Case Study: B2B Guanxi In China

Language shows a belonging to a certain social/ethnical group. It is undeniably an important defining part of a culture that contains the logic of the nation. As expected, foreigners acknowledge a language barrier as the main challenge while entering the Chinese market. Since the last century, English has maintained its place as an international language used daily in tourism and business spheres. Nevertheless, China is an exception to the rule. According to the Telegraph research, only 10 Million Chinese (less than 1% of the population) are proficient in English. For companies, it means lack of employees with foreign language knowledge and necessity to address their customers purely in Chinese. As a result, companies face following language

These are horizontal relationships between partners that are equally positioned. A cycle of favors sets up the focal point of this guanxi. Managers in different competing companies are eager to co-work to receive synergy effect while sharing same interests and goals. They are exchanging tangible resources, such as information and knowledge. Sometimes managers may collaborate to solve a problem. B2B guanxi improves both adaption process and forecast the and its trends. Business ties are typically vertical that include beneficial relationships with suppliers (perfectly performed deliveries), distributors (quality market research) and buyers (higher loyalty rate and brand

Companies use guanxi to beat competition and to secure benefits which is often connected to gifts (i.e. 红包 “hongbao” (red envelopes with money inside) and shopping cards) or indirect bribery. Unsurprisingly China prioritized anti-corruption fight, developing strict regulations and punishment. A bribed, as a rule, gets more severe penalties and loses their mianzi. This government policy results into bribery only inside guanxi relationship that decreases fear of legal punishment (Li,