A source of light

Or, Baidu done it in the datacentre with the walking frame.

Yesterday the Chinese internet search giant announced its brand new product, 百度老年搜索 (literally “Baidu Senior Citizen Search”).  An exciting day for increasing numbers of Chinese silver surfers!

According to Baidu, China has around 14 million silver surfers. They’ve been dubbed silver surfers, of course, due to hair which is often rendered silver-white by the flowing years, however they still like to keep up with current technology.  A great many of China’s silver surfers have been enriched by new China’s economic miracle and the part their kids’ have played in it, so to marketers, they’re actually a pretty interesting consumer segment.

At the launch of “Baidu Senior Citizen Search” Li Yanhong, the company’s CEO said “Despite their age, our parents, just like us, need to absorb information from the web. As the search engine provider which owns 90% of Chinese market, we must offer more convenience to silver surfers. So [Baidu] decided to make a new search engine, specially designed for them. Aside from information, the new engine is utterly easy to use, enabling our fathers and mothers to surf the web without relying on a mouse. Meanwhile, considering there are 14 million silver surfers in China, it’s quite a remarkable market.”

[Illuminant's summarized translation - read the original Chinese here]

Okay. Great idea, Baidu.  China now has a search engine to specicially serve retired netizens.  Lets now leap into this modern-as-tomorrow future and see how the service works!

Hmm. The new search engine is a little bit hard to find. It seems to us that it can only be visited from a small text link on the front page of Baidu.com. A single click took me to a yellow-page with very, very, very huge fonts. The big font is a good idea (well, a no-brainer, actually.  What else does the specialist search engine provide?  Somewhat disappointingly, we couldn’t find anything innovative, or even new.

Firstly, a yellow web-page is nothing new to Baidu. Years ago the company acquired a catalogue (name: hao123) of the most frequently visited websites to help web starters who are not yet familiar with a real search engine (this, of course, was originally a Yahoo! innovation back in the 20th century). The new Baidu “search engine” for silver surfers looks pretty much the same as hao123, only with a ton of stuff for youngsters removed. The catalogue includes weather, tourism, hospitals, traditional arts, senior citizen communities, web portals, and so on. But… despite the convenience of a heirarchichal link aggregation, is this by any standard a “search engine”?

At the top, beside the Baidu logo, there is a textbox emphasizing the facility of a search engine. The textbox, like everything else, is also extra large, of course.

According to Mr. Li’s speech, one might be led to believe that there is a great deal of new code behind the page to generate optimized and carefully selected entries to silver surfers. So, we tried the new engine with something tricky: a Mandarin-Chinese slang term in current use amongst China’s young netizens. This slang term is definitely not something silver surfers would be interested in. We expected that the search results would feature an explanation of the term, and several news stories addressing the rise of netizen slang. OK, type the term, click the button, and see what we’ve got here.

If my computer works all right, what I’m look at now is a very long list of the term being put into normal daily usage. Say, if I’m born long before the information era of China and only got to use computer in my old age, this list will confuse the hell out of me. Out of curiosity, I tried the term in the regular Baidu search engine. And… what the… I’ve got a completely identical list here.

Our inexpert conclusion is: except for super large fonts, the “new” search engine is nothing but a magnified version of old stuff. We’re scratching our heads.  Why would a good company bother spending money on creating buzz for an advanced new technology solution which could be easily replaced by buying my Mom a pair of glasses?

Interestingly, we’ve found that the new silver surfer’s “search engine” is (at the time of writing) totally advertisement-free. To be fair to Baidu, this is actually a pretty good thing: presumably China’s silver surfers possess minimal internet security understanding as well as high trust in new technology.  Silver surfers would be easy targets of the Chinese web’s ubiquitous phishing-attacks, Trojan horses, and virus-bearing malware.

Perhaps fault lies with us, for expecting too much of a leading Chinese web business.  After all, CEO Li did promise “a new search engine, specially designed for them“, and no court or judge would penalize Baidu for its “over-promise under-deliver” approach to this “new product” launch.

As a marketing agency working in China, we really shouldn’t be surprised at any part of yesterday’s buzz-creating activity, except at the lack of advertising on the “new search engine”.

Baidu, we’ll gladly be proven wrong.

