How to understand Guanxi

Whenever you read or hear about China you cannot get around the Chinese word Guanxi (关系).

For non- Chinese it is difficult to understand what this little word really stands for.

The original meaning is “relationship”. But most dictionaries mention that it can also mean “concerning something”, “condition” or “involvement”. And that is where most foreigners have trouble understanding how relationship can also mean “condition”.

Guanxi is used as a term for a personal network. Those networks influence almost all decisions made in China while contracts and agreements are seen as guidelines which can be questioned or changed.

Most foreigners find it hard to believe that Guanxi is not a synonym for the Western term “corruption”. In China they use the word Huilu (贿赂) for this illegal process.

So what is Guanxi, if it doesn´t mean corruption?

Guanxi- Relationships are unlike corruption not based on unions, groups or institutions but are concerning the link between two individual persons. From there on the network can be expanded to the people the other one has Guanxi with.

The dangerous thing about introducing other people to the people you have Guanxi with, is that you could lose your face (honor, credibility) in case the introduced person is not trustworthy or reliable.

This kind of relationship needs a long time to be built up but when established it can be on a very high level. Some of the relationships are based on living together in the same village or because two people were studying in the same university.

But unlike the western definition of friendship or companionship, Guanxi can only exist if the help one gives to the other is equal to the received favor. Eventually you have to “pay back” your Guanxi- Partners.

Time and consistence play an important role in this process which involves work and caretaking. It could be compared to a fire. You have to put wood into the flames to keep it going.

People you have good Guanxi have the skill to know when to get new wood and when it is time to use the fire. That’s why it is very important for Chinese to categorize people as family, friends or foes.

All this is normally unnoticeable for foreigners who are most of the time outside of this very Chinese network.

Interesting enough “Mei Guanxi” which could be wrongly translated as “no relationship” means actually “don´t worry”, “never mind” or “doesn´t matter. So don´t be insulted if someone on the street appears to tell you “We have no relationship”.

Five other eastern cities of Qingdao, Shaoxing, Suzhou, Xiamen and Yantai ranked from second to sixth, said a World Bank report released on Saturday at the Fourth China Investment Environment Forum in Hangzhou.

The report was jointly prepared by the World Bank and China’s State Information Center after surveying 12,400 companies in 120 Chinese cities. The companies were asked to rate the investment environment, government efficiency and achievements in building a harmonious society.

Eight percent of the companies are purely state-owned, 28 percent are owned by the state but with foreign investment, and the other 64 percent are non-state firms, the report said.

Apart from the six “gold medal cities”, 13 others including Beijing, Dalian, Guangzhou and Shanghai were judged “silver medal cities,” said David Dollar, World Bank’s Country Director for China and Mongolia.

Calculating all the indices of the cities, the World Bank pointed out in its report that east China’s Jiangsu Province is the most desirable place for investors in China. It was followed by Shanghai, Zhejiang, Fujian and Guangdong, all of which are on the country’s southeast coast.

The official said the World Bank’s evaluation indices included a city’s balance of macro economic management and political stability, consistent tax policies, foreign trade and investment levels, government administrative efficiency, quality of infrastructure and financial services, environmental protection and the city’s efforts in building a harmonious and well-off society.

Although less well-known than the metropolises, the six “gold medal cities” enjoyed high ranks in all the indices, said Dollar.

For instance, companies in Shanghai will spend 60 days a year, on the average, to deal with the relations with the government, but it will only take eight days in Hangzhou, the official said.

The evaluation results just show that a less developed city could have better investment environment than Beijing or Shanghai, if the local government is willing to enhance their administrative efficiency, bring more transparency to their work and facilitate the investors, Dollar said.

According to the World Bank’s research, foreign-funded companies’ investment-return rate in China is 22 percent and that of the domestic private companies is 19 percent.

Dollar said the overseas investors tend to prefer the cities with prosperous market and convenient sea transportation.

As a result, the per capita foreign investment in China’s eastern and southern provinces reached 128 U.S. dollars in 2004, 1.3 times than northeast, 7 times than the central area and 25 times than the western provinces and autonomous regions.

The World Bank published a similar report three years ago and Hangzhou also topped the list.

