1. Why do you think that it is so important to cultivate guanxi and guanxiwang in China? Guanxi and guanxiwang are essential to business in China. It is an important mechanism for building long-term business relationships and getting business done in China successfully. Because China is a big country for mechanism.
By establishing connections in relationships would help do a better job and mechanism; and the society of China lacks a strong rule-based legal tradition, thus guanxi and guangxiwang is becoming a necessary and regulations Guanxi is based on reciprocity, which is the undertaking of higher authority to accept an obligation to return a favor in the unspecified future whenever they benefit from the guanxi network. The development and expansion of the guanxi is a form of social investment that enriches the executive’s resources and future potential.
The importance of cultivating guanxi and guanxiwang in China is to realize the imperativeness of personal connection between two individuals who are bounded by an implicit psychological contract to follow the social norms of guanxi. The norms include self-disclosure, dynamic reciprocity, and the long-term equity principle. Establishing connections in relationships would help do a better job in completing an assignment and may be able to bend the rules for a temporary time period.
The society of China lacks a strong rule-based legal tradition, thus guanxi and guanxiwang is becoming a necessary and important mechanism for building long-term business relationships and getting business done in China successfully.
2. What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all the rules and regulations, rather than trying to find a way around them as Dan Mintz apparently does? As we look through the case of DMG in Shanghai, we recognize the influence of guanxi more apparently.
Dan Mintz, the founder of DMG, had no prior experience in the fields of advertisement. He had no contact in China, even no Mandarin language. However, he had guanxi with two young Chinese who have connections with people of various levels. Making their connections as bedrock of the company’s guanxiwang, they were able to emerge as one of the China’s fastest growing advertising agencies. DMG shows us that culture is an important thing in China. Guanxi refers to the business connections that are so important to companies doing business in China.
Guanxiwang refers to the relationship network that companies cultivate. Both of these are important to the Confucian ethics – loyalty, reciprocal obligations, and honesty in dealing with others – that drives business in China. Dan Mintz believes that guanxi and guanxiwang are important because they help companies get around restrictions that limit the ability of companies to function. It also is very useful when you have a business that delivers a good job; they bring the message over what gives you the opportunity to get good assignments from major companies.
So a business in China without the relationships network is doomed to fail, because if you can’t work around the law and have doors opened for you it is almost impossible to get a successful business. China cares very much about its culture, especially because its rich history goes back centuries around 500 B. C. The DMG experience in China shows that culture as an imperative factor when conducting business there: foreign or domestic. The guanxi and guanxiwang factors are very important pieces of China’s culture. Both are essential to someone who is trying to start a successful business in China.
Even though DMG may have obligations with higher authority, it has helped them to get a good reputation and support for the future, especially when meeting connections, such as with Bing Wu and Peter Xiao. When relationships are created in China, it helps businesses work around the laws and policies and it can open doors for any business that normally cannot be conducted anywhere else. Overall this is an advantage that DMG was able to acquire due to the fact that Wu was a recognized national champion and Xiao has political connections. . What are the ethical issues that might arise when drawing upon guanxiwang to get things done in China? What does this suggest about the limits of using guanxiwang for a Western business committed to high ethical standards? Guanxiwang plays a crucial role in business ethics, specifically referring to Western businesses moving to China. According to the case, it is impossible to get anything done without an intermediary, a third party introducing how to do business in China.
In this case, for example: Bing Wu and Peter Xiao. Chinese will simply not do business with strangers unless someone is able to draw guanxiwang, which is the intermediary in the networking circle. As indicated in the case, the reciprocation obligations almost like a bribe, for example, I’ll hit you and you hit me back! Business ethics in China rests upon a rich and diverse cultural moral heritage that emphasizes personal virtue and a right ordering of personal relationships in social organization and institutions.
There are several ethical issues that can be provoked by drawing upon guanxiwang (Hill, 2009, p. 105). First of all, there will not be many business opportunities. For those who are starting up a business, guanxi companies that exist can be barriers for entering a market. For example, the existing businesses can use guanxi to initiate confrontations among them or to acquire restricted rights for using essential facilities to operate business activities from the government. Overall, it might hurt the system of free market competition.