Article by Illuminant’s head of research, Kane Gao

Chinese dairy products display (unrefrigerated), originally uploaded by Illuminant Partners.

A particular story (in Chinese) has been posted on thousands of blogs in China over the last few weeks.  Preportedly written by a Chinese dairy industry “insider”, it is a breathless exposition of the many failures of China’s dairy food safety chain.

On behalf of one of our key clients, we take an active interest in Chinese food safety matters, so we briefed our research department to try to find the identity of the original poster of this story.  In the end, we were unsuccessful, but we did gain several insights during the research project.

But first, to set the scene, we should add one more blog to this chilling story.  It is reproduced, verbatium, below.  Our analysis follows.

———–

个奶业工人的实心话（转帖）
我不想再忍了，我所知道的奶业内幕！

I am the truth

我所学的专业是乳品工艺，刚毕业曾在某国内老大级乳业集团工作。职位——收奶员。

I am a milk collector in one of the big players in the Chinese milk industry.

这几天的三鹿事件，沸沸扬扬。其实在我看来，没什么奇怪的，事情总是要被揭穿的，只不过是时间问题，以及是哪一家企业成为那个撞上枪口的倒霉蛋。三聚氰胺————冰山的一角。也许这个事件就要告下一个段落，也许仅仅是个序幕的开始……

[The scandal] is nothing new. It was just a matter of time before the dairy safety problems would be be revealed. This is just the start of the scandal!

离职的员工到处去说原来公司的“坏话”，这个员工一定个没有道德的人。曾经我也是这么认为的，可最近我的想法变了，一个知道内情而不去告诉别人，眼看着别人吃亏上当的人，那才是个彻底道德败坏的人。

Some may said it is immoral for a former employee to say bad things about their former company. However, it is immoral if I don’t tell the truth.

离职后，我没喝过一滴奶！

After leaving my former job, I never drank a single drop of milk!

我先讲一下，收奶的过程。奶农的牛奶由当地附近村镇的奶站化验收集，按品质高低，分等级付给奶农钱。品质的指标不外乎PH值，蛋白质，干物质这几项。然后由奶站（当然了奶站是私人老板的）用罐装车混装后运到工厂，然后由工厂取样化验，测算指标同样按品质高低，分等级付给奶站钱。不知道大家看没看出来，想没想到这种操作模式会出现什么问题？有人说了，不是“天然牧场”“工业化收集吗”？有，的确有。但是我只能说：兄弟，你很傻，很天真！

The process is as follows: milk was collected based on quality in terms of pH, protein, and milk solids. Private collectors would collect milk from farmers and deliver the raw milk in tanks to the factory. The factory will collect a sample and pay the broker according to the various quality tests. So, where is the problem?

奶农想多赚钱怎么办呢？简单啊，掺水啊。那掺水指标降低就卖不上好价了怎么办？简单啊掺****啊。奶站想多赚钱怎么办呢？简单啊……。奶站的奶是从各个散户收来混装到罐车的，有一家的突然变质了，怎么办啊，全车都倒了吗？ 几十吨一罐的奶，蛋白质低了怎么办？干物质低了怎么办？PH值低了怎么办？有的牛病了打过抗生素怎么办？有的牛催奶打激素怎么办？

To earn more, water is added to the milk. But when milk from one of the farmers spoilt the quality of the whole tank, the milk collector will not dispose of the the whole tank.
话说回来了，奶农那点小计量能瞒奶站吗？奶站那点小九九能瞒工厂吗？如果我说，奶站不知情，工厂不知情。都是“不法奶农”干的坏事，全国人民要把矛头指向他们批判。那我可就真的，很傻，很天真。 I

f I were said farmers are the root cause of the contamination, I would be too naïve. Milk collectors and factorys know all about it.

