Guanxi and Mianzi are two social concepts deeply ingrained in the Chinese culture that must first be understood and put to practice before attempting to do business in China. Failure to respect and utilize these two important concepts can cause business and personal relationships to fall apart and negotiations to go sour. To the Chinese, these cultural aspects are considered part of business etiquette and are essential for international business relationships to flourish.
Guanxi is best defined as the formation of relationships or the act of social networking. In the business sense, Guanxi is how you can form social connections as to give you and your company a competitive advantage. Guanxi helps to form trusting relationships which can immediately benefit your business because when you need a favor it will work to your advantage, but be cautious because it can also be dangerous. Bill Dodson did a great job at describing Guanxi as “you scratch my back, I scratch yours,” but he also noted to beware that once offered the ‘back scratch’ do not question the quality or validity of the favor because your Chinese connection will take offense and might never offer a favor or recommendation again. Also important to keep in mind is that someone who offers you a favor may ask for a favor back at the most unexpected of times. Knowing that Guanxi is closely linked to the concept of Mianzi will help you navigate the difficult business channels of China as long as they are used properly.
The concept of Mianzi, also known as ‘saving face,’ often leads to misunderstandings between American and Chinese businesses. Mianzi is how one saves reputation and builds credibility. It is a strategy that Chinese people use to respect and preserve relationships. Saving face is top priority in the Chinese culture, meaning that the Chinese will often say ‘yes’ even if they mean ‘no.’ For buyers doing business in China this can cause complications (and here are those hidden costs again!) because a Chinese manufacturer may say ‘yes’ when asked if they understand all the requirements stated by their American partner, when they actually mean ‘no.’ If a Chinese supplier does not understand the product specifications and requirements, they may try to figure out and invent their own, leading to dysfunctional or poorly made products.
How are we Americans supposed to know when a Chinese person is really saying yes, no, or maybe? My answer is by experience! Learn to read between the lines, pay close attention to the small details, and always double check and question if something seems off.