Embracing Guanxi: The Literature Review

Abstract

Guanxi is deeply ingrained in Chinese society and business etiquette; therefore, it is critical to understand and appreciate it to gain a commercial foothold in China. This paper explores the fundamental differences between Chinese and Western approaches to business dealings, to identify the factors that make it difficult for Western managerial practises to adopt guanxi. The authors identify the differences in the perception of trust in both societies and how this ultimately leads to clashes in cultures. However, there is also a need for Western practices to be more flexible and appreciate guanxi and its implications if multinational corporations are to succeed in China. The paper concludes by suggesting a possibility for both approaches to co-operate well, given the relative success of each approach in their respective cultures.