我们从来不拒收奶，因为我们知道，一件东西是要充分利用的，这样才能取得最大的价值，获得最大的利润。我们分罐储藏。最好的奶，供到车间做（发酵型酸奶或搅拌型酸奶），因为不是好奶做不出来。其次，做纯牛奶，高钙奶之类的。再差的奶做花色奶即花生奶，早餐奶等。还有那些发酸的奶怎么办呢，当然不能倒了，做酸性乳饮料，就是广告狂哄乱炸的，女人小孩都喝的***。这是本公司最大的利润所在，一盒奶的成本，还没有哪个包装盒值钱。还有那种臭的熏人的奶怎么办呢，简单，做冰激凌味道最好。还有那些又臭成粘稠状的怎么办呢，做奶粉。当然这叫工业粉，它有它的用途，不是装袋子就上市场的。

We never stop collecting milk. We know that we have to maximize the value/profit out of the milk. Milk is stored separately. Milk with best quality will be sent for yogurt making, followed by pure milk and high calcium milk. Low quality milk will be used for “peanut milk” and breakfast milk. As for the milk that turns sour, it will be used to make acidic milk drinks. This is how the company earns money. The cost of the milk is lower than the cost of the box. How about the milk which is very smelly? Simple, it was used to make ice-cream (as it will smell the best). How about the smelly and sticky milk? It is made into industrial  milk powder, which has its other purpose (milk powder without packing).

我们有全球最大最先进的立体式仓库，媒体都赞扬过，可是你就没想想这快速消费品，生产出来就要卖的，搞那么大仓库什么用？酸性乳饮料越存放味道越好。那有人问了，生产日期怎么办？简单啊，提前打一个月，你也许不信吧，因为在你心中那是小黑工厂做的事。那又有人问了，市场上卖的岂不是过期奶？我就这么告诉你吧，你手中那盒奶就是过期一周了，你喝也没问题。因为你所卖的奶是UHT超高温灭菌液态奶。关于UHT超高温灭乳到底有没有营养，我不想再说了，因为这个涉及到某人在某年为中国提出的一个口号，我们正向这个口号迈进，别管你喝的是什么奶，反正是牛奶。

We have the world largest and best developed volumetric storage system which was hailed by the media. However, have you ever thought that such product is meant to sell quickly rather than for storing? What is the use of having such a big warehouse? Acidic milk will taste better the longer it was stored. How about the expiry date? Simple! Put a date which is one month later. I am telling you, the milk in your hand is already 1 week expired. You drank it and have no problem. This is because the milk being sold is processed using UHT (ultra high temperature) to kill the germs. There is no nutrient value after such UHT process. This is the slogan by someone in China: Don’t bother what milk you drink, it is milk.

有个广告，中国某企业已经是这种超高温灭菌乳全球产销量第一，难道是那些乳业发达国家真的比不上我们了吗？其实是人家不生产这种乳品了。这笑话有点冷是吧。

There is an advertisement stating that a Chinese company is the world largest UHT producer. This is not because the technology is good and better than that of developed countries. The reason is that the developed countries no longer producing such milk product.

那有人说了，我们以后喝高端奶吧，广告都说想过有品位的生活就和那种奶。是啊，那奶是贵啊，贵的东西就好啊，那奶蛋白质高啊，高，实在是高，这一点澳大利亚人都服我们啊。

Some say lets drink the high-end milk. The advertisements say that people who enjoy a quality lifestyle should drink that kind of milk. That milk is expensive. Expensive is good. It is high in protein. Even Australians respect us!

我就不相信地球上的奶牛能挤出那么高蛋白质的奶……

However I don’t believe any cow can produce such milk with such a high level of quality.

此言一出，某些专家就会来“辟谣”又得列出一套数据理论，来“引导”大家。

Once this was mentioned, specialists will provide a set of numbers to refute the statements and guide everyone to continue to consume.

是啊，我嘴没人家的大，钱更没人家拿的多……

Oh yes, my mouth is not as big and I am not collecting as much money as they did.

还有很多关键的还是不说为好，知道了对大家谁都不好。生活是美好的。

The key is that it will be better not to mention.

