Learn more about Relationships and Doing Business in China
What is good guanxi (pronounced gwon-she) in China’s culture?
In some cultures, the task at hand is the primary focus of business. These cultures tend to use clear language and have direct communication styles. It is easy to see whether a product, a transaction, or an activity benefits each party. Relationships are not the primary driver of economic activity.
In China, the main priority in business is building and maintaining relationships rather than focusing solely on completing tasks. The culture in China places great importance on whether a relationship can bring about connections or benefits for both parties. The term “guanxi” embodies these relationships.
Parties that accept guanxi must return it in equal measures. While guanxi can take many forms, it should be seen as given voluntarily. Exemplary forms of guanxi may result in lower obstacles to doing business in China. Guanxi must also be maintained going forward to keep the relationship adequately positioned.
How Should a Company Build Good Guanxi?
A few general guidelines exist for companies that want to do business in China. The company should build a business network with a focus on good guanxi:
- Introductions should be made by those who already have good guanxi with the prospect
- First meetings should be in person, not by electronic devices
- Remember that the relationship is at the personal level, not the organizational level
- It may take longer to build good guanxi than you might expect
- Dependability and reliability must be hallmarks of the relationship
- Trust is with the network and the connections, not with the organization
What are Important Points to Consider for Good Guanxi?
While understanding guanxi will generally help those looking to do business in China, the concept has essential nuances. As a result, working to generate good guanxi may result in poor business relationships. Points to consider include:
- The downsides to guanxi that sometimes correlate with questionable business practices
- Fundamentals of business are essential, and good guanxi alone may not provide solutions
- You must view guanxi across individuals, government structures, and corporate organizations
- Good guanxi may vary by location, industry, and corporate focus
What Does This Mean?
Companies looking to develop operations or expand business opportunities in China must understand guanxi. China has a distinct culture and rich history, just as all countries do.
As a result, there is rarely a single answer or a simple guide for a company seeking to do business in China. Research, education, and understanding the importance of business relationships and good guanxi will help companies determine how to proceed with their strategic objectives.
What Should Employers Do?
Companies with plans for business expansion should work with an experienced and knowledgeable Relocation Management Company (RMC). RMCs provide the necessary insight and solutions, including cultural and language training. A trusted RMC can help companies understand China’s culture, history, government, and industrial sectors. Companies should also learn the concept of guanxi and examine how to develop a network of business relationships.
Companies looking to test their expansion efforts in China might benefit from an International Professional Employer Organization. This is a global employment solution where a third party in a foreign country hires employees on your company’s behalf.
Companies contemplating the relocation of newly hired employees or transferees to China ought to assess their relocation schemes to guarantee their competitive edge and ensure that their employees receive top-notch relocation benefits and services.
GMS’ team of global relocation experts has helped thousands of our clients understand how they can quickly expand their business operations to new locations. Our team can help your company understand how to develop in China, focusing on good guanxi through relocation or utilizing an International PEO.
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