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Global Japan
NOV 1, 2016

Good Guanxi: The Key to Success in China

By Aya Murota
iStock photo/Rawpixel

If you are a frequent traveler to China or are engaged in business with Chinese companies, you may have experienced seeing the “two faces” of Chinese people; their “public” and “private” faces.

In public, Chinese people can be seen as self-centered, rude, and insensitive. A good example of this is the scores of people you can see pushing and shoving mercilessly to get on trains in Chinese cities. 

On the other hand, when it comes to their private lives, Chinese people show deep humility and affection towards their family, relatives, and friends. In particular, filial piety—respect for one’s parents, elders and ancestors—has been a central value in China for millennia. The reverse is also true; parents in China are willing to sacrifice enormously for their children.

In May this year, I had the opportunity to go to Shanghai with GLOBIS University’s CEIBS Visit Program. This was a good opportunity to examine the Chinese way of thinking firsthand and understand how Japanese (and other foreign) companies need to consider cultural differences before doing business in China.

I used to work for a typical Chinese family-owned company in Japan. Everybody except me was related to the president or vice president. In the first few months, I was treated as an “outsider”—everyone wore their public face when dealing with me.

However, after a few months working together and building trust, I experienced a gradual shift in attitude and communication style. I was asked to run some personal errands for the president, totally unrelated to my job.

In Japan, this may be seen as crossing the line or even “power harassment” but in Chinese culture, this is a sign of trust. I followed orders without complaining and was eventually accepted as an “insider”—part of the family. By building a good relationship and connections with the family, my work experience improved dramatically. Eventually, I could count on their full support whenever I needed it.

The concept of building personal relationships, or guanxi, is extremely important in Chinese culture and crucial when doing business. In one of our CEIBS study visits to a leading online real estate company, the co-founder explained how he and the CEO had established a relationship during their time on the CEIBS’ MBA program, how they’d had long talks walking across the Gobi Desert together, and how they shared the same dream of revolutionizing China’s real estate market: a classic example of good guanxi.

The idea of understanding Chinese business via guanxi is nothing new. Matsushita Konosuke (founder of Panasonic) cultivated a strong relationship with China’s leader Deng Xiaoping, demonstrating successful Japanese-Chinese guanxi.

Deng, China’s then leader, personally visited Matsushita’s Osaka factory in 1978 to ask for his help in modernizing China’s industry. Seeing Deng’s humbleness and sincerity, Matsushita did not hesitate in promising to help. Until Matsushita’s death in 1989, he and Deng built on their special guanxi. Matsushita made significant contributions to China’s economic growth and helped to improve Chinese people’s lifestyles dramatically. In return, Matsushita earned the Chinese government’s respect and goodwill and gained unprecedented expertise in manufacturing and operations in China.

The concept of guanxi is deeply rooted in the Chinese philosophy of Confucian harmony, which is achieved through good human relationships and connections. Of course, good relationships cannot be built in a day. Building guanxi requires a substantial amount of time and effort from both sides. It is critical for foreign people to understand the mechanisms of Chinese interpersonal relationships, and work tactfully to develop them. Once your Chinese counterparts accept you as an “insider,” doing business in China will be easier than you can imagine.