Source: Hangzhou Economic and Technological Development Zone

Introduction

Hangzhou Economic and Technological Development Zone (Hangzhou ETDZ), approved by the State Council in 1993,
has a planned area of 3.4 km². It is located in eastern Hangzhou city, 19 km from its downtown area and 15 km from the Hangzhou Xiaoshan International Airport, which operates 149 domestic airlines and 32 overseas airlines weekly. Hangzhou ETDZ is located approximately the same distance from Shanghai, Suzhou, Shaoxing and Ningbo, which are a 1.5-hour drive away. Additionally, it is close to Ningbo-Zhoushan Port and Shanghai Port – the two largest deepwater ports in China.

The central axis of Zhejiang province’s expressways was built in the zone, connecting the Hangzhou-Nanjing, Shanghai-Hangzhou, Hangzhou-Jinhua -Quzhou and Hangzhou-Ningbozhou Expressways. It also has a well-established railway network, as the Shanghai-Hangzhou, Zhejiang-Jiangxi, Xiaoshan-Ningbo and Xuancheng-Hangzhou railways intersect in Hangzhou city.

With 14 colleges and universities in Hangzhou ETDZ, the zone contains a large talent pool. It also established human resource bases in over 10 locations, with the capacity to supply more than 50,000 skilled persons per year.

Investment Climate

After fifteen years of development, Hangzhou ETDZ has become an important industrial cluster in Hangzhou. Its major industries include machinery, electronics, biology and pharmaceutics, textiles and chemical fibers, and food and beverage. Within the development zone, it has set up the Singapore-Hangzhou Science & Technological Park, the Modern Logistics Park, the High-tech Incubator, Innovation Industrial Park of Higher Educational Zone and New Medical Industrial Base.

In 2007, the zone’s GDP increased by 19.3% year-on-year to RMB 25.3 billion, accounting for 5% of Hangzhou’s GDP. The industrial output value from this zone rose 9.77% from the year before to RMB 123.8 billion, while industrial output value from major industries hit RMB 86.7 billion, accounting for over 70% of the zone’s total.

The total foreign trade value hit US$10.3 billion, consisting of US$4.1 billion from import and US$6.2 billion of export. Products from this zone were exported mainly to the U.S., Japan and the EU.

By the end of 2007, Hangzhou ETDZ attracted investments from fifty-two Fortune 500 enterprises, including Coco Cola and Motorola from the U.S., Toshiba and Panasonic from Japan, and Siemens from Germany. It is also home to domestically renowned large firms, such as Wahaha, Zhejiang University Shengmin Pharmaceutics and Bafang Logistics.

High-tech industries maintain an important role in the district’s economic development. By the end of 2007, there were thirty-nine R&D centers in Hangzhou ETDZ and forty-four high-tech enterprises. The industrial output value from high-tech sectors stood at RMB 77.2 billion, accounting for 62.4% of the zone’s total.

Investment Costs

Land Costs

Source: Department of Land & Resources of Hangzhou Municipality, 2004

Utility Costs

Source: Management Commission of Hangzhou Economic and Technological Development Zone, China Water, Hangzhou Gas

Logistic Costs
Air Freight Costs (RMB/Kg)

Source: Hangzhou Xiaoshan International Airport (based on the prices of Air China)

Labor Costs
Reference Salary at Labor Market

Source: Administrative Committee of Hangzhou Economic and Technological Development Zone

Winning Edge

1. Well-established industrial and economic base
2. Advantageous geographic location. As a coastal city, its land, air and waterway traffic system is quite advanced.
3. Rich human resources.
4. The Export Processing Zone is also located in this area, providing convenient and fast customs policies.

Limitations

1. Strong competition from the neighboring city of Ningbo, which boasts an economy strongly boosted by the world-class Ningbo-Zhoushan port.
2. Relatively high operating and labor costs.
3. The export-oriented small and medium-sized enterprises are easily affected by foreign economic development and foreign exchange rates.
4. Scarcity of mineral resources and shortage of gas and electricity.

The Administration Committee

1. Address: Yindu Mansion (Xiasha), Hangzhou Economic and Technological Development Zone, Hangzhou 310018, Zhejiang Province
2. Tel: 86-571-86913653
3. Fax: 86-573-86919973
4. Website: http://www.heda.gov.cn/, http://www.hzqt.net/

Kurzanleitung: Guanxi

Wann immer Sie etwas über China lesen oder hören, werden Sie über das Wort Guanxi (关系) stolpern.

Für nicht-Chinesen ist es schwer, wirklich zu verstehen, für was dieses scheinbar kleine Wörtchen eigentlich steht.

