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Ethical Issues in China Retailing. 3. Guanxi. Guanxi. Guan. Xi. A personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon (Wikipedia). Guanxi (Fan, 2002).

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guanxi
Guanxi

Guan

Xi

  • A personal connection between two people in which one is able to prevail upon another to perform a favor or service, or be prevailed upon (Wikipedia).
guanxi fan 2002
Guanxi (Fan, 2002)
  • Guanxi is based on relationships, but relationship do not guarantee the development of guanxi
  • Guanxi is an active connection.
  • Guanxi is a long-term social obligation.
  • Guanxi is reciprocal exchange.
  • Guanxi is a form of social capital.
  • Guanix is a dynamic process.

A→ B → C

levels of guanxi
Levels of Guanxi
  • Jia-ren
  • Shou-ren
  • Sheng-ren

Jia-ren

Guanxi

Shou-ren

Guanxi

Sheng-ren

Guanxi

Guanxi Model

business guanxi fan 2002
Business Guanxi (Fan, 2002)
  • Business Guanxi
    • Guanxi is a personal asset
    • Guanxi may not transferable
    • A guanxi process consists of informal social interactions.
  • B2B
    • Buyer-suppler
  • B2G
    • Business-government officials
    • Obtain information
    • Improve efficiency by reducing the transaction costs.
    • A way to bypass laws and regulations and obtain special treatment or scarce resources.
types of guanxi su and littlefield 2001
Types of Guanxi (Su and Littlefield, 2001)
  • Favor-seeking vs. Rent-seeking
    • Favor-seeking
      • It is selective and limits to certain carefully chosen circles.
      • Rooted in Chinese traditional ethics and possesses a moral power
benefits of good guanxi fan 2002
Benefits of Good Guanxi (Fan, 2002)
  • Right guanxi could bring a wide range of benefits: securing rare resources, bypassing or short-cutting the bureaucratic maze, obtaining information and privilege, reduce transaction costs, selling otherwise unsellable goods, provide insurance against uncertainty and assistance when problems arose.
  • Guanxi is not a competitive advantage.
  • Guanxi is necessary but not sufficient for achieving business success.
dark side of guanxi fan 2002
Dark Side of Guanxi (Fan, 2002)
  • Rent-seeking
    • Quanli guanxi (power-dependence relationships emphasizing rent-seeking)
    • Quanli guanxi is equated to bureaucratic corruption and is often synonymous with nepotism, bribery, favoritism, unfair competition, and fraud
    • Guanxi and Corruption

Money←Guanxi → power

Corruption

enter guanxi su and littlefield 2001
Enter Guanxi (Su and Littlefield, 2001)
  • Making friends or becoming shu-ren or insiders.
    • Take the lead in making commitments
    • Always be helpful
    • Always be empathetic
    • Use intermediaries
  • Develop guanxi cost time, energy and money.
  • Avoid quali guanxi and illegal transactions
how to control bad guanxi
How to control “bad” Guanxi?:
  • Create competition
  • Rotate the front line
  • Increase points of contact
  • Build company loyalty
will guanxi remain so important
Will Guanxi Remain So Important?
  • A better legal system will make it less necessary as transaction support
  • A market economy and administrative reform will make it less profitable