Is It So Important to Cultivate Guanxi and Guanxiwang in Chian?

MICHELLE F. GO

1. Is it so important to cultivate guanxi and guanxiwang in Chian?

It is very important to cultivate both guanxi and guanxiwang in China in order to adapt to the culture of the country. In China, guanxi is considered as a personal ties and social position that is more important than the law. There are many businesses in China that even  a business plays under the rules but doesn’t try to bend them in their favor, they failed to succeed.

Why do you think that it is so important to cultivate guanxi and guanxiwangin China?

There are so many laws that without guanxi and guanxiwang nothing would get done and a business would go out of business. The connections that a businessman makes can either make or break a deal. A deal gone well will give that businessman prestige and allow for him easy access to other resources in the future.

1. What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all the rules and regulations, rather than trying to find a way around them as Dan Mintz apparently does?

The experience of DMG tell us that things or people don’t work for free in China. If you ask for a favor, you need to repay for it. There is always a cost. The business that tried to follow all of the rules would never get any business.

1. What are the ethical issues that might arise when drawing upon guanxiwang to get things done in China? What does this suggest about the limits of using guanxiwangfor a Western business committed to high ethical standards?

In China , it is not a bribery.  Adapting to Chinese mentality “guanxi” is ethical for them and important to the community and to their relations. As to Western mentality in United States, it is considered as bribery and nepotism that is illegal.

The ethical issue is also a law in the United States, bribery. The question is should we do business with people who expect favors in turn for a favor? What if that is the only way to do business? These are hard questions. A Western business could never follow through with guanxiwang if they were committed to high ethical standards. They would have to go against their beliefs to work in China.

What is happening today? Is Shanghai different or the same?

Guanxi and guanxiwang is still the way businesses go about their business. It is the way it works and everyone is expected to give back when given to. It is not bribery in China as it is in the United States. This is a quote on guanxi:

Keep in mind that “Guanxi” can take on many forms. It does not have to be based on money. It is completely legal in their culture and not regarded as bribery in any way. So, there is no need to feel uncomfortable about it. Trustworthiness of both the company and individual is an important component. Following through on promises is a good indication of this. Treating someone with courtesy while others treat him or her unfairly is another aspect. Frequent contact fosters friendship as well. Chinese feel obligated to do business with their friends first. There are risks with this system, as well. When something goes wrong, the relationships are challenged, and friendships quickly disappear. “Guanxi” can also be very one-sided. When “Guanxi” is involved, there is a risk of obtaining an invoice of twice the amount that you bargained for.[1]