The Chinese word ‘guanxi’ translated literally means relationship. Fundamentally guanxi is about building a network of mutually beneficial relationships which can be used for personal and business purposes. In this sense, guanxi is not much different than the importance of having a strong network when doing business in any country. However, in China, guanxi plays a far more important role than it does in the West. While in the other parts of the world, you may be able broker a deal just through formal business meetings; in China it is necessary to spend time getting to know your Chinese counterparts outside the boardroom during tea sessions and dinner banquets.In the pacific rim, having guanxi can make all the difference in ensuring that business will be successful. Friendship, trust, cooperation, reliability, connection are key components guanxi can minimize the risk, frustration, and disappointment of sourcing offshore.
Having strong relationships alone will not ensure that you will be able to achieve your business goals in China. Your company will still need to have a strong overall business operation in order to be successful. You should also treat with skepticism those who claim that guanxi alone can enable your company to succeed in China. While these connections can help you open doors and find new opportunities, your company will still need all of the other components of your business to be strong if you want to grow in China.
Here are the guidelines for good guanxi:
- Importance of Contacts not contracts. In China, face to face communication and personal relationships take priority over written contracts. Manager from the United states look for the rationale or reason first, “is there a market with profit potential?” if so, they want a legal contract before they spend time on a business relationship. Conversely, Chinese need to establish a trust relationship first. they then look for common goal as a reason for doing business. In a way the legal contract is just a formality, serving to ensure mutual understanding.
- Pleasure before business. It seem impossible not to talk business when you have come to China for the express purpose of conducting business. But experts advice that you leave your sales pitches on the back burner and follow the lead of your Chinese hosts. many companies seeking partnerships in china overlook the importance of personal relationship. they send their top performers to wow Chinese businesspeople with savvy sales pitches, but companies that send their salesperson of the year can return empty handed, Friendship comes before business.
- Business partners are family members too. In China, family is extremely important. visiting businesspeople should never turn down invitations to partake in a Chinese executive’s family life. Family bases are strong and stable due to the relationship protected by social morality code or moral norm and moreover, it is long-term and even permanent to some extents. Family guanxi is shaped by the Confucian value. The Chinese phrase “five lun” refers to the traditional cardinal human relations: that between the ruler and the ruled; that between parents and children; that between siblings; that between husband and wife; and that between friends. Three of them are between family members which are constrained by morality code that lay emphasis on the responsibilities, obligations, qinqing and affection, and empathy. Family guanxi could be emotional and instrumental and except some social base, most of them are blood bases and with the purpose to exchange love and affection with each other. Acquired relationship which includes acquaintance, friends and the situation of knowing the same person, moreover, the sworn brotherhood. This category is also a social base which means a party in this relationship may or may not have to choice.
- Cultural sensitivity. China is not a homogenous market, but comprises many regional markets with different cultures and even different languages. Doing business in China requires all prejudices and opinions to be left at home. Developing “guanxi” takes time, effort and resources but is well worth the effort to build a strong network. Acquiring the right “guanxi” with authorities could determine the long-term competitiveness of a company in China. Gift-giving, trustworthiness, friendship, patience and contact in person are vital elements. Most importantly, know your do’s and don’ts. Avoid the number four: in Chinese the number is a homonym for the word “death”. Red symbolizes good fortune but anything written in red ink implies the end of a relationship. Gifts should be wrapped in red paper. Never give clocks as gifts (they are associated with death and it would be interpreted by the recipient as being sent to their grave). Any gift with a blade like a letter opener is taken to mean a relationship is severed. White flowers are associated with funerals. The Chinese are especially keen to exchange business cards. Accept a business card with both hands and study it briefly before putting it away. Present yours with both hands (ideally cards for use in China should be dual language) Chinese version up.