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30 Mar 2010
Guanxi: What is it and Why is it Important?
by Carey Chambers, dragonbn.com
Guanxi (pronounced gwan-shee) is a Chinese concept important to life and business that means "relationship". The term guanxi can also be used to describe a network of contacts.
If you have good guanxi you have a strong network of people and relationships that you can use to resolve problems, achieve goals or wield influence. With guanxi you can get things done quite easily in China. You can make money and be successful.
Guanxi is a stronger relationship than that of mere acquaintances. One person can prevail upon the other for a favor or to perform a service when needed.
Guanxi is particularly important in China because it is an accepted and ingrained way of doing business and because the government has strong control over, and involvement in, many aspects of China life.
"Unlike foreign countries, the government is more hands on with business in China (taxes, labor issues, intellectual property, etc)," explains one Alibaba trader.
"A relationship with the government will help you have the government be more hands off or help you resolve things when you have problems. Since the legal system in China is still developing, guanxi can play a critical role in how you live and do business in China."
The book "Guanxi: The Art of Relationships" by Buderi and Wang, which describes Microsoft's efforts to do research and development in China, has helped popularize the term among North American business people. The book offers the following explanation of guanxi:
"Guanxi is the Chinese word for the mutually beneficial relationships critical for success in the Middle Kingdom. In China, there's no such thing as a purely business relationship. Instead, to be successful in business, you must blend formal relationships with personal ones."
For more information on guanxi, see the Business Week article, "You Say Guanxi, I Say Shmoozing"
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