China Guanxi

China has been undeniably developing quickly according to those figures shown about China’s economy growth in recent years. The GDP growth rate of China in 2012 was 7.8%, surpassing both India (3.2%) and U.S. (2.2%) (google). The huge potential of the Chinese market seems very lucrative and attractive for investors all over the world. China, being not only one of the largest consumer market globally, it is also the central where most of the manufacturing and production take place.

In July 2013, China’s import and export amount increased 7.8% from the previous year with a total of $354.16billion. China’s export was approximately $186billion, with a growth of 5.1% while having a decrease of 10/9% in import (2). Import and export trading with China became almost essential for every single country in this world, significantly showing the importance to understand the business style and culture underneath.

To establish a successful trading business in China, investors have to fully understand and engage in the Guan Xi culture in order to compete with the locals. Guan Xi is literally translated as relationships. The depth of the relationship between each other affects the decision making process in business. Priority is given to those partners in Guan Xi with the businessman for accessing limited resources or controlled information.

To do business in China, understanding Guan Xi is as important as knowing the Ren Qing system of the Chinese culture. It is believed that the more Ren Qing ones accumulates, the higher is the chances of reciprocation to happen in the future. The term Ren Qing is referring to favors, where the indebtedness concept takes place. There is no time limit for the repayment of Ren Qing given by other party. However, one should expect themselves to return favor in the future after receiving Ren Qing from other party. In short, Ren Qing must be in the form of reciprocal.

Guan Xi in business can be described as an informal contractual...