Get out a spreadsheet – it’s time to mine your network in China!
What is guanxi, really? It can be translated as connections or relationships, but the concept encompasses much more. For this reason, the Chinese term, itself, rather than a translation, is used so much that Word’s spellcheck doesn’t flag it as incorrect English.
- First, guanxi refers to a mutually beneficial, personal relationship bound by reciprocal obligation.
- Second, guanxi refers to a network of such relationships.
- Third, guanxi refers to the benefit that is derived from these relationships.
The Guanxi dynamic is central to China’s socioeconomic structure, and essential for business success in China. Infact, "It is nearly impossible to do business in China without guanxi," says Maya Hu-Chan. "One also needs good guanxi to find a good doctor, enroll your children in a good school, or even get a table at a popular restaurant!"
Let’s look at each meaning.
Relationship: In the tradition of the Confucian ethical system, there is a moral obligation between people who have built a relationship to reciprocate favors, gifts and so on. Because a “righteous” person is duty-bound to reciprocate, and the other person is obligated to reciprocate your reciprocation at some point, this continuous obligation binds you together. It ensures your relationship stays intact, even if time elapses after the first reciprocation. In addition, unlike business connections in many other counties, in China you will need to build deeper bonds to execute similar business transactions.
Network: Guanxi can also be used to describe a network of contacts, that an individual can call upon when something needs to be done, and through which he or she can exert influence on behalf of another. This may sound like just more contacts, but an intact network plays a much more important role than just more opportunities. Lacking a strong legal system, Chinese social groups have been the de facto enforcer of good behavior. If someone acts inappropriately to another in the network, village, or other group, that person’s prestige within the group will drop as they lose face and are shunned.
Benefit: In addition to the relationships themselves, guanxi can refer to the actual favors that flow reciprocally through the networks and between people. Good guanxi means a good relationship exists and implies that each can expect the other to help when called on. This could be in the form of an introduction, information, recommendations, or influencing the progress of the business at hand.
How does one build guanxi? The best way to start is by being introduced by someone mutually respected as a guarantor. From there, face-to-face time together during which trust is built is the best way to cultivate the relationship.
In addition to developing relationships, you need to be aware of the possible favors you could receive from whom. This is where the Excel sheet comes in to map who you can call on for what.
So think about it. What would go on your spreadsheet?
