Guanxi () is a term used in Chinese culture to describe an individual's social network of mutually beneficial personal and business relationships. The character , , means "closed" and "caring", while the character means "system", and together the term refers to a closed caring system of relationships that is somewhat analogous to the term old boy's network in the West. In Western media, the pinyin romanization is more widely used than common translations such as "connections" or "relationships" because those terms do not capture the significance of a person's to most personal and business dealings in China. Unlike in the West, relationships are almost never established purely through formal meetings but must also include spending time to get to know each other during tea sessions, dinner banquets, or other personal meetings. Essentially, requires a personal bond before any business relationship can develop. As a result, relationships are often more tightly bound than relationships in Western personal social networks. has a major influence on the management of businesses based in mainland China, Hong Kong, and those owned by Overseas Chinese people in Southeast Asia (the bamboo network).

has not always been a guaranteed way of conducting business in China and Southeast Asia, especially for foreigners from the west. During the 1990s, was frequently disregarded for American business leaders when dealing with local officials. Corruption replaced in the form of tangible or monetary gifts.

networks are grounded in Confucian doctrine about the proper structure of family, hierarchical, and friendly relationships in a community, including the need for implicit mutual commitments, reciprocity, and trust.

has three sub-dimensions, sometimes abbreviated as GRX, which stands for , a measure of the emotional attachment in a relationship, ( /), the moral obligation to maintain a relationship with reciprocal exchange of favors, and ( /), or the amount of interpersonal trust. is also related to the idea of "face" (, /), which refers to social status, propriety, prestige, or a combination of all three. Other related concepts include (), the five cardinal types of relationships, which supports the idea of a long-term, developing relationship between a business and its client, and and , which respectively support reciprocity and empathy.

History

The system developed in imperial, dynastic China. The concept includes both formal and informal on-going relationships.

The term is not generally used to describe interpersonal relationships within a family, although obligations can sometimes be described in terms of an extended family. Essentially, familial relations are the core of one's interpersonal relations, while the various non-familial interpersonal relations are modifications or extensions of familial relations. An individual may view and interact with other individuals in a way that is similar to their viewing of and interactions with family members; through , a relationship between two friends can be likened by each friend to being a pseudo elder sibling–younger sibling relationship, with each friend acting accordingly based on that relationship (the friend who sees himself as the "younger sibling" will show more deference to the friend who is the "older sibling"). is also based on concepts like loyalty, dedication, reciprocity, and trust, which help to develop non-familial interpersonal relations, while mirroring the concept of filial piety, which is used to ground familial relations.

Ultimately, the relationships formed by are personal and not transferable.

In a business context

In China, a country where business relations are highly socially embedded, plays a central role in the shaping and development of day-to-day business transactions by allowing inter-business relationships and relationships between businesses and the government to grow as individuals representing these organizations work with one another. Specifically, in a business context, occurs through individual interactions first before being applied on a corporate level (e.g., one member of a business may perform a favor for a member of another business because they have interpersonal ties, which helps to facilitate the relationship between the two businesses involved in this interaction). also acts as an essential informal governance mechanism, helping leverage Chinese organizations on social and economic platforms. In places in China where factors like the structure of local government and the impact of government policies may make business interactions less efficient to facilitate, can serve as a way for businesses to circumvent such institutions by having their members cultivate their interpersonal ties. is important in two domains:

  • social ties with managers of suppliers, buyers, competitors, and other business intermediaries; and
  • social ties with government officials at various national government-regulated agencies.

In each case, a dynamic assessment would ask which of these stages had been reached in a particular business relationship.

The nature of , however, can also form the basis of patron–client relations. As a result, it creates challenges for businesses whose members are obligated to repay favors to members of other businesses when they cannot sufficiently do so. In following these obligations, businesses may also be forced to act in ways detrimental to their future, and start to over-rely on each other. Members within a business may also start to more frequently discuss information that all members knew prior, rather than try and discuss information only known by select members. If the ties fail between two businesses within an overall network built through , the other ties comprising the overall network have a chance of failing as well.

The link between and corporate corruption was very strong during the period of American foreign direct investment in the 1990s. Western executives learned about the practice of during preparatory courses before leading expansions in China. Once leaders were on the ground they often experienced systemic requirements for transactional kickbacks. Securing basic operational needs like construction permits routinely required under the table payments. Furthermore, the reliance on enabled local political leaders to force foreign firms into hiring specific regional contractors, ensuring that local deputies received direct financial kickbacks from the mandated partnerships.

Note that the aforementioned organizational flaws creates can be diminished by having more efficient institutions (like open market systems that are regulated by formal organizational procedures while promoting competition and innovation) in place to help facilitate business interactions more effectually. However, only becomes nepotism when individuals start to value their interpersonal relationships as ways to accomplish their goals over the relationships themselves. When interpersonal relationships are seen in this light, then, it is usually the case that individuals are not viewing their cultivation of prospective business relationships without bias. In addition, and nepotism are distinct in that the former is inherently a social transaction (considering the emphasis on the actual act of building relationships) and not purely based in financial transactions, while the latter is explicitly based in financial transactions and has a higher chance of resulting in legal consequences. However, the issue of as a form of government corruption has been raised into question over recent years. This is often the case when businesspeople interpret guanxi<nowiki/>'s reciprocal obligations as unethical gift-giving in exchange for government approval. The line drawn between ethical and unethical reciprocal obligation is unclear, but China is currently looking into understanding the structural problems inherent in the system.

