Project Management Institute

Taking it personally

global organizations must learn a different set of rules. With China's recent ascension into the World Trade Organization (WTO), multinational corporations eager to invest in the lucrative Chinese market must acclimate quickly.

BY NATALIE BAUER img PHOTOGRAPHY BY ANDREW LOITERTON

Marie-Laure Liao, Founder and Managing Director, Logic International, Hong Kong, China; ProTrain China, Beijing

Marie-Laure Liao, Founder and Managing Director, Logic International, Hong Kong, China; ProTrain China, Beijing

EXECUTIVE SUMMARY

Quan Xi, the Chinese term for relationship networks, forms the basis of business relations in China. It is of utmost importance, as it is the primary standard of accountability.

Start with an introduction, and pay a great deal of attention initially to relationships.

Reciprocity and indirect confrontation are required to maintain strong Quan Xi.

Specifically, firms must comprehend and adapt to the intricate social networks and protocols that dictate China's social and business climate, a philosophy called Quan Xi (pronounced kwan zee) that has evolved through the 5,000 years of civilization. “Asia has undergone great changes, but the emphasis in modern Chinese societies is still on relationships,” says Marie-Laure Liao, founder and managing director for Logic International, a Hong Kong-based firm that specializes in implementing projects in China and Southeast Asia. “Loyalties and obligations to individuals are what make the system work.”

Word of Honor

Quan Xi is an approach to business based on personal relationships that heavily incorporate trust and reciprocity. “[It is] a form of strategic alliances among individuals, and [it gives] access to resources and information over indefinite periods of time,” says Liao, who also founded and is managing director ProTrain China, a project management training firm with offices in Beijing and Hong Kong. “These are relationships that cannot be created overnight. You need to earn it on the basis of interpersonal trust, interpersonal [affability], loyalty and favoritism. When a Quan Xi relationship works, you can expect business, career and, hopefully, financial success.”

Although contract law slowly is taking root in Chinese culture, Quan Xi remains the primary standard of accountability among business partners and associates. “In America, many of us have been schooled in the use of contracts as a major method of enforcing agreements,” says Murray Johannsen, president of Legacee Management Systems Inc., a Westlake Village, Calif., USA-based relationship management firm that teaches executives how to bridge the cultural gap. “In China, contract law is still evolving. Agreements are held to because of the Quan Xi.”

TALKING POINTS

To effectively manage projects in China, managers and company leaders must possess strong cross-cultural knowledge to navigate the complicated networks that define the Chinese business world. Marie-Laure Liao, founder and managing director of Hong Kong-based Logic International, says project managers accustomed to directly confronting problems and setbacks must refine their thinking and adapt to the Chinese way of “saving face.”

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For example, when Liao managed the Formula One race broadcast program, she encountered difficulties with the program's producer, who ignored Liao's request to better train and prepare the broadcast team. The producer made mistakes. “Immediately after we were off-air, I didn't say anything as I had to find out a solution to communicate my frustration to resolve the issue. But I couldn't point my finger directly at the producer, as he would lose face in front of his team, as well as his authority toward his team in the future.” To point out the problem, Liao approached the conversation—in front of the producer's subordinates—in a roundabout way.

Producer: “Well, Ms. Liao, what do you think about my performance today?”

Liao: “Well, how well would you score yourself?”

Producer: “I guess I could have reached 100 percent today, but I made a mistake because I did not pay enough attention. Ms. Liao, you were right, we really need good preparation before the broadcast to avoid mistakes.”

[Producer then complimented each team member's performance, after pointing out his mistakes, and treated the team and Liao to dessert and coffee.]

Liao: “Let's applaud this good performance today. Thank you so much for being here and on time. Now, we just have to repeat the same performance on every show.”

Liao says that event set a precedent for the rest of the broadcasting project. “Since that day, it was a tradition that whoever made a mistake will treat the others,” she says. “And now I also always have what I want with the producer because he trusts me, as he knows that I will never cause him to lose face in front of his team.”

FINISHING FIRST

Talk about pressure.

For Marie-Laure Liao, broadcasting the Formula One World Championship races to more than 600 million viewers in 10 Asian countries, with the help of 240 project team members, 50 Chinese contracts and 28 television stations, came down to one thing: Liao's Quan Xi.

The founder and managing director of Logic International, a Hong Kong-based firm that specializes in implementing projects throughout China and Southeast Asia, relied almost exclusively on her keen ability to form, expand and develop an intricate linkage of personal relationships to make such an undertaking possible. “By having the Quan Xi [network] in place, I was able to secure all the necessary commitments and get agreements for television timeslots, processes and resources,” she says. “Without [the network], if we didn't have this kind of trust, they wouldn't ever have broadcast [the programming].”

