Understanding China: what is Guanxi?

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Brian Hennessy. An Australian in China

Think: Informal networks, using the back door, investing in relationships, calling in favours, underground economy, and so on. Guanxi is all of the above and more. In fact it is a highly sophisticated parallel economy which subverts a totalitarian system and its bloated, politicised bureaucracy.



Understanding China: what is Guanxi?


Guanxi is a vitally important feature of Chinese culture. Nothing happens without it.

  • Short definition: Connection & relationship. The social linking of two people who in some way have developed a relationship of mutual dependence is explained as Guanxi. The Chinese word Guanxi combines two characters: one character meaning connection; and the other meaning relationship.
  • Leverage: The Chinese gain leverage in daily affairs through Guanxi. This enables them to call upon certain others to supply, or help gain access to, scarce goods and services. However, Guanxi  is a more sophisticated process than this brief description implies.
  • Guanxi circle:  Guanxi is deeply embedded in Chinese culture. It is more than just barter or exchange because these are usually one-off transactions. For example, sometimes Chinese people refer to their network of friends, contacts, and associate as their Guanxi circle. Although they benefit from this network of social connections, they also contribute. They have social obligations to these contacts.
  • Web: Perhaps it would be more accurate to describe someone’s Guanxi circle or network as an intricate web of relationships. This web encompasses a person’s influence and obligations and can extend in an infinite number of directions. The relationships formed by these associations are generally considered lifelong.
  • Insider-outsider: Members of this web are regarded as ‘insiders’, and those people who are not members are regarded as outsiders. This Insider-outsider classification is a feature of Chinese society.
  • Reciprocation of favours: Relationships in the inner circle are nurtured by the practice of reciprocating favours. This is a system of mutual obligation where, “I scratch your back, you scratch mine,” is the modus operandi.  Favours can be called in at any time: from weeks to years to decades. It is a big social sin however, if one person fails to reciprocate. So, if someone offers you a favour, it is important to realise the implications before accepting. Once you accept, you may be locked in to a never-ending cycle of giving and returning favours.
  • The Chinese concept of self: Underlying this exchange is the Chinese concept of self which differs from the Western notion of self. For example; whereas Western thinking regards a person as a unique individual, Chinese thinking defines a person in relationship to others. No man is an island in China. This is a fundamental cultural difference.



Guanxi is the oil that keeps the wheels turning in Chinese society. Relationships are everything. 

Without Guanxi, it is very difficult to accomplish anything in the Middle Kingdom. You could of course go through established channels. However, as everyone in China knows, this will cost time (and maybe money), and there will be no guarantee of the outcome.

No Guanxi?

No way!



Buy our eBook, Get China Ready: Understand Chinese culture. Manage cultural differences, from Amazon Kindle eBooks (download their free App for your computer, laptop or tablet). Authors: Hennessy & Li. $9.99




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