About 6 months ago, I wrote an article entitled Are Chinese Suppliers Trying To Screw The Foreigners?

My point was that foreigners were an easy target because of their typical unpreparedness, but not more desirable as a target than other Chinese from a different province.

I got an interesting comment from Jason Lau, who reinforced my point:

Because of China’s long history as a village community system, people worked only with those they knew in the same or immediate area. Anyone who was from a different town, or different dialect, or sometimes even different last name could not be trusted – and because you couldn’t trust them, you didn’t need to be trustworthy. It was the village versus the rest of the world.

This is why strong relationships are so important in business in China today – the same principles still hold.

Makes sense. The question is, why isn’t it this way in Europe and in North America?

Actually it used to be this way in Western Europe too, until about 500 years ago. I just read this enlightening passage in the excellent book Linchpin, and I took the liberty to reproduce it here:

One of the factors in the growth of the Protestant Reformation was that commercial interests supported its spread because they needed the moral authority to lend and borrow money. It is hard to overestimate how large of a shift this let to in the world’s culture and economics.

As Thomas Jefferson wrote, it created a world where “the merchant has no homeland.” If everyone is a stranger, it’s a lot easier to do business.

Now, don’t get carried away and try to build trust the Chinese way… “Guanxi” is more dangerous than it is helpful!