Guanxi. What is it and does it mean?

Guanxi (literally 'relations') has achieved the status of a loan-word in English because there is no succinct translation of the concept. It describes a deep connection or relationship at a personal level; it is more than just friendship - and should not be mistaken for corruption! Guanxi implies a state of mutual obligation, usually nurtured over many years.

In English culture, we have a natural network of contacts developed through friends, university mates, colleagues, and family. This is the same kind of network guanxi is based on in China, but the difference is in Chinese culture, this kind of network is not only proactively maintained and nurtured but also expanded to help those within the network in business. So you might ask your Chinese counterpart if they can do something, and they will often respond, “no, but I know someone who can”. The Chinese counterpart is able to connect you to the right person, if not himself. At the same time he gains kudos by making the referral and reinforces his guanxi with both parties.

Many foreigners claim to have guanxi with their Chinese counterparts; few actually do. However, foreign businesses should be aware of what they have to offer in terms of their expertise, or the brand of their product, or their business potential and concentrate on using this to develop valuable relationships and networks of relationships. They should also work hard to establish good connections with Chinese people who will be able to tap into their own guanxi networks.

In short, every single relationship forged while doing business in China is likely to be important at some point or another, so the advice is: keep track of contacts made and be aware of the opportunities relationships might present.

Some guanxi tips
Make sure your company does not become over-reliant on the guanxi network of one Chinese employee; if he/she leaves, your company’s network could collapse

Before making an investment in building guanxi check out the person’s credentials using multiple sources, where possible

More guanxi = more expectations and obligations, so take care not to commit to too much guanxi building

Do not just become a ‘meat and wine friend’, but show an real interest and seek opportunities to understand and help the Chinese side

Do not simply abandon guanxi with a Chinese person once you nave got the benefit you were seeking, without thinking about the implications for your network

Relationships must perform and offer real benefits to endure

Guanxi is personal, not organisational so do not think you can simply hand over your connections and contacts to an underling. If someone is re-assigned, make sure there is a handover period and you make all the necessary introductions. Also make sure your Chinese guanxi connections know that the person to whom you have handed over is the right person for the job and that you have full faith in him or her.