Essays on Social Capital in China Based on Guanxi Case Study

Download full paperFile format: .doc, available for editing

The paper "Social Capital in China Based on Guanxi " is a perfect example of a micro and macroeconomic case study.   Guanxi is a concept in china that refers to the relationship between people. In business, it is a form of preferential treatment that a partner is given in exchange and includes easy ease of access to resources, access to controlled information, credit and protection in case of competition. Through Guanxi, there is the creation of favours and obligations. In modern China, the concept of Guanxi plays a major role in the business (Guan, 2011).

When one has good Guanxi when doing business in China, they are able to enjoy favours. The concept of Guanxi is deeply rooted in Confucius. Under globalisation, Australian firms have been looking for ways to increase their revenue. China has become of the most favoured destination for Australian firms. While a lot of Australian firms have expanded their operations to China, it has been noted that they face a complex task of Guanxi especially when carrying out negotiations. Guanxi is one of the most important cultural traits of Chinese people, especially when doing business.

In negotiations, Guanxi looks at the process of relationships, connections, trust and friendship (Tung, Worm, & Fang, 2008). To succeed in Chinese business dealing requires friendship and a lasting relationship. This report discusses the importance of the concept of Guanxi when establishing business between Australia and China. Social capital in China based on Guanxi Social capital is based on the way relationships among individuals which facilitates action. It’ s the opportunity that one receives by establishing close relationships with others. For the East Asian countries such as China, they have a great influence from Confucius (Hitt, Lee & Yucel, 2002).

This influence leads to the importance of interdependent relationships. In China, building relationships is based on Guanxi. Guanxi is an important factor in Chinese business success. This is due to the fact that Chinese business networks depend on Guanxi relations. The Guanxi network is a core competence and a competitive advantage when carrying out business in China. The business variables in which Guanxi is embedded in enhancing business success. Sale force marketing and credit liberalisation have been identified as the most important business variables that are embedded in Guanxi (Hitt, Lee & Yucel, 2002).


Chenting S., Ronald, K., M., Sirgy, M.J. 2006, “Enabling Guanxi Management in China: A Hierarchical Stakeholder Model of Effective Guanxi,” Journal of Business Ethics, Vol.33, no.1 p.1-29

Guan, J. 2011, “Guanxi: The Key to Achieving Success in China” Sino Platonic Papers, 217 (December, 2011)

Hammond, S.C., & Glenn, L.M., 2004, “The ancient practice of Chinese social networking: Guanxi and social network theory,” E: CO Special Double Issue, Vol. 6, no.1-2, pp. 24- 31. ectCoo kieSupport=1

Hitt, M.A. Lee, H. & Yucel, E. 2002, “The Importance of Social Capital to the Management of Multinational Enterprises: Relational Networks Among Asian and Western Firms Asia Pacific”, Journal of Management, Vol.19, no.1, p.353-372. %2F227190806_The_Importance_of_Social_Capital_to_the_Management_of_Multinatio nal_Enterprises_Relational_Networks_Among_Asian_and_Western_Firms%2Flinks%2F 02e7e52cc7e435ab09000000.pdf&ei=puP6VNe5GsXvUJSMg4AE&usg=AFQjCNERz_ HYiBKj8j-RgIxLb 57DsSOyg&sig2=THoHY3nzjwUVVExN4lty9A&bvm=bv.87611401,d.d24

Jayaraman, K. 2009, “Doing business in China: A risk analysis,” Journal of Emerging Knowledge on Emerging Markets, Vol.1, no.1. p. 55-60.

Kwock, B. Mark X. J., & Tsui, A.S.C.2013, “Doing Business in China: What is the Use of Having a Contract? The Rule of Law and Guanxi when Doing Business in China,” Journal of Business Studies Quarterly, Volume 4, no.4, p.1-12. content/uploads/2013/06/June_2013_4.pdf

Lin, T.W. 2004, “Business Strategy and Guanxi Business Strategies,” Marshall Review, Vol.2, no. 4, p.1-4. egy%20and%20Guanxi-1.pdf

Tung, R., Worm, V. & Fang, T. 2008, “Sino-Western business negotiations revisited-30 years after China’s open door policy,” Organizational Dynamics, Vol. 37, no. 1, pp. 60-74, Western_business_negotiations_revisited_30_years_after_China_s_open_door_policy

Vanhonacker, W. R.2004, “Guanxi Networks In China, How to be the spider, not the fly, The China Business Review,” (May–June 2004)

Wang,J. Wang, G. G., Aruona, W. & Rojewski, J.W. 2005, “Confucian Values and the Implications for International HRD,” Human Resource Development International, Vol.8,No.3, p.311-326, ues.pdf

Yan, L. & Hafsi, T. 2007, “Understand Chinese Business Behaviour: A historical perspective from three kingdoms to modern China,” Cahier de recherché, no. 07-32-05 (January 2007)

Yang, F. 2011, “The Importance of Guanxi to Multinational Companies in China,” Asian Social Science, Vol. 7, No. 7, p.163-167.

Zhu, Y., McKenna, B. & Sun, Z. 2007, “Negotiating with Chinese: success of initial meetings is the key,” Cross Cultural Management: An International Journal, Vol. 14 No. 4, pp. 354- 364. =8&ved=0CDIQFjAD& nard_McKenna%2Fpublication%2F43476250_Negotiating_with_Chinese_Success_of_in itial_meetings_is_the_key%2Flinks%2F09e4150b7da2dd0fca000000.pdf&ei=R- P6VImNJYa7UeaVhIgE&usg=AFQjCNHBFMTkBYbfuCciet476OyuGLTOCA&sig2=n IBeNpfaF37L0qyWnYGgDg&bvm=bv.87611401,d.d24

Zhuo, C. & Guang, H. 2007, “Gift Giving Culture in China and its Cultural Values”, Harbin Institute of Technology, Intercultural Communication Studies, Vol.15, no.2. p. 81-88.

Download full paperFile format: .doc, available for editing
Contact Us