From a Communist background, citizens are unused to dealing on a transactional basis. The idea of partnering with a complete stranger with only the protection of a contract’s written terms is foreign, as Communism has historically encouraged operation on a relational, rather than transactional, basis.  In this way, contractual agreements pull little weight in protecting each party in case of wrongdoing. And it isn’t exactly secret knowledge that a level of dubiousness exists within some business dealings.

Herein lies the premise of guanxi, in place of the legal system’s limited capacity to protect both commercial parties’ interest (especially when bribery isn’t rare), the trust and relationship established from a history of good-will forms a structure of obligation from which either are very unlikely to renege. To renege, or exploit at the detriment of the other party, perhaps in not returning a favour, would result in a loss of mianzi, or face.

And to a Chinese businessman, his mianzi and level of guanxi is everything. Comparable to a credit-worthiness from which others assess and evaluate whether partnership would be a wise option, in a country where hierarchical status and reputation reign, a businessman’s objective will succeed or fail depending on his network of people willing to provide support. Again, it may seem strange, if not outrageous to Western onlookers, but intelligent entrepreneurial ideas won’t succeed on their own merit, but only through an amplification from the right authority projected in a guanxi-leveraged network. As an example, a local will find it impossible to negotiate the quagmire of government bureaucracy to push a ‘ground-breaking’ venture through, but if he or she had a potent network of guanxi, the process could be expediated from an official’s simple phone call of recommendation.

Inherently, the warning flag of corruption raises in a system ostensibly characterised by favour-exchanging. If a profit-building action is performed following the receipt of a gift, isn’t that bribery? Whilst not seeking to explain wider allegations of corruption persistent in Chinese political and commercial circles (sardonically represented in the emphatic explosion of Internet memes following the Li Gang scandal), the building of guanxi is not illegal in its native purpose to deepen trust between two parties. It is not the means to an end, but rather a relational sweetener encouraging trust, commitment and goodwill from both parties achieving a purpose. Guanxi itself exists on a spectrum, where upon reaching higher levels, painstakingly developed and maintained through informal social contexts, one will be more willing to put reputation and money on the line in support of the other. These informal contexts are visibly seen in large dinner banquets, often replete with copious servings of food and moutai, followed by a rowdy after party in the karaoke room. Fostered raucously and opulently, these gatherings are typical of Chinese businessmen furthering their connection, and each will come inevitably with a heady stack of business cards ready to distribute.