Top 4 Things You Must Know About Guanxi


The business dynamics of every country is unique, and China is no exception. If you are looking to set up a new business here, you would do well to first acquaint yourself with the business culture present here. Otherwise, you might feel like a lost fish in a pond and your business will fail to take off.

One business concept unique to China is guanxi, a word that you might have heard many times in your Mandarin classes Singapore. Foreigners usually have a difficult time understanding what it is and consequently, fail to use it to their advantage.

An important part of doing business in this country, guanxi is all about creating and maintaining mutually beneficial relationships. Your business can’t progress if you don’t invest time and energy in building and maintaining guanxi. That’s why it’s a great idea for foreign businessmen to learn Chinese in Singapore as it would help them win trust, credibility, and confidence of influential people more quickly.

Shared ahead are a few important things about guanxi, namely what it is and how you can use it.

What is Guanxi?

Guanxi, in simplest terms, is a system of social networks which facilitate business as well as other dealings. Mutually beneficial relationships are an integral part of doing business in China.

Don’t confuse guanxi with networking. Yes, at one level, guanxi is in a way similar to networking done in the western world, but it is also a lot more than just networking. For instance, it is simply not possible to do business in China without guanxi.

Moreover in western countries brokering deals are done in the boardroom. However, in China, if you want a deal to go through, you will have to make efforts to know the person outside the boardroom as well. In China, a lot of importance is given to the individual connection. If you don’t establish this relationship first, chances of your deal being successful are as slim as your climbing Mt. Everest without oxygen.

How to build Guanxi?

The million dollar question, after one has understood guanxi as a concept, is how to build personal connections in China. Well, here are four tips to help you.

  1. Focus on building trust on an individual basis and don’t make the mistake of thinking that being associated with a big multinational or a reputable non-profit organization automatically lends you credibility. The networking is at the individual level and it is you, as a manager or business leader, who must win the trust of influential people. Once you build trust with decision makers, you’ll find doing business in China easier and a profitable enterprise.
  2. Ask someone who already has guanxi with the person you want to meet t o introduce you. First meetings should be in person and not over web chat, phone, or email.
  3. It takes time to develop guanxi—and only fool rush in. Of course, you would want the decision quickly and would like to move from zero to ten on the scale of ten of guanxi in a jiffy, but that’s now how things work in China. Building these relationships takes time, and that’s why you should start as early as possible.
  4. Guanxi is not a one-time act. Once you’ve established a relationship, continue to work on it to maintain it. You can depend on people with whom you have guanxi when the headwinds are strong, and, remember, your partners expect nothing less from you.

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