Why Guanxi Play in Major Role in China

Why Guanxi and Mianzi Play an Important Role in Chinese Business Culture Diana Yuan Zhang University of Houston-Victoria Abstract The paper discussed why guanxi and mianzi are the main factors that directly affect the business and politic side of China, and this is molded culturally for the past five thousand years. And how is this cultural influence becoming stronger than ever before.

By contrasting and analyzing guanxi and mianzi, this research paper is intended to point out the differences between values of China and U.S. A, and also the culture of China to have a better understanding why guanxi and mianzi is such a big deal. And end the research paper by how to build and maintain guanxi.

Best services for writing your paper according to Trustpilot

Premium Partner
From $18.00 per page
4,8 / 5
Writers Experience
Recommended Service
From $13.90 per page
4,6 / 5
Writers Experience
From $20.00 per page
4,5 / 5
Writers Experience
* All Partners were chosen among 50+ writing services by our Customer Satisfaction Team

Why Guanxi and Mianzi Play an Important Role in Chinese Business Culture The relationship between people is the most complicated thing in the world, the relationship between the Chinese are more subtle. Chinese people believes that “????? ,????? ” saying that at home one relies on one’s parents and outside on one’s friends.One thing that is really famous and special in China is how “relationship” works different from other countries and for foreigners to understand China’s culture and custom better; this is a necessary topic to cover.

In order to facilitate the study of Chinese type of “relationship”, foreigners even create the world “guanxi”. Wikipedia describes guanxi as “the basic dynamic in personalized networks of influence, and is a central idea in Chinese society.In Western media, the pinyin romanization of this Chinese word is becoming more widely used instead of the two common translations—”connections” and “relationships”—as neither of those terms sufficiently reflects the wide cultural implications that guanxi describes. ” In the west, people commonly handle their business first and if the business is successful, a relationship will be built. However, in China people believe that prospective business partners should build a relationship first and if it is successful, business transactions will be followed.Every transaction make in China mostly start with a good relationship with your business partners and the logical development of close relationships is the Chinese concept of guanxi. Vanhonacker’s (2004) comment, “In the West, relationships grow out of deals.

. . .In China, deals grow out of relationships,” Guanxi stands for any type of relationship. In the Chinese business world it is also understood as the network of relationships among various parties that cooperate together and support one another.Guanxi plays a very important role in Chinese’s life, because it directly affects the business and politic side of China, and this is molded culturally for the past five thousand years. “China, the great family of nationalities with minor estrangement among, in particular, is a society built based upon Confucianism where people are tied closely into varieties of guanxi, with which the social networks bind millions of Chinese firms into social and business webs, largely dictating their success.

” (Wong 2007) Successful people understand this fact.Guanxi is a very important resource and capital, and many successful business people are deeply aware that having the right guanxi is the importance of their own success. They know that human do not live on the planet alone, and every human being has their own advantages and limitations. This is the reason why they know how to share ideas, mutual assistance, and the importance of mutual guidance, so they carefully cultivate relationships with each other. So when one faces difficulties and challenges, one will not be alone, and one will have strength and conviction.A successful person always has their own network of relationship; they work very carefully to operate their Guanxi. Many people has misunderstanding of the word “Guanxi” is just to ask people for help when you needed, just as some people think that communicative behavior occurs when you need something. When it comes to guanxi we must keep in mind: business negotiated with human.

Stanford Research Center has published a survey report, concluded that: a person earns, 12. 5% from the knowledge, 87. 5% from the contacts. As you can see how important contacts play in role of our daily life.In China guanxi it is the key to everything: getting a new driver license, treated by a better doctor, getting into your dream school, landing a distribution deal, even eating at your favorite restaurant on a Friday night. Getting what you want in China means you have to have the right guanxi. Not only Guanxi occurs in China it is just that Guanxi in China can do put things in a whole in level.

“In Europe or America who you know might help you get a job, or get your child into a decent school. In China who you have guanxi with can mean the difference between freedom and jail, justice or discrimination, wealth or poverty. Hayes 2005)” The Chinese term guanxi can also at times mean the “networking. ” In China, the relationship is a complex thing. Commercial activities in china are characterized by guanxi can include side with government agencies, investors, partners, and even the relationship with their employees. By having the right guanxi in China, the company minimizes the setback, risk, and disappointments when doing business.

Having the right Guanxi with the relevant authorities in China will determine the competitive standing of an organization in the long term run.In additional certain risks, barriers, and set-ups you’ll encounter in China will be minimized when you have the right Guanxi working for you. That is why the correct guanxi is so dynamic to any successful business strategy in China. In Irene Yeung and Rosalie Tung article they point out one popular saying in these societies puts it “Who you know is more important than what you know. ” “Who you know” refers to personal connections with the appropriate authorities or individuals. (Young1996).

