Online dictionaries define ‘Guanxi’ as the basic dynamic in personalized networks of influence. Somehow this Chinese pinyin Romanization is far more complicated than “networking” or “relationships”. Although many Westerners find themselves confused by Guanxi and the role it plays in Chinese business, it has been widely acknowledged that one can hardly get things easily done without understanding this unique feature of the nation who have lived here for over five thousand years. So here is what Unilever, one of the world’s biggest manufacturers, has done with Guanxi to achieve their goals…

Unlike most of the multinational companies, Unilever has two presidents in both its headquarters in the UK and the Netherlands. Until 1998, the two presidents never joined each other when paying a visit to a country at the same time. But they did when the then UK president Nai FitzGerald and Dutch president Morris Tabaksblat decided to enlarge their business in China, and paid a historic "Double Visit" to the fast developing country, where the Lever brothers had established their own factory early in 1932.
 
Since their return to China in 1986 after the communists rose to power, Unilever has been doing a great job in marketing and localizing their daily life products. Until 1997, the Anglo-Dutch manufacturer contributed 500 million (about $ 61 million) in tax revenue to the Chinese government annually, and invested over 640 million US dollars in total here.

So, in 1998, the company thought it was time for them to carry out a new strategy for this huge emerging market, to get prepared for the next century's challenges. The changes according to the new strategy include:

- Moving the regional headquarters from Singapore to Shanghai
- Reallocating assets to improve their market compatibility 
- Listing the company in China with self-controlled shareholdings
- Developing more localized brands such as Zhonghua toothpaste, Lao Cai soy sauce within the next few years

With these thoughts in mind, the company began to contact its PR partner to carry out the details and prepare for the presidents' visit. They told their PR agent from Burson-Marsteller (BM) that the presidents wanted to meet with the then Chinese Premier Zhu Rongji.

This was not an easy job for BM to complete, so they turned to their Chinese partner, Global PR.

Established in 1986 with approval from the Ministry of Economic Relations and Trade of the People's Republic of China, Global PR has been active on China's public relations market for more than ten years. The company is run directly under the official Xinhua News Agency, which has been a huge advantage for it to lobby among the high level officials in the central government.

China has a huge bureaucratic system in their central government. If an individual wants to visit a top official, he has to go through an extremely long process before the requirement is approved.

For the time frame given, the agents of Global PR decided to put aside the endless process, and hand in the requirement directly to the State Council of China through their boss Xinhua News Agency, whose chief editor has the same rank as a minister.

As a result, on June 10th, 1998, the presidents were received by then Premier Zhu Rongji, who later showed great interest in Unilever's plan and extended the meeting from half an hour to one hour.
Due to its special relationship with official media, Global PR easily submitted the press release to a dozen important newspapers including People's Daily, Guangming Daily, Science Daily, Beijing Youth Daily, Xinmin Evening Paper, Wenhui Newspaper, and Jiefang Daily.

In the mean time, events such as a Tiananmen Square photo exhibit, and a CCTV interview had all achieved their desired goals.
 
With these well planned activities being carried out successfully, Unilever had made a good impression among Chinese people as well as the government.
 
Following this series of PR events, the company soon finished its assets-reallocating in China, which largely lowered its costs.
 
In 1999, they cut the price of OMO washing-powder by 40%. ’Zhonghua toothpaste’ and other localized brands were well supported by the local governments. Most of all, they were approved to have their self-controlled shareholding company listed.

Under the general principle of localization, Unilever has become more accurately speaking, a multi-local company rather than a multi-national one. What they have done in China is more than just naming their brands with traditional Chinese words. As a matter of fact, they have learned how to use various elements that influence the Chinese market in a way that benefits them, and that’s what we call Guanxi.

Reference:
http://www.17pr.com/html/92/t-3992.html
www.unilever.com.cn
Xinhua News Agency
Wikipedia: Guanxi

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