Doing business in China with guanxi

Cultural Insights — By on November 16, 2007 at 7:27 am

The term guanxi refers to the time-honored way of doing business in China by cultivating relationships. Anyone who works in China or with a Chinese company eventually has to learn about guanxi.  This week, Business Week magazine has an article about the practice of building relationships with the Chinese and discusses not only the traditional meaning of guanxi but also more contemporary ways of networking in China.

Loosely translated, guanxi means “connections” and, as any China veteran will tell you, it is the key to everything: securing a business license, landing a distribution deal, even finding that coveted colonial villa in Shanghai. Fortunes have been made and lost based on whether the seeker has good or bad guanxi, and in most cases a positive outcome has meant knowing the right government official, a relationship nurtured over epic banquets and gallons of XO brandy.

Now, like so many things in China, the old notion of guanxi is starting to make room for the new. Businesspeople—local and foreign—are tapping into emerging networks that revolve around shared work experiences or taking business classes together. Networking that once happened in private rooms at chichi restaurants now goes on in plain view—at wine-tastings for the nouveau riche, say, or at Davos-style confabs such as the annual China Entrepreneurs Forum held annually at China’s Yabuli ski resort.

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