xiao chen – thoughts on how to do “small” business

xiaochen tea

Originally uploaded by maryannodonnell

More thoughts on how Shenzhen does and does not work, this time inspired by a conversation with Xiao Chen, my tea vendor.

Yesterday afternoon I went to Nanshan Tea City, where Xiao Chen and her husband have a tea stall. They are from Fujian and sell amazing Iron Guanyin (the new tea is in and fragrant) and different grades of pu’er, which is what I usually drink. Pu’er is a fermented tea, and, like red wine, becomes richer and more complex with time.

Xiao Chen had just received an order of 13 year old pu’er that she wanted me to try. We sat at the table, where she prepared the tea, washing the leaves three times instead of two, poured the tea from the clay teapot into a class pot, and then into my small teacup.

As she has taken it upon herself to educate me about tea, Xiao Chen explained the importance of each step. Washing the tea leaves insures that one drinks the best taste, the small clay teapot preserves the fragrance and quality of the leaves, moreover it achieves these high quality results without wasting tea leaves. A glass pot is necessary because when the tea is poured out of the clay teapot the tea does not have uniform flavor. Instead, the first tea is relatively weak and the last tea is relatively strong.

While we were sipping the tea, Xiao Chen explained how she and her husband do “small” business (做小生意). Unlike big business, she said, small business depends upon “renyuan (人缘)”. According to Xiao Chen, renyuan is about the trust that people have within a human relationship. For their business to succeed, she and her husband need return custumers. To maintain the trust, the vendor and the custumer have to believe that the other has their best interest at heart: the custumer wants the vendor to earn enough money to make a living, and the vendor wants the customer to purchase high quality goods at the most reasonable price.

The dictionary translation of renyuan is “popularity”. However, that seems to me only part of what Xiao Chen was saying. By itself, yuan (缘) is a much more complex. It can mean “edge”, “reason”, and “a fated relationship”. The kind of renyuan necessary to run a small business successfully also has much to do with generousity and a willingness to let the business develop over time.

Xiao Chen not only treats me generously, letting me try different teas and teaching me about teapots, she also treats her fellow villagers well. While I was in the stall, Xiao Chen’s elementary school teacher stopped by. He had moved to Shenzhen three years ago because his son needed someone to take care of the house and children. The old gentlemen was lonely. When I asked if had adjusted to Shenzhen, he replied that he was lonely because he didn’t know anyone in his son’s neighborhood. Back in Fujian, he had ping pong companions and could walk around comfortably. Moreover, he was uncomfortable speaking Mandarin. That night, after the children had been put to bed, he stopped by Xiao Chen’s stall for a cup of tea and hometown conversation. Xiao Chen served him excellent Iron Guanyin and chatted with him in Hokkien.

Xiao Chen’s understanding of how to do small business explicitly acknowledges that economic relationships are also community relationships.It is an economic rationality that is not only about personal gain, but also about developing human relationships. More interestingly, it is a rationality that is invested, so to speak, in transforming strangers into return customers who have her best interest at heart, just as she has their best interest at heart.

Xiao Chen’s use of renyuan intrigues me because western scholarship on Chinese business culture is replete with studies of guanxi (关系), which is often translated as “human relationships”, which is also one of the dictionary translations of renyuan. It seems to me that the difference between renyuan and guanxi is the difference between relationships for themselves and instrumental relationships. Or more precisely, renyuan explicitly encodes human values of generousity, affection, and destiny, while guanxi does not. I suspect that those who are adept at “big” business have effective and broad guanxi networks (关系网). My northern friends, who do have “big” businesses speak of both guanxi and renyuan. I have the impression that guanxi is often talked about in conjunction with government and distant deals. However, I’ll have to listen more carefully to be sure.

I’m not sure if my understanding of the difference between renyuan and guanxi holds beyond Shenzhen, or beyond Guangdong and Fujian, the two Chinese provinces with deep histories of independent entrepreneurs. In the north, where coincidently most of the guanxi research has been conducted, business organizations seem to be bigger, or at least, the big business model is more valued. In Shenzhen and throughout Guangdong, most of the people I have met (and many not from Guangdong or Fujian!) have valued being their own boss, over working for someone else. This inspite of the fact that owner-bosses (老板) work long, long, long hours. Xiao Chen, for example, tends her stall for 12 hours a day, excluding the time when the stall is closed and she runs errands for the business.

So in thinking about immigration to and settling in Shenzhen there are important differences between labor (打工), office work (上班), and being an owner-boss (做老板). Most of those who come to labor want to eventually become owner-bosses of small businesses, like Xiao Chen. In this context, many cabbies want to own their car (difficult) and many cooks want their own restaurants. In contrast, many of the office workers I have met want promotions to positions of more power and responsibility within the organization.

Most of the time, these differences are theorized in terms of class position and income – an instrumental approach that seems predicated on and/or complicit with those who pursue guanxi. However, Xiao Chen’s small business ethics complicates this model. Her generousity and willingness to have smaller profit margins in order to develop a long term, destined relationship is also a theory of community development.

I wonder at what scale this kind of community economic rationality breaks down. Nanshan Tea City has approximately 100 stalls. Clearly, Xiao Chen has cordial relations with some vendors and co-exists with others. I will have to ask if what kind of relationship she has with the owner of Tea City; is it one of mutual trust, a more distant but effective guanxi, or is it a more aggressive relationship in which each is trying to get the better of the other (占便宜)?

So a provisional map of Shenzhen business circles – core of the world is “my people (自己人)”, who can be exploited and used in ways that extend the self, next circle is the world of renyuan, where mutual benefit is the goal, then is the world of guanxi, where both parties assume that the other is out for themselves, but won’t behave too outrageously (太过分/离谱), the edge of this circle fuzzies out until only strangers remain. Here the key question becomes, how to bring more of those strangers into my various circles?

I have met successful big business types, whose key to success seems to be the way they finesse the membranes at each circle –  the my people/renyuan, the renyuan/guanxi, and the guanxi/ stranger membranes, each is a milieu rich with possibility. It is also a model of relative, rather than absolute ethics. Each circle indicates a different level of trust, and therefore a different emphasis on either emotion (leaning toward renyuan), law (leaning toward guanxi), or one’s own interest (the world of strangers).

A friend of mine once explained that in China, being upright (做人) is more important than legal ties. Indeed, how one conducts oneself is the basis of renyuan – an honest vendor will be popular vender. A popular vendor will be successful. And the community will benefit. With guanxi, it seems that the individual benefits more than the community. Now, I’m wondering if guanxi points more to a regulated exchange in which participants distrust each other, like the rationally selfish actor of much western business theory.

In terms of cross cultural deal-making, perhaps, it would be useful to think of western business ethics as the ongoing effort to turn every relationship into guanxi, where close friends and stranges should, in theory, be treated equally, while in Chinese ethics, more often than not the point is to develop renyuan, where trust and pleasure and community benefit would all come together. The downside to the western model is that it downplays the importance of affective ties, while the Chinese model ignores responsibility to strangers.

One thought on “xiao chen – thoughts on how to do “small” business

  1. This is so true with small businesses. There is still personal interaction between the store owners and the consumers, which makes the experience for both parties a pleasure. But I am sure, that every small business owners would not want to stay small, im sure they want to expand, and the challenge then is to keep that personal interaction with your customers intact…

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