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.

WHAT DOES MIANZI/ FACE MEAN IN CHINESE BUSINESS ?

    The concept of face or “mianzi” is probably the most written-about cultural characteristic within the Chinese culture literature, face means dignity, respect, status, prestige and credibility, it can be saved, protected, lost or given by social behaviour, etiquette events like the organisation of banquets, giving gifts in a social area, to create a congenial atmosphere, which will be giving face to the counterparts and consequently opens the negotiation process (Beamer,1993). The easiest way to make a Chinese lose face is to criticise him in public, intentionally or unintentionally (J. Sebanius,C.Qian, 2008) that’s why respect, loyalty and politeness are major qualities to earn face from the Chinese. Graham and Lam (2003) called it social capital, it is mainly based on reputation and social standing, if Westerners cause the Chinese to lose it, it can be fatal for business negotiations. One of the sources of earning face is to have a good network of relationships, or what is commonly called in the literature “Guanxi”.

      Expatriate business managers admit that face is always enormously important in China. What makes a Chinese lose face is for example if you say “no” straight out to a suggestion he made, basically, that is enough to make the Chinese lose face. Of course, there are other matters that can make them lose face, generally speaking, that is everything that makes them feel that they are in an inferior position. The phenomenon of face is not only applicable to the Chinese but also to Westerners in a lesser extent.

       A situation where a Chinese person loses face can be aggravated if his/her colleagues or managers are present. If such a situation occurs then it can take a while before you are back on speaking terms with that person and in a worst-case scenario the persons involved might have to be replaced, situations like this are very rare but still they occur. Moreover, the reason why face is a more sensitive cultural trait in China than it is in western countries might be derived from the fact that if ones loses face in China, then that person’s Guanxi is negatively affected. If “X” loses face or gets an unfavourable reputation, then this can have a negative effect on the persons who know or have a connection to this person “X”. On the one hand, there is a Guanxi network behind every higher ranked individual and a change in that person’s face has a contagious effect, positive or negative, on the entire network. On the other hand, a person’s face can be significantly enhanced if you praise that person in front of his/her personnel or colleagues.