WHAT DOES GUANXI MEAN IN CHINESE BUSINESS ?

         Guanxi or the expectation of reciprocity is also a widely written-about cultural feature of doing business in China, as its importance has proven to be radical in business negotiations with the Chinese, it actually means relationship or connection in Chinese, but the concept of Guanxi is not only about relationships, it is also about maintaining them, through the exchange of favors rather than through expressions of friendship and sympathy. It implies reciprocity in a way that business negotiations are influenced by these favors to be yielded anytime and anywhere it is requested by a connection. And if it is refused, the relationship will be jeopardised as the other party will lose face and the whole guanxi network might collapse (Woo, Prud’homme, 1999). These favours are almost always remembered and reciprocated even during a long time, it is believed to endure personal relationships for long-term (Graham and Lam, 2003). The Chinese usually acknowledge two types of relationships: warm friendship, and impersonal relationships which are short-time, whereas warm friendship constitutes the Guanxi which is a long-term reciprocal social investment with stakeholders (J. Sebanius, C.Qian, 2008). As long as a business negotiator is building relationships, he is also gaining a higher social status.

           Having mutual acquaintances facilitates matters greatly due to the fact that it is a shortcut for creating trust. Expatriate managers illustrated that if one’s previous boss knows one’s client’s brother or a high-level politician in the province since many years, then it immediately creates a sense of trust. Hence, Guanxi is very important, it does not mean that it is impossible to contact the client directly and create the contact on one's own, though it takes longer time.

         What the connection is depends entirely on the context between the company and the client; sometimes the connection can be on a completely private level, for example a colleague who knows someone in the province where the client lives, this colleague might have done military service with the client in question. There is no simple answer to what the connections looks like. You need skills like relational ease, in order to find, create and then utilise these connections in a positive way.

          Chinese negotiators state that the need for a Guanxi-network varies depending on where in China you negotiate, however, they believe that the further to the south of China you get, the less important Guanxi becomes. This is due to the fact that there are heavy influences from Hong Kong and the cantonese business culture that is more based on a judicial system. Although, Guanxi is still substantial in Hong Kong, but not to the same degree as in the Northern parts of China.

            Eventually, it is not admitted that the side that can assemble more Guanxi will be more formidable than the other, this implies that it is possible to succeed in China without an intermediary; however, it will take longer time before an agreement can be settled with a new counterpart.