Maintaining good guanxi is essential in China because successful business depends on it. The concept of guanxi can be loosely translated as connection or relationship. Guanxi is a concept deeply rooted in Chinese culture, and therefore, understanding it requires an appreciation of Chinese society’s origins.  Before external influences, Chinese society was feudal. 

Because of irregularities in the structure of China’s ancient feudal legal system, it was essential to have good connections with people in charge of authorizations and of the collection of tributes in order to smooth business transactions. Over time cultivating guanxi became important in other aspects of everyday life and it is now one of the driving forces in the Chinese business environment.

Why Do You Need Guanxi?
The word relationship may be the official translation of guanxi but it is better understood as a system of reciprocal obligations. Guanxi is all about connections, usually in the business context but often in daily life as well. It’s a network or circle of relationships, friends inside the circle and others outside it. In this way it’s a strictly selective and discriminative system with its own rules.

Guanxi relationships can be established with both companies and professionals and with government officials. The latter is often necessary for obtaining mandatory authorizations, and the former for building wide network of your own. Take note that, unlike in the West, having connections with the government is not considered immoral, illegal or even noteworthy. Rather, it is common practice.

How is Guanxi Different from Western Relationships?
Guanxi connections are sincere, long lasting, and entirely different from Western style business and social relationships. For instance, in the West, we also have a sort of circle, with an obvious outside and inside, but the limits of this circle do not function as concrete barriers of separation. In the West, it is not uncommon for people to treat those on the outside of their circles better than those on the inside. With guanxi, this never happens.  In the West, if an exchange of favors between friends is discovered, it can lead to accusations of nepotism, which, though still quite common, is no longer well-looked upon. This sort of scandal never happens in China for two reasons. First, the importance of supporting people inside your circle is universally acknowledged. Second, though favors are granted and returned in guanxi relationships, the system is not nepotistic in nature. Favors are usually granted without self-interest, but they can be granted because the granter wants the guarantee to owe him a favor in return, to be in his debt. In the West, once a person receives a favor, he’s usually quick to return it, in order to “conclude” the transaction. In China, the perception of this kind of quick return is radically different. If a favor is returned too quickly, this may be understood as a desire to put an end to the relationship and things might go sour quite quickly as a result of the misunderstanding. In fact, the longer you take to return a favor, the better it is, because during the long period of obligation your relationship with the other person is necessarily important and valuable.

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