Chapter 11 – Guanxi, the System of Relationships

“Guanxi” which literally means “relationship”, demands that the Chinese help each other.

To fully understand the meaning of the word Guanxi, you must first take into consideration the type of Chinese social structure that originates from the past when everything was decided and planned at the top. Consequently, once a person was assigned a specific position it was very likely that he would remain in that same position for the rest of his life.

In a system base on these characteristics, it was inevitable that obtaining even the smallest privileges depended on an informal system of interpersonal relationships built slowly over time; this is how Guanxi came to be an important social and business concept for the Chinese.

Considering that until only very recently it was necessary to have social connections just to obtain a ticket for the theater or a train, it is easy to comprehend how important and deeply imbedded this cultural attitude became. China has made great social and business strides over the last 20 years and the pace of change continues to accelerate. However, the phenomenon of Guanxi still thrives today and is likely to for some time to come.

Critical in the Guanxi system of relationships is that relationships are permanent and developed over time. By their very nature, these relationships constitute a sort of insurance policy that must be continuously nurtured and improved to gain future favorable treatment.

In the west, relationships are also important in our society but they are often treated much differently. Once a favor has been obtained, it is often immediately returned in order to remove thedebt, similar behavior in China could be negatively interpreted as not wanting to build a lasting relationship. Something worth remembering as you increasingly do business in China. In order to increase the probability of success with your business initiatives in China, even foreign entrepreneurs cannot ignore the need to create a Guanxi over time, or rather a network of relationships that eases the achievement of objectives and without which you will face insurmountable barriers sooner or later.