What Is Guanxi?

Guanxi, pronounced gwan' CHē, is a Chinese term for relationships. It commonly refers to the ne๊tworks or connections used in business to open doors for new business and facilitate deals.

The term refers not just to the existence of relationships but to their nature involving personal trust and a strong relationship. It can also create moral obligations and require the exchanging of favors. A person who has a great deal of guanxi will be better positioned to generate business than someone who lacks it.

Guanxi is closely intertwined with the Confucian philosophy that has shaped many Asian cultures. It holds that the self extends to family, friends, and society to create a harmonious community. Guanxi implies an obligation that one has to another. The belief in China is that the wheels of business are lubricated with guanxi.

Merely saying that guanxi connects to Confucian philosophy doesn't complete the explanation of the term. Confucian thought dates back more than 2,000 years and it continues to be highly influential in China. Given the importance of Confucian thought, it should be no surprise that its stress on relationships and duty to others should be reflected in the notion of guanxi in Chinese business relationships.

Business comes before personal matters in the Western business model and the two don't often combine. They're closely joined in guanxi, however. The original Chinese symbols relate to the concept of a gateway to a relationship and this is a relatively accurate way to think of guanxi. The exercise of guanxi leads to the connections through which business can happen.

How Guanxi Works

Guanxi is perhaps best understood by the old axiom, "It's not what you know but who you know that's important." Guanxi comes in many forms in the West: alumni networks, fraternity or sorority memberships, past and present places of employment, clubs, houses of wors𒀰hip, families, and friends.

Guanxi is similar in social sciences to some concepts understood in network theory such as the idea of information or connection brokerage by well-positioned individuals in a social network or their 澳洲幸运5开奖号码历史查询:social capital.

Much of our lives today depends on networking, social networks like Facebook, and business networks like LinkedIn. We're all building these intertwined networks of connections to improve our business lives every day.

Understanding Guanxi

The odds of gaining access to a business opportunity and then winning that opportunity are higher when you work your connections. You'll naturally try to use this contact to your advantage if you're bidding for a contract in competition with others and you know someone on the other side of the deal.

You'll undoubtedly make a few phone calls to make sure lawmakers remain at least neutral and regulators stay off your back if you're a Wall Street executive with guanxi in Washington. You'll tap into your guanxi at the golf club to find a quicker route to your objective if you're a CEO who wants to make an 澳洲幸运5开奖号码历史查询:acquisition.

Special Considerations

Using your guanxi can be innocuous or hazardous depending on where you do business and how aggressive you are. Using connections may be commonly accepted as simply conducting business affairs in the West but you must still be careful of conflicts of interest whether they're governed by law or a company's code of ethics. You can face severe consequences if your networking abroad violates the 澳洲幸运5开奖号码历史查询:Foreign Corrup𒊎t Practices Act (FCPA).

Calling upon connections in China where the art of guanxi occurs in high form is the norm to get things moving. One can go too far even there, however. Business leaders with guanxi in the government have engaged in illegal activity with dire consequences. Abusing guanxi is a terrible idea virtually everywhere.

The Bottom Line

Understanding guanxi is essential to doing business successfully in China. Only by building social and business networks and contacts can a Western person fit well enough into the guanxi system to succeed.