"Just as a fence needs three stakes to make it firm, a good man needs three others to help him." --Chinese proverb--
Guanxi is the first word any business person learns upon arriving in China. Loosely translated, Guanxi means "connections" and is the key to everything. Guanxi goes back thousands of years and is based on traditional values of loyalty, accountability and obligation--based on the Law of Reciprocity; that if somebody does you a favor, you will be expected to repay it one day.
Playing the Guanxi game is still imperative and especially for foreign investors. Knowing that Party boss (or his children) remains not just a competitive advantage but an admission ticket. As China increasingly meshes its economy with the rest of the world, its ascendant professional and entrepreneurial classes are beginning to see the value of networking among themselves. "More and more Chinese who studied or worked overseas understand how to build these networks," says Yang Yuanqing, chairman of Lenovo Group, the big Chinese computer manufacturer.
Here are three steps to better understand the Guanxi game in China:
1. Be prepared still to carry thick stacks of business cards, but don't waste time trying to swap one with every person in the room. Guanxi is about building trust, not about building a personal database.
2. Never pass up an invitation to play golf, badminton or tennis with the locals, although crooning at the karaoke club is no longer de rigueur. Wine tastings and art auctions are good places to network.
3. In traditional Guanxi, if someone does you a favor, one day you will have to repay it. In contemporary Guanxi that follows the Divine Law of Love, people are more willing to give without expecting something in return.
Source: BusinessWeek, November 19, 2007