The Chinese term for relationship is “guanxi”, one of the most important cultural traits of Chinese people. The term “guanxi” may be better translated as personal contacts” or “personal connections”. “guanxi” can also be understood as “reciprocal obligation”, i.e. “a special relationship individual have with each other in which eachcan make unlimited demand on the other”, “friendship with implications of a continual exchange of favors”, or “the establishment of a connection between two independent individuals to enable a bilateral flow of personal or social transactions”.

“guanxi” derives essentially from the Chinese family system. In the traditional Chinese family, whenever small immediate or extended, members are mutually obligated to help one another. “guanxi” is strongly colored by Confucian reciprocal obligation toward family members. Through the establishment of the “guanxi”, people bond with each other with respected obligation toward each other. “guanxi” is essentially a network.

“guanxi” is usually established among people who share a commonality of certain identies – for example, tongxue (schoolmates), laoxiang (fellow viligers) and laopengyou (old friends). China is not a full-fledged market economy yet, which makes it difficult to allocate resources through market mechanisms alone, therefore, “guanxi” is a major means of resources aalocation. Without “guanxi”, one “simply cannot get anything done”. In recent years, making intensive use of “guanxi”, or getting through the “backdoor” to get things done, has been legitimately criticized by the Chinese government. However, in china hardly any aspect of social life is not touched by “guanxi”.

“guanxi” pervades the whole Chinese business process. Many sholars find that “guanxi” stratey is helpful for seeking background information about potential Chinese partners, negotiating prices and terms of payment, and implementing contract. Many western business men believe that doing business in china is not just a matter of price and product. To succeed in the Chinese market, foreign businesspeople must rely on friendship or good personal relationships (“guanxi”), which often take time and patience to build. At least most people believe that a fine “guanxi” with high level officials in Chinese bureaucracy can facilitate market penetration and smooth negociation and generate good business.

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