guanxi

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Recommended: The Impact of Globalization on China's Economy

Topic: Managing relationship issues in China
Research Question: Why guanxi is important in business succes?

Introduction
Globalisation has altered the business environment and the ways in which firms conduct business activities. Since China opened-up and changed its policies many foreign businesses have been attracted due its huge potential market opportunity. However, managing a business in China, business people should be aware of the Chinese cultural differences. The objective of this paper is to discuss the importance of guanxi in the business contex. This essay posits that guanxi is the key factor for doing business successfully in China, which it helps to build up corporate reputation, growing market share and minimaizing the risks of uncertainty. A theretical discussion will ensue, highlighting key debates and ideas concerning the importance of pre-departure preparation, cultural awareness and the significance of guanxi in doing business in China.

Chinese Culture
There is not one universally accepted definition of culture; a number of key cultural concepts and debates are needed to clarify this term. Chinese culture is considered to be different in many ways from that of the West (Carlisle and Flynn, 2005; Buckley, Clegg and Tan2006; Tung, 1986). Kwon (2012) argued that Asian culture involves Confucian dynamism, collectivism and high institutional orientation. This suggests that the nation encourages group performance and reward, and people feel pride and loyalty towards their organisations and families. Similarly, Anderson and Lee (2008) draw attention to the Confucian value which remains relevant in our day. Fan (2002) claims that Chinese business culture can be character...

... middle of paper ...

...nds” (Fan, 2002.p.557), due to it is meaning as the wrongdoing or corruption among executives. This paper further emphasised the importance of trust in building a long term relationship. Many researchers have argued that the trust is the vital determinant of guanxi success and it’s therefore an increasingly important issue that business people need to address in light to build a successful long term relationship. However, the main debates have been highlighted rely on how “trust” is interpreted between cultures and how this can build business relationships. The scope of this paper is limited due that empirical evidences does not provide direct facts to show “how” guanxi is beneficial to business success and also no clear evidences on their relationship with performance. However, it is suggested that further research into this field may be necessary for the future.

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