Seeing China for what it really is...
Firstly, it is not unique to China… Everyone does the same thing all over the world, but there it is called it lobbying, doing business with an old classmate, serving on boards of friends’ companies… It is all the same thing… A network established for the enrichment of the network and its members, but in China it sometimes presents itself in a more ugly way and to the detriment of gullible foreigners.
If someone tells you they have great guanxi and can help you make your business deal I have only one advice:
Run as fast as you can in the opposite direction…
If you need guanxi to make the business deal happen, there isn’t enough of a business case and profit margins for everyone involved – and that makes for a dangerous setting eventually leading to more serious problems…
Ok, that is a little simplified, and there are differences between cities and countryside, etc. but this isn’t really about that… What this is about is the reality of guanxi, and why you (as a foreigner) do not have it.
There is simply no way for a foreigner to have guanxi in China (not real guanxi in any case) without family ties… Overseas born Chinese might have it because of old family ties to the mainland or you might marry into an existing network – but then it is not your guanxi, it is your spouse’s.
To break it down, as a foreigner when you think you are in the guanxi network, YOU ARE NOT… What you are however, is an opportunity for the existing network to enrich themselves on your behalf while some breadcrumbs might fall your way…
However, business guanxi isn’t really that interesting – it is the other two types of guanxi that is important…
You need very strong government contacts to sway a legal opinion or a regulatory issue in your favor in business if you want to make changes to what is already happening in China. It being a new product that can revolutionize the market and make an existing product obsolete, a license that is required and the only real way to get an upper hand is to use guanxi to outrun the opposition, permission to do business in a restricted industry or work a difficult customs case… In any case, with a strong bureaucratic network it can become easier to do the things you need your business to do without having to wade tough an ocean of red tape everywhere…
The last and most important guanxi I want to write about however is the “get you out of jail free card” guanxi… This is the important guanxi… All other guanxi fade in comparison. If your business case has merit, you will be able to build a business in China but the longer you stay the more of a target you can also become for criminals or just everyday stupidity and “let’s blame the foreigner”… If you have real guanxi, this does not bother you though, because a simple phone call will make it all go away.
One final note:
If people aggressively tell you they have guanxi, they probably don’t – if they do not talk about it, but seems to get things done when they need to, they probably do…