• Title, Summary, Keyword: guanxi

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A Modern Analysis of 'Guanxi' of Foreign Investment in China

  • LEE, Seoung-Taek;PARK, Woo
    • THE INTERNATIONAL COMMERCE & LAW REVIEW
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    • v.68
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    • pp.197-218
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    • 2015
  • China is a land of guanxi, everything is connected with guanxi. China has a business culture based on guanxi connections underpinned by strong Confucian ethics. However, there are some reasons why it is difficult for western companies to run businesses in China. Firstly, foreign firms lack the understanding and experiences necessary for doing business in China. They don't know the absence of alternatives is one of reasons that guanxi is so powerful in Chinese society. Secondly, there are many misconceptions about guanxi. It is easier for many foreign scholars or businessmen to equate guanxi with corruption due to the ambiguity of guanxi. Thus, if a foreign enterprise possesses guanxi, it can be a source of competitive advantage for doing business due to lack of law systems for anti-corruption activities in China. Furthermore, it is gaining increasing importance not only in Business to Government(B2G) but also in Business to Consumers(B2C) relationships. Therefore,managers should pay great attention to the proper use of guanxi instead of being involved in corrupt behaviours because now the governments hold a strong attitude against corruption. In particular, establishment of working guanxi through red envelops(basically giving money) or illegal gifts can cause a great problem for both parties, which were naturally accepted among most government officials and businessmen until recently.

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Characteristics of Apparel Manufacturers and Distributors and the Effects of Private Guanxi on Organizational Relationship Type in China (중국 의류산업에서의 제조업체와 유통업체 기업특성, 개인 Guanxi(關係) 및 조직관계)

  • Moon, Young-Ok;Park, Na-Ri;Park, Jae-Ok
    • Journal of the Korean Society of Clothing and Textiles
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    • v.33 no.2
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    • pp.244-255
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    • 2009
  • The purpose of this study was 1) to inquire into characteristics of apparel manufacturers and distributors in China, 2) to classify private Guanxi and organizational relationship type, 3) to find differences in private Guanxi to enterprise type and the class of participations' position, and 4) to also find effects of private Guanxi on organizational relationship. Apparel manufacturers and distributors in China participated in the study. Random sampling method was used to collect the data. Data from 173 questionnaires were used for the statistical analysis. Descriptive analysis, factor analysis, Cronbach's alpha coefficient, t-test, and regression analysis were conducted. Two factors of private Guanxi were classified(i.e., affective Guanxi, instrumental Guanxi). Three factors of organizational relationship type were identified(i.e., opportunistic relationship, cooperative relationship, vertical relationship). The results indicated that distributors regarded affective Guanxi as important more than manufactures and employees regarded affective Guanxi and instrumental Guanxi as important more than presidents. Distributors regarded cooperative relationship as important more than manufactures. Employees regarded organizational relationship as important more than presidents. Affective Guanxi positively affected on cooperative relationship and vertical relationship but negatively affected on opportunistic relationship. Instrumental Guanxi positively affected on opportunistic relationship and vertical relationship. The result of this study may give valuable information to retail merchandisers and strategists who participated in fashion business in China.

The Effects of Private Guanxi and Organizational Relationship Type on Quality of Relationship and Performance of Distribution Channel -Focused on Apparel Manufactures and Distribution in China- (중국의류산업에서 제조업체와 유통업체간 개인 Guanxi(관계, 關係)와 조직관계가 조직관계의 질 및 유통경로성과에 미치는 영향)