真实案例看三鹿奶粉背后的KB的行业潜规则
目前闹得沸沸扬扬的三鹿奶粉事件，作为一个可能的知情者和懂点化学的人，我也来谈谈我的观点：

On the current Sanlu milk powder case, as a person who knows the truth and and the chemistry, I would like to provide my view:

1、媒体也好，厂家也好，国*家质量监督也好，还是在忽悠大家，为什么我敢这么说，因为三聚氰氨根本不可能直接加入牛奶中，三聚氰氨的市场售价并不低，奶农不可能不计成本，比较麻烦；那为什么媒体，厂家，国*家质量监督要异口同声的说是不法之徒加入了三聚氰氨，其实就是为为了掩盖一个更可怕的问题，那就是加入的其他毒性更大的东西，说穿了就是尿素，尿素作为一种便宜的农家化肥，真是经济实惠的“好添加剂”。

1. Be it media, factory, national quality control, or to cheat everyone, adding melamine into the milk directly is not possible. The price of melamine is not low. Farmers will count its cost and avoid trouble. However, why they keep saying that someone add melamine? This is because they want to cover a greater problem, which is adding in an even more toxic material which is urea. Urea is a cheap fertilizer and a good value milk additive.

2、为什么要加尿素，因为各乳品公司收购鲜奶，测试的标准主要是奶的蛋白质含量，说穿了就是氮的含量，尿素作为一种最普遍的氮肥，由于它独特的分子结构，记得好象是两个氮分子配个什么我忘了，氮的含量当然高了，混入奶中，提高氮浓度，价格自然也卖得高了；

Why add urea? As a milk collector, testing of protein is based on nitrogen content. Urea is a common nitrogen-based fertilizer. It has a unique structure with around two nitrogen atoms and something else which I can’t remember. Adding in the urea will increase the nitrogen content and increase the price.

3、尿素怎么转化为三聚氰氨的，很简单，奶粉的生产过程就是将鲜奶放在封闭的环境高温环境下，然后采取喷雾的方式直接转化成粉状就成了奶粉，而尿素在高温下会产生变化，生成三聚氰氨，OK，有毒的奶粉就这样生成了。

How come urea will transform into melamine? It is simple. During the milk making process, fresh milk was kept in high temperature. It was then being sprayed to form milk powder. At high temperature, urea will form melamine. The toxic milk powder is formed.

最后，我在谈谈我怎么知道这些内幕的，前几年，是01年还是02年，我记不太清楚了，在办理一件带B社会性质的案件时，他们主要罪状之一就是把持我市某区的牛奶收购市场，长期以次冲好，我们在办案中就了解到，他们在牛奶中加入尿素、少量食用油，然后加大量水（良心好的加自来水，不好的就直接加池塘或者田里的水），最后用专用的搅拌机进行搅拌，一批蛋白质浓度高的鲜奶诞生了，但最后几个犯罪分子都翻供，说他们这种做法是普遍的，并不是他们发明的，后来我们专门去天友了解，确实如此，他们对牛奶收购中出现的这些问题根本没有比较有效的检测措施或者是因为收购站点太多，没有精力和金钱来负担这么大的检测开销，所以对广大奶农的行为基本采取的是默认，奶农收购牛奶，就普遍存在次类现象，所以三鹿事件的发生就是必然的，而且这次三鹿出了事，全国其他所有奶制品企业都保持沉默，没有一家跳出来指责，什么原因大家看了我说的牛奶，你们敢喝吗？

Lastly, how do I know the truth? A few years ago which I can’t remember it is 2001 or 2002, I investigated a case where sub-quality milk was used as high quality milk. During the investigation, I learnt that they added urea, oil and large amount of water (potable water or pond water), and used a mixer to mix. High protein milk was then produced. The criminal said that it was not their invention but it is a common practice. We went to “天友” to understand. Indeed, during the collection, they can’t afford the effort and money to conduct analysis due to the high number of collection points and effective testing system. On such a mixing by farmer, the collector choose to keep quiet. Thus, Sanlu case will definitely surface.

———–

There are obviously many inaccuracies in the article, above, and Illuminant certainly doesn’t endorse any of the above as being fact, however we think an analysis is of interest.  The following is written by Illuminant’s Kane Gao, from our research and language services department:

Preface

A statement has to be made here since technically it’s impossible to classify the “insider story” as true or false. The source of the story can not be traced thus we can’t be sure if it’s fundamentally reliable.

Thanks to various portal websites’ fever for PV (page view) and common internet users’ fever for scandals, the story in question has been published everywhere over the Chinese part of internet. A search with Google returned 93,700 exact matches, leaving 329 items after omitting similar entries. 15,400 exact matches in Baidu, a search engine provider which is dedicated to Chinese material search.