Im herkömmlichen Sinne heißt Guanxi “Beziehung”, die meisten Wörterbücher erwähnen jedoch auch “sich beziehen auf”, “Bedingung” oder “Verbindung” als weitere Bedeutungen. Und hier kommt es für uns als Ausländer zu Auffassungschwierigkeiten: wie kann Beziehung gleichzeitig Bedingung heißen?

Guanxi wird als Begriff für persönliche Kontakte genutzt. Diese Kontakte nehmen in China Einfluss auf nahezu alle zu fällenden Entscheidungen, wohingegen Verträge und Abkommen lediglich als Richtlinien angesehen werden, welche bei Bedarf geändert werden können.

Vielen Ausländern fällt es schwer zu glauben, dass Guanxi nicht einfach die Bedeutung des westlichen Ausdrucks „Korruption“ hat. Tatsächlich wird für dieses illegale Vorgehen das Wort Huilu (贿赂) verwendet.

Was ist also dieses Guanxi, wenn es nicht für Korruption steht?

Anders als bei Korruption, basieren Guanxibeziehungen nicht auf Vereinigungen, Gruppen oder Einrichtungen, sondern betreffen die Verbindung zwischen zwei unabhängigen Personen.

Gefährlich wird es, wenn Sie jemanden einem Ihrer Guanxi-Partner vorstellen, der sich als nicht vertrauenswürdig oder verlässlich herausstellt. Dadurch könnten Sie Ihr „Gesicht“ (Ehre, Vertrauenswürdigkeit) verlieren.

Es benötigt viel Zeit, diese Art von Beziehung aufzubauen. Wenn sie jedoch einmal besteht, dann auf einem sehr hohen Niveau. Einige der Beziehungen basieren auf dem Zusammenleben im selben Dorf oder darauf, dass man zusammen an der selben Universität studiert hat.

Im Gegensatz zur westlichen Definition von Freundschaft oder Kameradschaft kann Guanxi nur dann zustande kommen, wenn die Hilfe, die man erhält, im gleichen Umfang erwidert wird. Im Endeffekt müssen Sie sich bei Ihren Guanxi-Partnern revanchieren.

In diesem Prozess, welcher durch Arbeit und das erweisen von Diensten für einander bestimmt wird, spielen Zeit und Ausdauer eine wichtige Rolle. Man könnte das ganze mit einem Feuer vergleichen: sie müssen stetig Holzscheite nachlegen, um das Feuer am brennen zu halten.

Personen mit gutem Guanxi, wissen genau, wann es an der Zeit ist Holzscheite nachzulegen und wann das Feuer genutzt werden kann. Daher ist es für Chinesen von Bedeutung, Menschen in Familie, Freunde oder Feinde zu kategorisieren.

Diese Vorgänge sind meist unsichtbar für Ausländer, die sich meist außerhalb dieses sehr chinesischen Netzwerks bewegen.

Interessanterweise heißt “Mei Guanxi”, was man fälschlicher Weise mit “keine Beziehung” übersetzen könnte, “keine Ursache” oder “macht nichts” in seiner tatsächlichen Bedeutung. Seien Sie also nicht beleidigt, wenn Ihnen jemand auf der Straße sagt, „Wir haben keine Beziehung“.

A chaque fois que vous entendez parler de la chine, vous ne pouvez pas passer à coté du mot Guanxi (关系).

Pour les non – Chinois il est très difficile de comprendre que ce petit mot est d’une très grande importance ici.

Son sens général est « Relation ». Mais les dictionnaires mentionnent  que cela peut aussi signifier « être concerné par quelque chose », «condition » et « participer ».Et c’est précisément cela que les étrangers ont le plus de mal à comprendre : que « relation » veut aussi dire « condition »

Guanxi est un terme utilisé principalement pour son réseau personnel. « Ces réseaux influencent presque toutes les décisions prises en Chine, tandis que les contrats et les accords sont vus comme des directives qui peuvent être modifiées ou changées.. »

Les étrangers trouvent  que la frontière entre le « Guanxi » et la corruption est finalement bien mince, et c’est la raison principale  pour laquelle nous avons relativement du mal à comprendre le sens de cette particularité national.

Mais qu’est ce que le Guanxi si ce n’est pas de la corruption ?

