<i>“Guanxi”</i> is a Chinese word for social relations. It has become a familiar term in the Chinese business world. What is <i>guanxi</i>? What are the implications of <i>guanxi</i> in Chinese marketing? The word <i>guanxi</i> is made up of two Chinese characters: <i><b>Guan</b></i> meaning connections and <i><b>Xi</b></i> meaning ties. Simply speaking, <i>guanxi</i> is about building a network of mutually beneficial ties or connections that can be used for personal and business purposes. <i>Guanxi</i> is a central idea in Chinese society. It plays a far more important role in China than it does in the West. The popular practice of <i>guanxi</i> management in Chinese business underscores the importance of cultivating a strong interpersonal ties and connections when doing business in any country. <i>Guanxi</i> is a complex concept in Chinese culture. It refers to relations or how one is related to others. It also refers to how good a relationship is. In Chinese culture, when you interact with another person, you pay attention to how this person is related to you and how good your relationship is. In addition, you also pay attention to how this person is related to others in your broader social network and how good these relationships are. For example, when you interact with your client, you will pay attention to your relationship with this client - whether she is a stranger, or an acquaintance, or your relative. You will also pay attention to whether you like this client or not; that is, your personal relationship with this client. Moreover, you will also pay attention to this client’s relations with other people in your broader social network. For example, knowing that this client is a relative of your partner will change the way you interact with this client. Finally, you will consider how good the relationship between the clients and people in your network is. For example, you will treat your clients favorably if you know that your partner likes this client a lot, but will not do so if you know that your partner dislikes them. In this brief overview, I have shown you <i>guanxi</i> in action in a clip at the beginning of this lesson, and I have also given you an example of how Chinese conceptualize <i>guanxi</i>. To better understand <i>guanxi</i> in the context of marketing, let us compare it to the concept of relationship marketing in mainstream marketing theories in our upcoming segment. Relationship marketing focuses on establishing, developing and maintaining successful relational exchanges and good customer relationship. In Western culture, relationship marketing aims at fostering mutual understanding, cooperative behavior and a long-term orientation in social interactions, within the boundaries of what legal rules and regulations permit. Generally speaking, relationship marketing emphasizes professionalism in relationship cultivation and does not advocate extension of the business or professional relationships into other relationships with the consumers. Relationship marketing also advocates the use of consistent strategies to cultivate relationships with all customers indiscriminately. In the example of waiting in queue for a table in the restaurant, allowing a friend of a colleague to jump the queue will not be considered a good relationship marketing strategy. <i>Guanxi</i> management is different from relationship marketing. Although <i>guanxi</i> management also emphasizes fostering relationships or social connections based on mutual interests and benefits, its focus is on how to maintain the relationships with particular people through exchange or reciprocation of favors. These particular people are those one wants to have, or already has, a potential profitable relationship with. That is, I rub your back and you rub mine. Moreover, I don’t rub the back of everybody, I do so only to those that I want to have a relation with, and so must you! To illustrate the application of the concept of <i>guanxi</i> in business, let us return to the restaurant story you watched earlier. Let us see how the concept of <i>guanxi</i> can be applied to explain why Li Ying, the restaurant owner, allowed Xiao Liu to go straight to a VIP seat in the restaurant. Xiao Liu, the restaurant customer who was allowed to jump the queue, had previously given a big favor to Li Ying, the owner of the restaurant. Li Ying: <i>Xiao Liu had gone out of her way</i> <i>to contact one of her business clients</i> <i>to speed up the licensing of my restaurant.</i> <i>Without her help, the opening of my</i> <i>restaurant would have been delayed.</i> <i>I owed her a big one.</i> <i>Giving her a table first is the least</i> <i>I can do to return her favor.</i> Please note that the exchange of favors is not restricted to exchanges of financial benefits. What is reciprocated in <i>guanxi</i> relationship may also be time, affect and emotion.