  • Moon, Young-Ok;Park, Na-Ri;Park, Jae-Ok
    • Journal of the Korean Society of Clothing and Textiles
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    • v.32 no.11
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    • pp.1760-1770
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    • 2008
  • The purpose of this study was 1) to find effects of private Guanxi and organizational relationship on quality of organizational relationship, 2) to find effects of private Guanxi and organizational relationship on performance of distribution channel, and 3) to also find effects of quality of organizational relationship on performance of distribution channel. Apparel manufacturers and distributors in China participated in the study. Random sampling method was used to collect the data. Data from 173 questionnaires were used for the statistical analysis. Factor analysis, Cronbach's alpha coefficient, and regression analysis was conducted. Two factors of private Guanxi were classified(i.e., affective Guanxi, instrumental Guanxi). Three factors of organizational relationship type were identified(i.e., opportunistic relationship, cooperative relationship, vertical relationship). The result indicated that affective Guanxi in terms of private Guanxi positively affected on quality of organizational relationship. Cooperative relationship and vertical relationship in terms of organizational relationship positively affected on quality of organizational relationship. Affective Guanxi positively affected on non-financial performance and financial performance in terms of performance of distribution channel. Instrumental Guanxi in terms of private Guanxi positively affected on financial performance only. Cooperative relationship in terms of organizational relationship positively affected on non-financial performance and vertical relationship positively affected on financial performance. Quality of organizational relationship positively affected on non-financial performance and vertical relationship positively affected on financial performance.

The Effect of Guanxi on Relationship Performance between Korean Apparel Firms and Chinese Partners (한국 의류업체와 중국 거래업체간의 ??????시(關係)가 관계성과에 미치는 영향)

  • Song Yun-Ah;Ko Eun-Ju
    • Journal of the Korean Society of Clothing and Textiles
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    • v.30 no.4
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    • pp.519-530
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    • 2006
  • The purpose of this study was to investigate whether management strategic types and entry strategy moderate the influence of Guanxi on the relationship performance between Korean apparel firms & Chinese partners. For these purposes, three hypotheses were developed and data was collected from 85 Korean apparel firms which have a business relationship with Chinese partners. Data was analyzed with SPSS methods such as frequency, factor analysis, multiple-regression, and hierarchical-regression analysis. The results were as follows: First, 'Prior to Guanxi' and 'Execution of Guanxi', which were sub-factors of Guanxi, influence positively on the relationship performance. And also the influence of 'Prior to Guanxi' was higher than 'Execution of Guanxi' on the relationship performance. Second, the influence of the 'Prior to Guanxi' on the relationship performance was stronger when Defender strategic type was used rather than other types. Third, the influence of the 'Prior to Guanxi' on the relationship performance was stronger when the entry scope of 'Both production & distribution in China' and the entry mode of 'Entry through Agent' were chosen.

Practice and Networks of Chinese Firms (중국의 기업 관행과 네트워크)

  • Choi, Ja-Young;Lee, Sung-Cheol
    • Journal of the Economic Geographical Society of Korea
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    • v.14 no.4
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    • pp.657-670
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    • 2011
  • China has gone through rapid economic growth due to transitional economies since 1978. In particular, Chinese transitional economies has led to fundamental changes in firms' activities under the socialist system. Nevertheless, Chinese firms have formed new industrial production organizations and spatial orders by sustaining personal networks based on existing traditional firm practice, which is called 'guanxi'. Therefore, the main purpose of this research is to identify the influence of personal networks, guanxi, on the business activities of Chinese firms by investigating the formation of guanxi mechanism. The main characteristics of guanxi represented in inter-firm relations are as follows. First, guanxi has played a role in facilitating inter-firm relations and business activities, because it has an inter-debt relations based on inter-reciprocal relations between firms. Second, Chinese firms has depended on posteriori guanxi rather than inherent guanxi by the internalization of personal networks through 'guanxi communicators'.Third, guanxi between firms and local government in extra-firm relations has been established to minimize risks from unstable legal regulations.

