In China, guanxi is everything — the difference between riches and poverty, success and failure. There is no exact equivalent in English, but guanxi can be translated as: “You scratch my back and I’ll scratch yours.”
Chinese business people like to make deals with people they know and trust. If you’re a stranger, building a relationship is going to take time — lots of it. It’s not so hard to understand. If one has Guanxi with another, one will do a favor, remove an obstacle, and perform any act that’s necessary on behalf of the other party.
In China the notions of loyalty and reciprocity go back for thousands of years. When China first started to entertain the notion of developing a market economy, there were no written contracts like what existed in Western countries. Having a “network” of friends and associates was the only way to get things done.
To be successful in China means trying to get through a vast and astonishing bureaucracy. No amount of intelligence, wit or humor will work without the right guanxi. For better or worse, guanxi is the oil the keeps the economic wheels running.
That’s when WESTERNERS start to complain. “But that’s not fair,” they say. Westerners have the mindset that it’s necessary to take responsibility for one’s own actions. The “Western way” doesn’t depend so heavily on connections. The Chinese see it differently and they rarely whine that life isn’t fair. Theirs is an ancient society and in Chinese history the concept of fairness hardly existed. The laws served those who had the power, depending on what dynasty was controlling China at the time. Common people had few rights — if they had any at all. Western countries leaned towards an all-encompassing legal system that tried — more or less — to serve everyone.
Chinese people, therefore, value relationships more than rules and regulations. Western business people learn quite fast that going through official channels in China is like trying to fit a square peg into a round hole. It doesn’t work. Be warned, however, that when a Chinese partner does you a favor he isn’t necessarily being a nice guy. This may be a subtle request that one day you’ll scratch his back.