Guanxi, Cultural Antecedents and Trust Building in Chinese Business Research Paper

Guanxi, Cultural Antecedents and Trust Building in Chinese Business Markets - Research Paper Example The focus in this paper is on the concept of Guanxi, central to the Chinese society. The literal translations of this term could mean 'connections' and 'relationships', but both these translated terms cannot describe the deeper meaning and implications that it actually stands for.The concept of guanxi is no longer confined to China and is accepted in the West also. Guanxi has been defined in different ways depending on the various perspectives. The Chinese construct considers guanxi as a very specific personal connection between two different people. This connection is exemplified by an inherent psychological contract that needs to be followed. The social norms include being committed, maintaining loyalty and ensuring that the relationship is maintained over a long term. Guanxi also has the key characteristics of trust for the parties involved that is developed through long term interactions, reciprocity and self-disclosure.In literal sense, guanxi means connection. When it comes to relationships, this term either refers to the connection between the parties that are involved, or to the connected parties.There are different stages of guanxi - either existent or non-existent, either good or bad, distant or close, deep or superficial and so on. Guanxi can exist between two or more individuals or even between organizations or different networks.It is also necessary to know that guanxi is function in the different spheres of human life, such as the families, friends, and professional groups, political and business. The term guanxi is used along with different verbs to give it different connotations and meanings. For example, if the phrase 'pull guanxi' is used, then it means the set of actions that indicate initiating and establishing a connection. Similarly, if the phrases ‘walk guanxi' would mean using the established connections to achieve any purpose that needs to be achieved.Similarly, the term has been used in other verb forms such as building, developi ng, breaking etc. According to Gold et al, (2002), guanxi can be described as part of China's national character. Over the years, Guanxi has played a very important role in the business relationships in China. If the businesses are Guanxi based, then, there would be a higher probability to reduce uncertainty, reduce the transaction costs, and lower the search costs as trusted suppliers are already known. Guanxi based business relationships also add to strong sense of connectedness (Tung and Worm, 2001). Even while dealing with foreign investors, Guanxi helps in reducing the uncertainty associated with doing business with outsiders. This is because Guanxi helps in establishing informal relationships that can guard against any opportunistic behaviour on