The government’s attitude makes the problem even worse. It gives no response to the story. Professionals in the dairy industry are silent on the subject, too. Thus the following research is based on limited material I’ve managed to find, and some common sense.

Can we believe in the “Insider Story”?

Only partly, according to common sense. Every now and then an “insider story” surfaces on the web. Some of them are evaluated as “can’t be sure”, others are hypes or slanders for certain purpose. Some portal websites occasionally “create” a shocking insider story to attract attention (and, of course, PV). Sometimes companies would try slander their competitors with forged scandals.

However, the story in question seems more reliable, although there are some glaring technical inaccuracies. Because it hasn’t make any official appearance on most known scandal-holic websites such as Sina, Sohu, and QQ (not officially means that it’s not in their news and special feature sections. But you can find the article on their subordinate forums or blogs.) Neither does it stand on the behalf of any specific dairy company, which make it less like slander. So, let’s give it a try. Now that both government and professionals are keeping silence, we’re going to make an analysis to see if it makes sense.

Factories’ roles in tainted milk products

Factories can’t be innocent in the production of tainted milk. Yes, it’s totally possible that dairy farmers or milk collecting stations may have added melamine into liquid milk. But it would be a miracle that all tainted milk “happens” to be processed into baby formulas without any acknowledgement of the factory (Sanlu, to be exact).

The story also mentioned that quality administrations, media, and milk factories themselves admit the addition of melamine to cover that fact that what they actually put into milk is urea. Yes, urea is cheaper than melamine, and its solubility is way higher. But the point has been proved to be fake after I consulted a medical expert.

Urea isn’t that poisonous, and it takes a lot of effort to make it turn into melamine. Simple heating in a closed environment is definitely not enough. The reason why the author tells such a lie is dim, but we can safely assume that addition of urea is not a “standard process” in Chinese dairy industry.

Also, the statements on UHT are technically incorrect.

“Recycling” of spoiled milk

This seems to be true because there has been a similar story about big dairy brands “recycling” spoiled milk and give it a second life. It was back in year 2005, Henan Provincial Television broadcasted a disguised investigation program. In the program, Guangming (another dairy giant in China) was exposed to be taking spoiled milk back from distributors, and “process” it into brand new products. The journalist saw that countless packs of spoiled liquid milk are being poured into tanks by factory workers. “This is recycling”, they told the journalist when questioned. Most of the packs are putrefied, with flies buzzing and maggots crawling. Even the workers were complaining about the overwhelming stink. But let’s skip the disgusting stuff; they “recycled” them anyway. 32 tons of putrefied milk, all processed by the next day.

“You don’t believe what you see here, because it’s simply out of your common sense. But you should know that every factory commits in such deeds, you just don’t have the chance to see.” A certain worker told the journalist.

Curiously, the Guangming scandal didn’t make a huge impact to the market, at least nothing I know of. Anyway, we can trust a state owned television media. They only censor news that they believe could result in panic, but they don’t tend to lie.

Our summary?  Its a hoax.

*Chinese material reference: http://news.tjinfo.com/100001/100061/100001_100061_1545.htm

Blog posting by Illuminant’s Kane Gao of research and language services.

Illuminant Moon Cakes 2008 (2), originally uploaded by Illuminant Partners.

Each year during China’s Mid-Autumn Festival, businesses and people exchange moon cakes with each other as symbols of friendship and regard.

Illuminant Partners always likes to innovate, so this year we had our friends at awfullychocolate make us a custom chocolate pudding treat for our seasonal gift.

Boxed in cups of four, they were warmly received by our many clients and suppliers.

On these three days of national mourning, the staff of Illuminant Partners remember the many victims of the deadly earthquake in Sichuan Province.

We’ve been helping a fantastic Australian company called SmartTrans to introduce their world-leading Olympic and major events transport technology, EventTrack, to China and Hong Kong.

This little cartoon, penned by our art director Olivia Ye, graphically represents a true story of a foreign friend of ours who tried to get to the Beijing Capital International Airport by flapping his arms at the taxi driver. The driver dropped him off at a Peking Duck restaurant!

Ahh… the communications gap. A problem that EventTrack by SmartTrans neatly solves, and helps thousands of people make their appointments in tricky foreign cities like those found in China.

