Goodwill hoarding

In some earlier posts on the business of culture, I've referred to three precious resources that are hard to come by and easy to squander in China: time, money and goodwill. The third one may be a bit of a puzzler. To the American eye it may look out of place alongside the twin kings of business resources. In China, though, you'll need it like you've never needed it before.

The West, and especially the U.S., worships logic and rationality. Our economic and political institutions are founded upon it. In the context of public life, we speak of feelings in mostly derisive terms. To be “emotional” is to be weak. This makes sense in the context of American universalism: emotion is subject to personal whim, and could endanger the Platonic perfection we seek in our institutions. And relationships based on positive feelings could divert our attention from what is “true,” and have us make bad decisions. There's plenty of psychological evidence that all humans, including Americans, make decisions based on emotion anyway. But Americans still see ourselves as a people who privilege rationality.

Logic and rationality don't hold the same sway in China. Relationships, including business relationships, are based on many factors; personal feelings are one important factor. You'll hear Chinese people talk about how they have a “good feeling” (hǎo gǎnjué 好感觉) toward someone, and that they're willing to do more things for this person because of it. It used to drive me crazy at markets when people told me they'd give me a better price because I speak Chinese (and that they therefore had a better feeling towards me). “What in heaven's name could my speaking Chinese possibly have to do with how much you charge me?” I would ask myself indignantly. Whether or not the actual price was lower doesn't matter. It's enough that it was advanced as a reason for a discount.

In his brilliant book Managing the Dragon, Jack Perkowski writes the following on the importance of trust — a form of goodwill — in business relationships in China:

I learned how strongly and favorably the Chinese react when they realize that you trust them.…The fact that I could set up a wholly owned facility to manufacture higher-technology compressors…would never have been possible if a certain amount of trust didn't exist between the two shareholders.…Everybody feels involved, like we're all part of the same family.

(pp. 177-8; I also recommend that you persue Mr. Perkowski's Managing the Dragon Blog)

Of course trust and goodwill matter in the U.S. too. But when push comes to shove in the U.S., we rely on public institutions like the courts to arbitrate. In China, where such public institutions are unreliable, building and maintaining goodwill must be a top priority for you and your organization.