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Red Star ChinaDiscovering the essence of Guanxi 

 Learn to be a good man first, then learn how to do business

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Agenda

1. Brief Introduction of the case

2. Brief study of Guanxi

3. Studying the options before Howard

4. Our solution

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The case in brief 

• Howard of Red Star has been building guanxi with the NCC Logistics head Pan to get alucrative contract.

• Unfortunately, Pan gets demoted to a remotelocation.

• Howard’s guanxi efforts are at a crossroad, he isin dilemma whether to stay put with Pan, orpursue guanxi with Hans, Pan’s replacement or aChinese authority higher up.

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Introduction

Importance of theNCC contract

Company 

Jeopardize theChina strategy 

Lucrative contract

Future businessexpansion

Professionally 

“Hui zuo ren”reputation will go

down

Future professional

growth in the balance

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What is Guanxi?

• Definition: Guanxi describes a personal connection between two people in which one is able to prevailupon another to perform a favor or service, or beprevailed upon. The two people need not be of equal social status

• It is a network of contacts in a broader view 

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Background of Guanxi- II

• Cultural background: Confucianism

▫ Benevolence

▫ Righteousness

▫ Fidelity 

• Shaped by 

▫ Harmony (Wulun)▫ Tit-for-tat as a “golden rule” 

▫ Loosing face as a worst case

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Confucius saw five major human relationships that should begoverned by li, or propriety. Those relationships are:• 1. Ruler and subject• 2. Father and son• 3. Husband and wife

• 4. Oldest son and younger brothers• 5. Elders and juniors (friends)

Shu, or reciprocity, is seen in the five relationships as follows:

• 1. Benevolence in rulers, loyalty in ministers and subjects• 2. Kindness in the father, filial piety in the son• 3. Righteous behavior in the husband, obedience in the wife• 4. Gentility in the oldest son, humility and respect in the

 younger siblings

• 5. Humane consideration in elders, deference in juniors.

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Structure

• Relations between natural persons• Vague agreements

Guanxi

Bonding

Empathy 

Reciprocity 

Trust

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Howard’s Choices 

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Choice 1: Stick with Pan

Pros

Guanxi near fruition

Better longer term relations with thecompany 

Crisis situation a litmus test to prove that “,Bad times help build good relationship”. 

Cons

Demotion of Pan means out of favour for along time

Question of gaining advantage fromsomeone without any power

Possibility of losing NCC business if Pan notrehabilitated.

Pan himself not confident of return

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Option 2:Build Guanxi with Hans

Pros

Direct contact point

 Westerners may now be acquainted with theconcept of Guanxi and it may be pursued

Cons

Confusion on how to pursue guanxi on Howardspart

 Westerners may consider it as just bribery 

Hans in a superior position in the relationship somay not like Guanxi

Business over friendship culture in west

Future relationship with Pan in jeopardy 

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Option 3: Build Guanxi with an

authority higher than HansPros

Confidence on the part of Howard

Time in hand to pursue Guanxi

Requirement of a Guanxi contact inthe future

Targeting a higher authority thanPan’s previous position 

Cons

Long amount of time needed inidentifying right person

Guanxi may or may not be a success

Future relationship with Pan in jeopardy 

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Our Solution

•  We propose that

▫ Option 3: Build Guanxi with an authority higher thanHans

 would be more preferable mainly because,1. Imminent return of Pan not foreseeable and if morethan 2 years, would jeopardise Howard’s company andcareer.

2. Longer term guanxi contact necessary in the company.3. Position targeted higher than Pan’s former posting.

 

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Team Members

• Charanya Chandran F11013

• John Anthony Jose F11025

• Nagesh V. Saralaya F11032

• Srishty Merlin Bastian F11055

• K. Vignesh F11058

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