Guanxi ~ Scratch My Back!

“Guanxi describes the basic dynamic in personalised networks of influence, and is a central idea in Chinese society. In Western media, the pinyin Romanisation of this Chinese word is becoming more widely used instead of the two common translations—”connections” and “relationships”—as neither of those terms sufficiently reflects the wide cultural implications that guanxi describes.” ~ Wikipedia.

In a nutshell, guanxi is the exchange of favours for (eventual) mutual benefit. Individuals within the network of influence are expected to offer favours to one another regularly, often without being asked. Guanxi plays a pivotal role in doing business in China, as these connections can help smooth the way over the many obstacles to a successful transaction. Developing guanxi is time consuming, but should be considered an important investment.

Establishing guanxi can be as simple as treating someone with courtesy and respect, even if their position in society does not warrant it and particularly if the individual is frequently unfairly dealt with. Social contact on a frequent basis develops friendship and understanding, resulting in better relationships. Chinese business people usually deal with their friends before others, so this friendship is important. Demonstrating your reliability is also important, as repeat business will result in your ability to deliver what you have promised. This is particularly valid when difficult situations arise, as your credibility will be strengthened when you show you will not abandon your responsibilities.

Guanxi with high ranking government officials is declining, but still important in China. The taint of corruption is slowly being eradicated following repeated crack-downs by the authorities, and Chinese businessmen are less likely to offer excessive gratuities to officials as a result. Careful, appropriate building of relationships in this area can be beneficial to foreign business entities, however, as much time can be consumed in bureaucratic processes unless a friendly official is available to assist. An alternative way of handling this situation is to hire a “Zhong Jie” (Middle Man) to submit the required paperwork for you. The time saved in employing such a person can be well worth the investment!

A business with wide-reaching guanxi will usually outperform competitors with less connections, so this is an important aspect of conducting business in China. The giving of gifts such as cigarettes and alcohol, hosting banquets, treating others with respect, maintaining ‘face’ and demonstrating reliability are all important components of this process.