A foundation concept in the Chinese mindset can be gleaned from the following exchange:
Disciple: “Is there one word that may serve as a rule of practice for all one’s life?”
Confucius: “Is not reciprocity such a word?”
Whilst the master was espousing the Golden Rule (do not impose on others what you do not wish for yourself) which is the philosophical basis of maintaining “face”, and was explained in my previous blog, face is inseparable from the web of personal relationships which informs the way institutions or affiliations work in China. This is Guanxi, invariably one of the first cultural code words you would learn in China.
The literal English translation of Guanxi is “connections”, which does little justice to the cultural importance and implications of the word in Chinese society. In their context, Guanxi consists of a series of trust-based and tradable connections defined by reciprocity, mutual obligations, and often overlayed with hierarchical considerations – this gives rise to a personalized network of relationships based on mutual dependence and influence. The Chinese spend their lives and make an art form of building such a latticework of connections.
Friendships bring implications of continual and ongoing exchanges of favours. These repeated favour-exchanges ensure some type of trust among members of a Guanxi network, and membership cultivates a sense of collectivism which engenders a sense of belonging, an affinity or attachment, to the group. In dealing with individuals in China, it is not far-fetched to assume you are dealing with a larger collective, and prudent to be aware that an us versus them perspective may exist across the negotiating table.
At its most basic, Guanxi describes a personal connection between two people in which one is able to prevail upon another to perform a favour or service, or be prevailed upon. The two need not to be of equal social status. Favour or service granted need not receive immediate reciprocity, but there will be an expectation for the future (social credits). Beyond this, Guanxi can also be used to describe a network of contacts, which an individual can call upon when something needs to be done, and through which he or she can exert influence on behalf of another.
The West describes this as “it’s not what you know, but who you know”. However, The Chinese go further as Guanxi can describe a state of general understanding between two people: “he is aware of my wants/needs and will take them into account when deciding his actions which concern or could concern me without any specific discussion or request”.
When dealing with the Chinese, the foreigner who attempts to get by without making or nurturing Guanxi is almost always doomed to failure. An organization needs a comprehensive plan (and budget) to map out a Guanxi building blueprint (“getting membership”), inclusive of key individuals to target and assessing the plan against accumulated social credits. You need to also beware of favours granted or received beyond levels of acceptability and probity. Once the plan is successful, the question is then how to cleverly use Guanxi to further business or political objectives.
Tim is the founder and managing director of DaLu Venture Solutions and works with clients to optimize value in their Chinese Foreign partnerships across the lifecycle phases of Joint Venture (JV) development and management.