firms in the near future?),
institutional environment (e.g., In your opinion, how important is the
institutional environment for success in your business?) and cultural
distance (e.g., Do you feel differences in language, business practices,
and culture would affect your engaging in business with Australian
firms? Why?). All in-depth interviews were conducted over the phone and
were audio recorded with consent from the participants. On average, each
interview lasted 40 minutes. The interviews were transcribed verbatim ver·ba·tim
adj.
Using exactly the same words; corresponding word for word: a verbatim report of the
conversation.
adv. before data analysis.
Phase 1: Findings
Intentions to do business with Australian firms

10. In general, all six participants expressed interest in doing
business with Australian firms, should such opportunities arise in the
near future. In relation to preferred types of business arrangement,
long-term partnerships were most preferred (5 persons, 83%), followed by
joint ventures (1 person, 17%). These two types of business arrangements
were considered beneficial from the perspective of developing long-term
trading because risk and profits can be borne by both parties (ITW ITW In The Wild (informatics,
antivirus research)
ITW Information Theory Workshop (IEEE)
ITW Into Thy Word (religion)
ITW Into the Woods 01,
ITW02, ITW03, ITW04, ITW06). In addition, the long-term partnership was
conducive to the building of trust between business partners, a concept
which has been consistently identified as crucial in business
engagement.
Factors influencing business decisions
The six business executives uniformly identified trust as the most
important supporting factor in business engagement. The Chinese culture
places great value on trust in developing interpersonal relationships
including business partnerships. The Chinese rely more on personal trust
and mutual assurance than contractual terms to conduct businesses.
"Since you have chosen me to be your business partner, you should
trust me. This means that you should not specify too many details and
then monitor the procedures. As friends, we have shared understanding
and mutual trust. Thus, there is no need to detail everything in a
written contract" (ITW02). "Trust means quality in products or
materials supplied" (ITW03). "Trust facilitates communication
and lubricates business relationships. If there is a problem, it can be
easily resolved through communication between trusting business
partners" (ITW05). "Unless your clients trust you, they
won't give you their market share" (ITW06).
Business networks were also identified by all interviewees as an
important factor influencing business engagement with foreign firms.

11. business network ties were regarded as resource capital because they
could enable a business to be set up within a short period of time.
"If you don't have a good network, it will be difficult for
you to open a market within a relatively short period of time. Thus, you
must have sufficient financial capital. In this sense, business network
is capital" (ITW02). Business network ties also referred to
relationships with suppliers and clients, which was considered important
for sustaining a business.
"Suppose you were to set up an enterprise in China, you must
have access to three constituents of your business: supplier, labor
resources, and transportation. This is business network. For example, if
your textile factory was located in north China and your supplier was in
the southern part of China, then your business would not be viable due
to the cost of transportation of raw materials and time" (ITW01).
business network ties included relationships with government bodies and
financial institutions. Connections with government agencies were viewed
as particularly important to certain businesses, such as import and
export trading, because their daily operations involve dealing with many
documents that government authorities require. Financial institutions
were perceived as important for business start-ups (e.g., accessing bank
loans) but less so once the firm has established its business operations Business operations are
those activities involved in the running of a business for the purpose of producing value for the
stakeholders. Compare business processes. The outcome of business operations is the
harvesting of value from assets (ITW05, ITW06). The ability to navigate through myriads of
network ties
is considered crucial by the interviewees for business operations in
China.
Cultural barriers
When we asked the interviewees about the influence of cultural
differences in business engagement, interestingly, foreign language
proficiency Language proficiency or linguistic proficiency is the ability of an individual to speak or
perform in an acquired language. As theories vary among pedagogues as to what constitutes
proficiency[1], there is little consistency as to how different organisations (e.g., the
ability to speak English or Chinese) was not
considered as important as we had expected. Instead, norms of business

