The Importance of Relationships When Doing Business in China

Chinese Guanxi at a glance

Guanxi can be confusing to someone who is not Chinese or hasn’t studied Chinese culture. When translated in English, guanxi literally means relationships. Chinese culture has deep and ancient roots that continue to influence modern Chinese society. At the heart of guanxi are cooperational values, community and the maintenance of mutual trust. It accentuates the spirit of community and togetherness, trustworthiness and loyalty among a network of people.

The concept has garnered global attention because it is the driving force behind the complex network of China’s modern society. Beside impacting individual and family values, guanxi has also strongly influenced Chinese business and corporate practices.

Doing Business in China-Guanxi

Modern guanxi

The Chinese lifestyle and worldview is very different from that of the western world. Two major differences are:

  1. Family values are at the core of Chinese life.
  2. Confucian principles are intertwined with these family values.

These values were very prominent in a person’s life generations ago, and they still are today. They have helped to shape China’s cultural values.

According to the law of nature, everything and everyone, abstract or concrete, has a life cycle. The concept of life being temporary is the reason why ideas, approaches and techniques are constantly cycled through the continuum of time. Confucianism was birthed from Chinese philosopher Confucius’ teachings. It’s an ethical and philosophical practice that has kept its message and significance over thousands of years. Guanxi has persisted throughout the ages in part because of its connection to Confucianism. In fact, as time marches forward, this concept seems to be growing stronger and further weaving itself into Chinese society.

Guanxi in Business

Traditionally, Chinese business had been centered around the family. A business and the running of it was handled by the members of the family. Today, family centered business is not unusual, and amicably shares the market with the public sector. Modernization cannot be escaped. Surprisingly, guanxi still firmly holds its relevance, although new ways of thinking are emerging.

Guanxi, in contrast to western culture, fosters direct communication among those in the group, eliminating the need for going through a prescribed chain of command. By practicing proper guanxi, an organization or business can:

  • Reduce risk factors.
  • Allow members to vent frustration and disappointment.
  • Conquer communication barriers.
  • Build trust and faith, while strengthening bonds among the group members.
  • Increase credibility.

Chinese would rather do business with someone they know they can trust. Guanxi helps to build networks within the corporate sphere and within the country.