Business Culture

Guanxi

The phrase “it’s not what you know, but who you know” is well known in Western business circles due to the fact that having the right contacts can provide a great deal of assistance in advancing one’s career and closing important business deals. This idea takes on a much greater significance within China, in which business organisations and social circles are often nepotistic in nature. That is, relationships do not merely supplement an individual’s effectiveness in business and dealings in everyday life; instead, relationships form the foundations upon which business and society are built upon.

Many Chinese business people rely almost exclusively on their personal relationships when conducting business, and protect their networks with a level of devotion rarely seen in Western countries. In the following article, several key aspects of relationships, or guān xì  (关系), in China will be explored with the goal of acquainting the Western business person with the basic fundamentals of how relationships work in China, as well as how to build successful and fruitful relationships with the Chinese.

Relationships in China Today

Due to the autocratic nature of Chinese governing systems and methods, there has always been a lack of fair and reliable social and legal institutions within China. Because of this, Chinese people today often feel that they are only really able to truly trust and rely on their closest friends and relatives.

In addition, unlike as in the West, most Chinese business people are not accustomed to “business only” relationships. Rather, they prefer to create a friendly and personal relationship first, and then conduct business afterwards. And aside from cultural preference, there is a strong business reason for doing so. Despite the fact that almost every company will sign a contract at the commencement of a business deal, the actual ability of a company to enforce said contract is many times lower than in the West, especially for smaller companies. By focusing on developing a strong relationship first, as opposed to a formal and tightly worded contract, local Chinese business people can more easily be assured of a long-term and profitable collaboration.

In order to create successful relationships with the Chinese, it is also important to be able to grasp some additional concepts in Chinese culture. Understanding the Chinese concepts of “Face,” “Giving Gifts,” and “Proper Character” can not only provide fresh insight into the minds of the Chinese, but can also greatly increase a Western business person’s ability to create strong relationships and communicate effectively. Remember that although many Chinese have knowledge of Western practices and experience dealing with “unenlightened” Westerners, they are still Chinese at heart. Trying to do things their way not only shows respect but also shows your commitment to a long-term relationship in China.