From 1998 until 2002 from China to the Philippines to Thailand, the 8-month-long programming included the live broadcast of 17 qualifying rounds, 17 races and one-hour recorded weekly newsmagazines—all adapted to each station's local language with its own set of commentators.

The team structure reflected the complexity of the broadcast. A three-person production team worked each race, while six- to 10-person adaptation teams stood by to transfer the data to local television stations.

In China, each of the 16-member networks enlisted two- to three-person satellite transmission teams to man the state-controlled television networks. “That's something very exceptional in China because then you're controlling the state-owned broadcasting board,” Liao says. “It's a matter of trust that we could do something like that.” Ten- to 12-person performance analysis groups monitored ratings and viewer demographics for each broadcast, while small management teams coordinated sponsors, reported the financials and oversaw the contract management process.

Managing the complex ordeal tested Liao's job not only as a project manager, but as a relationship mediator. With nearly 50 contracts up for grabs, Liao had to balance the Chinese preference for verbal agreements with overseas subcontractors' demands for written contracts. Because time was not on her side, Liao depended heavily on her Quan Xi network to secure solid agreements and get the live programming on the air. “The contract negotiation for each deliverable may take more time than the entire race season you're trying to broadcast. If you start broadcasting only after having finalized and signed the contracts with all the television stations, you won't be able to accomplish anything on time,” she says. “On the other hand, if you don't have the Quan Xi-type of relationships in place when you try to start broadcasting without having signed contracts, the consequences could be a real disaster.”

Marie-Laure Liao and team members.

Marie-Laure Liao and team members

Adding to the pressure, Liao had to manage the complexities of a multinational team stationed in China. Liao understood that showing her team a degree of reciprocity would go a long way. “Our production teams had to work Sunday nights, sometimes working up to 6 a.m. the next day. That's a lot of hours,” she says. “So I would invite everybody on the crew for a big breakfast after staying with them through the night—because, after all I am a part of them too. I'm a part of the team.”

These simple yet sincere gestures enabled Liao to manage a team that broadcast what became the third most-watched sports programming in Chinese television history for the 2000 and 2001 seasons. “When the team performs better, then we have to say thank you to all the people involved,” she adds. To continue the exchange, Liao took the entire project team on a five-day holiday at a tropical resort, which will be remembered fondly the following year as the season starts up again, reinvigorating her project team to continue its top performance.

Today, because of her ability to manage such complex relationships on a high-profile project, other sports companies and television industries are in discussions with her to recreate her magic. For one, plans are underway to broadcast the first Grand Prix race China has ever hosted in Shanghai in 2004. Not one to let down her network, Liao is cautious to highlight the multifaceted benefits of such an event. “It's a win-win situation,” Liao says. “It's a way to put China on the map.”

In this sense, a project manager or executive's word is much more than embellishment; it is the veritable deal. “A lot of foreign companies see Quan Xi as greed or corruption,” Liao says. “But really it's that trust that you can delegate somebody to do something and hold them accountable. It's an interpersonal trust through friendship. That's what Quan Xi means. That you can expect, that you can trust, that there's accountability.”

With that sense of duty in place, Quan Xi is an effective motivational tool and a useful recruiting mechanism. “For an information technology project with complex programming and database warehousing, a project manager from another field, say the financial sector, is nominated. Instead of that person focusing on becoming an expert in databases or in programming, we will work with that person to understand how he could grow his Quan Xi network to add value to the team,” Liao says. “That means developing relationships with other project managers, executives, suppliers and partners, so any challenges that the team will face could be taken care of rapidly, efficiently and with the right people around the table.”

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Pair up with a Chinese-speaking foreign expatriate with experience in doing business or managing projects in China.

SoonKheng Khor,

Chief Executive Officer and Founder, 4i Technology (MSC) Sdn. Bhd., Malaysia

Open Sesame

Creating a Quan Xi network is not an unattainable goal, though it does require diligence, modesty and a lot of time out of the office. To start, project managers and executives should seek an introduction from a trusted associate with access to an established relationship network. Khor suggests pairing up with a Chinese-speaking foreign expatriate with experience in doing business or managing projects in China. “If you're introduced, it's much easier to break into the network,” Johannsen says, adding that chambers of commerce, government officers and cultural mediators—people who earn a living by facilitating cross-cultural relationships—are good resources.

While introductions lend a degree of legitimacy, the relationship requires a great deal of attention in its initial stages. “The first level is the development of the friendship,” Johannsen says. “One needs to spend a fair amount of time to develop trust. If trust cannot be developed and rapport cannot be developed, the reciprocity part of the relationship will not begin.”

