Guanxi can be approached in three different ways: Kwang-Kuo Hwang, Eric Tsang and Ying Fan. The Kwang-Kuo Hwang consists of three parts. First of all, we have 'the expressive tie', which includes durable relations with family and close friends. Second, 'the instrumental tie' is an unstable relation where you try to obtain fixed assets to achieve your goals. And finally, there is 'the mixed tie'. It is comparable with the 'expressive tie' but the relations are more superficial. The Eric Tsang consists of 'the blood based guanxi' (relations with family, friends and people of the same clan) and the 'social based guanxi' (social interactions). Finally, there is the Ying Fan with three subdivisions: 'the family guanxi' (~expressive ties), 'the helper guanxi' (~instrumental ties) and 'the business guanxi' (oportunistic business relations).
In this article, The Economist, tries to figure out, the role of business networks in todays society. It is known that people with strong connections, can get easier in top business positions. So more specific, the article, compares the influence of online networking websites, for example, LinkedIn, versus traditional business networks, such as, freemasons. The term network, is known in China as Guanxi. But nowadays, our economy spreads further than, e.g. the country boarders. Because of the globalization, a larger international network is needed. Traditional networks will not be enough to fulfill all needed international contacts. Thats why networking websites are growing in popularity. However, it seems to be logic that we will rather help people where there is a personal link, than where theres none. So my conclusion of this text is that, networking websites are not as good as the traditional networks, but the importance of internet networking is certainly not negligible.
This article tries to give a clear definition of what the Chinese term Guanxi exactly means. Guanxi (pronounced: gwan-shee) can be translated as relationships, but the concept is much more than that. Its a strong obligation. If a party has done you a favour, e.g. introducing you to someone, this will automatically create a certain expectation to give something in return. Guanxi can be compared as a sort of currency which can be saved and spent between the two parties. The system is also protected against people who try to make profits on the others. If the other party feels like you have a lot of debts towards him, this can be very harmful to your social network. Harming a guanxi is NOT done. If you cant pay back a little gift is recommended as a symbol that you havent forgotten the favour. In Chinese contacts its all about maintaining a healthy balance towards your networks.
Everywhere in the world, people know the traditional business networks. The influence of the Opus Dei is still visible in France, Spain, Italy and Latin America. Ivy League(1) in the USA is the same as the guanxi we know in China. When we take a look at the online business networks, with his 42 million members, LinkedIn is the most popular one. Others are XING and Viadeo. The most important difference between the traditional and the online networks is the easy accessibility. In addition, the traditional networks also have an ethical dimension. For example, the Opus Dei works with IESE (a business school in Madrid), which want to give people a Christian dimension. Furthermore, the importance of these networks in the USA is not large, but we see that American entrepreneurs invest more money in companies of people who studied at the same universities as themselves.
Long-term orientation, cooperative behaviour and mutual understanding are all characteristics of guanxi. Nevertheless, these characteristics can also be found in western relationship marketing. So what makes guanxi more special? Guanxi is a description for the interpersonal relations between people in China. Its based on the social norms and morality that are conventional in China. The social norms and morality are strongly influenced by Confucianism. We also notice that the legal system in China doesnt work that well and isnt really reliable therefore people only rely on and do business with people whom they know. A guanxi network is a closed network. It means that you only trust people who are also a member of the same guanxi network and that you distrust outsiders. In order to maintain your guanxi you need to have trust and empathy. Trust is needed to maintain a long-term relationship with your guanxi network members because most of the contracts in China are personal oral agreements. Empathy is needed because Chinese people dont communicate their preferences and views publicly because they fear being shunned by others. Its absolutely necessary that you know what other people think and feel in order to keep a long-term relationship with a guanxi network member. In contrast to guanxi relationship marketing is based on legality and rules. Agreements are often written and can be settled with everyone. We can conclude that all settled agreements are based on trust. In China its trust in your guanxi network member and in the West its mostly trust in the legal system.
Guanxi is an important element in Chinese business life, but one should be very aware of possible conflicts of interest. Employees could be helping out competitors for personal gain. Therefore it is important to keep in mind some useful hints to prevent this from happening. Making sure that the employees' gains are equal to those of the company is one way to avoid so called "bad guanxi". In addition to this, teamwork in the sales guarantees a form of social control and by maintaining good relations with the employees and their familiesa strong base of company loyalty is founded. It is clear that by carefully monitoring the guanxi-relations in your company, bad guanxi can be reduced to a minimum.
When Western people set up a company in China, they must be aware of some ethical standards.Since China is becoming a key player in global industry, the Chinese demand respect and do not wish to be treated like children. In order to conceive their goal of worldwide success, they realize that it is necessary to decrease corruption, which is, according to university students, still present in many companies. In this case, when the company in China determines its ethical code, the Western founder should give this assignment to the Chinese people themselves. The Chinese have to develop the rules, which are based on Chinese philosophical views. There exist groups, f.e. "The Business and Organizational Ethics Partnership", that try to inform people more about these ethical standards. Starting from their 18 basic rules the organization even offers an opportunity to take classes in business ethics.
