What is Guanxi and why is it a Chinese business essential?

Guanxi (gwan-shee): describes the basic dynamic in personalized networks of influence, and is a central idea in Chinese society.

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Guanxi founded on:

TRUSTMUTUAL ACCOUNTABILITY DEPENDABILITYRESPECTOBLIGATION

Guanxi is essentially China’s unofficial version of the idiom “You scratch my back and I'll scratch yours”

Guanxi Essential tips:

1. Intercultural Sensitivity and Understanding: Speaking the native tongue or at least attempting to learn a few phrases

2. Reputation: Otherwise known as “saving face,” maintaining a highly-regarded reputation with well-established and potential clients in your professional network is crucial 3. Appropriate Representations: For obvious reasons, local Chinese staff members should serve as representatives or ambassadors for your company as they are familiar with the norms and idiosyncrasies that the clients and customers are accustomed to in their culture.

China is a relationship-oriented society that truly believes in interpersonal dynamics as the cornerstone and lifeline of all companies regardless of the industry.

Guanxi East-West Dichotomy:

“the perceived differences between Eastern and Western societies”

ChineseGuanxiis reliant on personal interactions , whereas Western culture can rely on the enforceable contract laws imposed on parties.

Legal Ambiguity: China does have a legal system that addresses business contract law, however, there is at times (to say the least) ambiguity in the meaning and interpretation of these laws. Thus, lying and cheating is most prevalent, providing greater reason to develop guanxi.

Litigious-Oriented Society: While confrontation between Western companies can be resolved in court or through means of negotiation, mediation, and arbitration, those in China most often are conditioned to entrust the traditional values that date back to Confucianism- respect, trust, and dependability

It’s dependent on networking through the implications of proper “networking,” or guanxi, based on the cultural and social expectations found in China.

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