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Guanxi Networks in China

  • Jiang, Ke;Barnett, George A.
    • Journal of Contemporary Eastern Asia
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    • v.12 no.2
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    • pp.89-97
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    • 2013
  • This paper explores the influences of the traditional Chinese culture on social relations in China. It provides an introduction to the concept of Guanxi, the notion that social connections are based on socially situated reciprocity. This is different from social interaction in Western society that is based on self-interest and equity. Guanxi represents the foundation of social networks in many Eastern countries. As such, the study of social networks in China requires scholars to examine Guanxi networks. The paper demonstrates how a Guanxi perspective might be added to the examination of various theories that comprise structural (network) theory, including social capital theory, social exchange theory, cognitive and contagion theories, and the role of homophily for the study of Chinese society and its social organizations.

Building Guanxi and Networks of Korean Foreign Direct Investment Firms in China (대중국 한국 투자기업의 꽌시 형성과 네트워크)

  • Choe, Ja-Yeong;Lee, Sung-Cheol
    • Journal of the Economic Geographical Society of Korea
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    • v.15 no.2
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    • pp.228-239
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    • 2012
  • Guanxi could be regarded as communities based on blood, regionalism, school ties centering on individual person. It has been used as a means of personal interests security and acquisition. What is more, it has formed a mode of socio-economic order, which is an inter-obligation relations based on mutual benefits. In practice, it is necessary to understand and accept guanxi in China, as it is a key factor to understand consumer patterns, inter-firm relations and extra-firm relations between firm and government. In this context, the main aim of the reserach is to identify the impact of guanxi on the business activities of Korean foreign direct investment firms in China by investigating their networks based on guanxi.

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Determinants of Relational Quality between the Supplier and the Retailer in the Chinese Cosmetics Market (중국 화장품시장에서 공급업체와 소매업체간 관계의 질에 영향을 미치는 요인에 관한 연구)

  • Im, Seong-Yo;O, Se-Jo
    • Proceedings of the Korean DIstribution Association Conference
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    • pp.53-83
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    • 2005
  • This study focuses on finding out the determinants of relational quality between the supplier and the retailer in the Chinese cosmetics market. A total of 72 questionnaires were collected by surveying beauty shops which mainly do business with the foreign cosmetics suppliers in Shanghai area. The findings support the premise that a retailer's trust in a supplier is positively related to the retailer's commitment. Supplier's ability, guanxi and cultural sensitivity have positive impacts on trust. Formalization, supplier's specific investment and cultural sensitivity affect commitment positively. But the formalization is not significantly related to the retailer's trust. The guanxi is not found to be significantly related to the retailer's commitment yet.

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The Impact of Conflict and Influence Strategies Between Local Korean-Products-Selling Retailers and Wholesalers on Performance in Chinese Electronics Distribution Channels: On Moderating Effects of Relational Quality (중국 가전유통경로에서 한국제품 현지 판매업체와 도매업체간 갈등 및 영향전략이 성과에 미치는 영향: 관계 질의 조절효과)

