D2071 Exam 1: Guanxi

lecture 2

What is Guanxi?

• Its not just a social network, but more about a heavy emphasis on trust and personal dimension

• reciprocal relationships, personal connections, gift giving, mutual benefits, continuing overtime if nurtured

Guanxi as Product of Chinese Culture

• put people into categories more sharply than westerners

• more family orientated

• exchange in favors is critical

Guanxi is a Response to…

• Institutional Weakness

• China does not have fully developed legal system

• Guanxi is used as substitution

What are the 2 types of trust

• Trust from the head (cognitive): based on knowledge +ability

• Trust from the hear (affective): based on like the thought process of “I’ve gotten to know you so I trust you”

Gift giving is..

• common for developing trust and Guanxi

• Meotion behind reserve, for appropriate occasion, face/ respect and dignity(mian zi), reciprocity

Gift Giving do

• gift for big festivals ( lunar new year, mid-autmn festival)

• politely refuse before accepting

• return a gift that is a little more expensive than the gift you received

Gift Giving don’ts

• Unwrap a gift in front of giver

• expect Chinese business partners to reciprocate immediately

Corruption

• bribery, extortion, cronyism, nepotism, parochialism, patronage, influence peddling, graft, and embezzlement

• Penalties are severe + reputation damage

• China high in corruption

Discussion about reading 2c

• who is hurt: company?

• dyt multi-national have responsibility to act ethically: reputation, they get penalized in both home country and other countries