Doing Business in China For Dummies®

You Scratch My Back, I’ll Scratch Yours: Introducing Guan Xi

The Chinese term for relationships, which we use throughout this book, is guan xi (gwon shee). Guan xi has no literal translation to English, but generally, the Chinese use the expression you (yo) guan xi, or “you have guan xi,” to mean that someone has a particular relationship or is generally well connected. The bottom line is that you either have it or don’t — and you definitely want to have guan xi.

In some ways, doing business with guan xi is similar to the way people do business in the West. Guan xi is a more muscular form of the principle that it’s not what you know; it’s who you know. Guan xi is mainly based on trust and the understanding that favors should be returned, which are also important in Western business relationships. However, subtle and important differences crop up between the way these factors work in the West and in Chinese guan xi. The following sections help you understand those differences.

In the end, a good business plan can succeed without good guan xi (although you’re likely to develop good guan xi as you succeed, because everybody loves a winner); likewise, a bad business plan will fail even with the best possible guan xi. See Chapter 4 for more about planning for China.

Trusting performance

Parties must trust each other in order to have guan xi. (No, they don’t need trust because they’re ...