Guanxi can be taken in many forms it does not have to be based on money.What is Mianzi? It is not possible to discuss guanxi without introducing the related concept of mianzi. A related issue, mianzi, or face, is equally important within Chinese social settings and therefore of significant importance in a business context. Mianzi is translated as “face” and is often interpreted as both the showing of respect (“giving face”) and ensuring you do not offend people (causing them to “lose face”). “In Asian culture, if someone has “good face” (or quite simply has “face”), such “face” means someone has a good reputation in front of one’s peers.Interestingly enough, having good face is actually a “bankable” notion in Chinese culture.

Having face in front of one’s business colleagues or within a community is literally a statement of that person’s value. If someone has good enough face, in some cases they can walk into a lending institution (such as smaller, privately operated banks), and take out a loan on their word only. People with good face are generally dependable, reliable, and safe to do business with. As we say in Western culture, “His word is as good as gold.

This is essentially what good “face” means. (Melendez 2007)” In western relationship helps the individual, but in China, they also define the individual. This is why “miazi” is all connected to “guanxi”. The concept of “mianzi” is very hard to explain in a few sentences. As David Yau-fai Ho, the first Asian to serve as the President of the International Council of Psychologists says, face is “a concept of central importance because of its pervasiveness with which it asserts its influence in social intercourse.It is virtually impossible to think of a facet of social life to which the question of face is irrelevant” Also a recent study conducted by the China Youth Daily found that over 93 percentage of the 1,150 respondents surveyed admitted that face is very important to them, with 75 percentage acknowledging that making a mistake in public was, by far, the most humiliating experience they could ever have (Shan, 2005). This study shows that most Chinese will do whatever to avoid looking bad in the public. To Chinese people “face” is a very important thing, sometimes to the extent of incomprehensible.

Before Chinese people think face is sometimes even more important than life. The ancient Chinese idiom a “???? ”, saying someone greeted a half-died starving man to dinner, but the host speaks very impolitely to him, the starving man feel insulted by the host, so he refuse to eat the dinner that the host offered, and rather starve to death. In today’s world we might think even though the host had a bad attitude, the half-died starving man should still eat the food first and maybe through rock at the host window later if the man felt insult by him.It is really hard for us to understand the face theory of the traditional Chinese culture. We have to realize two things: first, in the Chinese culture, mianzi represent individual social status and social value, that means personal behavior must be consistent with this identity image; secondly, mianzi is an important factor affecting the interpersonal relationship. You can think of face as respect, honor or reputation, you can also think of it as public image, particularly through the eyes of one’s close connection.

China and the United State’ attitude toward “mianzi” are very different, which is the cultural communication problem cannot be avoided. China’s business culture stresses of mianzi should communicate effectively in a harmonious atmosphere. Mianzi play a decisive role in the communication.

In respect of the Chinese people, the people have to deal with two major relationships, a relationship between man and nature, also person-to-person relationship. Western culture pays more attention to the relationship between man and nature, so that is why western’s natural science is especially developed.Chinese people are most focused on the relationship between people. If a Chinese person is bad at dealing with interpersonal relationships, then it is really hard for him to gain a foothold in the community. For example, in China, supervisor had convey a concept that is an employee make any mistake that mean he or her had “bring the shame” to the entire department. Even the “smear” is personal, it will still be considered as the whole department of “loose face”.

Lost mianzi would be very difficult to re-establish the image of the collective.During negotiations if one feels he or her encountered each other lad to “loss of face”, the majority of Chinese negotiators will think it is very embarrassing, if the negotiation continue it will feel very awkward, and on the other hand only a small number of United State negotiators will think it is embarrassing. As you can see mianzi is key motivator among Chinese business people. Mianzi factors in many decisions and action taken in the business world, also in day to day life in china just as how guanxi play an important roe also.Understanding both of these concepts, and their importance in business relationships in China, it is manifest importance.

It is possible to spend years developing a business network by applying a good guanxi In David Smith article he pointed out that: “understanding of guanxi, only to spectacularly fail because of a misunderstanding of mianzi”. “Face and guanxi (roughly spoken as “gwahn-shee”) work hand-in-hand. Where face is the substance – the fuel – that makes the Chinese business engine turn over, guanxi is the “personalized glue” that makes it all stick together as a working dynamic.

