China is a unique place to do business, offering very different rules and norms than you might be used to. One of the most confusing things for foreigners working in China is the concept of developing guanxi. But fear not. Here we explain exactly what guanxi is and how you get it, build it and keep it.
What is Guanxi?
Guānxì (关系) is a very broad term in Chinese and difficult to directly translate into English. In most Chinese-English dictionaries, guanxi will be defined simply as “relationship”, but it means much more than that. Guanxi can be best described as the concept of the strength of a relationship that can offer advantages and favors. If you have good guanxi with someone it basically means you’ve sucked up to each other to the point of being “buddies” and will therefore favor each other if and when the opportunity arises. China, like many other East Asian nations, is a collective society and therefore places great emphasis on forming alliances and working as a group, contrasting starkly with Western individualism.
The Two Types of Guanxi
Guanxi can be categorized as social guanxi or business guanxi. Social guanxi refers to personal connections among relatives or people within one’s social circle (such as friends, colleagues, etc). In a business context, guanxi relates to authority and can be roughly translated as “knowing people in high places”, such as government officials.
The Purpose of Guanxi
Guanxi building is vital for those working and doing business in China, as Chinese people naturally prefer dealing with people they’re familiar with. They consequently have a lack of trust towards strangers, which can make it extremely challenging for foreigners who lack sufficient guanxi. Contracts in China are often obsolete as a large amount of business is done with verbal agreements to avoid complicated paper work. This is why the Chinese generally prefer doing business with people they have good guanxi with, as a level of trust already exists. The importance of guanxi is often hugely underestimated by foreigners doing business in China.
Gift Giving and Guanxi
Gift giving in China is a customary headache that you will definitely come across on your guanxi adventures. Unlike many developed countries that have clear rules about gift giving and bribes in business, there are still a lot of gray areas in China. For Westerners working and doing business in China, it is sometimes difficult to distinguish between guanxi and corruption. Gift giving within a business context – seen as taboo in the West – can prove an ethical dilemma for guanxi newbies.
Money is the standard gift thrown around in red packets (hóngbāo - 红包) during birthdays and cultural festivals in China, but in the guanxi world money is a definite no-go area. However, gift giving in the Chinese business world is still widely practiced. Be careful though, as it can be difficult to distinguish between what may merely be an innocent gift and what may be perceived as a bribe. Specific items make for good or bad gifts in China, usually dependent on superstition. Here are some safe-bet gift ideas and ones to avoid:
You can’t go wrong with a basket of fresh fruit. This is a low-key, safe option that can be purchased from major supermarkets and decent fruit sellers. Brandy, cognac and whisky are also fail-safe presents for businessmen/women, and can make for great ice-breaking at meals and after meetings. Other acceptable gifts include fine pens, small kitchen appliances, cigarettes and lighters.
Avoid expensive or luxury gifts which may be perceived as bribes. Sharp objects, clocks and cranes should be completely avoided as they imply bad luck in the highly superstitious Chinese society. Business gifts should be given in public to prevent any unwanted accusations. Do not expect gifts to be opened immediately.
How to Develop Guanxi
Developing guanxi is one of the biggest challenges for foreigners who want to work and do business in China; it can be very costly as it requires a substantial amount of time and money for socializing. Understanding guanxi is merely the first step. Now you’ve done that, here are some simple tips to help you boost your guanxi credentials.
Speak the Lingo
The first step to take on the road to great guanxi is to improve your Mandarin skills and develop your cultural understanding of Chinese festivals and superstitions. Learning at least a few polite Mandarin phrases is an easy way to ingratiate yourself to your Chinese peers. Most will be astounded that you can speak any Chinese at all, and your efforts to stutter out a sentence from time to time will not go unnoticed. It’s also worth mentioning that you do not necessarily have to learn business Mandarin, as guanxi is largely developed outside the workplace where it is somewhat taboo to talk shop.
Get On Social Media
Having an active presence on Chinese social media will help widen your guanxi circles significantly. As most forms of Western social media are forbidden, Chinese people are almost non-existent on such platforms. Once your phone is set up, make sure you get registered on WeChat, QQ and Weibo. Almost every Chinese person uses such platforms for day-to-day communication. WeChat is a great way to build your guanxi. Regularly making posts on your ‘Moments’ and responding positively to your contacts’ posts will go a long way.
Be proactive and make the first move. As mentioned above, Chinese people tend to have a lack of trust in outsiders, so by simply making the first move in guanxi building you’re laying down your commitment and giving “face”. You can do this by asking the person in question for lunch, dinner or drinks (for which you will of course pay). As favour returning and face saving are a fundamental part of Chinese culture, your subject will likely be keen to return such kind, therefore expressing their mutual commitment to your relationship.
Regularly meeting/grooming your contacts is essential if you want to maintain the strength of your guanxi. Be sure to check on your connections every now and again, even if it’s merely sending a message over WeChat. It’s an absolute must to express friendly wishes to your contacts during national festivals; failure to do so could leave an irreversible bad impression. You can also share your own cultural festive wishes as your Chinese connections may be keen to learn about your culture in return. Also, participation in group activities which may be perceived as time-wasting or pointless by many Westerners will be expected in China in order to maintain and build guanxi networks. Expect invitations to group meals as well as the inevitable odd KTV night out.
Lastly, compliment your contact. In fact, over-compliment them whenever you can. This is a great way of giving 'face', and the Chinese give and receive compliments freely. When complimented yourself, make sure to deny such assertions and repay with a compliment back. If you're running short on positives, compliment their partner or kids. This is sure to put you in their good books.
Any more tips on how to get guanxi? Tell us in the comments below.