Guanxi Networks in China: Its Importance and Future Trends

Abstract

China's market potential is unparalleled, although many foreign business practitioners have commented that operating profitably in China is difficult, and more complex and time consuming than should be necessary. Given these facts, a lot of research on doing business in China gives recognition to the concept of Guanxi, a social and business relationship network, as the key to conducting successful business. By analyzing current research and collecting primary data from both the Chinese Mainland and Taiwan Province, this study aims to clarify the importance of Guanxi, and to study the future trend of Guanxi. By doing so, this paper intends to help business practitioners in China, especially those from the Western countries, to gain a deeper and more practical insight into the Chinese social network, and to help them make effective cross-cultural adaptation and business decisions in the unfamiliar cultural environment of China. Copyright The official journal of The Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS) 2006.

Executive perks: Compensation and corporate performance in China

“…One such feature affecting perk consumption is the use of guanxi to build business relations. Guanxi, loosely defined as "connections," with governmental officials and business partners is crucial for long-term business success, and guanxi is often built through lavish meals, trips, and gift giving (Ai, 2006;Luo & Chen, 1997;Yeung & Tung, 1996). But guanxi can also lead to nepotism, cronyism, favoritism, and some forms of corruption, as defined by western standards (Alon, 2003).…”

“…Herein, we use the term "incentive" to denote the use of perk compensation to motivate management to supply a proper work effort. Second, perk compensation, such as meals, entertainment, and travel, helps companies build useful connections (guanxi) with governmental officials and business partners, as guanxi is often built and maintained through lavish meals, banquets, gift giving, joint entertainment, and trips (Ai, 2006;Yeung & Tung, 1996). Guanxi has been acknowledged in the literature as an important factor in doing business in China (Ai, 2006;Alon, 2003;McGregor, 2005).…”

The perceived importance of sport management competencies by academics and practitioners in the cultural/industrial context of Taiwan

“…Commentators on the local business environment have tended to highlight three key features in particular which, in combination, distinguish Taiwanese business culture. These are Confucianism (Chan, 2008;Lu, Rose, & Blodgett, 1999;Tan & Chow, 2009), guanxi relations (Ai, 2006;Chou, Cheng, Huang, & Cheng, 2006), and attitudes to political nationalism (T. Y. Wang & Chang, 2005).…”

“…The concept of relationship is understood as "guanxi", a term indicating the personalised networks of influence, which is central to business success in Taiwan (Ai, 2006;Chou, et al, 2006).…”

Silence in Intercultural Collaboration: A Sino-Dutch Research Centre

“…This distinction can be recognized in the context of networking behaviour. In the West, networking is generally associated with individualism and highlights the commitment to personal tasks and projects (Luo, 1997;Ai, 2006). The individual transaction is seen as the most important unit of exchange.…”