In a diasporic context

can be used as a school of thought that influences how ethnic Chinese think of and view society. The Chinese in the diaspora are more likely to adhere and connect to the group of people with shared background. Moreover, diasporic communities might possess ties with individuals in their home country. allows the diaspora to maintain their networks and foster close relations with people in their home country and form a subethnic enclave within society. could also influence how the diaspora assimilates into the host country, and how the diaspora deals with racism in society. Groups that could be studied are Chinese-Americans, Chinese-Indonesians who have faced prejudice in their host countries. Marred by the Los Angeles massacre in 1871, in 1992, the Japanese American internment during World War II, and the idea of the "Hindu Invasion", the Asian Americans already in the United States faced discrimination from the wider American society. They had to find solutions based on trial and error, looking for legal, political, and social ways to find their place in society.

Ethical concerns

In recent years, the ethical consequences of have been brought into question. While can bring benefits to people directly within the network, it also has the potential to bring harm to individuals, societies and nations when misused or abused. For example, mutual reciprocal obligation is a major component of . However, the specific date, time and method are often unspecified. Thus, can be ethically questionable when one party takes advantage of others' personal favors, without seeking to reciprocate. A common example of unethical reciprocal obligation involves the abuse of business-government relations. In 2013, an official of the CCP criticized government officials for using public funds of over 10,000 yuan for banquets. This totals approximately 48 billion dollars' worth of banquets per year.

is a neutral word, but the use or practice of can range from "benign, neutral, to questionable and corrupt". In mainland China, terms like guanxi practice or are used to refer to bribery and corruption. practice is commonly employed by favour seekers to seek corrupt benefits from power-holders. Guanxi offers an efficient information transmission channel to help members to identify potential and trustworthy partners; it also offers a safe and secret platform for illegal transactions. norms help buyers and sellers of corrupt benefits justify and rationalize their acts. Li's Performing Bribery in China (2011) analyze how practice works in corrupt exchanges.

This question is especially critical in cross-cultural business partnerships, when Western firms and auditors are operating within Confucian cultures. Western-based managers must exercise caution in determining whether or not their Chinese colleagues and business partners are in fact practicing . Caution and extra guidance should be taken to ensure that conflict does not occur as a result of misunderstood cultural agreements.

The term (, the 'art' or 'knowledge' of ) is also used to specifically refer to the manipulation and corruption brought about by a selfish and sometimes illegal utilization of . In turn, distinguishes unethical usage of from the term itself.

research

is a well-researched topic and the subject of continuing academic interest on both theoretical and empirical levels.

Similar concepts in other cultures

Sociologists have linked with the concept of social capital (it has been described as a value structure), and it has been exhaustively described in Western studies of Chinese economic and political behavior.

  • Blat (Russia)| in Russian culture
  • in Bulgarian society
  • in Middle Eastern culture
  • in Cuban culture
  • Old boy network in Commonwealth, US and Finnish culture
  • Dignitas (Roman concept)| in ancient Roman culture
  • (literally 'connections') in Israeli culture. :wikt:פרוטקציה| (from the word 'protection') is the use of for personal gain or helping another, also known in slang as 'Vitamin P'.
  • (literally 'plug in' – compare English 'hook up') in Spain, meaning to 'plug' friends or acquaintances 'into' a job or position, especially making use of an unfair advantage over others.
  • in Latin American culture
  • system in the Philippines (basically "godfather" or patron), also known locally as (Filipino word for "to hang on", "to hook on").

Western vs. Eastern social business relations

The four dimensions for a successful business networking comprise: trust, bonding, mutual relationship, and empathy. Nevertheless, the points of view in which these dimensions are understood and consolidated into business tasks are extensively disparate in the East vs the West.

From the Western point of view, trust is treated as shared unwavering quality, constancy, and correspondence. Instead, from the Eastern point of view, trust is additionally synonymous with obligation, where is required to be kept up through persistent long haul affiliation and connection. The Chinese system of (the basic norms of ) supports the Eastern attitude, emphasizing that one's fulfillment of one's responsibilities in a given role ensures the smooth functioning of Chinese society. Correspondence is likewise a measurement that is substantially more stressed in the East than in the West. As per Confucianism, every individual is urged to become a (exemplary individual) and compensate some help with altogether more than one has gotten. In conclusion, compassion is a measurement that is exceedingly implanted in Eastern business bonds, the significance for dealers and clients to see each other's needs is extremely important. The Confucian understanding of , which also equates to "Do not do to others as one does not want others to do to him", stresses the importance for sellers and customers to understand each other's needs. For example, reciprocal obligation plays an intricate role in maintaining harmonious business relations. It is expected that both sides not only stay friendly with each other, but also reciprocate a favor given by the other party. Western relationship marketing, on the other hand, is much more formally constructed, in which no social obligation and further exchanges of favors are expected. Thus, long-term personal relations are more emphasized in Chinese practice than in Western relationship marketing.