how guanxi works
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 understanding guanxithe 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 special considerationsusing 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 1in 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 