What is Guanxi? Is it exclusively Chinese? Why has it been so important in doing business in Asian countries?

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When researching the intricacies of conducting business in Asia no one will miss the word “guanxi”. In fact, respect for guanxi is one of the first things that a foreigner learns about "how to do business in China” (Lee, 2006). Furthermore, guanxi is believed to be so important in Chinese society, it has been suggested that most Chinese individuals and organisations rely upon it to a certain degree (Shan, 2005). The concept of guanxi is enormously rich, complex, and dynamic and the growing acceptance and popularity of guanxi in the West has made it all the more important to understand the construct in its entirety (Chen, 2004 and Redding and Wong, 1986). In this essay I will therefore analyse exactly what guanxi is, and argue that while building social networks is always a cultural and business consideration in any Asian country, essentially guanxi is exclusively Chinese. I will also examine the importance of guanxi in conducting business transactions in China, and explain how in some circumstances the importance of guanxi for foreign businesses operating in China has been overstated. However, before analysing the importance of guanxi, it is vital to firstly understand exactly what guanxi is. This is not an easy task, as Tsui and Farh (1997: 59) remark “the literature (both Chinese and English) shows no consensus in translation of the term guanxi”. Although guanxi is able to be interpreted at different levels and from different perspectives (Tsui and Farh, 1997 and Yang, 1994), it is commonly referred to as an indigenous Chinese construct (Hwang, 1987; Yeung & Tung, 1996 and Tsui and Farh, 1997). Redding and Wong (1986) define guanxi as a Chinese word for the intricate and pervasive networks of social relationships. Tsui and Farh (1997: 60) expand on this by defining guanxi as “the existence of particularistic ties between two or more individuals”. Chen (2004:

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