Melendez 2007)” Chinese Culture Economics and culture are not developing as two parallel lines. They interact and affect each other reciprocally (Wong, 2007). When something goes wrong or you needed something to be done finding the right guanxi seems to be the only way in China. Some people think that the culture of guanxi came from their traditional way of farming production. It is their tradition with close family relationships as a link to the family extends to the results of the social relation.To observe guanxi culture’s origin we have to think why we need guanxi? The Sole purpose of having the right guanxi is to get the benefits. Then why guanxi will be able to obtain benefit? Because there are some people out there hold benefits? And why the people who hold benefits are willing to have relationship to benefits the others? That is because he has a grasp of the public assets? In western guanxi is not as popular as in China is because; most of the assets they master is private. Even if one has hold of the public interest; the external supervision is very good.

Back in ancient China, family is the most important thing in everybody life, from a normal all the way up to the emperor, there is no difference in the way they see family, they take care of the family first before they think of them self. Guanxi culture is deeply rooted in Chinese cultures because property, rights, including social resources never had a clear boundary. After Qin Dynasty establishes authoritarian rule system, the Chinese start to use this concept to rule the country, “???? ,???? ;???? ,???? (Under the whole heaven, every spot is the sovereign’s ground; to the borders of the land, every individual is the sovereign’s minister. ) In other words, all the rights are owned by the Royal. In such large system, the Royal hold their own “family business” so the royal need to hire people to work for them, and then had a huge bureaucratic class. Bureaucratic class exists to do “steward” for the royal, In addition to their salary; they are not supposed to take any guard resources especially property.At the same time, most “steward” are not “saints”, and it is very difficult to face such a huge asset that they custody, and they do not want to appropriate to oneself.

As assets custody, there are two pathways that they can “transfer” the assets. First, according to the system of royal “legitimately” transfer, second, transfer through less legitimate even very legitimate way. No matter which way they chose to transfer the asset, they need the help from other people. The first pick is to transfer to the people that they relatively close to.This way, they are doing a favor, they can earn mianzi and also they can earn gratitude, on top of that they can get something in return. At the same time, as people wants to get the “public” assets, rights and other resources, they will take advantage of a wide range of opportunities, and desperately to make good relationship with the people who have the rights of resource allocation. This relation is not an ordinary human contact, but to the interests of the benefit they can get.

With this kind of “tacit “this is where all guanxi and mianzi started.Nepotism is very common for Chinese people, because for a country that used to rule under the Confucius ethics, in handing a lot of thing, the Chinese do not go by the formal or right way, but rely on the nepotism, that is why the community makes guanxi a very big deal. A research says “About 90 per cent of China’s billionaires are the children of high-ranking officials. Princelings have fared far better in business than in politics, observed analyst Zhang Hua, who commented on the phenomenon in Hong Kong’s Apple Daily in 2007. Not a single (princeling) family has been left behind,’ he said sardonically.

The various families have carved out territories in various industries. The family of former premier Li Peng, for example, controls the country’s energy sector. His daughter Li Xiaolin is chairman of China Power International Development, an electricity monopoly. His son Li Xiaopeng used to head Huaneng Power, another energy heavyweight. The family of former Chinese president Jiang Zemin has moved into telecommunications, while the offspring of former premier Zhu Rongji are strong figures in banking.His son Levin Zhu is the chief executive of China International Capital Corp. The princelings began staking out their dominions in the business world in the 1980s when China was opening up its economy. Armed with their fathers’ connections, they were able to exploit the opportunities thrown up by China’s economic transformation.

By the 1980s, this economic revolution had led to much public disquiet, and when students staged protests at Tiananmen Square in 1989, much of their anger was initially directed at what they saw as rampant corruption by senior officials and their families. Tan 2009)” This research accurate description of the current situation in China put aside the high-ranking official even if an ordinary citizen who is looking for a good job, having good or right qualification that fit the job will not get you in, you also need to have the right guanxi. Many graduates who accomplished a lot during college, having the all kind of certificate, doing good internships, joining top organizations, still can’t find a good job, to them they think all their certificate are just a blank sheet of paper.On the other hand, student who use to barely pass their class, lacking thought out college, but just because their family have the right guanxi, just after their graduation they can find a great job with all the benefit. Even though this kind of situation happens in the western too, but it is ten times worse. The people who have no money, no right, no guanxi always have to work for the one who have everything, perhaps this is today’s reality in China, no matter how hard you work, it is very hard for you just go on the top without the right guanxi. ConfucianismIn China people use more than half of their energy to handle relationship between each other, in another world is to build up the right guanxi.

