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The significance of Guanxi.

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The significance of Guanxi In my essay I will hope to discover the true essence of Guanxi. What it means. Where it came from and how crucial it really is when conducting business in China. My aim is to bring together the views and opinions of a cross section of people and interpret them into my own understanding. After analysing the topic in question I will go on to conclude, 'The significance of Guanxi'. With foreign trade in China totalling US$509.77 billion in 2001, and with investments from over 180 countries ( REUVID, J) differences in culture, business practice and perceptions will become evident. One subject so wide spread and intriguing that it is becoming the subject of study is Guanxi. Guanxi has two common translations they are 'connections' and 'relationships' (wikipedia 2007 [online]) It may be seen that Guanxi is a set of personal connections with other people by which their position or knowledge can be utilised to each other advantage. This informal favour will be reciprocated by the debtor at a future date. The two parties need not be of the same social status and repayment of the favour is returned over a period of time. Where incurring a debt in English business practise is seen as unhealthy and will result in quick trade offs to balance the books, Chinese see quick reciprocation as 'an unwillingness to become involved with the other party, as balancing the debt end the relationship'(BURNS 1998) ...read more.


While a market economy emphasises marketing, financial and operational savvy, the planned economy places more importance of government relationships and Guanxi.(GULAIT and LEE 2004) Under Mao Zedong Guanxi thrived as a way of allocating investment in the absence of a market. Geoffrey Murry suggests it stems back further 'during periods of strong rule, imperial powers reached into the furthest corners of the Chinese empire. The exercise of this power was arbirary and brutal; the mandarin was both prosecutor and judge. A separate judiciary was never established, and hence the ordinary person never looked to the law to settle his grievances.' He suggests that this tradition of looking around the law for the solution has carried on. If obligations of a person take over civic duty in order to satisfy Guanxi then is this not corruption? If one were to focus directly on Guanxi being reminisant with corruption then one would miss the positive implications Guanxi evokes. In order to educate a foreigner on Guanxi you have to look at the context in which it is used. Guanxi is not generally used to describe relationships within a family or with friends. Anthropologists and theorists alike will try and depict differences in social interaction between countries. Research by Hofstede (1988 ) into organisational culture in the international arena shows that Chinese people's short term orientations are that of protecting face, respect for tradition and reciprocal greeting and favours. ...read more.


To say that Guanxi is insignificant would be false, but with the increased accession into a market economy, I believe Chinas dependency on Guanxi will ease. With China joining the WTO they are making huge efforts to modernize their legal structure. In China today powerful economic enterprises are paying more and more attention to the laws, rules and regulations that are part of the emerging newly developed Chinese state. Guanxi posses more questions that it answers. All I can conclude is to call attention to what Guanxi is, but not to why it accurse. That is a question for political scientists, which I am not. The significance of Guanxi is dependant on who you are and what you hope to gain from China. Try as we might to try and compare it to something a little closer to home. I believe Guanxi is truly unique to china. Reference list BURNS, R (1998) doing business in asia Addision Wesley Longman Austrailia Limited GEOFFREY, M (1994) Doing Business in China. China Library GULATI, D, A and LEE, Y, A kellogg on China. Kogan Page Limited GUTHRIE, D (1998) The significance of Guanxi in chinas economic transition, The China Quarterly, pg 255 REVUVID, J and YONG, L (2005) doing business with CHINA Kogan Page Limited Wikipedia (2007) definition, Guanxi [online] Available at: http://en.wikipedia.org/wiki/Guanxi [Accessed on 18th April 2007] The ancient practice of Chinese social networking (2002) Guanxi and social network theory [online] Available at: http://emergence.org/ECO_site/ECO_Archive/Issue_6_1-2/Hammond_Glenn. ...read more.

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