Sofitel Kunming


Is the importance of Guanxi in business in decline

Stephen58 (43 posts) • 0

Many Western researchers and academics claim the use and importance of guanxi in business is declining in Shanghai and eastern provinces where most of China's international business is taking place. However I don't see this decline in the significance of guanxi happening in business and life in general in Kunming and invite comment from you, observers, academics, business people and any stakeholders who may live or work here and have a view on this topic. Furthermore I promise to reply to all of you who choose to comment. Many thanks. Stephen (Edith Cowan University)

The Dudeson's (1106 posts) • 0

I agree. There is a decline in guanxi for smaller favours, since officials don't want to get busted for unprofitable favours. For all the business documents and procedures I needed, we still were road blocked without guanxi or gifts. It's embedded too deeply in Chinese culture to disappear in less than a decade.

Geezer (1930 posts) • 0

I recommend this book:

"The Way We Think: Chinese View of Life Philosophy," Li Gang

ISBN 978-7-80200-411-5

Copyright 2009 by Sinolingua


The first three chapters (1-Mianzi Outweighs All Else, 2-Brotherly Friendship, 3-Chinese Art of Conduct in Playing Mahjong) provide some insights. Most Western experts attempt to explain mianzi, 面子, and guanxi, 关系, in a Western context. Li Gang presents mianzi and follows with two chapters on relationships.

My conclusion is that guanxi is alive, well and thoroughly ingrained in Chinese culture and life. It is a major factor in Chinese business.

HFCAMPO (3062 posts) • 0

I had a discussion with an architect about this topic about 6 years ago and he said that guanxi was in decline and will eventually go the way of the dinosaur in most cases but not all. He gave this as an example.

He said when his architect company needed a new architect a new person was sent - no resume needed - the invisible hand decided who gets the job - no questions were asked. However, this system had nothing to do with ability. He said now all architects must use a resume so he has seen the changes in his lifetime.

He said - Before most companies were state owned and had to provide room and board for its employees. 6 years ago he said there were only a handful of those companies left. I am sure many of you know of certain residential quarters that are only for employees. Many companies have slowly phased these out and are no longer for employees only. I now own a home that is owned by the China Southern Power Grid in Dali and I own a home here in Kunming that is owned by a Pharma Company.

Another topic he mentioned was civil servant workers. He mentioned that guanxi was still alive and well in this department, especially when it comes to civil servants who join the Communist Party - they have preference. However, guanxi is not about gift giving but more about - Its not WHAT you know but WHO you know - type of thing.

Many jobs that were only for civil servants have now been opened to all people so there is a decline in civil servant jobs (Many private hospitals now). Also, there has been a decline in Communist Party membership. In the old days, a person who landed a civil servant job had it made but now people can earn a better living working outside the civil servant jobs and live like kings. Civil Servant jobs are no longer valued and actually looked down upon now. Civil servant workers are now considered low class and no longer esteemed or respected.

Every year my students tell me how their parents want them to take the annual (Oct-Nov) civil servant test and how they want them to join the Communist Party in the University. Most of them refuse and this debate with parents lingers - old way vs new way.

The last example he gave was in education. He was very clear that this has nothing to do with guanxi and is nothing more than plain bribery, although it is masked as guanxi.

I saw a recent example of this as there is a new system in place for primary school kids going to middle school. Some provinces made this change in 2015 and more now in 2016. Since many parents and teachers do not yet understand how this new system works they resort to good old fashioned bribery to get their brats into better schools.

I see this system slowly coming to an end soon because there are more parents with money and power now. Some parents are willing to fight and stand up for their rights, especially when their kids have the good scores while others do not and get in through bribery.

I predict we will see more and more cases of headmasters who can not justify how some rich kid with poor scores got in while others with good scores did not. Test scores are all computerized and in plain sight now.

Finally, it is the young people who will change this old system. As they grow older and replace the older leaders they will discontinue the guanxi system. They are tired of the drinking and the late night diners and KTV and they are now focusing on ability.

Personally, I believe guanxi is a Self Fulfilling Prophecy. In the land of China, anything can be accomplished - in time. However, it is those people who want it done NOW that resort to this behavior and feed the beast and intentionally, unintentionally, or ignorantly continue this system.

I have always been very clear with all the chinese people I interact with - I never receive gifts - and I have refused many a gift and made the person feel bad or lose face - too bad.

One of my requirements for my students is that they delete most of their QQ contacts. Most have 100s, I only allow 20 (Wechat is another beast). One of the usual arguements I get is that they may need that person at a later date. They admit they have no contact with that person any longer but they keep them in case they need them later on. I ask them, Do you realize you are using this person? they say YES but many people keep me on their contact list for the same reason.

