Doesn't Guanxi Work in the US for Chinese Firms?

♠ Posted by Emmanuel in at 7/18/2012 02:57:00 PM
Let us begin by defining "guanxi" [關係], or forming relationships crucial to doing business in China:
 “Guanxi” literally means "relationships", stands for any type of relationship. In the Chinese business world, however, it is also understood as the network of relationships among various parties that cooperate together and support one another. The Chinese businessmen mentality is very much one of "You scratch my back, I’ll scratch yours." In essence, this boils down to exchanging favors, which are expected to be done regularly and voluntarily. Therefore, it is an important concept to understand if one is to function effectively in Chinese society.
The WSJ recently had an article that illustrates the challenges for Chinese firms wishing to invest in the United States. Why do they keep encountering problems--especially over "security" concerns? The answer may be that they do not fully understand that investing in the US is not quite the same challenge as investing in China where hooking up with the "right" people sorts out a whole bunch of concerns about doing business. It's not necessarily that the American way of doing business is superior, it's that there a whole lot of other people Chinese firms need to be cautious about when investing Stateside:
The 38-page report is based on interviews with Chinese business officials who have invested in the U.S. Some of its suggestions are obvious: "win-win cooperation can create great opportunities," said advice attributed to Cirrus Industries Inc., a Duluth, Minn., propeller-aircraft maker purchased last year by a subsidiary of Aviation Industry Group of China.

But other advice reflects important differences between how business is done in the U.S. and in China. "Unlike in China, personal relations with officials play a very small part in the enforcement of laws and regulation," said the report's introduction.

Another tidbit for would-be Chinese investors: "The U.S. media [are] completely independent of the government, so even if some local officials welcome your investment, others might voice opposition in the media. Do not be discouraged by this. 
When in America, do as the Americans do, I guess.