Mianzi In Chinese Business Culture Essay

Table of Contents

List of figures and tables

1 Introduction
1.1 Problem Definition and Objectives
1.2 Course of the Investigation
1.3 Methodology

2 Confucianism in the Chinese Culture
2.1 Roots of Confucianism
2.2 Core Elements of Confucianism
2.2.1 Moral Person (junzi)
2.2.2 Human Morality (ren, yi, and li)
2.2.3 Relationships (guanxi)
2.2.4 Face (mianzi)

3 Confucianism and the Chinese Business Culture
3.1 Effects and Relevance of Confucianism
3.2 Positive and Negative Implications of Confucianism on Businesses
3.2.1 Hierarchy and Harmony
3.2.2 Group Orientation
3.2.3 Past Orientation
3.2.4 Guanxi Network
3.2.5 Mianzi (Giving Face)

4 Outlook and Conclusion
4.1 Outlook
4.2 Conclusion

Reference List

Appendix

List of figures and tables

Figure 1: Confucius (孔夫子)

Table 1: Managerial practices and their philosophical origins (Cheung & Chan, 2005)

Table 2: Financial Times Top 45 (2012)

Figure 2: Confucius (drawn by Wu Daozi in Tang Dynasty)

Figure 3: A Page from the Analects (Lunyu)

Table 3: Implication of Confucian ideas on businesses (Yeh & Xu, 2010)

Table 4: Techniques to establish the network of guanxi (Hwang et al., 2009)

Table 5: Techniques to maintain the already established guanxi (Hwang et al., 2009)

Table 6: Factors contributing to the establishment of guanxi (Hwang et al., 2009)

Figure 4: GDP in China (in Billion US Dollar). Source: IMF

Figure 5: Exports from China (in Billion US Dollar). Source: WTO

1 Introduction

1.1 Problem Definition and Objectives

In the last decades, globalization – the increased interconnectedness among countries all over the world – became more and more important in the fields of politics, economics and in cultural contexts. In current times, China exhibits a unique role, being the world's manufacturing powerhouse in economic terms while maintaining a strong, traditional culture. Foreign companies seeking to exploit the advantages the Chinese economy promises must adapt to the cultural characteristics of Chinese firms. The influence of Confucianism is the key difference between Western and Eastern companies – this has to be taken into respect when trying to enter the Chinese market and when planning to begin strong relationships with Chinese companies. This essay will highlight the core elements of Confucianism, their impact on Chinese business culture and managerial implications that can be drawn from these observations.

1.2 Course of the Investigation

After highlighting the methodology and explaining how the author gained the respective knowledge about the topic, the roots of Confucianism are shown. The core elements of Confucianism are drawn to give the reader a detailed understanding of the implications Confucianism has on the Chinese culture and on the businesses that operate in it. The influence and the relevance of Confucianism on Chinese companies are shown. After that, positive and negative implications of Confucianism on the Chinese business culture are highlighted. Here, quantitative and qualitative findings are consulted to give a thoughtful evaluation of Confucianism in Chinese business culture.

1.3 Methodology

This review is supposed to cover the speech 'Confucianism and Chinese Business Culture' held by Dr. Zhang Yan at Tongji University, Shanghai, on 11th September 2013. Additionally, it includes empirical and non-empirical journal articles about Confucianism and business making in China. To obtain a comprehensive and high quality sample the author focused on the top management journals provided by the Top 45 Financial Times list (see Table 2 in the appendix). A search algorithm was developed to investigate all relevant articles in these journals in the electronic library EBSCO. This search algorithm included the key words Confucianism and Confucius. The author focused on papers that strongly broached the issue of Confucianism in China and in Chinese businesses. After reviewing all results, particularly titles and abstracts, a total of 27 high-quality papers were found, from which 9 were seen as relevant for this essay.

2 Confucianism in the Chinese Culture

2.1 Roots of Confucianism

Confucianism (儒家) is a philosophical system that is rooted in the teachings of the Chinese teacher, politician and philosopher Confucius (孔夫子) He was born in 551 BC in Zou, Lou state. Confucius may be the greatest ancient Chinese philosopher of all time, having taught wise remarks on nature, the world and on human behaviour. He showed that education is not merely an accumulation of knowledge, but it is a means of self-perfection (Zhang, 2013). Confucius’ ideal person was the gentleman or “lord’s son” (junzi).

illustration not visible in this excerpt

Figure 1: Confucius (孔夫子)

The Analects (lunyu), which are also called The Analects of Confucius, is a collection of ideas and sayings by Confucius. It was written during the Warring States period (between around 475 and 221 BC). The Analects is one of the most read books in China and thus, takes an important role in today’s society. In Confucius’ view, the moral conception of the people was the most relevant factor when defining the overall wealth of a society. It is therefore of high notability to seek moral goodness.

