Articles

Family and Guanxi: How Filipino-Chinese Do Business

The taipans in the country are mostly Filipino-Chinese. We have known them well as business leaders and innovators. Their influence is so ubiquitous within the Filipino society that everything we need, from grocery, fast food, and clothes to condominiums and malls, are owned by many Filipino-Chinese entrepreneurs. How do they do their business? And how can you do business with them?

First, Don’t call them Intsik

In-chek is Hokkien for the phrase “his uncle”, referring to a newcomer, and has been used since Rizal’s time. It’s not exactly a racial slur, according to Richard Chu, a Chinese-Filipino scholar. In fact, many Filipino-Chinese are used to it. Be warned, though: others still find it offensive.

Nevertheless, the term Chinoy, a portmanteau of Chinese and Pinoy, (born from Chinese and Filipino parents) has been commonly heard and accepted nowadays, to refer to many second and third generation Chinese immigrants. Those from the first generation are pure born Chinese immigrants from Fujian, China, and some of them are now the taipans we know today, and they are not “exactly” Chinoys.

In business settings, however, referring to them as FilChi or Filipino-Chinese is more formal and appropriate.

Confucian Roots

Confucian worldview heavily influences how FilChis maintain relationship, both personal and business. While they live in Philippine soil, their values are way rooted far back to their Chinese origins. Some of the younger generations may learn and speak Filipino or other regional languages, but they are brought up more in Confucian principles that commonly guide them much later in their lives. To the rest of Filipinos, such ways of upbringing and values might be totally unfamiliar.

Confucian tradition highly regards the concept of ren, often translated as “human heartedness”, a value that is believed to be inborn in all, but needs continuous cultivation. Moreover, the concept li or propriety, is what reminds them of conduct in interacting with other people and the larger society, placing emphasis on proper behavior in all human interaction.

Family First

If you wonder why the entire family runs the business, like the shopping malls and industries we know, it’s because family is ultimately foundational in the Confucian tradition. Family is not just a functional social unit; it is also business itself. FilChi parents bring up their kids and steep them in values of frugality, delayed gratification, sense of harmony, and respect for parents and elders. This emphasis on family and blood ties is deeply embedded in the very structure and heart of FilChis’ way of doing business.

These Confucian values in the family are always at work in doing business within the context of family, as well as in connection with a few circles of trusted people. These ties are not just a requisite to any business FilChis do: these ties are business itself – for stronger family relationships, meaningful friendships and business partnerships are crucial to the growth of business.

But, how does it work and benefit the business?

Guanxi: Circles of Trust and Relationship

According to Taiwanese-American business strategist Ming-Jer Chen, in his book Inside Chinese Business, Guanxi is hard to translate, but connection or network is the word often used to describe it. Every Chinese business, whether in mainland or overseas, use Guanxi to establish enduring and mutually beneficial business relationships. Guanxi explains why FilChis (who are among the overseas Chinese being mentioned in many Guanxi studies) do business by making connections that last.

Chen also notes that Guanxi is widely misunderstood in the West as something like cronyism, bribery, and corruption, since it involves the practice of gift-giving (later on this). This misunderstanding of Guanxi is too simplistic, since it’s more complex and personal than how most Westerners see it.

Though there are cases when Guanxi is abused and misused, the deep and sincere practice of Guanxi lies on its power to create cultural bonds and shared meaningful experiences. It is a social circle or network (long before social media) developed by one person, as his/her personal network, of extended family and relatives, significant connections (fellows from the same village, former classmates, club members, friends of friends, old friends, former classmates, colleagues in the military, former co-workers), and even strangers.

As a good example, we’ve heard stories of young FilChi business startups funded by their parents, as families are the immediate source of support, particularly in raising capital for a business. Or the stories of most business people who support each other in times of economic downturn or business crisis.

Cultivating Guanxi

Chen illustrated Guanxi as a network of interlocking circles, which at first might seem to be too far out, but he says it might be exclusive but it’s not impenetrable as it looks. In fact, it’s not about getting in the Guanxi circle alone, but more so on creating your personal Guanxi.

If you want to make sense and use Guanxi to your advantage, never do the same mistake most Westerners do. Most Westerners tend to think that it’s about lavish gifts and big parties, thinking that one can establish Guanxi much faster. It’s anything but Guanxi.

