What Chinese firms can teach the U.S.

BANGOR – When Alan Clemence first traveled to China in an effort to expand his Charleston machine shop, he expected his business conversations to revolve around money. To his surprise, his interactions were quite personal, he said.

“The kindness of the Chinese people is just extraordinary. They really are into collaboration, and they can be tough, shrewd businesspeople sometimes,” Clemence said.

Clemence has traveled to China 15 times in the past four years – his wife and 3-year-old daughter live there – and in doing so, he has cultivated “guanxi,” or relationships that are both personal and professional and necessary for doing business in China.

Clemence has yet to set up a China branch of his company, Burroughs Machine Tool Products, but said in the future he hopes to be able to divide his time between Maine and China.

At a seminar on U.S.-Chinese business relations hosted by the Maine International Trade Center in Bangor on Thursday, Clemence and about eight other local businesspeople listened to local experts Suzanne Fox, owner of Fox Intercultural Consulting Services in Falmouth, and Stephen Franck, director of MITC’s Lewiston office, discuss how to interpret guanxi and China’s other cultural and business customs.

As one of the fastest-growing international markets, China is an important trade partner for Maine businesses, ranking as the state’s third-largest export destination – behind Canada and Malaysia – in 2006.

Exports from Maine to China have grown more than 200 percent since 2002, reaching a record $152 million in 2006, according to Franck.

Maine’s major export products to China include pulp and paper, electrical and industrial machinery and processed foods, Franck said.

Products and services in high demand in China include medical devices, housing and building products, machine tools, food packaging equipment, consumer goods and environmental technologies, as China faces severe environmental pollution, Franck said. An increase in disposable income in Chinese households provides an opportunity for Maine companies to export a wide range of consumer products there, he said.

Fox addressed the cultural side of business in China, and said guanxi often become relationships in which individuals make unlimited demands of each other and expect automatic special consideration in business deals.

For U.S. businesspeople, it can be difficult to tell which relationships are guanxi and which are superficial or serving only the interests of the other party, she said.

“You need to be careful which requests you entertain,” Fox said. “Corruption is rampant.”

A business deal in China is often a long courting process aided by intermediaries and formal meetings. This stands in sharp contrast to the speedy transactions, cold calls and informal meetings of the U.S. business culture, Fox said.

Ford Reiche, president of Safe Handling, a bulk-product transportation and processing company in Auburn, said the seminar came at the perfect time, as he is just about to travel to China and India. Reiche said his 100-employee company already purchases supplies from China and it was the cultural lessons that were most helpful to him.

David Harbison, owner of Bison Pumps, a well pump manufacturer in Houlton, said he has not yet made any transactions in China.

“I’m here to learn more than anything,” Harbison said.

Clemence said he hopes Thursday’s seminar is the first of many similar discussions.

“I hope to be part of a community that does business in China,” he said.