12. practices were regarded as most likely to influence business
cooperation. These differences were often reflected in different
attitudes to contracts. The Chinese preferred contract terms to be more
general, whereas Westerners would like to specify every detail in the
contract. "When we communicate with the British or Swiss business
people, we feel they sometimes make a very simple matter sound
complicated. They use paragraphs to describe what could be explained in
one or two sentences. Of course, this could reflect their cautious
attitude to business, but sometimes we feel there is no such need"
(ITW02).
Another cultural barrier was overlap between business and
interpersonal relations. The Chinese placed values on interpersonal
relationship This article or section may contain original research or unverified claims.
Please help Wikipedia by adding references. See the for details.
This article has been tagged since September 2007. development, as business partnerships tend
to be perceived
as long-term. For example, it is customary for the Chinese to host
formal dinners for their foreign business partners. Accepting such
invitations gives face to the Chinese partners who pride themselves on
extending hospitality and friendship to their foreign guests.
Understandably, the Chinese would feel uncomfortable when their American
partners each carried a lunch bag to a business meeting. One interviewee
related an experience, "We arranged a business meeting with our
American partners in Ningbo and planned for dinner after the meeting.
However, the Americans each carried a bag of KFC KFC Kentucky Fried Chicken (restaurant
chain)
KFC Kenya Flower Council
KFC Kitchen Fresh Chicken (Kentucky Fried Chicken motto)
KFC Kung Fu Cult (Cinema)
KFC Kitchen Fixed Charge meal and were eating
KFC food while attending the meeting. We felt a bit uncomfortable
because the Chinese would not do such a thing" (ITW06).
Summary
Findings from Phase 1 consistently shows trust, business network

13. ties, government support and personal contacts as important factors in
influencing business exchange. The Chinese business executives prefer
long-term business partnerships and placed emphasis on trust. Integrity,
credibility, trustworthiness trustworthiness Ethics A principle in which a person both deserves the
trust of others and does not violate that trust, and the reputation and character of a
person encapsulate en·cap·su·late
v.
1. To form a capsule or sheath around.
2. To become encapsulated.
en·cap trust. Trust is effected largely through depending on
people whom an individual personally knows well and such personal trust
is believed to reduce risks in business exchange and facilitate business
control. Economic decisions in China are not based solely on market
considerations, but rather are embedded in the context of larger social
relations and institutional forces, including government bodies and
financial institutions. To test the extent to which the views and
factors identified in Phase 1 are representative of a more diverse
sample, we conducted a survey in Phase 2.
Phase 2: Participants and procedures
Forty-nine business people (63% male) from different cities in
China China is a geographical area encompassing multiple territories, under two states. You may
be looking for: List of cities in the People's Republic of China List of cities and towns in Hong Kong
, and with cross-industry variation, participated in an interview
survey. The participants were recruited by using a combined method of
website search and researcher contact. Most participants were highly
educated, under 45 years of age (77%) and from the more developed
regions (60% from Beijing and Shanghai; 26% from Tianjin and Guangzhou);
others were from developing regions (14% from Hubei, Xinjiang, and
Chengdu). All but one participant spoke English and 12% of the
participants spoke a second foreign language including French, German or
Japanese. Senior managers made up 44%, and middle to lower level mangers
comprised 40% of the sample. The remainder were divided between
professional staff, such as engineers and lawyers (8%) and
administrative officers (8%). Business types included import/export

14. trade, manufacturing, technology and media communication, food and
medicine, retail, education and consultancy firms. A significant
proportion of the firms were Chinese-owned private companies (40%). The
next most prevalent ownership structures were state-owned enterprises
(22 %) and wholly foreign-owned subsidiaries (18%). Only 10% of the
firms were joint ventures, with the remaining 10% being other
structures, such as listed companies and partnerships.
[FIGURE 1 OMITTED]
The questionnaire consisted of 41 closed and open questions about
their business experience (e.g., How would you rate the importance of
the following factors for doing business with overseas firms?);
intentions to engage in business with Australian firms (e.g., Does your
firm intend to do business with Australian firms in the near future?);
and factors that may potentially influence their business engagement
with Australian firms (e.g., How would you rate the importance of
business network ties in doing business with Australian firms?). In
light of evidence that Chinese respondents may overuse overuse Health care The common use of
a particular intervention even when the benefits of the intervention don't justify the potential harm
or cost–eg, prescribing antibiotics for a probable viral URI. Cf Misuse, Underuse. the neutral
mid-point of scales (Lee, 2000), a six-point scale, rather than the
traditional 7-point scale was used. The survey was conducted via either
face-to-face or over the telephone interviews.
Phase 2: Findings
Intentions to engage in business with Australian firms, preferred
channels and business type
On a 6-point Likert scale Likert scale A subjective scoring system that allows a person being
surveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important,
relevant, interesting, most ho-hum, or other, and 5 being most excellent, yeehah important, etc
where 1 stands for "definitely
no" and 6 "definitely yes", 46% of the participants
indicated that they were likely to engage in business with Australian

