Chris Devonshire-ellis: China Business - Its Not About Guanxi
Theres been a certain amount of blog chatter about guanxi in China the role of relationships when doing business in or with China
. Dressed up as an almost mystical intangible that needs to be put in place in order to succeed, a lot of the debate has been about defining it, attempting to determine its usefulness or otherwise, and much providing of hocus pocus over who has it and who doesnt.The ability to even determine what guanxi is or isnt seems to mark you out as a China expert. Its utter nonsense and much of it is rather dull. In fact, guanxi doesnt help you in any particular way in doing business in China. Instead it can be painful if relationships are used purely as a you scratch my back and Ill scratch yours type of mentality. Thats not business. Thats the selectively tribal granting of favor. Its sleazy in the extreme, and can lead to issues with corruption and ultimately into trouble with legislation such as the FCPA.
Rather than write guanxi into the Chinese business manual, then, its much better to concentrate on your business fundamentals and common sense. While businesses vary, following a business model that made you successful elsewhere is almost certainly, perhaps with a few adjustments, going to work in China. I mentioned some of these in my article In China, White Goods Become Red. If you have your business model worked out, it wont need any adjustment for guanxi.
Of more importance in China is conducting your due diligence when buying from China (ensuring what you pay for is what you get, that QC structures are in place, and that letters of credit are authorized only when the goods are verified), selling to China (making sure you get paid), and of course when establishing a business in China. Weve written a lot about the subject and not once do we mention guanxi, and the more serious minded businessman wont need to either. A successful business involved with China is about conducting your due diligence, about the integrity of your business model, and its about working hard and with the right people. Its definitely not about mysterious relationships with any inscrutable Chinese gentlemen.
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