Les relations avec « Guanxi » sont différentes de la corruption car elles ne sont pas basées sur des groupes, des entreprises ou des institutions. Le « Guanxi » concerne exclusivement les relations qui existent entre deux personnes. A partir de là, Cette plateforme relationnelle peut être étendue à d’autres personnes.

Il existe cependant  un risque dans ce type de relation : quand vous présentez une personne à une autre personne avec laquelle vous avez une relation Guanxi, vous pouvez perdre la face (honneur, crédibilité)  dans le cas ou cette personne ne se montrerait pas digne de confiance ou  tout simplement peu fiable.

Ce type de relation a besoin de temps pour se construire mais quand elle est établie elle peut atteindre un très haut niveau. Certaines de ces relations ont trouvé leur origine dans le fait que deux individus avaient vécu dans le même village ou qu’ils avaient étudié dans la même université.

Mais à la différence de la définition  occidentale de l’amitié et de la camaraderie, le Guanxi ne peut exister que si l’aide que l’on fournit est égale aux faveurs que l’on reçoit. Il se peut dans certains cas que l’on doive « rembourser » notre partenaire Guanxi.

Le temps et la constance jouent un rôle important dans les processus professionnels. Cela pourrait être comparé à un feu : vous devez mettre régulièrement des buches pour qu’il ne s’éteigne jamais.

Les personnes qui possèdent un bon Guanxi savent quand il faut remettre une nouvelle buche et quand il faut utiliser le feu. C’est pourquoi il est important pour les chinois de classer leurs relations selon différentes catégories comme la famille, les amis ou les adversaires.

Cela n’est pas très important pour les étrangers car ils sont la plupart du temps exclus de ces relations typiquement chinoises.

Détail intéressant : “Mei Guanxi” qui a pour sens littérale ”nous ne nous connaissons pas”  dans se cas présent signifie ”pas grave” ”pas importance” ou ”cela n’est pas grave”. Donc ne vous sentez pas offenser si quelqun dans la rue vous dit ”nous ne nous connaissons pas”

A Sino-Foreign Cooperative Joint Venture (CJV) is a joint venture between a Chinese and a foreign company within the territory of China. The Chinese company usually provides the labour, land use rights and factory buildings, while the foreign company brings in the necessary technology and key equipment, as well as the capital. This joint venture is based on a cooperative joint venture contract in which matters like the terms of cooperation, the division of earnings, the ownership of property upon the termination of the contract term of the CJV, the sharing of risks and losses, etc are laid down.

Differences between a Sino-Foreign Equity Joint Venture and a Sino-Foreign Cooperative Joint Venture

There are three main differences between an EJV and a CJV:

• While an EJV is always a legal person, and thus a limited liability company, a CJV can be a legal as well as a non-legal person. The latter option is not very common though because it would mean that the partners of the joint venture would be personally liable for any losses the company might make in the future
• In an EJV the distribution of profits has to take place equivalent to the ratio of the capital contributions made by the parties, while the distribution in a CJV can take place according to the parties’ wishes. A CJV is thus a lot more flexible than an EJV.
• In a CJV a party may, besides contributing registered capital, provide for so-called cooperative conditions (Hence the name Cooperative Joint Venture), e.g. market access rights.

This has not gone unnoticed in China. Nexocial is now in the finals of becoming the Best Information Technology Software Business in China. There are 2 awards available, one is the jury award, and the other one is the public award. For that I would like to ask you for your help. Please vote for us and help us win this award the 28th of January in Beijing. You can give your vote here: http://www.china-smee-forum.com/smee/smee_100128/vote.php and select the category: “Best Information Technology Software Business”, select Hugo Leijtens from the drop down list and vote!

Thank you for your support to Nexocial and Chengdu!
Hugo Leijtens
CEO Nexocial

Credit Video Tessera Multimedia

For pictures, visit the chengdupresents.com Portfolio

We chose Mooney’s (Shangri-La) as the venue for this party because of it’s excellent in- and outdoor facilities. This turned out to be a good call, since it was pouring rain outside!
Despite the heavy rain and traffic jams, 165 HR and Marketing managers showed up for an evening filled with entertainment:

- DJ Marco got everybody in a party mood.
- Australian live band Peachy playing requests and classic dance floor fillers.
- BBQ, accompanied with red wine and refreshments.
- Laser-tag powered by CS strike.
- Dancing, networking and relaxing.
We would like to thank all attendees and hope you had a good time!

