Embracing Guanxi: The Literature Review

Embracing Guanxi: The Literature Review

Jilong Zhang (RMIT University, Australia) and Nattavud Pimpa (RMIT University, Australia)
Copyright: © 2011 |Pages: 9
DOI: 10.4018/978-1-60960-587-2.ch819
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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.
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Foundations Of Guanxi: The Literature Review

While it is emphasised in the Western concept on “what you know,” refers to technological expertise, including the price and quality of tendered product or service, it is emphasized in Confucian societies on “who you know,” which refers to personal connections with the appropriate authorities or individuals. These connections are known in Chinese as guanxi, which is believed to be a striking feature that helps to enter a profitable and growing Chinese market. Thus, the issues of what indeed guanxi is and how it works in effect thus have become focal discussions

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