Wednesday, February 2, 2011


Hey everyone! Sorry for the lags between posts - it's been pretty busy around here. Anyways, a reader recently asked me to write on the topic of "guanxi," which roughly translates to "relations." Basically, it's a system of connections and networks between individuals that the Chinese society really emphasizes. Though I'm not by any means an expert on Chinese society, I will try my best to explain using my observations and experiences.

With a population of over 1 billion, China is a difficult place to get anything done without guanxi. The system has its good and bad aspects. At the worst extreme, guanxi can seem like nothing more than bribery, schmoozing, and taking advantage of knowing the right people in the right field. However, guanxi also promotes maintaining and fostering good relationships with old friends and others you meet in life. It emphasizes the ability to create strong personal bonds and fulfill obligations towards others.

In the states, we like to separate personal life from business, and we do not like to mix business with pleasure. Therefore, it may be hard for people to understand the guanxi system, but I will do my best to explain by providing a few examples.

Chinese people do business over dinner. If you want a favor or a deal, your best bet is to invite the person out for a meal and a drink, preferably at a nice restaurant, or at home if you know them a bit more personally. During the meal, there would probably be lots of flattery, drinking, maybe smoking, and possibly a fight over who pays the check at the end. Hopefully at the conclusion the favor would be asked for and granted, or a business deal would be made.

My uncle is the chief editor of a university scientific journal, and he gets invited out to meals all the time, either by people hoping to have their article accepted to the publication, or people whose articles have been published and want to thank him. Likewise, he sometimes hosts colleagues from other universities with whom his department wants to create connections. A friend who is a doctor at a hospital receives invitations from families who want her to take on a relative as a patient, or from pharmaceutical companies who want their products in the hospital. Sometimes people also send gifts as a sign of goodwill.

All of this occurs because there are just too many people and not enough opportunities, whether for medical care, education, or employment. You have to know the right people and cultivate good relationships with them in order to skip through the bureaucratic red tape. It's much easier to know the physician personally and receive care than to wait in line for hours or possibly days in a city hospital.

It is true - sometimes an extreme form of guanxi can start to look like corruption, such as when you have a great connection with the police or judge. However, guanxi is how China operates, and most people accept it, though I think there have been reforms to remove some of its worst aspects. It exists at some level in the U.S. as well - we have all known someone who got where they are because of the right connections. Is it wrong, or is it just good luck?


  1. Molly, I think in the West we link business-private more than we ackowledge in our examinations of guanxi. It's called 'networking' and we all do it.

  2. Very true, but I think the degree of this networking is much less pervasive in the states and, a lot of it takes place in more work-related environments such as conferences.

  3. Thank you for posting this. It's very interesting. I think I'm going to think more about it, but, in the spirit of guanxi, Happy New Year!! (I know it's late, but the new year isn't over till I'm out of dumplings, lol.)

  4. Thanks Aaron! Happy New Year (a day late)!

  5. This is a nice illustration of guanxi. I think it's crucial mostly because, like you said, as China is still a developing country, there are not enough resources for everyone. You see a lot of the similar characteristics of guanxi such as corruption and bribery in many other developing countries as well. I would say that you do see a lot of the similar things here in the states in the way we network, for example, my former bosses, managing directors in investment bank, spends a large amount of time entertaining clients - whether over dinner tables, golf matches or yankee games. It seems to me that it's almost as important as the business meetings and conferences they go to. Some of these clients are their long-time friends whom they take family vacations with, and others they are hoping to get closer with.