15. firms. The mean score for their ratings on the six-point scale was 4.27,
suggesting a level of reasonable likelihood of future business
engagement with Australian firms (see Figure 1).
When we asked participants about the channels through which they
would choose to communicate business intentions, over half of the
participants (55%) identified "personal contacts" as the
preferred channel of business engagement, whereas 45% of them did not
identify it as their preference. The next preferred channel was
"professional associations" (43% yes; 57% no) and
"Chinese government Ever since Republic of China founded in January 1st, 1912, China has had
several regional and national governments. List
Chinese Soviet Republic Provisional Government of the Republic of China Reformed Government
of the Republic of China bodies" (32% yes; 68% no). A few
participants (9%) nominated "trade exhibitions" as a preferred
channel of initiating business relations. In relation to the preferred
types of business arrangement, most participants indicated
"long-term trading partnership" (69%), followed by "one
time contract" (18%). Neither "joint ventures" nor
"wholly-owned subsidiary" were popular business arrangements.
Firm-related factors influencing doing business with foreign
ventures
Participants rated "precise terms for formal contract"
and "common understanding of business norms" as two highly
important factors in doing business with foreign firms. Factors, such as
"English language English language, member of the West Germanic group of the Germanic
subfamily of the Indo-European family of languages (see Germanic languages). Spoken by about
470 million people throughout the world, English is the official language of about 45 nations.
proficiency pro·fi·cien·cy
n. pl. pro·fi·cien·cies
The state or quality of being proficient; competence.
Noun 1. proficiency - the quality of having great facility and competence of Chinese business
people",
"close interpersonal relationships" and "familiarity of
each other's culture", were considered fairly important by

16. participants (see Table 1).
In Table 1, those who had experience doing business with Australian
firms (n =18) consistently showed higher mean scores, compared with
those who did not have such experience, but who did have experience in
international business beyond Australia (n = 27). However, when we
compared the differences on the ratings statistically, results from
independent sample t-tests did not reveal statistically significant
difference between the two groups. We next asked participants to rate
the importance of a number of factors for entering into business with
Australian firms. Overall, having "trusting business
relations" was rated as most important, while "international
marketing experience" and "human resources The fancy word for "people." The human resources
department within an organization, years ago known as the "personnel department," manages the
administrative aspects of the employees. " were also
rated as important (see Table 2).
The results indicated higher ratings by those who had Australian
experience across all factors. We then conducted t-test to compare the
mean scores for participants whose firms had business experience with an
Australian firm (n =18), with those from participants whose companies
did not have Australian experience (n =29). However, only the difference
in ratings on "human resources" (i.e. the firm's
employees with relevant expertise) reached statistical significance (p
<.05). Having the employees with necessary expertise was considered
more important by participants whose companies had engaged in business
with an Australian firm, than participants whose companies did not have
such experience.
Subsequently, the 18 participants (37%) with experience doing
business with Australian firms were asked to rate the level of perceived
differences between Australian and Chinese business partners. Compared
to local Chinese companies Chinese owned companies can be defined as enterprises within
mainland China, Hong Kong, Macau and the Republic of China (Taiwan): List of companies in the
People's Republic of China List of companies in Hong Kong List of companies in Macau ,
Australian firms were seen as moderately
"willing to adapt to Chinese way of doing business" (M = 3.2)
and "sensitive to the difficulties Chinese firms encounter" (M

