The third feature is the long-term trend line A. This is a fallback support feature which is also currently aligned with the upper edge of the long-term Guppy Multiple Moving Average (GMMA). Taken together, these three features are bullish.
The Shanghai market is closed for Golden Week, making it a convenient time to explore the concept of face and its impact on business in China. Any discussion of guanxi, like that in last week’s notes, begs the question of face. For those Westerners working in China, guanxi is a complex web of relationships which pales in comparison to understanding the multiple concepts of face.
Face is your standing and reputation in the community, amongst friends and with strangers. It is all pervasive and a constant concern.
Face is about respect and sincerity. Face without sincerity is a falsehood, and this falseness is quickly unmasked by people who have spent a lifetime assessing character as a foundation of survival. Chinese friends talk of people having a good heart. This is not a cliché. It is an assessment of sincerity.
See also: ‘Buy the dip’ call gets louder as China selloff seen limited
Face is inescapable in China, and it is found all day, every day, in every situation. Without even a basic understanding of face, Western businessmen are truly stumbling blindly in a minefield.
Face can be gained or lost, received or given by you. Face can be borrowed or loaned. Face can never be ignored, and it can never be purchased.
Working in China, we must remember to show respect to our Chinese colleagues and also to ourselves. Something said in jest may be taken as a loss of face. This is a problem for Westerners who typically joke in this way with friends and colleagues.
See also: China brands are now global competition
If I speak Chinese poorly but proudly identify my teacher, then my teacher loses face because my poor performance reflects poorly on her teaching ability. The solution is to explain that my Chinese is poor because I am a poor student. This allows my teacher to save face.
Many Westerners will think these issues are unimportant and that the responses seem overly polite and contrived. For Chinese colleagues, these are essential considerations of face. In combination, these may become a significant impediment to the way you do business or the quality of the business you undertake.
Face is also private, allowing very good friends to talk to each other in quite direct and at times apparently insulting ways without losing face. Paradoxically, this directness gives you face because it affirms the closeness of the friendship. Personal face comes from the way you treat your family, deferring to their age or looking out for their welfare.
Face is given when you acknowledge a person’s position and status in a public environment. This can be achieved through seating arrangements, the order in which you enter a room, and the information included on a name card.
Face is taken away when the expected deference to status and position is not observed.
Face is lent when you praise your colleague by acknowledging the role their work has played in your success. In the West, this acknowledgement is about teamwork and is not typically viewed as a face-saving aspect.
Face is lost when you stay in a four-star hotel to save costs, but you want to negotiate a multimillion-dollar deal. You may think this shows you want to keep business costs down, but you lose face because it is interpreted as being stingy.
For more stories about where money flows, click here for Capital Section
Face also applies in informal and relaxed situations. The host loses face at a relaxed, informal dinner if you request an extra bottle of wine, as it suggests he is not attuned to your needs.
The host also feels disrespected when you offer to pay for the meal, as it implies you think they do not have the necessary financial resources to do so.
Face is gained, not when you are treated as you expect, but when you are treated better than you expect. This may be an unexpected pickup from the airport by the chairman’s car and driver.
Face is received and acknowledged when you are treated and act in a way consistent with your standing in the group. As a foreigner attending a conference, it is appropriate for me to speak English. I receive face because this is what is expected of me as a foreign expert. I give face to the organisers because I fulfil the role and expectations of a foreign expert.
Face is taken away when I speak entirely in Chinese at a conference. It takes away my standing as a foreign expert. I lose face because I diminish my “foreignness” by speaking in Chinese. I also take face away from the organiser because I am less foreign. I make a good impression with an introductory greeting in Chinese because this shows friendliness, but I enhance this impression by switching back to English for the remainder of the speech.
Face is transferred by association. One of the difficulties in organising a conference in China is that people are reluctant to accept speaking invitations until they know who else will be speaking. They wish to gain face by being associated with more important people. They wish to avoid losing face by being associated with less important people.
Face is tangible, and this is most easily understood in terms of gifts. This concept is not too far removed from common Western thinking about gifts. An intangible face can also be created with the same gift if it shows that you made significantly more effort in its selection. This gives the gift the intangible aspect of face.
Face is variable and situational. The Chinese face is more pervasive than the casualness of the Singaporeans, and it has a fluidity and complexity that surpasses the rigid formality of the Japanese.
Westerners are not expected to understand the details and intricacies of face. However, face cannot be ignored, and a more sophisticated understanding gives you a competitive edge.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a former national board member of the Australia China Business Council
