“Guanxi” (connections), is an especially mystical Chinese word that, for a long time, has been used by suppliers, officials, pundits (not to forget “chundits”), and others to impress, scare or confuse the hapless foreign businessperson in China. It has been getting quite a lot of press recently, so I thought I would put my oar in and comment.
Literally “guanxi” is a Mandarin Chinese term that describes the complex, inter-dependent relationships that exist between two or more parties. “Guan” means “close together,” and “Xi” means “relationship.” In practice, of course it is a bit more complex. Diligence China provides a good introduction:
- “Guanxi. Technically, it means connections. In mainland China where monetary profit was not always feasible, people developed a semi-formal means of supporting allies and building up a “bank” of obligations owed. It is not always subtle or sublime, though Chinese are so familiar with the idea that there is less need to discuss it directly.”
But I also like this one, from James McGregor, author of “One Billion Customers”:
- “Guanxi, the oft-cited Chinese word for relationships or connections, is overrated, temporary, nontransferable, and resides in the hands of the individual who has it. Never, ever put your business in the position where you are dependent on one individual for access to government officials.”
Now, while guanxi is generally less important to the average businessperson, it is certainly still an important issue to understand and manage. Relationships are important in business everywhere, but they are relatively more important (and complex) in China’s group-based culture.
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