17. = 3.2). The extent to which Australian firms were aware of "how
Chinese conduct business in China" received a relatively low rating
(M = 2.6) as did "Australian companies understand how Chinese firms
do business" (M = 2.7). Nevertheless, even the lowest ratings did
not deviate from the neutral point. The overall findings suggest a
certain level of confidence in Sino-Australian business partnerships
(see Table 3).
Institution related factors influencing business engagement
In regard to the institutional environment, the Chinese business
people rated "business network ties" as most important in
doing business with Australian firms, followed by ties with
"government agencies" and "financial institutions"
(see Table 4).
In Table 4, those who did not have experience doing business with
Australian firms tended to rate all factors, except one (trade
associations), slightly lower in importance compared to those who had
Australian business experience. Ratings from those without Australian
experience were more likely to be based on assumptions, instead of
actual experience. Our results confirmed the importance of establishing
business network ties and building relationships with Chinese government
agencies, when doing business with Australian firms.
We next asked the participants to rate the importance of a number
of supporting factors for business engagement with Australian firms.
Again, "trust" emerged as the most important factor in doing
business with Australian firms, followed by "government
support". Consistent with findings from Phase 1, connections with
government agencies were viewed as especially important for import and
export trade (see Table 5).
When we asked participants to rate the factors that might
discourage them from doing business with Australian firms, they rated
"differences in business practices" as most likely to

18. discourage them from entering into business partnerships. Interestingly,
again "differences in language spoken", was less likely to
discourage the Chinese from business collaboration with foreign firms.
This finding suggests that language difference might not be as
significant a barrier as it has been assumed by Western business
executives who have positioned themselves to enter the Chinese market.
Chinese business people are gradually familiarizing fa·mil·iar·ize
tr.v. fa·mil·iar·ized, fa·mil·iar·iz·ing, fa·mil·iar·iz·es
1. To make known, recognized, or familiar.
2. To make acquainted with. themselves with
Western business practices; it is also necessary for overseas firms to
understand Chinese business culture (see Table 6).
Discussion
The factors consistently perceived as important in influencing
Chinese business people's intentions to engage in business with
foreign firms are: trust, business network ties, government support and
personal contacts. The findings from our study suggest that networking
plays an important role in Chinese business engagement. Foreign ventures
in the Chinese market may consider targeting more developed regions,
where foreign businesses already exist, as a seeding process, for market
entry to China. These existing foreign businesses and their Chinese
partners can function to build networks and expand business operations
in new regions. Word-of-mouth communication strategies and opinion
leaders can be powerful tools for advertising products and businesses in
collectivist cultures such as China.
The growth of private entrepreneurship and the spread of market
relations form the primary condition for autonomous, vibrant business
associations to occur. As yet, there has not been sufficient research
conducted in this domain to make claims regarding any conclusive Determinative; beyond dispute
or question. That which is conclusive is manifest, clear, or obvious. It is a legal inference made so
peremptorily that it cannot be overthrown or contradicted. patterns of the business operations
environment in China. Chinese
business practices are moving increasingly away from a
government-dominated model to one of marketization This article or section is in need of attention

