The China Market: Strategic Implications of Guanxi

This article examines the differing perceptions of the nature of guanxi –“personal connection”– among business executives in Hong Kong and the different ways in which they use it. In the process, it contrasts views of relationship marketing in China and the West and suggests that the importance of guanxi for success in China may be waning. It substantiates the view that personal links and absence of commitment are major elements differentiating relationship marketing in China from that in the West. Major disadvantages of guanxi are perceived as being the extra time and cost this approach involves. For western managers involved in the China market, the research reported here has three strategic implications. First, in some form or other, they need to include the guanxi approach in their relationships with Chinese partners; second, they should be aware that guanxi may not involve commitment; and, finally, they should mount sustained efforts to build up guanxi to give them a competitive edge in their search for an insider position in the China business arena, whilst being aware that guanxi cannot eliminate threats and competition.