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Relationships (Guanxi)

Fundamental to Doing Business in Greater China


By Amy C. Liu


This article is an excerpt from the book Taiwan A to Z: The Essential Cultural Guide. Some of the information from this article was presented by Christopher Deal and Amy C. Liu in a workshop at SIETAR-USA’s annual conference in Spokane, WA in April of 2010 (SIETAR is the Society for Intercultural Education, Training, and Research). The workshop, “Working with the Chinese: Essential Aspects of Chinese Culture and Their Implications for Communication,” included information applicable to Mainland China, Hong Kong, Singapore, and Taiwan, with this entire group being referred to as Greater China.


What is Guanxi?


Every business transaction is a dealing of guānxi (關係 or 关系) and every guanxi is intricately connected and maintained. A Taiwanese has guanxi with all kinds of people: in the work unit, at local shops and street stands, and with relatives, friends, colleagues, subordinates and supervisors. It’s what makes many aspects of daily life run smoothly. No one should wish to remain completely outside the guanxi system, and no one can. It is just as important to accumulate credit in what I call the “guanxi account” as it is to save money in one’s bank account. Just as we all wish to have more money in our bank account, every Taiwanese desires to accumulate more connections in their guanxi account. The more one has in his/her guanxi account, the more face, respect and prestige are gained.


There is no direct English translation for the word guanxi. It’s often translated as "relationship" but it is far more than that; it describes your relationship, connection, dependency, network, friendship and, most importantly, your obligation. One’s life revolves around the accumulated guanxi and the resulting obligations of these connections. guanxi involves an ongoing series of reciprocal exchanges. One helps and gives to another and therefore expects, at some unspecified future date, to receive from that other person.


To put it in another way, if one receives, one incurs an obligation to give later on. What is given need not be similar in value to what was received. For instance, one’s gift of imported wine may later be repaid by the other’s use of influence with getting better services at a hospital. Taiwanese often keep a mental record of what they have received and given. When guanxi is needed, a Taiwanese will search for the best connection within one’s own web of relationships to achieve their objective. Should further guanxi be required, one would "pull" guanxi (拉關係 or 拉关系, lā guānxi) to search in others’ webs of relationships.


The Importance of Introductions


Introductions are an important way to gain guanxi, even among remote connections. At the first meeting (whether business or social), Taiwanese show respect for each other to ensure harmony. However, as an introduction is made, the friendship and connection are established. The formality gradually dissolves into informality. One begins to trust the other party through the person who makes the introduction. This introduction not only connects the two new parties, it also helps establish credibility for the person making the introduction.


My classic example of the importance of introduction is as follows. I’ve been buying fresh juice at a small local juice stand for about two years, and with the guanxi built over time, the lăobăn (老闆 or 老板, owner) now gives me an extra small cup of juice to drink while waiting to get my order. I introduced my friend Lisa, who is American and came to Taiwan for a summer Chinese language program to the laoban, and she immediately received the same treatment: a small cup of juice to sample while waiting for her order. It took me two years to build the relationship and I no doubt spent a good total sum of money having delicious fresh juice at the stand.


With my introduction, Lisa immediately benefited from my two years of guanxi and was treated the same. Every time Lisa goes back to that same juice stand, she receives something extra: a fresh orange, some local sweets, or that small cup of juice. Lisa of course is a friendly American and the friendly Taiwanese no doubt like to show her a little local hospitality, yet without my initial introduction, she would not have gotten this special treatment so quickly. The same concept further applies in a business setting. Trust is built when guanxi is introduced, and thus it becomes easier to do business. Everyone is trying to accumulate guanxi in their life, and this collected guanxi is saved and spent with discretion, just like money in a bank account.


Reciprocation and Obligation


Nurturing a relationship thus becomes important. It’s vital to reciprocate. Understand that it is expected that the favor is definitely to be returned at some time in the future. Many guanxi are built on coffee breaks, golf outings and dinners; some business entertaining can involve cultural sightseeing trips or gift giving. A small gift is appreciated as it indicates a kind gesture and may lead to forming important connections. However, you should be suspicious when receiving a "valuable" gift such as a brand name watch. This action could be an indicator that a major favor will be expected from you in the future.


For a Taiwanese, one’s guanxi and "obligation" can never be disconnected once introduced. One depends on these guanxi in life. As a result, Taiwanese are people oriented. They enjoy face-to-face interaction, as it develops trust; they share more information among those with whom they have the best guanxi; business and friendships may seem to evolve slowly, yet once established, last. Consequently, when interacting or working with Taiwanese associates, expect to spend a higher portion of time socializing at dinners and functions, deal with more unscheduled visits or last-minute changes of arranged meetings, and to comply (due to obligations) with favors asked. Remember: the web of guanxi is circular; it never dies out.



Click here to read more about Taiwan A to Z: The Essential Cultural Guide or to “Look Inside” this book on Amazon.com.


Taiwan A to Z: The Essential Cultural Guide



To cite this article, you may use the following citation information, in APA format:

Liu, A. C. (2009). Taiwan A to Z: The Essential Cultural Guide. Taipei, Taiwan: Community Services Center.