Main basics from China: Guanxi & Face in Business

For this final post about my study trip in Shanghai «How to do business in china», I have decided to write about two main concepts to success in China: Guanxi & Face.

«Guanxi (Simplified Chinese 关系 / guānxi)» is a general Chinese term used to describe relationships that may result in the exchanges of favors or «connections» that are beneficial for the parties involved. This type of relationship can become somewhat time consuming and complex.

The Chinese term guanxi can, at times, equal the term networking. The elements of exchanges based on guanxi carry a long tradition in doing business in China and Chinese communities. Good guanxi can be the key needed to opening doors otherwise closed. The types of relationship building are almost unlimited but exclusive. Not creating situations where others may «lose face” is an important balancing act that those taking part must be constantly aware of. So it can be created in many ways and should appear to be offered voluntarily. Good guanxi can minimize natural or manmade obstacles in doing business in China. Over time it may take some effort to maintain and nurture the needed amount of guanxi to do business at different levels.

You must remember that those taking part in the acceptance of guanxi are required to return the given measured on the amount of the previously accepted.

In simple terms guanxi appears to carry an element of trust. It’s true that a lot of business in China revolves around circles of personal and mutual trust. So for any outsider to do business in China they must take the time to form relationships. This has been a big obstacle for many western businesses trying to enter the Chinese market. Business connections made through guanxi must be maintained to ensure proper positioning for future business.

How can be created and maintained? This kind of relationship isn’t only based on direct cash exchanges. Although this is correct on some levels it isn’t the norm today. Often guanxi transactions are «hidden» and not made obvious to the casual observer. Although the direct giving of «gifts» is a common form of building guanxi it isn’t the only way. Inviting or hosting dinners for prospective clients or business partners can create an environment for guanxi. Also the exchange of favors or «inside information» may amount to good guanxi.

However, relationships built on guanxi can quickly fade or disappear if part of the relationship chain is put into question for any reason. There is a fine line between guanxi and bribery. The path to good guanxi isn’t an easy path to follow.

«Face (Simplified Chinese 面子 / miàn​zi)» is an important aspect of interpersonal communications within Chinese culture and foreigners must understand it if they intend to effectively interact with the Chinese. The traditional saying is that “A person needs face just as a tree needs bark.” Some argue that face, along with money and power; comprise the three most important factors that dictate personal behavior in China.

The concept of face is a bit of an abstraction in that it takes many forms and is somewhat hard to concretely define. However, one can view face as a manner of behaviors intended to avert conflict, shame, and general unease and also promote respect and flattery for others in both social and business situations. The essence of face is that the Chinese expect to be treated according to their social status and position and are sensitive to anything sensed as diminishing their place. It cannot be underestimated how seriously face is viewed in China and how it can impact virtually every decision made by a Chinese person.

And…What about “losing the face”? It is basically to create a feeling of shame, embarrassment, or general unease in oneself or another. The Chinese will act in a manner to avoid causing such situations. The concept of «losing face» can affect one’s decision in a variety of contexts.

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