Relationships in China are an important aspect of doing business, developing “Guanxi,” which is a network of relationships in China among various parties who can cooperate, exchange favors, and support each other in their business endeavors.

If you hope to develop a successful business in China, Guanxi is a crucial concept to understand and practice.

A business that has established the right network of relationships in China minimizes its risks, bureaucratic frustrations, and obstacles. Not only must the leadership of a business develop connections with other business owners and customers, but it is vitally important to secure excellent relationships with relevant authorities and staff within the governing organizations of various industrial sectors. Often, the right kind of Guanxi will be a significant determinant of a business’ competitive standing in China; no matter how great your product or service is, unless you have a good personal relationship with key officials, it is difficult to seize a sizable portion of the market.

Initiating and nurturing a strong network of beneficial relationships among Chinese businesses and government channels demands time and resources. To do so, a business owner often visits the homes of people who may have important connections, such as suppliers, retailers, bank officials, and members of licensing departments, bringing gifts such as wine, foods, and luxury items. Guanxi is also established by treating someone with extra consideration, delivering more than promised, and being exceptionally dependable, even when business is not going well.

When you begin with your immediate network, they will eventually put you in touch with other helpful acquaintances and resources to expand your network of relationships. These relationships are ongoing – you do not simply focus on relationships before a deal takes place, but maintain them for years. This is because the Chinese greatly prefer to do business with people they know and trust.