From Acquaintance Ties to Familiar Ties: The Principles of Requital and Favor

Acquaintance tis' turning into good friends is a process that relies on favor exchanges and that often involves ceremonial acts, such as often having dinner together after work, calling each other ―Buddy‖, etc. Such expressive acts in China, however, are no more than a declaration that

―I invite you to be my buddy.‖ By this time, the two persons are not yet real friends. Acquaintance tis' turning into familiar ties entails a large number of favor exchanges, which, as we have mentioned above, have several characteristics. Firstly, they are a type of debts of gratitude that the giver is not allowed to talk about while the receiver must not forget. Secondly, they are a type of long-term acts – people keep doing somebody a favor on the one hand and doing something in return of somebody else's favor on the other. Thirdly, there are always favor debts in each one's favor account. Fourthly, they are highly need-specific, as they are always intended to satisfy an individual's urgent and particular need, such as providing critical resources or helping to make face.

―Making face‖ is something very interesting in China. Businesspersons, for example, typically like inviting governmental officials to conferences or seeking to have photos taken with them before putting them up on the walls in their offices. Either of them actually means the endorsement from these officials. These are typical instances of making face. On the other hand, making face usually requires ―returning face‖, that is, doing things in return of the favor debts. Such businesspersons, again for example, tend to hold a grand banquet and invite people from different sectors to it on the birthday of one of the aforementioned government officials or their parents. This is how they demonstrate their extensive ties. This is essentially a type of favor exchanges: I help you make face today to prove that I'm within your guanxi circle and, on some other day, you speak for me to show your support. This is a favor that requires reward in one way or another in the long run although it is impossible to clearly price it.

The circle theory that I will try to put forward next focuses on this proposition: Chinese always attempt to change short-term transactions into long-term favor exchanges. As relationships are established, the scope of favor exchanges generally will keep expanding. Westerners are inclined to carry out short-term transactions; and Chinese, long-term cooperation. Moreover, favor exchanges have a fifth quality that they are made in an extremely wide scope plus very rich contents. A group of businesspersons, for example, may at first carry out no more than simple cooperation, such as Jack buying yarn from Tom. As their relationship grows deeper, however, their cooperation will probably go beyond this. Gradually, Jack also may buy from Tom buttons needed by his factory. They may become long-term partners and join the same regional group of businesses, before ultimately making investment, speculating in the housing market and even carrying out political lobbying together.

When people establish familiar ties with each other, expressive acts are no more than ceremonial, so to speak, as they are only symbolic invitation. And only after real essential benefits are exchanged will their relationships be increasingly cemented. Friends will become increasingly distant with each other if they can find no reason for such exchanges. And many years later, when they meet again, they will see it very difficult to find anything in common, especially in terms of interests, despite that they remain emotionally close to each other.

Next, I would like to use several examples to explain the process of guanxi management while acquaintance ties are developing into familiar ties. Mr. A of CL Industrial, again for example, got to know a businessperson whose company produced high-grade knitting paper. His products were amazingly beautiful and had extensive applications. Mr. A once again shared his expertise with this businessperson, told the latter of some business opportunities that could be developed, and, hence, helped the latter increase the sales revenue greatly. So the two persons gradually turned into familiar ties from acquaintances. A subsequent favor exchange brought closer ties between them. A five-star hotel invited a high-ranking government official to announce its opening; how to package the gift for this official became a headache of its executives. After knowing this problem, Mr. A sent them a package and a handbag made of knitting paper produced by the aforementioned businessperson's company. All the attendees, on the day of the ceremony, couldn't help marveling at the package, and many of them later on asked where such a refined package and handbag came from. By acting as an introducer, Mr. A helped the businessperson win not only business opportunities, but also good word of mouth in the industry and ties with high-ranking government officials. It was with such a positive cycle of favor exchanges that the two persons established good familiar ties with each other. They were not only good friends, but also became partners in many business deals. And on the side of Mr. B of SF Technologies, the building of familiar ties was more about wisdom and skills in selecting from among candidates for these ties. Two years after Mr. B started his business, the Central Taiwan Science Park (CTSP) was founded and received an influx of big companies that came here to build facilities. By that time, there had been few high-tech companies in central Taiwan, and Wintek was one of them. New comers that needed specialist in the field of clean rooms all attempted to poach such specialists from Wintek through high salaries. And many of the Wintek employees who had good personal relations with Mr. B joined the new comers and played important roles there. Some of them were even transferred to the Chinese Mainland. These persons, who already were friends of Mr. B, of course recommended SF Technologies to their new employers. Accordingly, SF Technologies saw its operating income multiply in addition to business presence across the Taiwan Strait. Behind this seemingly smooth process was a philosophy unique to Mr. B in terms of operating egocentric guanxi network. Firstly, cultivate people in a peer-to-peer manner. This should start from the middle level managers and even the grass roots instead of the top level. That is because you can receive immediate benefits by approaching the high-ranking managers, but you will find it very difficult to establish long-term familiar ties with them. Mr. B said that there had long been sycophants around an executive, who would also think that these people were good to gain advantage and, accordingly, would take all such favors for granted. As a result, joining these sycophants generally will not bring you any advantage. This shows the difficulty of establishing ties with high-ranking officials before turning them into acquaintances and then into good friends. But the story with those at lower levels would be totally different, as they are short of resources and need to perform so well as to get promoted. Mr. B was therefore very friendly to such people. He would always do his best to help them solve problems at work in addition to inviting them to dinner and giving low-value gifts during holidays. That was how he enabled them to perform well before their superiors and within their companies and, thus, added to the favors that they owed to him.

Secondly, let people rely on you. Mr. B values the quality of services by doing a perfect job as long as it is within the company's service scope, thereby winning the other party's full trust. As time went by, these people would come to rely on Mr. B and always think of him whenever they had problems. And naturally, Mr. B would receive orders very smoothly. Later on, when these people at lower levels got promoted or joined other companies, they would still trust and rely on him. Today, SF Technologies are achieving successes one after another thanks to so many high-ranking officials with whom Mr. B has established close ties years before.

There may be people who doubt the capacity and power of minor roles, thinking that they have no say for major matters. Developing familiar ties will of course be useful for the future, but what about the present? This Mr. B would not deny, but he thinks that it is impossible for a company to only make big deals. It is true that high-ranking officials typically play a dominant role in the reception of big orders, but they tend to invite bids for such orders in an open manner. Accordingly, the candidates will compete with each other in terms of price and cost, and accordingly will make thin profits despite large monetary amounts. Briefly, receiving a big order does not always mean high margins. By comparison, small deals and orders tend to bring high margins despite small monetary amounts. Moreover, information on them is mostly possessed by minor roles. And that is how Mr. B gains access to massive information on small orders and does business with a nibble-away tactic, which, in the long run, will also bring considerable profits.

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