Mini Case: Guanxi and Gift
(Grown up in China, I will address this case with my personal experience)
As a growing market, China becomes increasingly appealing to western companies. To many of them, China is a country that is fundamentally different than most countries of the world, such as culture and social norm. Notorious corruptions have tarnished its reputation for attracting potential investors and businesses, who have been struggling to adapt the unique way of running business in this ancient country. Admittedly, bribe or gifts could be the fastest way to win contracts for companies like Meridian given the company has no significant connections, but those behaviors don’t work every time, at least not in the way that western companies can imagine.
Lots of westerners believe that guanxi in China is building relationship by giving gifts or treating a fancy dinner. But it’s more complicated in reality. While giving gifts or cash is indeed a normal way to build guanxi, it is more about understanding people and the context. In Meridian’s case, I think it is a smart idea to hire in advance an agency specialized in government relations which shows Meridian is well aware of the difficulty of dealing with Chinese culture. The agency’s plan to arrange meetings with government officials would certainly help Meridian understand the government and build a foundation for long-term relationship. However, the agency’s recommendation of giving gifts such as red wines really comes as a shock to me and I highly doubt if this agency is a local one familiar with Chinese culture and norm.
In China, people do not accept gifts from strangers especially when they never met before. Once they accept, they know they will have to give something back in return and then pressure is on. Lots of government official were put in jail just because they couldn’t resist huge financial incentives, but few cases were involved with foreign companies even though those companies were...