Nothing ever happens in China without a relationship. Guanxi, an indispensable requirement for getting approval to do business in China as well as another important marketing variable that trade executives must manage on the top of the traditional pol...
Nothing ever happens in China without a relationship. Guanxi, an indispensable requirement for getting approval to do business in China as well as another important marketing variable that trade executives must manage on the top of the traditional policies, is perceived as a major determinant for successful business in China.
Any business in this society, including both local firms and foreign businesses, inevitably faces Guanxi dynamics. Not a single company can go far unless it has extensive Guanxi in its setting. Its role in the business sector has been unbeatable and unparalleled. It sometimes has been more important than any legal contract or document.
However, as Chinese society integrates into the market economy, its roles are seemingly becoming weakening. Quality and price is getting more attention than before while less attention is paid on Guanxi in doing business. Powerful economic actors often pay more and more attention to the laws, rules and regulations that are parts of the emerging rational-legal system which is being constructed by the Chinese state.
More and more foreign companies are finding out that the scope of their Chinese partners' Guanxi is limited, may take them in directions that are difficult to control, or may not be strategically useful. In addition, some companies are finding that Guanxi may not be cost effective. In a rapidly changing and profit-oriented business field, relying on Guanxi may not be the right track any more. If enterprises in China, including both local and foreign firms, want to get the edge in their own market, they have to change their old frames. They have to follow market system as they do in other countries. Who you know is no more important than what you know in China.