Business in China: Cultural Factors

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It is highly important for all international companies to understand that business culture in China is based on strong family networks or cultural ties secured in "quanxi" connection (Huang, 1987).

This form of Chinese culture is heavily influenced by Confucianism, Taoism and Cultural Revolution. Under the cultural acceptance, good business practice in helping family and close associates and building relationships prior to doing business deals.

Fei's (1948) framework also illustrate the network circle differentiation that different "guanxi" are governed by different moral standards and behavioural practices. It is recommended that MNC appoint chinese locals as Service Managers to build on the "guanxi" to achieve status and moving towards insider status (Buttery & Wong, 1999:151-152) with the central government officials.

Guanxi implied mutual obligation, assurance and understanding, and governs Chinese attitudes toward long-term social and business relationships (Luo, 1997) that provides a balance to the Chinese bureaucracy by giving individuals a way to get around rules through the establishment of personal relations (Alston, 1989).

Companies need to be conscious of that main difference between Chinese and Western business practices lies in the extreme weight of guanxi in the former, as opposed to the specification and enforcement of contracts in the latter (Tai, 1988).

In conclusion, business transactions with Chinese individuals and organisations need to be approach with the understanding of Chinese will place them in the framework of their own guanxi networks (Lou & Chen, 1996).


Hwang K.K. (1987) Place and Favor; The Chinese Power Game, American Journal of Sociology Vol92, pp944-74.

Buttery E.A. and Y.H. Wong (1999). The development of a guanxi framework, Marketing Intelligence and Planning, vol 17(3), pp147-154

Fei, H.T. (1948) Peasant Life in China. London: Routledge & Kegan.

Alston, J P, Wa, guanxi, and...
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