The location of Mc Donald’s, on the corner of Wangfujin street and the Avenue of Eternal Peace, is a very good strategic choice. It’s close to the heart of Beijing and Tiananmen Square, which is historically a very famous place and is still today a very active place. A lot of people cross this area every day and the fast-food concept match to the demand.
Mc Donald’s encountered the imperfect rules of Guanxi. Guanxi is one of the powerful forces values in Chinese culture. It refers to a concept of relationship. Guanxi express the relationship of one party to another. More importantly the term also express an obligation of one party to another build over time by the reciprocation of social exchanges.
If the Government has a better Guanxi with Li Ka-Shing than with Mc Donald’s, the priority will be for the first one.
These rules don’t apply to most countries. Each country got its culture but the Guanxi Concept is specific to China. However, agrees between Governments and Companies exist in other forms (i.e lobbying).
It is commonly admitted that a western company, just like any other legal entity, has to respect the law. Business law has been made to ease exchanges between a company and its environment; it is the cornerstone of any business, preventing misunderstandings on a first hand, and fixing conflicts on a second hand.
In emerging countries and especially in China, law is not as important as in western countries. Due to different past and other traditions, what matters in China is not actually the law, but it is rather the relationship between a company and its environment. The main key in order to success in business is to build strong relationships with powerful decision-making men who ultimately decided in case of contention. This relationship is called the guanxi.
In this case, McDonald’s opened a new restaurant in Beijing; this auspicious place ensured the success of the restaurant but also made...
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