Guanxi (pronounced GWAN-she) is a term synonymous with doing business in China, and anybody who wants to succeed in China needs to know how to employ guanxi to their advantage.

However, many Westerners new to China find it a difficult concept to grasp. Literally translated, guanxi is nothing mysterious that cannot be rendered in the English language; it means simply “relationships” or “personal connections.”

Guanxi is not entirely foreign in the Western business community. Many businesses in the West use personal relations to their advantage. The difference is the connotation, usage and scope of these relations. However in China, understanding how to use guanxi can make the difference between mild success and a great success.

Why do Koreans, Japanese and Taiwanese operate more smoothly in China? It isn’t because they’re Asian; they know how to gain guanxi and employ it, because it operates similarly in Japan and Korea, and to a much stronger degree in China.

Guanxi implies power. A popular Chinese expression is “If you have guanxi, you can do anything.” Many a Chinese citizen’s worth in business is measured not by any talent, but more by whom that person knows. A person who knows people is valuable because they can always get their foot in the door and secure access to the means of resolving problems and deals.

Chinese, whether it be in the government or business, have an intense mistrust of “outsiders” – swindlers are everywhere in China! Consequently, the only person one trusts are those within one’s guanxi circle.

Business deals are generally made based on these guanxi connections, because they are the only ones they believe they can trust. Trust is a valuable commodity: it is more valued than talent. Although to some this might reek of nepotism, the scope of guanxi can be quite large and extend away from an individual by several people.

The main people in the guanxi circle are the family and extended family. These people are given priority above all things, and this is sometimes true in the West. The difference is that a son, in the West, who obtains his job because of his father is looked down upon, whereas in China many people would admire him. Who your family is can make a huge difference. If your father was a criminal, you are usually disqualified for any job, and if your father is a bureau chief in the government, you are qualified for anything because you have guanxi.

The next group of people would be friends and classmates. Classmates are extremely important in China. Chinese maintain relations their entire life with classmates from elementary school, middle school, high school and university. Sometimes, they may not even remember each other, but if one says they were classmates, they are automatically connected. Unlike in the West where relations with classmates is often analogous to being strangers, classmates in China are second to family and mutually assist each other over a lifetime.

The next group is the hometown or dialect groups. This is not significant any longer for major metropolitan areas in China, but in medium-sized cities and in southern China the most important question one wants to know is “where are you from?” In the West, generally there is not too much special preference for home-towners, but in China there is a strong preference.

Anyone from these groups are given strong support in business.

To observe business dealings in China is to find a web of guanxi mixed into the whole deal.

The next issue is how to employ guanxi.

Let us use a hypothetical situation: Mr. Li wants to sell banking software to banks in China. Instead of making sales calls or talking directly to every bank CEO in China, he will search among his existing guanxi for a connection with someone of influence. Perhaps Mr. Li doesn’t have direct guanxi with anyone significant, but he does have a friend Mr. Wang whose former classmate, Mr. Zhang B, is a cousin of the Vice-Minister of Commerce, Mr. Zhang A. Mr. Li would have Mr. Wang call Mr. Zhang B to arrange a meeting with Mr. Zhang A. The invitation would be polite coded terms such as “invite you to dinner” means one is looking to build his guanxi with you and “I would like to hear your expert opinion” means one is looking for help. Mr. Zhang A will clearly understand these encoded terms.

Even if Mr. Zhang A were uncomfortable with meeting Mr. Li, he would dare not reject the invitation because he would cause his cousin, Mr. Zhang B, “to lose face” in front of his former classmate. This is important due to two issues: firstly, helping friends is seen as an ethical imperative and performing a favor on behalf of a friend ensures later one can do the same. Secondly, for a person in the guanxi circle of high status, he is ethically obligated to support those below him; furthermore, he often is assured that position by the support of those below him. Therefore, when a friend or relative comes knocking, one must answer, but in the future they can do the same, and expect full support and loyalty.

Guanxi is thusly based on an endless loop of favors.