2.2 Core Elements of Confucianism

2.2.1 Moral Person (junzi)

Junzi 君子 is a description of the ideal man (lord’s son). In Confucianism, Sage is the most perfect, ideal person. However, for individuals it is impossible to become as good. Therefore, junzi is a state of morally goodness that can be achieved by an individual. Ren is a relevant factor when becoming the junzi. Gaining inner peace through their virtues and having superior moral and ethical perceptions are the fundaments of junzi.

In contrast to junzi, xiaoren (小人) is an untrustworthy, unloyal and egoistic person. Those persons are only focusing on their own personal gain, on power or money. Leaders of nations should not be or be surrounded by xiaoren because it will have a negative effect on the whole country.

2.2.2 Human Morality (ren, yi, and li)

The core of Confucianism is built up by the three concepts ren 仁, yi 义/義 and li 禮. Those concepts have to be pursued by people to become junzi. Although Confucius underlines that it is nearly impossible to pursue all four concepts perfectly, the pursuit itself is the important belief everybody should imply in his or her behaviour.

Ren is expressed in human relationships. Basically, the Chinese word ren is made up of two words, 'human' and 'two'. When asked by one of his students, Yan Hui, what ren really means, Confucius answered “One should see nothing improper, hear nothing improper, say nothing improper, do nothing improper”. It is the virtue Confucius strongly connects with the happiness of being altruistic.

Ren is therefore the inner development of an altruistic personality while keeping in mind that someone is always part of something bigger – a family, a nation or a whole culture. Here, the weightiness of human relationships is highlighted.

Yi is often translated as righteousness. It underlines which actions are morally and ethically correct. Li is often expressed as a ritual. It shows what is right in the view of the society. As such, it is often the same as yi, however it is not necessarily always the same. Li and yi can be different.

2.2.3 Relationships (guanxi)

Guanxi 关系 highlights the concept of building up relationships. Especially in a family-oriented society such as China this concept is of high importance.

Relationships are built up through genuine interest and reciprocity. Genuine interest can be expressed by, for example, learning a few Chinese expressions, having an own Chinese name or inviting the business partners to dinner. Zhang, 2013, cites the relationship between Bill Gates, former CEO of Microsoft Inc., and the Chinese government as an example of guanxi. Bill Gates visited the Chinese president three times, in 1991, 1995 and in 2003 to establish a long-term cooperation between his company and China (Zhang, 2013).

[...]

The Chinese cultural values of guānxi (关系), miànzi (面子) and rénqíng (人情) are essential when doing business in China, but may be challenging concepts to grasp for those in the English-speaking world. Gao Hongzhi, a researcher of the role of guānxi in Chinese-Western business relationships, explains the three principles.

What is guanxi?

Guanxi is a cultural concept in China, with its roots in rural society. People have known each other for generations; quite often they have family connections. Guanxi is about looking after each other. It’s quite strong in-group thinking.

In China-New Zealand trading, New Zealand exporters need to build strong guanxi with Chinese importers. People who know nothing about guanxi might say: “Oh! Relationship-building is what we do in business, anyway. We do business with Americans, Australians, Europeans. We all need good relationships. Why does guanxi matter?”

Guanxi comes from the personal bond first. Then the business relationship comes in. Guanxi starts with people making friends, even though there may be no instrumental benefits in it. When a foreign company goes into China, the first thing you need to do is start to network, meet people, and build good guanxi. And then, when the personal relationship is strong enough, you can trust what other parties say and start to use contracts, almost to secure promises.

“Guanxi starts with people making friends, even though there may be no instrumental benefits in it.”

The logic here is that you sign a contract with somebody you really trust. But if you sign a contract with somebody you do not have guanxi with, the contract power is limited.

In China, the legal systems are still not well-developed. Many contracts haven’t been well-enforced, either by the companies in the relationship or by legal powers. In that regard, relying on legal protection is a business risk for companies operating in China. Strong relationships between business partners, between managers and employees, between exporters and importers are important.

What is guanxi gatekeeping?

The concept of gatekeeping comes in when there is a boundary between two groups of business networks. A New Zealand will get into the Chinese market as a member of a foreign network, because New Zealand companies normally don’t go into China on their own.

Quite often, Kiwi companies go in with partners they’ve already developed a relationship with. It might be somebody from international business community, like a US company that's already in China and belongs to a foreign organisational network.

Then there’s Chinese local business networks: Chinese companies, Chinese clients and, quite often, Chinese government agencies. The two networks have different values.

