09 Jan GuanXi – Relationships in China
Whether you are running a company in China or attending Mandarin classes in Singapore, one word you are likely to have heard many times is guanxi. In English, the word means relationship. However, guanxi as a concept is misunderstood by many in the business world.
Shared below is some useful information regarding what guanxi is and, equally importantly, what it isn’t, the reasons that make it important for your business, and how you can maintain it. So without further ado, let’s delve into the concept of Guanxi.
What is Guanxi?
This concept is all about creating and maintaining mutually beneficial relationships. So, at one level, guanxi in China is what strong network is in the western world. However, there are also key differences in between the two. Guanxi is many times more important and plays a much bigger role in business in China than networking does in western countries. In other countries, it is possible to seal a business deal through business meetings. That is not the case in China.
Here you need to invest time in first knowing your potential business partners outside the official meetings through dinner banquets and tea sessions. However, the greater time commitment required in guanxi is not the only difference.
Usually, guanxi runs a lot deeper than an average business relationship in western countries. For instance, pursuing some business opportunity together with or lending money to someone with whom you enjoy a strong guanxi is fairly common in China.
What is Guanxi not?
Without a doubt, guanxi is very important for doing business in China, but it isn’t everything. Guanxi alone can’t make your business a successful entity. For that, you need guanxi and rest of the business components.
Think of guanxi as an important key, one that will open doors of new opportunities for you. To make the most of those business opportunities, you must have a sturdy business operation in place.
What Makes Guanxi So Important for Your Business in China?
The concept of the face has a lot of importance in the Chinese culture. It offers businesses protection which law doesn’t provide. If a businessman takes advantage of someone with whom he has guanxi, everyone in his guanxi will come to know about it and sever their business relationship with him. Therefore, it is in the best interests of everyone in guanxi to conduct business ethically.
That’s why businessmen in China prefer to do business with someone with whom they enjoy strong guanxi. They feel—and rightly so—their business interests are safer this way. Developing and maintaining guanxi is as crucial for foreign companies as it is for Chinese businesses. You have a far greater chance to grow as a business if you develop secure guanxi with government organizations and Chinese companies.
How Can You Maintain Guanxi?
It is not so easy for a foreign company to develop guanxi in China. You must have a couple of things in place: full-time business presence in this part of the world and a native Chinese employee responsible for developing guanxi.
A native-born Chinese will be well-versed with all the necessities involved in developing guanxi. As the head of your business, it would also be a great idea for you to learn Chinese. You can show your respect for Chinese culture and language and win the trust and admiration of your potential business partners by conversing in Chinese. To be able to learn Chinese in Singapore, consider joining a regular language course.