Relationship-building in China: Do you know what “guanxi” means?

With the growth of business opportunities in China, foreign companies have taken the plunge and jumped right into the China market – without always looking where they leap. As with any business, success depends on many factors and building relationships is just one of them. This is where “guanxi” comes into play.

Guanxi is a Mandarin Chinese term that can be translated into English as “relationship”. However, the word “relationship” doesn’t quite express the full meaning of the word. “Partnership” and “bond” don’t quite suffice either. Guanxi isn’t simply a relationship, partnership, or bond, between you or your company and your business partners. It’s all of that and more. It includes the connection and influence that your business partners have with others (such as their suppliers and the government) and how those relationships can impact your business. It’s personal and pervasive – even in business.

While in the United States getting too personal with a company you partner with could be considered overstepping private bounds that exist for individuals to separate their private life and work life; this concept is almost non-existent in China. Although in the United States personal relationships can exist in the business environment (especially at the higher levels of an organization), in China, guanxi exists between large multi-billion dollar organizations and between small companies of only one or a few individuals. And, speaking Chinese can be a great advantage; however the assumption that speaking Chinese will alone establish guanxi can be a costly supposition for businesses as they expand into China.

Here at Communispace, our online communities reflect the diverse relationships among our clients, members, and ourselves. In some ways, our communities epitomize guanxi through the relationship/bond/partnership that exist in various degrees and permutations between client, member, and facilitator:

The study of guanxi can tell us a lot about how to foster vibrancy in online communities. By the same token, online communities that cultivate engagement and “social glue” could be an important archetype to study for business strategists trying to understand how guanxi works.

Books have been written about guanxi and surely more will follow as a greater number of foreign companies successfully enter China to participate in a vast and growing market of opportunity. Many more organizations will enter and then retreat, if only temporarily, realizing they are not adequately prepared for doing business in China.

If your company is considering entering the China market make sure building guanxi is at the top of your to do list.

For companies entering China, understanding how cultural differences manifest themselves online has crucial implications. With the rapid adoption of social networking worldwide, are local cultures being replaced by one homogenized global culture, or is national diversity still expressed in online environments? To learn how marketers and market researchers can accommodate cultural differences when reaching out to consumers in new markets read the Communispace research paper Breakthroughs without Borders.