Another part of guanxi that will disappear with time is that more young people have a stronger self esteem and know their own identity. Part of what keeps guanxi alive is the Inability of chinese people to say NO. So they do favors because they feel obligated, not because they really want to.

Travel opens peoples' eyes and many young people now travel on their own, not in tour groups. As they see and interact with different people they begin to assimilate new ideas and in turn give up many of their old beliefs and old ways. Visit your local PSB and see how many chinese people are getting passports.

Guanxi worked while China remained a homogenous country and culture. This is no longer true and fading quickly each passing year. Foreign Devils are everywhere in China since the Olympics of 2008. Learning english started in middle school, then began in the third grade, and now in first grade. Ask any chinese young person when Valentines Day is and they will say Feb 14, not July 7. As China becomes more westernized, and it is, guanxi will fade away.

As part of her work, my wife attends Parenting seminars frequently. All the Information presented is from the west (Psychology) and unknown previously in China. Do a Baidu search of - Supernanny - watch the videos - more chinese people are now open to counseling - this was unheard of in the past because of FACE.

Guanxi will continue to decline in the future because people can not do in business what they can no longer do in daily life. One can not deny that guanxi still exists, the question is how often was it seen 10 years ago and how often is it seen now - in Kunming.

Stephen58 (43 posts) • 0

Hi HF Campo and thanks for these comments
Do you feel that that this new confidence from parents re standing up for their rights (eg getting their hard working students into schools) has only come in the last decade?I first came to Kunming in 1999 and there was still a strong shadow from the authorities as to what people wee able to do? Especially complain! My university colleagues were still scared to step out of line and demand a fairer deal even though they could see favours being done? Are these behaviours being accepted more now? With this in mind do you think the next generation is beginning to reject the illicit side of guanxi? or will the guanxi practices from the older generation slowly but surely change their thinking to the old ways? Interested in your views.Sincerely Stephen

Stephen58 (43 posts) • 0

Hi Dudeson and thanks for these comments
what do you think are the pressures that will make such a strong cultural characteristic (guanxi) disappear in only a decade? Do you think it is pressure from the authorities? the new generation seeking a fairer way or something else? Thanks for your input sincerely

HFCAMPO (3062 posts) • 0

Yes, these changes stem from 2005 = WTO = business must be done in western ways because China wants their business.

Western influence has increased significantly since 2008 = Olympics = many more foreigners living and working in China now.

The next generation is unlike the previous one because of western influence. To understand China one must look at the USA in the 1950s and 1990s. What took the US to do in 50 years China has done in 10 years so people here are changing rapidly.

To complain was unheard of 10 years ago but legitimate complaints are encouraged now. I am a frequent contributor to 12345 - the Mayors Hotline - they want input from the public and they want to know what is wrong.

Do not forget President Xi's stand on corruption. This has a direct and significant impact on Guanxi.

Again - Guanxi will continue to decline in the future because people can not do in business what they can no longer do in daily life. One can not deny that guanxi still exists, the question is how often was it seen 10 years ago and how often is it seen now - in Kunming.

Stephen58 (43 posts) • 0

Hi Geezer
thanks for these great leads.
Do you think the pressure from authorities to eliminate corruption and/or the thinking of the new generation is resulting in any weakening or decay in this cultural phenomenon?
Re guanxi - Do you think Kunming business women and men are thinking and conducting business in the same way as business operators in coastal regions? Do you think the international presence in business in the east is having any effect?
thanks for you comments

Stephen58 (43 posts) • 0

Hi Campo
is the speed of changes you described happening faster on the coast than inland?
If so do you think business method and practice across China is becoming more uniform?

tigertiger - moderator (5084 posts) • 0

I think HFCampo hit on something important there, related to mobility.
When people are more isolated (or poor) relationships within your community are very important. They can make or break you. If you upset one person, you can alienate half the town. I have seen this lead to nepotism and cronyism in small towns back home in Wales and England. If you mess up these relationships when you are younger, you and your family can pay a price. Some parents will clearly want to teach their children the importance of relationships.
As people become more mobile they not only see different models of behaviour, but they can start up new networks. Many people now move away from home for work, and start up new networks. People may even change career several times, and so get another 'fresh start'.
I also mentioned poverty. Thirty years ago I worked in an oil town in Alberta. People had money, and were snobbish. They had economic power to keep secure. I also got to visit small towns in Montana, where the people were poor but very friendly. I believed that this was in part due to their security/wealth being attached to their good relationships with others. I have since seen studies backing this up.

In conclusion, I believe that as Chinese society become more mobile and wealthier, and as guanxi plays a smaller role in providing security/wealth, it will become less of a factor. Although it will always remain a part of the core culture, perhaps more espoused than culture in action than it was before.

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