The Guanxi of the Chinese People
“Guangxi” is an autonomous region located in the Southern Part of China. Guanxi (without the “g” in the middle) is a connection formed between two, or more parties, where there is the willingness to accept arrangements and/or terms that they would not normally agree to with other people, especially strangers.
Having sufficient guanxi, or its more modern and expanded concept, guanxiwang is everything and serves as the key to unlocking the door to corporate governance in China.
Guanxiwang goes even further than guanxi, involving an entire network of transactions or exchanges between two parties or more. It works like this: A and B form a relationship, and B and C also form a relationship. The two parties become interlinked through the common agent, B, who acts as facilitator and witness.
Manifestations of Guanxi within the Chinese Culture
In china, the most common form of guanxi would be familial ties. Guanxi is also common amongst individuals sharing a place of birth, residence, community, university class, army unit, social club, etc. Members of triad associations, of which have ties to organized crime, often have a form of guanxi amongst them.
A common manifestation of Guanxi within Chinese behavior is the act of exchanging favors within those who share guanxi ties, returned even when separated by long periods. In fact, good guanxi depends on reciprocity, or hui bao. Favors may not be immediately reciprocated, but each party is aware of the obligation.
In China, it is very common for an individual to ask help from a university classmate to get a better-paying job, so long as the individual returns the favor in any form or manner, such as providing help in hastening the process of application for importation identification cards and/or documents. In a much simpler sense, guanxi acts as a way for individuals sharing ties to use favors to ask for help whenever necessary.
Westerners and Guanxi
With China opening its borders and becoming less secretive in recent years, there is the possibility for a foreigner or in most cases, a westerner to participate in the guanxi system.
Westerners who build up significant guanxi ties by being friendly, doing favors and giving tangible contributions to the guanxi system will find themselves being in the receiving end of favors when necessary. The person(s), or company, with the best guanxi is often the one able to make the best connection needed to conduct market research in China.
In the world of commerce, guanxi is necessary for both foreigners and locals alike, as it allows for faster processing of deals, better access to clients, and the easy resolution of minor and/or significant problems.
As mentioned in the Chinese Market section, a go-between is necessary for Westerners wishing to do business in China. The Chinese people transmit trust via guanxi, therefore a trusted business associate will pass newcomers on to his own network of associates.
Some Westerners who do not understand the guanxi and guanxiwang systems have branded them as corruption, and refer to them in a derogatory manner. These concepts are merely the Chinese way of doing business, and only become corrupt when they involve underhanded activities such as bribery or blackmail.