Guanxi - The Way To Engage More With The Business Culture Of Chinese

China has one fifth of the world’s consumer. China’s economic growth and living standards of the people is growing fast in recent years. Business people from all around the globe are interested to have a business in China or work with Chinese since in the next decades the GNP of China is predicted to go forward compared with United States (Davies et al. 1995). It might be challenging for multinational companies to conduct business in China because they have to completely understand about Chinese business culture which is a new thing that they have not ever learned before.

Reading from ‘Guanxi Networks in China’ made me realize that it is very important to learn about guanxi especially if we have a desire to work with Chinese. If we have a deep understanding about guanxi, it will help us to engage more with the business culture of Chinese. Guanxi means a connections or personal relationships between people. Guanxi is about two individuals who have special relationships that fully committed to each other and it is personal and implicates obligation which imply exchange of favours (Alston 1989).

This new understanding of learning about Guanxi more deeply is important for me so that I will be able to have a broader social and business relationship that leads me to successful business. By contrasting and comparing business cultures between Westerners and Chinese, we can define the guanxi ethicality in a different way. First, Chinese usually ask where the person is originally from but Westerners usually ask about the person’s job. For Chinese, such question is a foundation to build a tight guanxi. Chinese are more human-hearted rather than task-oriented (Lovett et al. 1999).

Chinese believe that caring for their group members is important since it will create a harmony for the group and they believe that caring and respecting others will produce an ethical behaviour in the society. Conversely, Westerners are more task-oriented and focus on the expected results. For Westerners, caring and respecting others are only for the people who have made an investment. Westerners cannot trust Chinese because they think that Chinese will always help their friends, and Chinese cannot trust Westerners because they think that Westerners will never help their friends. Second, Chinese believe that in the first place, people have to build relationships and transactions will be applied if the relationships are successful.

Chinese assumed that if the contract has been signed, it means that the first phase of business dealings finished. Specific changes that are caused by unexpected problems have to be made over the years. Chinese always keep their promises since they have high respect towards their business partners. In contrast, Western put the transaction in the first place and the relationships are a secondary consequence of the transactions. Western assumes that keeping their promises is not for the trading partners but for their high regard of the registered approval (Ai 2005). Third, for Chinese, guanxi is a strategic alliance between individuals and it needs a general access to information and resources. People can exchange what others have, not only what they have. The most important thing is the whole pattern of relationship (Seligman 1999).

On the other hand, Westerners are focusing more on a single transaction which is a smallest unit of economic exchange. Usually they are asking whether a sale was subdue to competitive bidding or whether keeping promises. This new insight gives a benefit for me because I am more encouraged to learn about guanxi to engage more with the culture and business practice in China and it is very useful for my preparation especially in business dealings related with China. From the reading, we can see that guanxi plays an important role for multinational companies in China. Guanxi with Chinese government can help transnational companies to get information about government policies and business opportunities (Davies et al. 1995).

If a business has a strong guanxi network, it will help business to obtain more business opportunities since guanxi do an important role regarding with gaining business opportunities in China. For example, KFC has a good guanxi with Chinese government so they obtained a building license when they opened their largest store in Tiananmen, Beijing, in 1987 (Luo 2002). Moreover, guanxi can help business updating with government policies such as export proscription and import ordinance (Davies et al. 1995). Having a good relationship with Chinese government can help international businesses to have a successful business in China. Multinational companies in China can gain an access for resources from guanxi (Thomas 2002).

It is necessary to have a good guanxi with Chinese government to obtain efficient resources especially for production materials. For instance, Shanghai Volkswagen is able to get a high-quality compulsory parts and urgent shipment since they build a good relationship with their suppliers (Luo 2002). Additionally, guanxi gives benefits for businesses to motivate their employers, increase corporate reputation, and expand market share (Fan 2007). On the other hand, guanxi might give a negative impact as well. Guanxi can be used in a wrong way such as corruption and bribery even though companies gain benefits from it. The most negative impact of Guanxi is a corruption (Lee et al. 2001).

People who are able to help the companies to make guanxi with those people might receive money from the companies. Companies that do bribery or corruption would receive punishment since Chinese government is paying attention to bribery and corruption (Luo 2002). If there is a company that is found doing bribery and corruption would make all of their customers gone, their reputation will go down, and they become uncompetitive in the market. Therefore, international companies should handle guanxi carefully especially to those who do not understand Chinese business culture fully.

Learning about guanxi will affect on my future career since it will determine whether my business would be successful or unsuccessful. If I have a deep understanding about guanxi, my business that is related with China would be successful as I have prepared myself for business dealings by understanding guanxi completely. The economic growth in China is increasing rapidly and probably could go over the United States. Therefore, all business people around the world are now interested to have a business in China because they want to take this golden opportunity. But, it is difficult to build a business in China if we do not understand guanxi completely.

Hence, to make it easier for me to conduct business in China, I have to learn and understand guanxi which means to build a relationship or connection with Chinese. To meet the trends of the increasing economic growth in China for the future, I am preparing and equipping myself with necessary tools and value-added skills by learning and understanding about guanxi. By having a good connection with Chinese government, we can get an access for efficient resources, information about government policies and business opportunities. And so, the probability of having a successful business in China will increase because of a profound learning towards guanxi.