China, also known as Peoples Republic of China, is a country located in East Asia. With a population of 1.3 billion people, is the most occupied country in the world, and now days is the second world power with a GDP growing at great speed (8.7%, 2009). Its high growth rates, low labor costs, low manufacturer prices, high quality labor force, and huge emerging market, have attracted the world's highest levels of foreign direct investment. Since China joined the World Trade Organization in December 2001, it has also become one of the most open economies in the developing world.
Under the globalization conditions, one must say that everyone around the world has it eyes on China, but there is an important factor to take into account: their national and organizational culture. “The Chinese social system is classified as a relation based system, which focuses on the special relations between individuals and is based on reciprocity in order to achieve harmony” [1]. The accomplishment of this goal is done mostly through a Guanxi relation and it can be defined as ““a friendship with unlimited exchange of favours”, [2] and in order to make it work the businessman or woman must complete his or her obligations, try to be loyal to friends, do favours and maintain a reputation for fairness.
There is also a social rule that governs the social and business interaction in China. This is known as renquing, and means that the person emotionally responds to all the situations that occurs in his daily life, also means a resource that a person can give to another in the course of social exchange, it can mean as well, a set of norms that a person must follow in order to get along well with other people of the Chinese society. As all of these allow the preservation of social harmony, an all together they provide a mechanism to prevent interpersonal conflicts.
In the internationalization aspect the Guanxi is also take into account. When doing business usually, there will be co-operation withintimate guanxi. If they want to make a linkage, it is
necessary to find the right person first. The cooperative inter-business relationship is primarily based upon the personal trust between the two major bosses. Furthermore, it is essential to be aware of the Chinese guanxi network connections to understand the ins and outs of a deal. Guanxi also implies reciprocity; its impact on business negotiation is that it requires assistance or favors to be yielded whenever and wherever it is requested by a connection.
So if anyone decides to enter to this country, might consider studying all their cultural aspects first, including the Guanxi, because as we saw it is of big importance for them. Besides handling organizational relationship in China context is a necessary skill for foreign investors to acquire in order to handle interpersonal problems in the Chinese way.
Sources:
necessary to find the right person first. The cooperative inter-business relationship is primarily based upon the personal trust between the two major bosses. Furthermore, it is essential to be aware of the Chinese guanxi network connections to understand the ins and outs of a deal. Guanxi also implies reciprocity; its impact on business negotiation is that it requires assistance or favors to be yielded whenever and wherever it is requested by a connection.
So if anyone decides to enter to this country, might consider studying all their cultural aspects first, including the Guanxi, because as we saw it is of big importance for them. Besides handling organizational relationship in China context is a necessary skill for foreign investors to acquire in order to handle interpersonal problems in the Chinese way.
Sources:
[1] - Chen, I Chun Lisa and Easterby-Smith Mark. 2008. “Is Guanxi still working, while Chinese MNCs go global? The case of Taiwanese MNCs in the UK”. Human Systems Management 27: 131-142.Pg 132.
[2] ibidem
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