College of Administrative and Financial Sciences
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Case study
Reread the Management Focus on“China and Its Guanxi,” available in your e-book (page no.110)and answer the following questions:
Assignment Question(s): (Marks: 5)
- Why do you think it is so important to cultivate guanxi and guanxiwang in China? (Mark:1)
- 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 does? (Marks:2)
- What ethical issues might arise when drawing on 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? (Marks:2)
International Business
Answer 1;
Guanxi is a Chinese term that means relationships. However, in business settings, the term can be referred to as “connections.” Moreover, the concept of guanxi and quanxiwang is strongly rooted in Chinese culture; thus, the Chinese will occasionally rely on guanxiwang for the sake of help (Hill, 2008). In China, if you are privileged to have the right guanxi, then even the legal rules which govern the society can be bent or broken. For instance, from the case study, Dan Mintz can be witnessed making connections with two high ranking Chinese government officials in order to seek permission to film commercials in places that are out of bound to the outsider (Hill, 2008). Surprisingly, Dan Mintz is allowed to film since he had the right guanxi.
Guanxi, as well as guanxiwang, are very important to the businesses in China. Thus, these social networks of power are significant mechanisms, specifically for establishing long term business relationships as well as getting several businesses done in china in a successful manner (Hill, 2008).
According to (Hill 2008), building connections in business relationships would aid in doing better work and mechanisms since Chinese society lacks a rule-based, strong, and legal tradition. Consequently, guanxi and guanxiwang have since become necessary with its foundation based on reciprocity.
Answer 2;
Guanxi (personal power, relationship, and connections), unlike the rule of law, have since become the key to getting things done in whichever way in china (Hill, 2008). As witnessed, several companies that obey the set rules may find it difficult to compete fairly in China. This is major because; in china, no single individual is willing to do anything for free unless bribed (Hill, 2008). Notably, as witnessed in the case study of DMG in Shanghai, the business enterprises that are bound to the set rules will be disappointed to get any business. Hence, it’s a fact that the influence of guanxi in China has become more apparent (Hill, 2008).
According to (Hill, 2008) Dan Mintz had no experience in the field of advertisement. However, due to his guanxi with the two powerful government officials, his company was able to emerge as the fastest-growing advertisement company. In a nutshell, Mr. Dan Mintz had a strong belief that guanxiwang, as well as guanxi, are vital since they aid companies in avoiding restrictions that hinder their ability to function properly (Hill, 2008). Thus, culture is a significant thing in china.
Answer 3;
Since reciprocal obligations are vital to the process, a number of companies could get in trouble in case a favor is demanded from them by a network partner that is deeply involved in unethical actions. However, a number of students believed that in order to survive in china, what you know isn’t that important, but it’s who you know that matters (Hill, 2008). Hence, since success normally relies on others, entities doing business in china cannot depend on others but rely on guanxi.
In the United States, the ethical issue is a major law that governs businesses. Thus, the act of bribery isn’t allowed in whatever case (Hill, 2008). The big question is, should we carry out business activities with an individual who expects a favor in return for a favor? What if this is the only better way to do business, for instance, in china?
Due to this, western business entities could find it hard to follow in line with the guanxiwang in case they are bound to high ethical standards. Moreover, they would be forced to go against their western belief in order to operate successfully in china (Hill, 2008).
Reference
Hill, C. (2008). International Business: Competing in the global market place. Strategic Direction.