  • Chun, Dal-Young;Kwon, Joo-Hyung;Lee, Guo-Ming
    • Journal of Distribution Research
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    • v.16 no.3
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    • pp.1-32
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    • 2011
  • I. Introduction: In Chinese electronics industry, the local wholesalers are still dominant but power is rapidly swifting from wholesalers to retailers because in recent foreign big retailers and local mass merchandisers are growing fast. During such transient period, conflicts among channel members emerge important issues. For example, when wholesalers who have more power exercise influence strategies to maintain status, conflicts among manufacturer, wholesaler, and retailer will be intensified. Korean electronics companies in China need differentiated channel strategies by dealing with wholesalers and retailers simultaneously to sell more Korean products in competition with foreign firms. For example, Korean electronics firms should utilize 'guanxi' or relational quality to form long-term relationships with whloesalers instead of power and conflict issues. The major purpose of this study is to investigate the impact of conflict, dependency, and influence strategies between local Korean-products-selling retailers and wholesalers on performance in Chinese electronics distribution channels. In particular, this paper proposes effective distribution strategies for Korean electronics companies in China by analyzing moderating effects of 'Guanxi'. II. Literature Review and Hypotheses: The specific purposes of this study are as follows. First, causes of conflicts between local Korean-products-selling retailers and wholesalers are examined from the perspectives of goal incongruence and role ambiguity and then effects of these causes are found out on perceived conflicts of local retailers. Second, the effects of dependency of local retailers upon wholesalers are investigated on local retailers' perceived conflicts. Third, the effects of non-coercive influence strategies such as information exchange and recommendation and coercive strategies such as threats and legalistic pleas exercised by wholesalers are explored on perceived conflicts by local retailers. Fourth, the effects of level of conflicts perceived by local retailers are verified on local retailers' financial performance and satisfaction. Fifth, moderating effects of relational qualities, say, 'quanxi' between wholesalers and retailers are analyzed on the impact of wholesalers' influence strategies on retailers' performances. Finally, moderating effects of relational qualities are examined on the relationship between conflicts and performance. To accomplish above-mentioned research objectives, Figure 1 and the following research hypotheses are proposed and verified. III. Measurement and Data Analysis: To verify the proposed research model and hypotheses, data were collected from 97 retailers who are selling Korean electronic products located around Central and Southern regions in China. Covariance analysis and moderated regression analysis were employed to validate hypotheses. IV. Conclusion: The following results were drawn using structural equation modeling and hierarchical moderated regression. First, goal incongruence perceived by local retailers significantly affected conflict but role ambiguity did not. Second, consistent with conflict spiral theory, the level of conflict decreased when retailers' dependency increased toward wholesalers. Third, noncoercive influence strategies such as information exchange and recommendation implemented by wholesalers had significant effects on retailers' performance such as sales and satisfaction without conflict. On the other hand, coercive influence strategies such as threat and legalistic plea had insignificant effects on performance in spite of increasing the level of conflict. Fourth, 'guanxi', namely, relational quality between local retailers and wholesalers showed unique effects on performance. In case of noncoercive influence strategies, 'guanxi' did not play a role of moderator. Rather, relational quality and noncoercive influence strategies can serve as independent variables to enhance performance. On the other hand, when 'guanxi' was well built due to mutual trust and commitment, relational quality as a moderator can positively function to improve performance even though hostile, coercive influence strategies were implemented. Fifth, 'guanxi' significantly moderated the effects of conflict on performance. Even if conflict arises, local retailers who form solid relational quality can increase performance by dealing with dysfunctional conflict synergistically compared with low 'quanxi' retailers. In conclusion, this study verified the importance of relational quality via 'quanxi' between local retailers and wholesalers in Chinese electronic industry because relational quality could cross out the adverse effects of coercive influence strategies and conflict on performance.

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Relative Competitive Strengths of Overseas Chinese Firms in China: Advantages of Homeland Investment (중국투자 화교기업의 상대적 경쟁력: 모국투자의 이점)

  • Kim, Jong-Shik
    • Korean Business Review
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    • v.18 no.2
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    • pp.21-43
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    • 2005
  • Since China opened its market to foreign investors, overseas Chinese firms have been the biggest foreign investors. Because of the uncertain market environment, other foreign finns incurred larger liabilities of foreignness than overseas Chinese finns. Some parts of liabilities of foreignness stem from cultural differences and last for quite long time. Therefore better understanding of Chinese culture and guanxi network can give overseas Chinese finns competitive advantages over those from other countries by offering market information and reducing transaction costs. Also better management skills, information about export markets and abundant capital allow them to maintain competitive strengths over local firms. As foreign firms accumulate market knowledge in China, they can reduce liabilities of foreignness. However, it is very difficult for foreigners to understand Chinese cultures and to utilize guanxi network as well as Chinese. It is likely that Overseas Chines firms can have competitive strengths in some industries such as banking, retailing, and foreign trade, where relationship with local contractors and exploitation of worldwide Chines networks can play important roles to make successful business deals.

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