A study of compatibility variation across Chinese buyer‐seller relationships

Abstract

PurposeThe purpose of this paper is to study compatibility variations in buyer‐seller relationships between Mainland Chinese firms and Hong Kong Chinese buyer firms that act as intermediaries to markets in the West.Design/methodology/approachData are drawn from 19 multiple in‐depth case study interviews with Mainland and Hong Kong Chinese firms and buyer firms from the West.FindingsCompatibility dimensions that provide further evidence of factors that underpin the nature of classical‐type exchange arrangements, vis‐à‐vis relational relationships, within Chinese buyer‐seller interactions are identified. Compatibility variations based on political and legal factors are driven by interpretation and application of Chinese state laws at the business and provincial levels rather than at the national level. Mainland Chinese tend to exhibit authoritative vis‐à‐vis Confucian‐based practices and a short‐term orientation within interactions.Research limitations/implicationsThere is a need to expand the psychic distance composite to elucidate compatibility variations within the distinct provincial business regions of China. Quantitative studies to test for compatibility variability in China business practices across China are needed next. A better understanding of the nature of classical inclinations used by the Chinese is crucial, as is an understanding of how firms, both domestic and foreign, are able to leverage classical and relational relationships within Mainland China.Practical implicationsUncertainty associated with the entrepreneurial behaviours of Chinese businesspersons and a varying emphasis on traditional Confucian values in business result in a hybridisation of interactions across classical and relational types. Guanxi may be evolving beyond traditional social and personal trust as Mainland Chinese business relationships have advanced from the smaller scale CFB stage to the state‐owned enterprise stage, and now to the larger and increasingly important world trade stage.Originality/valueThe paper challenges shortcomings in research that has centred exclusively on the relational nature of Chinese business interactions, and it builds on previous research to study compatibility variations underpinning these Chinese interactions. It predicts a hybridisation of interactions amongst Chinese actors and provides a foundation for future quantitative research to study compatibility variations, and also classical‐type business practices across China. Increased international market awareness may also be leading to the inclusion of an economic trust factor, driving classical‐type Chinese buyer‐seller relationships, as is more characteristic of arrangements found in Western exchanges.