Business Relationships in China: The Advantage of Quanxi
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Chinese manufacturing, import solutions, import consulting, business relationships China, foreign manufacturing
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The term quanxi or guanxi (pronounced GWAN - SHEE) is most properly
associated with China, or those countries with a predominantly Chinese culture
such as Taiwan, Hong Kong, or Singapore and extends throughout East Asia.
Quanxi is the Chinese term for the construction of close family relations, or a
joined network of relationships with the emphasis on the individual and
informal groups rather than formal organizations. Building guanxi means
building relationships. This is achieved through socializing within ones group,
and also among members of different groups in order to expand ones web of
relations. Quanxi is often referred to as “connections” or a form of bribery by its
western counterparts, but“the difference involves a close relationship among
individuals which resembles a father-son relation of assistance-duty as
consequence of their being linked by the co-member of a linking individual”
(Zheng 4).
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industries in China, manufacturing network, Asian manufacturing, overseas production, mainland China exporting
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Historically, it was necessary for Chinese merchants to seek informal relationships and bonds between different
families in order to secure successful trading and transactions that are protected by law in western nations.
According to Yang in Gifts, Favors, and Banquets, the concept of quanxi came about due to two factors. “The first
being the breakdown of social order during the Cultural Revolution which gave rise to the widespread practice of
people relying on connections instead of state organizational structures to secure everyday survival”(Yang 217).
The citizens of China had to rely on the exchange of gifts and favors among family and friends in order to survive.
The second factor involves quanxi practice rising as a result of economic reform resulting from the influence of
the capitalist West and “its ethic of self-gain.” This notion of self gain goes against Chinese beliefs reveled in
Confucian logic. “According to Confucius, a man of “perfect virtue” (jen) is one who is motivated by duty toward
others and who suppresses inclinations toward desire and personal gain”(Zheng 3). As a result the Chinese
started quanxi practices to get away from personal gain and establish relationships in order to move towards
“perfect virtue.”
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product sourcing, purchasing agents, joint-ventures, Chinese business partners, manufacturing partnerships
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In today’s society their are two main types of quanxi that exist, quanxi and quanxi xue (practice). The main
difference between these two is that “quanxi implies social relations, while quanxi practice implies the use of
these social relationships to make exchanges, manufacture indebtedness, or accomplish tasks”(Yang 222). The
distinction between the two is growing with quanxi practices being called “deviant” or “crooked" leading many
large institutions to shy away from this practice and rely on quanxi instead. Both quanxi and quanxi practice have
helped China to reshape the structure of its society with the growth of an important network-based social system.
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Beijing exporters, Wei Hai industrial center, mass production, Asian market, business overseas
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Quanxi is not as important as it once was, but is still necessary when doing business in China. The Chinese culture
is different from Western culture in some ways with regard to business, although some contemporary analysts
down-play its importance. The Chinese prefer to do business transactions with people whom they know and
trust, which means that western companies have to make themselves known to the Chinese before any business
can take place. Also this relationship is not between two companies, but instead between individuals and is an
ongoing process. The companies have to maintain this close relationship if they wish to keep doing business with
their Chinese counterparts. Quanxi does not have to be based on money, but instead involves treating someone
with decency and the building of trustworthiness with the individual or the company.
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contract manufacturers, shelving and storage, office systems, Shanghai exporters, Shanghai industries
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In summary, an understanding of quanxi is vital to doing business in China. Quanxi literally means “relationships”
and is important to understand if one is to function effectively in Chinese society. With the world economy
expanding and China being a large part, it is essential for western companies to develop strong relationships
between themselves and their Chinese counterparts. These relationships need to be both between the companies
and the individuals involved in order to develop quanxi-type relations. Therefore, as long as the concept of quanxi
is alive in China, a strong network-based socio-economic system will exist, and western companies can only hope
to make business connections on that basis.
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References:
Freedman, Maurice. The Study of Chinese Society , Stanford: Stanford University Press, 1979.
Hellstrom, Linda. Conducting Business in China: the issue of “Guanxi” , Stockholm School of Economics: 1997.
<>http://www.hhs.se/eijs/anomaly/cGuanxi.h...
Kipnis, Andrew. Producing Guanxi, Duke University Press, London, 1997.
Lee, Tahirih. Contract, Guanxi, and Dispute Resolution in China, Garland Publishing, Inc., New York, 1997.
Yang, Mayfair. Gifts, Favors, and Banquets: The Art of Social Relationships in China, Cornell University Press, New
York, 1994.
Zheng. “A Nesting of Groups, Not a Network of Individuals.” Online
<>http://orion.oac.uci.edu/~dbell/html/bod...
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