Guanxi(Relationship) in China Business
There has been a certain amount of blog chatter about guanxi in China the function of relationships when doing business in or with China. Dressed up as an nearly mystical intangible that needs to be put in area as a way to be successful, a lot of the debate continues to be defining it, trying attempting to determine its usefulness or otherwise, and considerably offering of hocus pocus over who has it and who doesn’t. The capability to figure out what guanxi is or isn’t seems to mark you out as a China specialist. Its utter nonsense and considerably of it is instead dull. In reality, guanxi doesn’t help you in any distinct way in doing business in China. That’s the selectively tribal granting of favor. It’s sleazy in the extreme, and can cause problems with corruption and eventually into trouble with legislation like the FCPA.
Instead of writing guanxi to the Chinese business manual, it’s significantly better to focus on your business fundamentals and common sense. While business vary, following a business model will certainly make you success in business, probably with a number of adjustments, likely to work in China. I mentioned a few of these in my article in China, White Goods Become Red. When you have your business model worked out, it needn’t any adjustment for guanxi.
Of a lot more relevance in China is conducting your due diligence when buying from China (ensuring what you pay for is what you get, that QC structures are in place, and that letters of credit are authorized only when the goods are verified), selling to China, and of course when establishing a business in China. We’ve written a lot about the topic and never once do we mention guanxi, and the more serious minded businessman won’t require to both. A triumphant company concerned with China is about conducting your due diligence, in regards to the integrity of one's business model, and it is about working hard and with the proper people. It is definitely not about mysterious relationships with any inscrutable Chinese gentlemen.