About four years ago when I was still living in Asia, my buddy Benjamin invited me to celebrate the Chinese New Year with his family in Lanzhou, a city on the Yellow River in northwestern China.
The welcome I received was epic — let’s just say that I ate more dumplings than any human ever should.
From Lanzhou we took the train to Xi’an, the ancient capital and the endpoint (or starting point) of the Silk Road.
When we got there, I was surprised to find that “everything had been taken care of.”
We had a car, our own private driver, and a hotel room.
Why didn’t we have to pay?
I mean, Ben’s family was comfortably upper middle class, but they didn’t seem the type to splash Yuan around on private drivers.
“It’s guanxi,” Ben said.
This was going to take some explaining.
While it doesn’t have a direct English translation, guanxi basically means something like “relationship.” Ben’s dad had a colleague in Xi’an, so he made sure we were comfortable while we were in town, even treating us to an insanely delicious Peking duck dinner on our last night in town. The understanding was that Ben’s dad would do the same for his colleague.
I was struck by the idea.
It was so different than anything I encountered in the US or Europe — sure, letting a friend crash on your couch was normal, but to cover everything for your friend’s kid and his goofy American friend? That was a big ask.
Guanxi put into relief a difference between Western and Eastern perspectives that I had just began to appreciate while living in Seoul, South Korea. With the long influence of Confucianism in East Asia, the person you are isn’t just who you are individually, but the relationships that you’re a part of.
It makes sense, then, that guanxi is such a huge part of professional life in China.
As University of Washington management professor Xiao-Ping Chen notes in her review of the subtleties of guanxi, it’s two words: guan, or a point where two things connect, and the conjunctive word xi, which denotes “in relation.” When used as a verb, guanxi means “to tie up”; when used as a noun, it “denotes a state in which entities (objects, forces, or human beings) are connected.”
Management literature has found that guanxi predicts sales growth and firm performance in companies, that it provides access to markets, and that it has a “profound impact” on firm efficiency and growth.
While the introduction of capitalism gives guanxi a relatively new application, scholars argue that it’s some 2,000 years old.
As University of Miami management professor Yadong Luo explains in the Asia-Pacific Journal of Management:
Traditional Chinese society is built around clan-like networks, with close family members constituting its core. Loyalty to the in-group is paralleled by a deep distrust of non-members. It must be understood that the concept of ‘family’ extends largely beyond its strictly biological meaning.
It could be pictured as a set of concentric circles of contacts. Typically, it stretches from close family to slightly distant, to more distant, eventually embracing people who are not blood relatives but who are connected to someone in one’s family, such as classmates, people from the same region, and and friends. In the initial stages of any business undertaking, Chinese people will look first to these links as bases for guanxi.
On the one hand, doing business with people that you know and trust makes a lot of sense.
On the other, you can see how guanxi can lead to problems. Chinese executives have said that the “reciprocal obligations” that are a part of guanxi create issues, while cultural critics outright argue that guanxi is largely to blame for China’s problems with corruption.
Whether it’s good or bad, guanxi appears to be an embedded part of Chinese culture — and it serves as a mirror to the American focus on networking.
In 2013, Entrepreneur Porter Gale recently published a career guide with a title that sounds almost Confucian: “Your Network Is Your Net Worth.”
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