Johannsen recalls some of the simple techniques he has used to build and refine his network. In one instance, he and a Singapore-based business associate walked together two hours each morning for three days, talking and generally getting to know one another, which eventually led the pair to decide to work together. “[These simple events] help to determine who you have the potential to do good business with,” Johannsen says. “They're looking for not only the opportunity to do business but also they're looking for character, asking, ‘Can I trust this person?’”

There are no magic words that will help team leaders build the appropriate relationships with key stakeholders, but a good dose of common sense and a modest approach will go a long way to attract important project players. “Be prepared to [develop and] maintain your Quan Xi network with activities outside of work,” Liao says. “Be prepared to go to out for dinner or to have drinks. It is a sign that you respect [your network] as friends. As a matter of fact, many real discussions regarding your projects may happen during these moments, and conflicts could find the proper resolutions.”

Right From Wrong

From the start, Quan Xi followers must clearly understand the concept of reciprocity. It is a crucial concept to Quan Xi but one that tends to create the greatest number of misunderstandings in a project. “A lot of times people don't understand that you must give in order to receive,” Johannsen says. “It's very important in both cultures to understand the exchange of favors and the laws of reciprocity. It's basically how business gets done. It's a central theme in both cultures. It's just that the rules are a bit different.”

Most of the confusion results from a simple difference between Western and Eastern culture. While Western professionals tend to keep business and personal relationships separate, Chinese and other Quan Xi followers look at both relationships as part of a greater whole. Therefore, personal favors can be exchanged for business tips and vice versa. To establish and maintain their Quan Xi, project managers must thoroughly practice reciprocal exchanges and remain acutely aware of each relationship's status through detailed stakeholder analyses. “The Western manager has to be hypersensitive to how the rules have changed,” Johannsen says. “In America, we're very rule-oriented, and because of that, we're less oriented toward developing our personal networks, our social capital. Managers have to rely less on their authority and begin to use a lot more favors that create obligation if they want to get things done in East Asia. If you take favors, though, without returning them, you'll hurt the business and the project, ultimately ending the relationship.”

Diplomacy Matters

Quan Xi networks also are threatened by open, direct conflict. One of the central characteristics of the Western management style, confronting problems, delays and other project snags head-on, is considered a major offense in China. Causing managers and executives to “lose face,” especially in front of their peers and subordinates, brings the Quan Xi— and therefore the project—into question. “Americans get in trouble because they don't sense that they've created a situation where the other party loses face,” Johannsen says. “Oftentimes people will bend the truth primarily because they don't want to lose face themselves or are saving their bosses' faces, which is a problem because project management requires relying on facts.” Both he and Liao suggest using indirect language (see sidebar, Talking Points, p. 52) to soften the blow of an error or predicament and to ask plenty of questions to elicit a respectful yet truthful answer.

AMERICANS get in trouble BECAUSE THEY DON'T SENSE THAT THEY'VE CREATED A SITUATION WHERE THE OTHER PARTY LOSES FACE.

—MURRAY JOHANNSEN, PRESIDENT, LEGACEE MANAGEMENT SYSTEMS INC., WESTLAKE VILLAGE, CALIF., USA

Managers and executives also must be cognizant of the chain of authority on a Chinese project. Quan Xi relies heavily on equitable relationships among associates of the same or parallel stations in the project and corporate scheme. “The method of influence functions best as a reciprocal relationship between people who have about the same type of authority or hierarchical responsibilities,” Johannsen says.

To stay on the safe side, project managers and executives working in China should proceed with a degree of caution—and with a good eye for the details. “With different beliefs, languages and levels of social interaction, a breakdown in communication becomes an inevitable problem,” Khor says. “Even the simple and mundane become issues of contention.”

Winds of Change

Global—and even local—project managers are bound to make mistakes along the way, but with a solid sense of modesty in place, they likely will learn the benefits of this reciprocal system.

As China spreads its global influence and continues to attract hungry investors, it's likely that local customs will gain a hint of flexibility. Ultimately, though, many experts believe that it will be the West that will have to make a leap of faith. “Both traditional Eastern and Western economic systems have had many difficulties in adapting to new realities,” Liao says. “Especially with China's integration to the WTO, we will work off a model of trust based on various factors of integrity and benevolence. I believe that trust— not dependence on an expensive and conflict-originated system—will be the ‘glue’ that holds future economic systems together.” PM

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK | MARCH 2004 | WWW.PMI.ORG
MARCH 2004 | PM NETWORK

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