Is Guanxi Important?

By Jian Shuo Wang on 2007-12-21 23:01 · YLF

YLF

Many books about China says: “Guanxi is important in China”. Many people do research based on the books. Many foreigners know Guanxi is important in China.

The problem is, it is a little bit out of date today.

Guanxi is important, but no longer the ONLY key

Guanxi or relationship was very important, and is still very important in today’s China society. However, the importance of this factor is degraded based on my observation. It is just like “Hukou is important, and is still important, but not as important as before”.

Before, when there are no market rules, many things are controlled in the hands of the key person. Since everything belongs to a “virtual” country, the factor of a person is the most important factor.

However, these days, especially in large cities in Shanghai, or Beijing, many decisions are now business decisions, and there are clear owners (just like most countries in the world), the role of Guanxi start to fade out.

I want to make it clear that I am not saying relationship is not important in China any more. It is still more important in decisions than many other countries. What I am saying is, it is not as important as many books described 10 or 20 years ago.

3 Comments
Does Guanxi mean "trusted relationships"? I feel that in China, trusted relationships is more important that the US because there is less legal recourse to some violation of a contract or business engagement. I don't know from personal experience, but it is a general feeling that the legal system is still less predictable. In China, the "most trusted" vendor can be more valuable than the "most expert" vendor. Expertise can be learned, but integrity cannot be. Of course, integrity is important everywhere, not just China. Does Guanxi mean "connections that unlock government controlled resources"? That seems important in some industries (real estate) more than others. This is a complex and interesting question Jian Shuo. Hope your readers can help me understand this better!
— Elliott Ng · 2007-12-22 23:43
@Elliott, Guanxi IS important in China, much more important than in other developed countries. The point I want to make is, currently, the age for people in charge to make decisions at his/her own is moving away from us. It is still not a perfect legal-governing society, but it is improving.

For example, in the government, before, knowing a person means you get the business. However, recently, knowing a person is only the basic requirement to get things done, and you still need to follow certain rules, and sometimes laws. The importance of Guanxi is declining.

In business world, importance of Guanxi is because it is a much more reliable way of building trust, instead of laws. Trust is often refer to Guanxi.
— Jian Shuo Wang · 2007-12-23 00:24
I think you are right, Jian. As a foreigner, I am running a business myself in Shanghai and good relationship (Guanxi) does not necessarily mean that you will get the job, however it is a basic requirement that your company gets considered for a certain job in first place. So Id say Guanxi is important as "door opener", however doesnt help much to actually close a deal.
— Mr Cool · 2008-11-07 15:52