Guanxi: Exploring the Impact of Business Relationships in China

This report delves into the concept of 'Guanxi,' a fundamental aspect of Chinese business culture, emphasizing the significance of relationships and networks. It explains how Guanxi, derived from the Chinese language, refers to connections that open doors for new business opportunities and deals, functioning as a crucial element for business success in China. The report highlights the importance of Guanxi, which is rooted in Confucian principles, and how it influences business practices. It discusses the role of networking and mutual favors in business success, especially considering the absence of robust legal frameworks. The report emphasizes the need for building strong relationships to navigate social pressures and the importance of Guanxi for international companies entering the Chinese market. It concludes by suggesting how Western managers can better understand and utilize Guanxi to gain a competitive advantage, and provides a list of cited works.

Running head: QUESTION 0
[Document title]
FEBRUARY 15, 2020
STUDENT DETAILS:

QUESTION 1
The term ‘Guanxi’ came from Chinese language. It means connection or network that
unlock door for new businesses and enable deal. It is also called as ‘gwon-she’. It is based on the
old axiom that "it is not what the person knows, but who a person knows that is significant.” The
individual having lots of guanxi would be in good condition to develop business in the
comparison of person who does not have Guanxi (Li). The Guanxi has significant role to play in
the Confucian principle that considers person as a part of the family or society. It encourages
graded along with friendly relationship. It is a good idea to include guanxiwang in the western
culture, as longer as one sticks to ethical values as well as regulation of social philosophy.
Firstly, the guanxi comes from individual bond. Formerly, the business relationships
come in. Guanxi starts with people making friends, even though there may be no instrumental
benefits in it. It is essential to develop guanxiwang (relationship-network) as well as Gaunxi
(relationship) in China. The main reason is that the relationship along with mutual favours are
how business becomes successful. It can see that China has pathetic rule of law, wide-ranging
regulation along with exploitation. If any person ignores the contract, there are no legal
recourses. It is not legal to do things based on mutual interest and friendship. It is evident that the
guanxi is about observing after each other. This is quite strong in thinking of group. Therefore, it
is essentially required to have good network of relationship to constrain social pressure to do
things (Bian).
In this way, guanxi is a network of relationship amongst different contracting persons that
cooperate as well as support each other. The guanxi has to be appreciated, infrequent, and
improperly imitable before this may lead to the sustained advantages. It can be concluded that
the guanxi is as same as the concepts of network theory, like notion of information or connection
brokerage by well-placed people in the social network (Macwan). This is specifically accurate in

QUESTION 2
China that rolls of business are oiled with guanxi. While international companies go into China,
the first thing to do is to make network as well as create good guanxi. After that, it is requited to
get confidence what other contracting person says. Henceforth, it is a basis of sustained
competitive advantage for the international entities conducting business in China (Sheng). Even
if the some advantages are attained, this can be problematic to endure. The main reason is that
the guanxi can be disrupted by something as easier as flexibility of workforce. By advising
manners of entities to secure the guanxi, it is expected that this concept of the management of
China can be made more comprehensible to westerner. Therefore, the western managers can
increased and encouraged use of guanxi in China.

QUESTION 3
Work Cited
Bian, Yanjie. Guanxi, how China works. John Wiley & Sons, 2019.
Li, Ling. Guanxi-Networks. Routledge, 2017.
Macwan, Mayur. ‘Guanxi from point of view of the head of DMG working in China.’ 24 october
2016, https://www.asiamediacentre.org.nz/features/chinese-business-values-guanxi-
mianzi-renqing/
Sheng, Chunhong. Guanxi and Local Green Development in China: The Role of Entrepreneurs
and Local Leaders. Routledge, 2019.