What is Good Guanxi in China’s Culture?

What is good guanxi (pronounced gwon-she) in China’s culture? Global Mobility Solutions’ 2019 Forum included a presentation by Mark Frederick, Ph.D., Senior Consultant IOR Global Services. Mark is a global consulting and coaching professional with over 20 years of experience partnering with companies to help them identify, develop, engage, and retain global talent.

Mark has worked closely with companies from over 60 different countries on global talent management, change management, and cultural integration projects. He also coaches leaders on developing a global mindset and strengthening key competencies. Mark introduced attendees to guanxi and explained its meaning and importance.

Relationships and Doing Business in China

In some cultures, the task at hand is the primary focus in 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 is beneficial to each party. Relationships are not the main driver of economic activity.

In China, relationships are the primary focus in business, not tasks. The culture in China places greater emphasis on whether a relationship results in connections or favors that benefit each party. Guanxi is a term that reflects 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. Good forms of guanxi may result in lower obstacles to doing business in China. Guanxi also must be maintained going forward, to keep the relationship in its proper positioning.

How Should a Company Build Good Guanxi?

There are a few general guidelines for companies that want to do business in China. Basically, 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 relationships, not with the organization

What are Important Points to Consider for Good Guanxi?

While an understanding of guanxi will generally help those looking to do business in China, the concept has important nuances. As a result, working to generate good guanxi may not result in good business relationships. Points to consider include:

  • The downsides to guanxi that sometimes correlate with questionable business practices
  • Fundamentals of business are important, 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 need to 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 necessary insight and a wealth of 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 proceed with developing a network of business relationships.

Companies looking to test their expansion efforts in China might also 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 considering relocating new hires or transferees to China should review their relocation programs. This will help ensure they have a competitive advantage, and that their program provides the highest level of relocation benefits and services for their employees.

Conclusion

GMS’ team of global relocation experts has helped thousands of our clients understand how they can easily expand their business operations to new locations. Our team can help your company understand how best to proceed with expansion to China with a focus on good guanxi through relocation, or by utilizing an International PEO.

Learn best practices from Global Mobility Solutions, the relocation industry and technology experts who are dedicated to keeping you informed and connected. Contact our experts online or give us a call at 800.617.1904 or 480.922.0700 today.

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