Home / Country Focus: China / Guanxi
Project part-financed by the European Union
If you are already trading with China, it is quite likely that you will have already come across the term guanxi – but do you know how to get it? If you are new to the market and are hoping to do business with the Chinese it might be a term you are still to come across. Whichever your situation developing the right guanxi is vital to the success of your plans to trade with the Chinese market.
Put simply, guanxi means ‘relationships’. In the Chinese business world, guanxi describes a personal connection between two people, or a network of contacts. In practice, guanxi really comes down to exchanging favours which are expected to be done regularly and voluntarily.
In China, guanxi can make the difference between no deal and a successful business relationship. Developing good guanxi with the relevant organisations and authorities can help a business ensure it gets off to a good start in the Chinese market.
Chinese people favour doing business with people they know and trust so any UK business wishing to enter the market needs to build up a good relationship – and in turn good guanxi – before expecting any business to take place. It is vital that this relationship is maintained and is not put aside once a deal is sealed.
Building up the correct guanxi can be a lengthy and time-consuming process, but certainly a worthwhile one. Someone wishing to do business with China should take a real interest in the personal circumstances of their Chinese contact and make special efforts to present meaningful gifts or favours.
Although gifts may play an important part in the process, the development of good guanxi does not just come down to money. It is important for a UK businessperson to treat their Chinese contacts with respect and prove their trustworthiness. The Chinese will want to know that they can depend on their UK acquaintance to come up with the promised goods or service as and when agreed.
Developing good guanxi should be seen as similar to developing a good friendship. This requires frequent contact and a mutual feeling of trust. It may also take a while to form this relationship but it is an important step towards trading with the Chinese market – and the Chinese will always choose to do business with their friends over strangers.
