A Chinese colleague reached out during the week, seeking my assistance in relation to a commercial theft. The fact that the theft had been allowed to happen was a loss of face, so it was important in dealing with the request for assistance that not only did I not cause even more loss of face, but if possible, I was able to give some face by my response.
Face, and its counterpart guanxi (which refers to having personal trust and a strong relationship with someone), are difficult concepts to come to grips with. Face in Singapore has a less strict application than it does in China, although the People’s Republic of China (PRC) staff in Singapore bring with them the mainland concepts. Business success in China rests on at least a basic understanding of face.
To put it simply, face is your standing and reputation in the community, amongst friends and with strangers. In China, it is all pervasive and a constant concern. Face is an integral part of your position in the community, the way you interact with society and the way society interacts with you.
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.
China’s face has multiple aspects and it is found all day, every day, in every situation from private and personal, to public and professional. Face is so blindly obvious to the Chinese because it is intuitive and this makes it difficult to explain. Without even a basic understanding of face, Western businessmen are truly stumbling blindly in a minefield.
For the Speaker of the US House of Representatives Nancy Pelosi, her recent visit to Taiwan was about politics and enhancing her prospects in midterm US elections. But to Chinese eyes, she appears to have no concept of how face drove the responses to that visit.
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How business handles the fallout will also inevitably involve giving face, so it is appropriate to give the concept more scrutiny.
Face can be gained, or lost, given to you, or you can give to others. Face can be borrowed, or loaned. Face can be many things, but it can never be ignored and it can never be purchased.
Working in China, we must be mindful of face in the interest of our Chinese colleagues and ourselves. The two aspects are often inseparable. For the Western thinking, many of these are trivial and the responses smack of an unnecessary and contrived politeness.
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For the Chinese, some are significant, some are less important and some are just an irritation, but they all reflect on the idea 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 has many aspects. Face is public and private. Face can be given and taken. Face can be borrowed or lent. Face can be lost or gained. Face can be received or taken away. Face is transferred by association and introduction. Face is tangible and intangible.
Next week, we examine just a few of these to give you a flavour of what is involved to assist you in navigating the difficult months ahead.
Technical outlook for the Shanghai market
The Shanghai Index consolidation has somewhat recovered with the index closing above the support level near 3,220. It is not a consolidation as such because it is part of a rebound rally that has lifted the index back to around the 3,220. However, the rapid fall last week to a low of 3,144 can be seen as an overshoot of the support level.
Confirmation it is an overshoot will come from the way the index continues to use 3,220 as a support area and this means any retreats should not fall below the previous low of 3,144.
The Guppy Multiple Moving Average (GMMA) relationship continues to show downward selling pressure but it has weakened. The long-term GMMA developed rapid compression and turned down. This shows investors have stopped buying and become sellers. However, strong selling is indicated by a rapid separation in the long-term GMMA and this has not developed.
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The short-term GMMA is no longer using the long-term GMMA as a support feature. The short-term GMMA has quickly moved completely below the lower edge of the long-term GMMA. This is bearish but the rebound rally has the potential to move above the long-term GMMA. This is also a condition of trend weakness rather than trend strength. This means the downtrend is developing rather than confirmed.
A weak head and shoulder trend reversal pattern has appeared but the market has not yet developed strongly to achieve the pattern objectives. It is weak because it is not well defined. The downside target for the pattern is near 3,080. The pattern is more important for the way it confirms bearish pressure rather than for any targets calculated from the pattern.
On the bearish side, the downside target for the Index is near 3,050. This target is calculated by taking the width of the trading band and projecting this value downwards. The trading band support is line B and the resistance is near line C. The downside projection gives a target shown by line A. This is not a particularly strong historical support level so it is used as a guide to the downside move.
Last week’s fast retreat was followed by a rapid rebound similar to the index behaviour in March 2022. Traders continue to watch for consolidation to develop around 3,220. This may include sideways movement prior to any sustainable uptrend rebound.
Daryl Guppy is an international financial technical analysis expert and special consultant to Axicorp. 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 national board member of the Australia China Business Council. The writer owns China stock and index ETFs
