What is Guanxi? Guanxi (“gwan-shee”) is loosely translated as “connections” (Wenderoth, 2018). It’s known as social networking and is perhaps one of the most important Chinese cultural practice in foreign business (Moran, Abramson, Moran, 2014, p. 418). “Guanxi loosely translates as personal connections, relationships or social networks. It implies trust and mutual obligations between parties, and it operates on personal, familial, social, business and political levels. Having good, bad or no guanxi impacts one’s influence and ability to get things done” (Wenderoth, 2018). By having good practices of guanxi, it will help build trusting relationships with others.
Guanxi is a cultural characteristic that has strong implications for interpersonal and inter-organizational behaviors in Chinese society. In China, people as well as organizations try to nurture guanxi energetically, which influences their attitudes toward long term social and personal relationships. An example that I would like to share of my guanxi experience is with my employer, which conducts business worldwide. During my travels in China, my co-workers and I were able to build a planning IT system for our China colleagues, so that they could enter orders effortlessly and without worry. Since this was my first time traveling to China, I was unsure of what to expect. It was refreshing meeting my teammates in-person for the first time. During our IT project, we created trust and mutual benefit. Since guanxi is deeply rooted in China, it was important for me to have an understanding of China’s cultural practices and philosophies. Now that I have personally met my China colleagues, they always ask me how I’m doing and how my family is doing, which makes me feel like we connect on a deeper level. It’s a great feeling.
After doing some online research in the library, I found out that there is a downside to having bad guanxi and that it can lead to poor unethical choices. It has been apparently known for corruption and bribery in business transactions (Littlefield, 2003). While it’s important to have strong business connections with your coworkers, it can also result in businesses cutting corners and going outside of the law “you scratch my back, I’ll scratch yours” so to speak (Littlefield, 2003). Illegal business transactions are very common worldwide and should be strictly prohibited. While I’m glad that I did not encounter this experience, I can only imagine what business transactions take place that are unethical and illegal.
The concept of building personal relationships, or guanxi, is extremely important in Chinese culture and crucial when doing business (Moran, Abramson, Moran, 2014,). When you have the same goals and aspirations to succeed, similar to my planning system IT example, it’s helpful to create strong relationships with your business partners. Having a positive multi-cultural workforce gives my organization an advantage to succeed.
References:
Littlefield, J., Sirgy, J. & Su, C., 2003). Is guanxi orientation bad, ethically speaking? A study of chinese enterprises… Retrieved from https://www.researchgate.net/publication /227109970_Is_Guanxi_Orientation_Bad_Ethically_Speaking_A_Study_of_Chinese_Enterprises
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing cultural differences (9th ed.). Oxford: Routledge.
Wenderoth, M. (2018). How a better understanding of guanxi can improve your business in china. Retrieved from https://peopletalkonline.ca/avoiding-stereotypes-in-the-workplace/
cms7206 says
Miranda,
I found your post on Chinese Guanxi to be very interesting. The basis of the relationship is very important, it seems, in Chinese business culture. It was interesting to see how the negative aspect was as prevalent as it was. But it does make sense that there would be a substantial trade off to pay for the loyalties fostered over time. Even though those connections can prove to be beneficial in any business environment, there is always a price that must be paid.
For companies coming from outside of that culture, this can be a very challenging environment to succeed in. To try and understand how to manage frontline employees and their personal networks before they start creating problems for the company is critical. (Vanhonacker, W.R., 2004)
Some organizations seem to have been able to circumvent this issue with the following four steps.
Building company loyalty – through the use of family relationships and close, family-like bonds, companies are utilizing these types of relationships within the organization and its hierarchy to place individuals in positions where they have the greatest influence and impact within the organization. This is fostered through increased integration of the social interaction between leadership and its staff members. (Vanhonacker, W.R., 2004)
Increasing the points of contact – Increasing the number of people/points of contact for different items being offered has proven to be an effective way of depersonalizing the sales and procurement process by creating a team-based approach. This effectively decentralizes the entire process, thus removing the impact that one individual can have on the success or failure of a specific item. (Vanhonacker, W.R., 2004)
Rotate the front line – this particular step can be trickier than the rest as it needs to be done in a manner in which it does not seem to be punitive or arbitrary. During times of mergers or restructuring would be most appropriate. This would allow the company an opportunity reconfigure the sales or procurement staff’s client assignment. Thus, diffusing the development of powerful guanxi.
Creation of competition – simply by increasing the amount of bidding that is required for procurement enables the company to make selections of providers on a more transparent level, therefore alleviating the potential for the cultivation of guanxi.
