Interfacing Business Relations with Southern China: An Empirical Study of the Relevance of Guanxi

Despite the widespread belief of the significance of guanxi for facilitating business engagements in Asian contexts, Jew empirical studies have been conducted to examine (1) the importance, and (2) the ethical dimension of the practice of guanxi in a typical Chinese cultural context. Yet, guanxi, the phenomenon of interpersonal relationship of social networking, is perceived to be significant in the daily lives of Chinese people and is considered as an important key for gaining business success in modern China. This study examines the importance of guanxi and the ethical dimension of its practice among 193 Chinese managers from 78 private and joint venture enterprises in five major industrial fields that were located in eight coastal cities of Southern China. The results reveal a high degree of consensus for the importance of guanxi, and the ethical dimension of its practice across key demographic categories of managerial level, age and formal education. These findings confirm the Chinese managerial culture being underpinned by a unique network. Despite commerce and industry practices increasing by being on a global term, managers tend to be profoundly anchored to Confucian ideals of harmony, hierarchy, collectivism, and personal relations. This paper discusses the implications in terms of the business practice and management in the contemporary economic transition of mainland China. INTRODUCTION The Chinese concept of 'Guanxi' is difficult to be translated in a simple phrase. A myriad of meanings and nuances are involved in the single most impactful phrase of chinese social, commercial or political life. The economic character of many societies dominated by overseas Chinese have often been called "Guanxi Capitalism" (Hamilton, 1989). The phrase 'Guanxi' is a complex particularistic relationship that maps emotional, material and social obligations of individuals or organizations as they interact. No successful business relationship with Chinese could escape the obligations inherent in the 'Guanxi Bond' and a careful maintenance of this inevitably leads to effective outcomes. Of course, all cultures emphasize personal relationships and network development, but the uniqueness of 'Guanxi' cannot be compared with such social frames. "The significant distinguishing feature of guanxi is that fundamentally it is a method of economic organization without resorting to law or to other formal rules. Business relationships in other cultures do not have the force of such a basis to sustain them. " (So and Walker, 2006:3). Guanxi may be derived from common or shared identification such as family ties, hometown educational institutions, workplace or similar shared heritages. It may also arise through mutually respected intermediaries. All Guanxi relationships are nurtured and developed according to the protocols of 'Ren quing', which implies a strong sense of reciprocity (Chatterjee, 2001). 'Ren quing' protocols are the fundamental five relationships that define the Chinese value system. These virtues of 'ren' are benevolence, compassion, sympathy, empathy, and community orientation. However, foundations of Guanxi are built on four elements-namely, trust, favor, dependence and adaptation. It has been suggested that the widening radius of Guanxi practice in recent years may be associated with the chaos and collapse of social order during the cultural revolution period. The global linkages of Chinese companies have given a new dimension to this practice. The character of the Guanxi in the pre-reform era was mainly to gain access to official channels, quotas for commodities or other favors. In recent years, the manifestation of Guanxi has become more widespread and extravagant. One of this manifestation can be observed in the extravagance of 'gift giving'. The negative effect of this can be seen in the rising expectation that anyone doing business without Guanxi is obligated to respond in a conformist way. The consequences of non-conformity will be the denial of access to business opportunity. …