Mr. Li may have successfully had the meeting with Mr. Zhang A, but his connection with Mr. Zhang B might not be trustworthy enough to close a deal. Sometimes guanxi is only enough to get one’s foot in the door, especially if it is as convoluted as the aforementioned example. In such a case, Mr. Li’s goal would be to build his guanxi with Zhang A. If Mr. Li is a smart man, he will research Zhang A’s interests and likes. On first meeting him, the rule of the game is simple: make Zhang A happy and do not discuss business. The entire meeting goal should be to “make friends” and everything is put in friendly terms (although both sides are cognizant of the other’s intents).

Mr. Li will likely present a thoughtful or highly-luxurious gift such as high quality golf-clubs or a rare bottle of rice-wine depending on the individual’s interest. This will put Zhang A in a difficult position: he cannot reject the gift, but the meaning of the gift is “I just did something nice for you now you should do something nice for me”. In this way, it can be seen that this type of meeting is couched within terms of friendship, and discussions are more centered on interests than business.

From Mr. Zhang A’s perspective, he couldn’t care less which company provides his banking software. In his eyes they are basically the same. “If it looks the same, it is the same”. And although one system might be a much better buy, the guanxi he gained from another company might be more valuable than any financial and efficiency savings. Therefore, Mr. Zhang A is more likely to chose the person who has a better or closer relationship to him. If Mr. Zhang A uses his power, he can force all banks in China to purchase Mr. Li’s banking software; this kind of deal makes Mr. Li indebted to Mr. Zhang A for a major favor outside of business. Therefore, a year later Mr. Zhang A may call on Mr. Li to do banking security software for free or to help him do a business deal.

These practices are somewhat similar to what happens in the West, but with some significant differences. Chinese often perform favors in the natural expectation that a favor will be returned. If a favor isn’t returned, there is a strong sense of shame and “loss of face.”

Losing face is a major factor in guanxi because it is the consequence of not performing one’s obligations in this, what seems to some outsiders, a farce of a relationship. Losing face is the biggest dishonor one can suffer.

Preserving face leads to people going to extremes – for example, maintaining a marriage when one’s spouse is blatantly not providing fidelity (which is as common in China as it is in Western societies), because divorce is usually a major loss of face within Chinese society. Consequently, Mr. Zhang A would never call Mr. Li out on his insincere gestures of friendship, because not only would he cause Mr. Li to lose face, he would also lose face because he was rejecting these prima facie gestures of friendship.

Rejection can occur, however, but a rejection is rarely declared directly, but it is increasingly common due to changes in Chinese culture. Generally, for example, if a favor is requested, a negative response will be “I’ll definitely consider it” or “I’ll see what I can do.” These are all sentences which state they will make an attempt, but they neither promise nor deny the favor. At other times, a rejection will come in the form of being ignored or through deferring a decision. “I can’t make such a decision, unfortunately, but I’ll bring it up with my boss.” These are clearly and simply translated into normal Chinese as, basically, “no.”

Now the final question is, as a Western business person dealing with Chinese, how do you employ guanxi to your advantage? In my experience at Illuminant Partners, I have had to use guanxi to perform many tasks from getting meetings with high-ranking BOCOG officials to interviews with important media outlets. In the West this may be seen as an inability on my part to perform my job, whereas in China if you cannot use your guanxi you have no ability.

My fellow Illuminant partners have the same challenges and opportunities every single day at work. We all strive to understand the complex web of relationships at work in China, and to use them for our clients’ advantage.

Remember the following things:

Everyone in China is a potential resource

Everyone you meet has the potential one day of becoming a useful business asset. Get to know what they know, so you can employ them later.

Speak Chinese

If you are going to be doing business in China – and I don’t care how old you are – learn to speak Chinese. You automatically are given a huge amount of credit, trust and respect even when you speak the most basic Chinese. If you don’t speak Chinese, you’re almost always dismissed as a foreigner who doesn’t know the first thing about China.

Dinner invitations

Treat people to dinner often. Inviting someone to dinner and paying for it is a couched term for “I want to build up my guanxi with you so you can do me a favor later.” This ingratiates someone in your favor to be called upon later.

Do not directly discus business until you are familiar

Money is dirty in China although everyone loves it. Discussing money and business is considered uncivilized and unbecoming. Talk about fun things.