All of these steps seem to be effective. On a more personal note, the type of work environment that diffuses guanxi would be a less stressful environment for all involved as you alleviate the potential for overt favoritism and corruption within the organization. These are potential cancers within an organization and can serve no beneficial use for the future health of any organization.
References:
Vanhonacker, W.R. (2004), When Good Guanxi Turns Bad, Harvard Business Review. Web. Retrieved March 15, 2020. Link: https://hbr.org/2004/04/when-good-guanxi-turns-bad
jld6236 says
Hi Miranda,
Great post, I appreciated reading about your personal experience working cross-culturally. It made me think of our lesson on synergy, and how to achieve it despite working in global teams. I think your being able to meet your team members in person solidified your working relationship and established trust and common ground, which seem to be important in building guanxi. Since you understand the importance of guanxi in Chinese business culture, I’m sure it adds to your team’s synergy and collective energy. You have worked to create the basis for a solid team relationship. Therefore, you can overcome some common barriers to synergy such as conflict due to differing perspectives and cultural misunderstandings (PSU WC, 2020). You should continue to keep your team’s cultural differences in mind as well as what is important to them so that your team may feel more comfortable sharing ideas and suggestions with you (PSU WC, 2020).
References:
PSU WC: Pennsylvania State University World Campus. (2020). OLEAD 410 Lesson 06: Cultural Synergy. Retrieved from https://psu.instructure.com/courses/2041071/modules/items/27977851
Timothy Molina says
Hello Miranda,
Guanxi is a very interesting term that you addressed in order to point out the different cultural practices that reside in China and its workers as compared to us in America. It correlates very well with our previous focus on cultural synergy, as according to Moran, Abramson, & Moran, (2014, p. 266), “synergy is a cooperative or combined action, and occurs when diverse or disparate individuals or groups collaborate for a common cause. The objective is to increase effectiveness by sharing perceptions and experiences, insights, and knowledge.” This focus on synergy goes hand in hand with your mention of guanxi, as collaborating with each other empowers the overall impact of guanxi. The thing that is surprising, is how much of it is encouraged when dealing in foreign business as well; however, as you have brought the idea forth already, it does certainly have its volatile moments when considering how powerful it really is. I am quite curious how much of an impact it had on increasing employee morale, since improved teamwork on the positive end usually leads to that. That being said, in my past research on China specifically, I have noticed that giving gifts in business deals within companies and companies that are partnered, e.g., a small form of bribery in our own country’s terms, is commonplace over there. Would you say that this is a form of guanxi? I ask because guanxi seems to be more rooted in social networking and encouraging collaboration.
References
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing Cultural Differences (9th ed.). Oxford: Routledge.
Erik Micallef says
Hi Miranda,
Your post on Guanxi was a good read and I learned a bit from it. Having the opportunity to experience Guanxi firsthand must be extremely helpful and I have to admit that I’m a tad jealous. I have yet to travel to China, let alone get an experience with work related matters on the same level as you. One matter I’d like to dive deeper into are the downsides to Guanxi. Personally, I’ve seen countless times people get stepped on by there coworkers as I’m sure you have as well. So the flaw within Guanxi that I see is when someone who might be non confrontational may get stepped on because they are close with the coworker and might be too afraid to say something that might be beneficial on the count that feelings may get hurt. Not that you shouldn’t take someones feelings into account, but say theirs a safety risk in a space program. That is something that should be accounted for immediately. So I guess in so many words I’m trying to say I see a fine line where Guanxi can be exceptional in the workplace but if the wrong person was implemented into that system it could falter some. Overall, I really liked your post and look forward to your future ones.
rxb5512 says
Your post was very informative. To further the topic, Guanxi was a result of ganqing, which is rooted in the philosophical teachings of Confucianism, genuine feelings of concern, and loyalty toward others (Moran, Abramson & Moran, 2014). I have also experienced the effects of guanxi on a business relationship; I began a project with team members from China. I had very little interaction with them up until the beginning of the project; there was a face-to-face meeting, but due to timing, I was able to attend. Over the next few months, the project made very little progress, and communication was difficult. I would request feedback about decisions the team needed within a defined time frame, and almost without fail, we would miss the deadline as someone would bring up a point that needed to be further discussed or investigated the day the decision needed to be finalized. Another opportunity arose to meet face-to-face with my Chinese team members and after traveling to China, spending time and sharing experiences I found communication improved. Not only did I receive feedback when requested, but I was also contacted directly about issues that could impact future decisions. I had started to build a relationship that fostered trust and I hope to continue developing this relationship.
References
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing cultural differences (9th ed.). Oxford: Routledge.