Guanxi interaction has been viewed by many scholars as an idiosyncratic cultural phenomenon (Lee and Ellis, 2000) where Confucianism is the major life philosophy. Confucius was the most influential and respected philosopher in Chinese history. His ideas were the strongest influence on Chinese society from around 100 BC till the early 20th century. The Chinese governments throughout this period of two millennia had made his ideas their official state philosophy.

Confucian theories and philosophies were even exported to neighboring countries and honored as wise and noble ideals (Culture 2007). Chinese traditional ethics and cultural summed up that relations between people as “?? ” (human relation). “Human Relation” is the specific personal, family, social relations, including interpersonal relationships. Confucian teachings are based on five human relationships that are founded on moral principles, Wu-lune (?? ), the basic norms of guanxi, “??? ,??? ,??? ,?????? ,??????? that between the ruler and the ruled; that between parents and children; that between siblings; that between husband and wife; and that between friends.

Above the five relationships, parent-child relationship, monarch relations is a fundamental relationship. More than thousands of year, no matter how Chinas feudal society development and changes, and how the different specific content change of human relationships over the years, but none of the “Father and Sons” (reflecting kinship), “Jun Chen” (reflecting the political relations) the foundation of the concept of human relations shaken a bet.Confucian concept of human relations is the most fundamental is the word “?? “(virtue). Where “? ” is “father and son” as a starting point to solve the problem of the relationship between the individual and the individual; and “? ” solve the “monarch” The backbone of social relations. Confucianism is the cornerstone of traditional Chinese culture. Want to know why guanxi and mianzi is such a big thing in China; we have to start off by have a better understanding of Confucianism.

Chinese culture has deeply influenced by the Confucianism, Thousands of years of feudal society taught nothing more than ???????? The Four Books (The Great Learning, The Doctrine of the Mean, The Confucian Analects, and The Works of Mencius??????????????????? and The Five Classics (The Book of Songs, The Book of History, The Book of Changes, The book of Rites, and The Spring and Autumn annals????????????????????????? Traditional thinking of the sense of responsibility, self-control thinking, and loyalty and final piety thinking are the result of the Confucianism and the feudal rule in combination.Therefore, Confucianism is the backbone of social relations. Pros: 1) Emphasis on education. Create individualized teaching methods and attention to individual difference in teaching, adept inspired teaching. 2) Pay attention to morality, decency and propriety, righteousness, consciously comply with truth and goodness. 3) Ideologically adept dialectical thinking, emphasis on the nature of agriculture, emphasis on experience , also that natural cycle are the root that causes of human reason.

Promote agriculture-oriented due to actual resources of the ancient China. 4) To promote the country to “? ” (courtesy, manners), “ethical political”, if Western culture is the “intellectual” type than Chinese culture is “morality” type. Cons:1) Do not pay attention to importance of agricultural production of knowledge, do not pay attention to learning of science and knowledge. Strong sense of political purpose, Confucius is inclined to politics. 2) Do not emphasize to logic but pay much more attention to experience. ) Emphasize that the individual compliance to the group, repressed individual personality ideological unity caused national’s simple-minded filial piety and blind loyalty.

4) Ethical relationships solidified and absolute. The three cardinal guides (ruler guides subject, father guides son and husband guides wife) and the five constant virtues (benevolence; righteousness, propriety, wisdom and fidelity) as specified in the feudal ethical code. Parents authoritarian. All these become personal oppression and spirit slaughter.Restrict thinking and way of life of the whole China; it is a forward resistance of history. 5) Ethical concept: hierarchy is most supreme, thus limiting the development of the natural sciences and technology. “Building upon the thoughts of others, Confucius codified the proper relationships between the ruler and the ruled, the father and son, the husband and wife, the elder and younger brother, and the teacher and student.

(Neville 2012)” These are the main focus that Confucius had taught. Neville had said “All have roles and responsibilities in a Confucian system, and they are not equal. This concept might be very difficult for those who grow up in a society that is shaped by the Declaration of Independence. In many respects, Confucianism substitutes for an independent judiciary that has never really existed in China. “It provides a structure for moderating disputes and deciding who gets what,” “That is very different from a Western or an American judicial system, in the sense that its premise is that not everybody is equal.

In fact, people are inherently unequal under Confucianism. (Neville 2012)” Build and Maintain GuanxiMan are social animal, each individual has their own unique ideas, background, attitude, personality, behavior patterns and values. Interpersonal has a big influence on everyone living, working, and even organizational climate, organizations communication, organizational efficiency, and also has a great impact between the individual and the organization. Since we are a member of the society, we have to build relation with others, and right relation help us to get the right guanxi, where guanxi is a huge thing in China’s society.Since Chinese people prefer to do business with people they know and trust this is why after research and learning the Confucianism I listed of seven elements help to build guanxi in China: 1) To build the right guanxi the principle is to treat people sincerely, the prerequisite for building guanxi is trust and the most essential foundation of trust if that you believe in someone, which you have to be a person who is the same outside and inside.