In that case, we need a gatekeeper, a member of both networks. A lot of Chinese students who have studied in Western countries become gatekeepers. Quite often they are employed by foreign organisations, because they know Chinese business culture well and they already belong to Chinese networks.

Guanxi is about building a relationship at the personal level first; then talking about business. That’s why the gatekeeper starts to interact with the Chinese client at the personal level, building a certain level of personal trust. Official business meetings will then be easier to facilitate and the contract can be easily negotiated. If there’s a problem with the contract, it will be radically easier to reconcile.

(Click to download infographic)

Can somebody of New Zealand origin become a gatekeeper?

Yes, they are already. In my interviews with gatekeepers working for New Zealand companies, about half are of Chinese origin and half are of New Zealand origin. For example, the Kea expatriate network is very active in China. Members often network with each other, and many work for high-profile companies like IBM.

As long as you can find somebody who has a certain status recognised by Chinese clients, that person can be your gatekeeper.

What is mianzi (face)?

Mianzi is a social currency in China to do with the status of a person in a local community. Quite often it's to do with the title of a person in relation to an organisation. Mianzi is socially constructed, which means it has to be evaluated from a social perspective. Who has got mianzi from a New Zealand perspective? New Zealand government officials. 

What does mianzi mean in a business context?

Chinese culture is hierarchical. Where you get a low-level gatekeeper, they can only open the door at a low level. Where you get a high-level gatekeeper, you will open the door at a high level.

Seen from a Chinese perspective, the position of a gatekeeper is about face, mianzi. How do you get mianzi in China? First of all, your title and hierarchy matters. From my interviews, I know the New Zealand Embassy and Consul-General have been active in supporting New Zealand exporters to break into Chinese networks. Quite often they visit clients with exporters, to give mianzi to Chinese clients and Chinese government officials. When Chinese government officials see a high-profile person from New Zealand, they see that it’s important.

“In Western contexts, we talk about saving face. But we don’t understand what gaining face means.”

When we talk about status, we talk about face-work. In business meetings or informal gatherings, you need to know how to engage with other people, to give them mianzi.

In Western contexts, we talk about saving face. But we don’t understand what gaining face means.

Gaining face is just the opposite of saving face. Saving face means you want the other person to avoid an embarrassing situation. But giving face gives the other party a sense of respect, makes them feel important.

Giving face is relatively easy. It’s about symbolic interactions – a few Chinese banquets, as long as you know how to drink Chinese spirits ... you know, bottoms up!

What is renqing, and where does it come in?

Renqing means an exchange of favours.

Let's say a software company has been developing an app that’s successful in New Zealand. They take that to China but don’t have much resources or relationships there. Compare it with Tencent, which is a huge company. In this case, no matter how many symbolic interactions you’ve had or how many dinners you’ve had drinking with people there, you have nothing substantial to indicate that you are good enough to work with.

In this case, you need renqing. You need somebody who knows the Chinese party well and has already built strong guanxi with the decision-maker. It'd be even better if that person has already had an exchange of personal favours with that client. The client has an obligation to at least listen to that person.

Strong renqing means strong accumulation of personal favours exchanged in the past. In China, they call it social currency.

Is guanxi really different from networking anywhere else?

If we think about New Zealand companies in the UK, you still need to build strong relationships. In that regard, the fundamentals are similar.

But there will be some cultural variations. New Zealand is quite individualist; we don’t want to rely on an external party. It’s a challenge for New Zealanders to develop a relationship with a collectivist society like China, where the relationship is sometimes more valuable than the deal.

Let’s go back to fundamentals. Why do we have to be so concerned with guanxi in China? I put it down to the institutional environment, built around rural, closed, agricultural society. China was a feudal society for a long time, because China is historically an agricultural country. People are fixed to the land and don’t move around. Who you know is important, not the rules. Legal institutions are still not fully developed; relational governance is still important.

When relational governance becomes less important, legal governance becomes more dominant. Guanxi is still very important in northern parts of China. But in the south, it is more market-focused. When people go to Shanghai or Guangzhou they tell me, “Oh! This is like the West!”. That includes the language used and the norms applied in the business setting. One of the key reasons is the institutions in those segments of the market.

That’s why we should never say China is just one country. Legally and politically it is, of course. From a business perspective though, you see almost several kingdoms, several different important markets. You develop your strategy according to where you go. 

Gao Hongzhi is Senior Lecturer, International Business, at Victoria University of Wellington, and co-author of Toward A Yin-Yang Perspective of Relational (Guanxi) Gatekeeping in Business Network Management in China.

– Asia Media Centre

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