Guanxi is about the value of sincerity, of creating deep connection. It’s not even about an organization-to-organization thing, but all about between persons and their true bond, built over the years organically through thoughtful exchange, and not contrived for the sake of business benefit alone.

This kind of approach has a lot of similarities with how Filipinos connect with each other, through the most ordinary of things: food, occasions, and conversations. Perhaps what makes the FilChis different is the intent and degree to which they dedicate their time in cultivating this, not just for bringing people closer together, but also to have their backs on each other in doing their business in the long term.

Renqing

For example, the practice of Renqing or often mistaken as favor or gift-giving, is far from what is wrapped but more on the “thought that counts”. Translated as human empathy, Renqing is mutual indebtedness (quite similar to utang na loob), repaying someone who offered kindness and support in times of need.

Chen quoted a Chinese entrepreneur who said that Renqing is like "owning someone a favor is like giving a blank check without expiration date". Chinese, in general, Chen says, have long memories: they remember each other’s interaction and treatment, and that’s why Renqing becomes an approach to maintain contact and exchange, thus nourishing Guanxi.

No need to make exchange of favors equitable, Chen notes. There’s a Chinese saying that goes: “You honor me with a foot, and I honor you with a yard. Receive a droplet of generosity and repay like a gushing spring.”

Doing Renqing is not about getting favors from the other (an intent behind bribery, red tape and corruption), though it is often misconstrued and misused as such. Don’t do this, as trust is crucial and you might ruin it if you have hidden agenda or desired favors, and the damage can be indefinite.

Doing Business with FilChis

FilChis, with their Guanxi and family-centered businesses, often operate their business privately. They maintain relationships through family gatherings. Family is the priority, in business leadership and even informal decision-making. The organizational chart may publicly show the positions, but the true roles are unseen elsewhere.

Chen suggests doing your homework of really getting into the heart of the business by getting to know the family behind it. Learn more about the family who operates the business, their unspoken culture, values and the bonds they have forged with other business owners and stakeholders.

Often, you’ll see them in person as low-key, quite unassuming, and modestly dressed. You’ll never know the person might be the most powerful in the business you are dealing with. The key is to show them courtesy and respect. In Confucian terms, respect is a crucial attitude towards others.

Use Guanxi itself. There is a huge likelihood of strong business connection between families, and if you need to connect with one, but you only know the other, then try to ask.

Communicating your ideas with FilChi business people may need more time – and trust, which, without you knowing, is the one they value and test. As an outsider in their business, you must learn to wait and be patient, and not to rush on things (the way most Western business people do). Business results for FilChis are not short-term and ideal, but always long-term and practical. They may take time to examine not just the ideas but your attitude on these ideas, as well as your sincerity and if your values are resonant with theirs.

Note that FilChis do business hugely different from Westerners. Even at the surface they seem to be more updated and westernized, the true gauge is the quality and strength of network and business relationship, and not just the merit of business, position or work.

Relationship is Always Central

FilChis, like their other Chinese counterpart abroad and in mainland, see and do their business guided by their subtle sense of harmony with all others, and strong sense of order in society and family. Guanxi is not just a business buzzword, and family is not just an aspect of life separate from business. For the Chinese in general, the way they work and strive to succeed in business is not about the earnings, but the relationships that sustain it.

Filipinos, at some degree, know this, though business and family seem to be incompatible. There is much to learn from the FilChis: how to work and deal with stakeholders not just as business clients, but to see them as human beings, and cultivate with them deep, meaningful, and abiding relationships that may endure the changes in business.

American influence is evident in the Filipinos’ way of life: from the jeepneys plying the streets, music, film, pop culture, to the education system which uses English as the medium for instruction. It is not surprising, therefore, that the Philippines is a popular choice for American businesses.

How can an executive seamlessly navigate the nuances between a conservative, family-centered Asian culture and the liberal, individualist ways of American colleagues? Follow our blog to learn how to successfully blend Asian values with American business practices.

Global Executive Solutions Group (GESG) is a premiere executive search firm that provides highly qualified leaders to complement top management teams in the Philippines. It offers end-to-end recruitment solutions including succession planning, professional development and outplacement services in the Philippines and the Asia-Pacific Region. Contact us today for customized solutions to your executive search problems!