Also when you are trustworthiness they can get the feel of “You got my back, I got your back. 2) Be interested in other, not just let others be interested in you. Being interested in others will make one grateful, and we always like those people who are interest in ourselves. Also being interested in others will make them feel that you are caring. 3) Properly listen to get more useful information. Carefully understand others, and seek what can of help you can provide to the person you want to build guanxi with, to do so you would win their goodwill. 4) If you want to build guanxi with others you should try you best to be interest in that person, listen and understand them in your best way.So you can put yourself in other’s show.

Being understood is the strongest need, which is why this is very important. 5) Do not promise thing you cannot do. Do not let others produce unrealistic in you. For example if a company promised to do something and it is due as it promised, then the company is showing trustworthiness and other companies would be more inclined to deal with that company. 6) Willing to help others.

Small things can cause big change, many small things accumulate can make a tremendous change.You never know who you helping, that person might be the one who can help you in the future, and this is the key to build up guanxi. 7) Time are very valuable, saving one’s time is the most precious gift. You can do that by being on time, making that time with you valuable, and doing things efficiently. After you have built up guanxi with others, you have to maintain your guanxi. Reciprocal favors are the key factors to maintaining one’s guanxi and failure to do so can result in an end to one of your contacts.

That is why guanxi can be a never ending cycle of doing favor for each other. Final Thought The finding of this study shows me a very good understanding of how important of guanxi and mianzi are in China when you are living there or doing business with them. Guanxi and mianzi are cultural concept that has been influenced the Chinese life for thousands of years and how Confucianism is the key to everything.

Having a better understanding of Confucianism will have a clear perspective of why Chinese make a big deal out of guanxi. Reference Bai, C. , Q. Liu, J.Lu, F. M. Song, and J. Zhang.

2004. Corporate governance and firm valuations in China. Journal of Comparative Economics 32 (4). Dong, Q.

, and Y. F. Lee. 2007. The Chinese concept of face: A perspective for business communicators.

Paper presented at the Decision Sciences Institute Southwest Region 2007 Meeting, San Diego. Guanxi. (n. d. ). Retrieved September 30, 2012, from Wikipedia: http://en. wikipedia. org/wiki/Guanxi Hayes, R.

(2005). China’s modern power house. BBCNEWS, http://news. bbc. co.

uk/2/hi/programmes/from_our_own_correspondent/4298284. tm Hwang, A. , S. Ang, and A. M. Francesco.

2002. The silent Chinese: The influence of face and kiasuism on student feedback-seeking behaviors. Journal of Management Education 26 (1): 70–98.

Lee, M. Y. and Ellis, P. (2000), “Insider-outsider perspectives of guanxi”, Business Horizons, January/February, pp. 25-30.

Melendez , J. (2007). The concept of “face” in chinese culture.

Share your voice on yahoo. http://voices. yahoo. com/the-concept-face-chinese-culture-566703.

html Schipani, C. A. , and J.

H. Liu. 2002.

Corporate governance in China: Then and now.Columbia Business Law Review 2002: 1–69. Shan, Echo. (2005, August 8). ‘Mianzi’ of Chinese weighs a lot, comes at a price.

China Daily. Retrieved July 23, 2008 from http://www. chinadaily. com. cn/english/doc/2005-08/08/content_467216.

htm Smith, D. (2012) Guanxi, Mianzi, and Business: The Impact of Culture on Corporate Governance in China. http://www1. ifc. org/wps/wcm/connect/aeae62804b7321708fcdcfbbd578891b/IFC+PSO+26+052112. pdf? MOD=AJPERES Tan, G. 2009. The untold nepotism barons: 90% of China’s billionaires are children of high ranking Communist officials.

Chinesepolitics. http://sub. garrytan. com/the-untold-nepotism-barrons-90-of-chinas-bill The influences of Confucius. (2007) In Cultural-China. Retrieved from http://history. cultural-china.

com/en/182History5836. html Neville. F.

Understanding China: Confucianism, Guanxi and Face. 2012. Thundeerbird. Understanding China: Confucianism, Guanxi and Face Vanhonacker, W. R. 2004. Guanxi networks in China. China Business Review (May–June).

Wong, M. 2007. Guanxi and its role in Business.

Chinese Management Studies. Vol. 1.

No 4 pp. 257-276. DOI 10. 1108/17506140710828532