Drinking is essential

Drinking, just as in the West, is an essential tool. However, if you’re going to be doing business with older Chinese (in their 40s or older), you better be prepared to drink baijiu. The older generation grew up on baijiu, and despite the fact that is may sometimes taste like nail polish or industrial chemicals, drinking baijiu has symbolic cultural meaning as the drink that “brothers-in-arms” drink. So bottoms up!

Don’t be afraid to pool your friends resources

If you don’t know anyone who can help you, ask your friends who they know. It’s not impolite in China as it might be in the U.S.

Never say “no!”

Never say never. It is the worse thing you can say, because it causes people to lose face. Always say phrases that are non-committal or avoid it. If someone ask for a favor that cannot be done, then answer “I’ll seriously think about it” or avoid it altogether by saying, “Let’s not talk about business now. Let’s have fun.”

Never allow anyone to lose face in front of others

Go out of your way to prevent any loss of face. Never point out another’s faults and do not directly contradict them. To do so, not only will cause him to lose face, but might make him an enemy, and worse, if you do this consistently, you will lose face because you will be considered arrogant and uncompassionate.

Never talk about problems

In the West we talk about problems, but in China you imply problems. One of the biggest mistakes Westerns make is that they directly talk about problems, which when coming from the mouth of a foreigner, it is construed as a criticism of Chinese, which makes all Chinese lose face. Instead, talk about the positive side of things first. Afterwards you can add “There is, however, one miniscule problem that I’m sure you’ll rectify… We can help you with this problem.” Everyone will understand you, and you will come off as being a generally positive person.

In conclusion, the use of guanxi is essential to your business and communications success in China, and aught be viewed as a distinct cultural differentiator to Western modes of business and relationships.

Authored for A Source of Light by Illuminant Partners account manager Christopher Heselton on 30th January 2008.

It is no secret that Illuminant Partners is closely aligned with the Australian business community in China. While we have team-members with a wonderful diversity of ethnic and cultural heritages, our Chief Exec is an Australian, and he has brought a lot of Australian corporate clients onto our roster.

Our involvement with Australian businesses operating in China and Hong Kong is not the last word in our Australian roots: we also work very closely with the various departments of the Australian Embassy in Beijing (primarily, Austrade and the Department of Foreign Affairs and Trade), and our Chief Exec serves as deputy chairman of the Australian Chamber of Commerce in Beijing.

This week, we are proud to further demonstrate our support for Australian business interests in China, by our sponsorship of the Australian Ball, to be held at Beijing’s China World Hotel on Australian national day, January 26, 2008.

We’re a “bronze” sponsor, and by coincidence, our two fellow bronze sponsors are good friends of Illuminant’s: Woods Bagot is an important client of ours, and GNS is our corporate advisory firm.

We decided to provide sponsorship for this flagship event in the Beijing expatriate calendar because (a) it is a demonstration of good corporate citizenship, (b) we want to put our money where our mouth is, and (c) sponsorship will expose our brand to a great many influential business people, both clients and prospects. Since we entered our “fast growth” period four months ago, the added profile for Illuminant will (hopefully) support our business development objectives.

Tickets went on sale from the Austcham secretariat in Beijing on Tuesday this week. Last year, they sold out in only three days — they’re a hot property!

After years of speculation, China’s central government has decreed that the national public holiday schedule is to be reformed from calendar year 2008. A call for public comment on a proposed schedule was made some weeks back, and although there has been no official announcement as to the results (yet), we have it on good authority that the following schedule will apply, nationwide and for all people, from January 1st, 2008:

Western New Year
3 days vacation (1-Jan-2008 through 3-Jan-2008)

Chinese New Year (aka “Spring Festival”)
7 days vacation (6-Feb-2008 through 12-Feb-2008)

Grave Sweeping Day
3 days vacation (4-Apr-2008 through 6-Apr-2008)

International Socialist Workers’ Day (aka “May Day”)
3 days vacation (1-May-2008 through 3-May-2008)

Dragon Boat Festival
3 days vacation (8-Jun-2008 through 10-Jun-2008)

Mid-Autumn Festival
3 days vacation (14-Sep-2008 through 16-Sep-2008)

China National Day
7 days vacation (1-Oct-2008 through 7-Oct-2008)

Certain pundits have been predicting full flexibility of vacation time for workers. It seems that as fast as China is reforming, the national economy is not quite ready for such a move, as yet.