Chinese insider's description of Guanxi interpreted for WesternersOct 05, 2021
Let's take an A-political peek inside the mind of a Chinese insider to extract valuable insights to support our ambitious endeavors in China. - Gene J. Hsu
Note: The Chinese system, its rules, and how we (foreigners) should play this game and navigate its complexities is neither good nor bad. All sides benefit from greater understanding and enlightenment.
Desmond Shum is a Chinese commoner who scaled his way to the pinnacle of living the "China dream." While he has fallen out of grace with the CCP, foreigners can extract many valuable lessons from his book, Red Roulette.
In this blog, we will dissect his portrayal of Guanxi (关系) within the context of his ascension and how it applies to common business relationships in China today.
First, read his exact phrase.
"We play a similar game with a vast array of bureaucrats. Each approval was obtained through connections. Each connection meant an investment in a personal relationship, which meant an awful lot of effort and even more Moutai.
Forging personal ties and establishing Guanxi was the most difficult part.
Guanxi wasn't a contractual relationship per se: it was a human-to-human connection, built painstakingly over time. You had to show genuine concern for the person."
Now, let's break down each sentence and its implications for anyone trying to play and win the China game inside the Chinese arena.
Sentence 1: We play a similar game with a vast array of bureaucrats.
Even Chinese insiders think of it as a game that everyone who wants to succeed with its closed system must play and play masterfully.
Sentence 2: Each approval was obtained through connections.
Guanxi is one's connection with someone in a position of authority, and deeper Guanxi means more expedient approvals. There is always a tendency to work harder on behalf of those with closer Guanxi, even amongst ordinary people. In practice, it is often the difference between receiving lip service or discretionary effort.
Sentence 3: Each connection meant an investment in a personal relationship, which meant an awful lot of effort and even more Moutai.
Guanxi translates as a relationship that requires a personal investment of time, effort, and goodwill. Your "investment" is demonstrated through actions that create the perception of commitment and alignment, which is usually facilitated through gifts and drinking (Moutai) in Chinese culture.
Sentence 4: Forging personal ties and establishing Guanxi was the most difficult part.
Even for those on the inside, developing and maintaining Guanxi is complicated. Comparatively, it requires a disproportionate amount of attention than business strategy.
Sentence 5: Guanxi wasn't a contractual relationship per se: it was a human-to-human connection, built painstakingly over time.
The payoff for cultivating close Guanxi relationships occurs at some unknown time in the future. In the meantime, efforts in this regard continue to be more and more demanding of your time, energy, and attention.
Sentence 6: You had to show genuine concern for the person.
The only metric that matters is how the other person feels.
These sentences about Guanxi are a microcosm of how misaligned most foreigners approach developing their relationships in China.
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