A special word of thanks goes to all our partners, without whom this event wouldn’t have been possible:

Groupama
AGS four winds
Chengdu Bureau of Commerce
Mooneys and the Shangri-La Hotel in general.
Ganzit Business Consulting
Maxxelli Real Estate
Keep your eyes on www.chengdupresents.com for party pictures, video and future events.

If your company wants to be involved in our future events (partnership, sponsoring,…), please contact us at info@chengdupresents.com

We are looking forward to see you at our next event
The Chengdu Presents team

Maxxelli-blog: Name, age, sex, position
MVB: Martijn van Breugel, 31, Male, General Manager EDDP (European Deluxe & Design Products)

With offices in both the Netherlands and China, we are able to successfully assist European companies to enter the emerging Asian market.

China is changing from a production market into a consumption market. We provide European companies that are producing high quality luxury and design products the right tools to find their ways to the growing group of wealthy Chinese people.

Maxxelli-blog: What do you do in Chengdu?
MVB: Running EDDP and currently representing Badge2Match. A networking badge that effectively matches people during networking events

Maxxelli-blog: What did you do before?
MVB:Product Designer for Axxicon in the Netherlands. We developed the new generation of DVD: Blue Ray & HD – DVD
Carried out more than 15 projects in China. (Travelling from NL to China)

Maxxelli-blog: Why did you come to Chengdu?
MVB: To start my business. I believe Chengdu and the rest of West-China have huge potential. Compared with the east coastal cities, competition is limited and costs are low.

Maxxelli-blog: How did you start your business?
MVB: During my visits in China for Axxicon I created a strong bond with China and its inhabitants. By studying the history of European economic development I predicted that the demand
for luxury products in China will be huge in the near future. I prepared my business in the Netherlands for almost one year. We started cooperation with renowned Dutch producers of luxury and design products and Flew to China with my Dutch girlfriend Maartje. We carried out our market research in China, started our WFOE and opened our office. With connections in both China and Europe we are further expanding our business in China.

Maxxelli-blog: Who are your customers?
MVB: Organizers of network events like: Conferences, Summits and trade shows who want to bring together their attendees on an effective, fun and innovative way.
Also 5 star Hotels and Multinationals who want to ‘Match the right people’ at their internal events.

Maxxelli-blog:What kind of services and products do you propose to customers?
Currently we are focusing on Badge2Match, An Interactive Networking Badge which is successfully used on networking events in Europe.
Networking is getting increasingly important in our globalizing Economy and meeting the right contact at a meeting can often pay for the price of the entire trip.

The wireless enabled Interactive Badge helps delegates to find other attendees with aligned interests effectively on a conference floor. In case of a “match” between delegates,
the Interactive Badges will emit a discreet attention signal and light up in the same color so the delegates directly know who to approach.

To see Badge2Match in action check out our short introduction movie: http://www.eddp.eu/badgetomatch or check the Badge2Match introduction brochure

Some Benefits / Value of Badge2Match:
1. It is an ‘icebreaker’ to start a discussion;
2. It ensures you will only talk with the right people. Therefore you won’t lose valuable time talking to people without common interests;
3. Improved and reliable RF technology ensures that the Interactive Badge is light and slim (close to a regular conference pass);
4. The Interactive Badge is cost effective, can be re-used for other events & is easy to use: “Monkey Proof”;
5. The Matching questionnaire software is compatible with existing registration software;

The Networking Badges are a great success in Europe and won the renowned Dutch ICT Award 2009

Meeting the right people often is the main reason for people to go to an event. Using the Interactive Badges guarantees the attendees they will.
Therefore the Networking Badges will attract more visitors to events and increase the ROI of the event organizer.

It’s a great marketing tool since it draws a lot of attention from attendees and media. Sponsors are therefore normally more than willing to participate.

In short it is an innovative, fun, easy, affordable & effective way to improve networking and increase ROI.

Contact

Name en: Martijn van Breugel
Name ch: 马丁
Address en: No. 33 6F, Manhattan Building, No.49, Renmin Nan Lu, Section 4, Chengdu 610041, China
Adress ch:中国成都市人民南路4段49号 曼哈顿大厦6楼33号 610041
Phone number:13438201323
Email: info@eddp.eu
website: www.eddp.net.cn (Chinese) & www.badge2match.com (English)
Opening hours: 9am-18pm

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