With regard to small family businesses in china, a guanxi can be best described as a _______

Guanxi (pronounced gwan' CHē) is a Chinese term meaning relationships; in business, it commonly refers to the networks or connections used to open doors for new business and facilitate deals. The term refers not just to the existence of relationships but to their nature: to having personal trust and a strong relationship. It can also create moral obligations and require the exchanging of favors. A person who has a great deal of guanxi will be better positioned to generate business than someone who lacks it.

Closely intertwined with the Confucian philosophy that has shaped many Asian cultures, guanxi holds that the self extends to family, friends, and society to create a harmonious community. Guanxi implies an obligation that one has to another. In China, the belief is that the wheels of business are lubricated with guanxi.

Guanxi is a Chinese term describing an individual's ability to connect or network for productive business purposes.
The Chinese symbols for guanxi essentially mean gateway to relationships.
Guanxi is perhaps best encapsulated by the axiom, "it's not what you know, but who you know."
Abusing guanxi through aggressive or dishonest business practices can jeopardize one's reputation or present opportunities for corruption.

The exchange of favors between people in a network need not be the same.

Merely saying that guanxi connects to Confucian philosophy does not complete the explanation of the term. Confucian thought dates back more than 2,000 years and continues to be highly influential in China today. Given the importance of Confucian thought, it should be no surprise that its stress on relationships and duty to others should be reflected in the notion of guanxi in Chinese business relationships.

Business comes before the personal in the Western business model, and the two do not often combine. In guanxi, however, the two are closely joined. Indeed, the original Chinese symbols relate to the concept of a gateway to a relationship, a neat and relatively accurate way to think of guanxi. In other words, the exercise of guanxi leads to the connections through which business can happen.

Guanxi is perhaps best understood by the old axiom, "it's not what you know, but who you know that's important." Guanxi in the West comes in many forms—alumni networks, fraternity or sorority memberships, past and present places of employment, clubs, churches, families, and friends.

In social sciences, guanxi is similar to some concepts understood in network theory, such as the idea of information or connection brokerage by well-positioned individuals in a social network or their social capital.

Much of our lives today depends on networking, social networks like Facebook, business networks like LinkedIn. We are all building these intertwined networks of connections to improve our business lives every day.

The odds of gaining access to a business opportunity and then winning that opportunity are higher when you work your connections. If you are bidding for a contract in competition with others and know someone on the other side of the deal, naturally, you will try to utilize this contact to your advantage.

If you are a Wall Street executive with guanxi in Washington, you will undoubtedly make a few phone calls to make sure lawmakers remain at least neutral and regulators stay off your back. If you are a CEO who wants to make an acquisition, you will tap into your guanxi at the golf club to find a quicker route to your objective.

Using your guanxi can be innocuous or hazardous depending on where you do business and how aggressive you are. Using connections may be commonly accepted as simply conducting business affairs in the West. Still, you must be careful of conflicts of interest, whether governed by law or a company's code of ethics. You can face severe consequences if your networking abroad violates the Foreign Corrupt Practices Act (FCPA).

In China, where the art of guanxi occurs in high form, calling upon connections is the norm to get things moving. However, even there, one can go too far. Business leaders with guanxi in the government have engaged in illegal activity with dire consequences. Abusing guanxi is a terrible idea virtually everywhere.

Confucianism is founded mainly on the five relationships and their importance to the individual. It looks to create social harmony based on these intertwined harmonious relationships and mutual courtesy in a well-ordered world.

Networking and guanxi have essentially the same linguistic meaning. However, networking in Western business is a recent concept that lies relatively lightly in our culture. In contrast, guanxi sits deeply in China's language and culture, forming the basis for virtually all social relationships.

Building guanxi is usually a long-term process. Several techniques can help do so. You can begin by gaining knowledge about China's history and culture. Seeking formal introductions to individuals with whom you want to do business is also helpful to start relationships, especially where you make a conscious effort to create trust and social contact. Finally, gifts and entertaining, especially dinners, are traditional Chinese methods of building social capital.

Because it is so dependent on relationships, guanxi taken to its extremes can cause cronyism, nepotism, and corruption. On occasion, illegal acts result from misapplied guanxi. Further, guanxi often ignores the qualification or merit of the individual favored. In other words, guanxi can lead to the less qualified person obtaining a position or deal, leading to a less productive situation for the business.

Understanding guanxi is essential to doing business successfully in China. Only by building social and business networks and contacts can a Western person fit well enough into the guanxi system to succeed.

Relationships are everything in China. While you are building and nurturing your business relationships, you may be asked to share stories and information of a surprisingly personal nature. Don’t be concerned when a Chinese person you are meeting for the first time asks, for example, "how much money do you make?", "what is your partner’s Eastern astrology symbol?" or "what are your religious beliefs" – it is all about building a relationship, an essential part of doing business in China.

The Chinese call this guanxi (关系). Guanxi refers to having personal trust and a strong relationship with someone, and can involve moral obligations and exchanging favours. Sometimes incorrectly perceived in Western business as bordering on unethical behaviour associated with corruption (i.e. awarding projects to a friend’s company rather than the most qualified firm), it is a core part of doing business in China.

“We open our Suzhou doors whenever an Australian official visits, which helps demonstrate to Chinese government officials that we are well connected and respected at home. The guanxi we display from Australia is often as important as our local guanxi.” – Peter Michell, Executive Director, Michell Wool

Guanxi is often translated as “connections”, “relationships” or “networks”. However, none of these terms do justice to the fundamental and complex concept of guanxi and its central role in Chinese culture. Guanxi can also be used to describe a network of contacts, which an individual can call upon when something needs to be done, and through which they can exert influence on behalf of another. These networks can have a direct impact on conducting business in China, including market expansion and sales growth. Maintaining open 'bureaucratic relationships' can also help businesses set up with minimum delays. But it can also bring challenges. Australian businesses might understandably struggle to integrate guanxi into their business practices. The key is to remain diligent and be aware that the reciprocal nature of guanxi also dictates an informal obligation to 'return the favour'.

Building guanxi involves a long-term approach. It can be done in several ways:

General knowledge of China - Relationships can be aided and built by some general knowledge of China and its culture. This can assist to establish an immediate connection to a new Chinese contact.

Formal introduction - Because Chinese people prefer to do business with people they have a personal connection with, it can help if you are introduced to a prospective business associate through an intermediary. The higher the social status that your connection has, the more successful you are likely to be at being introduced to the right people and key decision-makers.

Conscious effort - Relationships in China are more trust-oriented and personal than relationships elsewhere, therefore a conscious and continued effort is required to develop and maintain them. It will require frequent visits, almost daily communication (preferably CEO/company director to CEO) and plenty of socialising.

Gifts - Giving gifts is an important aspect of doing business and building relationships in China. Australians should provide at least some overly ‘Australian’ gifts, such as toy koalas. Gifts that have your company emblem will also be well received.

Dining and entertainment - Once you have established relationships in China, you are likely to be invited to dinners and other forms of entertainment including golf, nightclubbing or karaoke. If you are invited for dinner at a business contact’s house (which is generally a reserved honour) – arrive on time, remove shoes before entering and take a gift. Dining is commonly used to gently probe positions without any formal commitment.

“The Chinese business model tends to be less contractual and more based on trust and the guanxi so there can be a sense of frustration. It’s slower to build relationships, but having said that, once trust has been established the Chinese partners and entities normally want to move very quickly,” John Russell, Director, North Head