19. from an expert on the subject.
Please help recruit one or [ improve this article] yourself. See the talk page for details. and
privatization privatization: see nationalization.
privatization
Transfer of government services or assets to the private sector. State-owned assets may be sold
to private owners, or statutory restrictions on competition between privately and publicly owned.
This shifting of control over the core business decisions to individual
firms and their senior managers provides a fertile ground for foreign
businesses to explore opportunities in China's enormous market.
However, it is more difficult to manage operations in countries that are
culturally different. The differences, expressed in social, cultural,
institutional, and socio-economic aspects, constitute psychic distance The term &#8216;Psychic
Distance&#8217; is a composite of the Greek word &#8216;Psychikos&#8217; referring to an
individual&#8217;s mind and soul (Simpson & Weiner 1989) and &#8216;Distance&#8217; which
is based on perceived cultural differences between a &#8216;home&#8217; country and a,
which materializes as uncertainties in establishing international
operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in
Wildstorm comics. It was originally called International Operations. I.O. first appeared in
WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. in
China (Brewer, 2007). However, as foreign firms accumulate
experience and learn more about Chinese business norms, acclimatization acclimatization
Any of numerous gradual, long-term responses of an individual organism to changes in its
environment. The responses are more or less habitual and reversible should conditions revert to
an earlier state. to these uncertainties will occur and they will progressively become
more competent and comfortable engaging in business with Chinese firms.
Accounting for the Chinese business people's views on factors
influencing their business communication and engagement with foreign
firms will help foreign firms to minimize the liability of foreignness.
In addition, as business people establish a greater shared understanding
of the cultural factors underpinning business decisions, exchange
relationships will have an enhanced prospect for sustainability.
business engagement with China promises net benefits for all countries
involved, but this will only be realized with culturally sensitive
management.
Acknowledgment acknowledgment, in law, formal declaration or admission by a person who
executed an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment is
made before a court, a notary public, or any other authorized person.

20. This research is supported by the Australian Research Council
(LP0776272). We also acknowledge the support of our industry partners:
Queensland Government--International Collaborations, The Chamber of
Commerce & Industry of Queensland, and Middle Kingdom (Aust.) Pty
Ltd PTY LTD Propriety Limited (company structure in Australia).
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Table 1. Importance of Firm-related Factors
for Doing Business with Foreign Firms (Mean)
Factors Experience with Experience with
Australian firms other foreign
(n = 18) firms (n = 27)
Precise terms in formal contract 5.4 5.2
Common understanding of business 5.2 5.1
norms
English language proficiency of 4.9 4.3
Chinese business people
Close interpersonal relationships 4.8 4.9

25. Familiarity of each other's 4.6 3.9
culture
Note: Six- point scale where 1 = unimportant and 6 = important.
Table 2. Importance of Firm-related Factors
for Doing Business with Australian Firms (Mean)
Factors Experience with No Experience
Australian firms with Australian
(n = 18) firms (n = 29)
Trusting business relations 5.9 5.7
International marketing experience 5.2 4.9
Human resources 5.2 4.5
Financial resources 4.9 4.4
Legal resources 4.8 4.3
Government support 4.7 4.3
Note: Six- point scale where 1 = unimportant and 6 = important.
Table 3. Chinese Business People's
Perception of Australian Firms (n = 18)
Australian firms... Mean
Are willing to adapt to Chinese way of doing business 3.2
Are sensitive to the difficulties Chinese firms encounter 3.2
Are easier to work with than Chinese firms 3.0
Understand how Chinese firms do business 2.7
Are aware of how Chinese conduct business in China. 2.6
Note: Six- point scale where
1 = Strongly disagree and 6 = Strongly agree
Table 4. Institutional Network Ties in Doing
business with Australian Firms (Mean)
Institutional network ties Experience No Experience
with Australian with Australian
firms (n = 18) firms (n = 30)

26. business network ties 5.1 4.6
Government agencies 5.0 4.2
Financial institutions 4.6 4.1
Law firms 3.9 3.7
Universities 3.8 3.4
Trade associations 3.6 3.8
Note: Six- point scale where
1 = unimportant and 6 = important.
Table 5. Factors Influencing Doing Business with Australian Firms (Mean)
Factor Experience with No experience
Australian firms with Australian
(n=18) firms (n=28)
Trust 5.9 5.7
Government support 5.0 4.3
Legal support 4.7 4.2
Official interpretation of rules 4.7 4.0
Note: Six- point scale where 1 = unimportant and 6 = important.
Table 6. Factors that Might Discourage Doing
business with Australian Firms (Mean)
Factors Experience with No Experience
Australian firms with Australian
(n = 18) firms (n = 30)
Differences in business practices 4.1 3.6
Differences in culture 3.7 3.0
Differences in language spoken 3.5 3.0
Geographic distance 2.8 2.5
Note: Six- point scale where 1 = unlikely and 6 = likely.