Market Culture is vivid subject area which once has to
clearly identify before starting a new business in a complete alien venue. It’s
different from place to place, country to country and society to society. This
factor plays a significant part in running a business successfully. If a
business entity unable to recognize the market culture, it will be quite
difficult for them to survive.
Let’s discuss about a strong concept in Market Cultures,
“Guanxi”. The Chinese business culture “Guanxi”
literary means “Inter personal relationships”. At its most basic,
“Guanxi” describes a personal connection between two people in which one is
able to prevail upon another to perform a favor or service, or be prevailed
upon. The two people need not be of equal in social status. “Guanxi” can also
be used to describe a network of contacts, which an individual can call upon
when something needs to be done and through which he or she can exert influence
on behalf of another. In addition, “Guanxi” can describe a state of general
understanding between two people: "he/she is aware of my wants/needs and
will take them into account when deciding her/his course of future actions
which concern or could concern me without any specific discussion or
request".
“Guanxi” refers to the benefits gained from social
connections and usually extends from extended family, school friends, workmates
and members of common clubs or organizations. It is custom for Chinese people
to cultivate an intricate web of “Guanxi” relationships, which may expand in a
huge number of directions and includes lifelong relationships. Staying in
contact with members of your network is not necessary to bind reciprocal
obligations. Reciprocal favors are the key factor to maintaining one’s “Guanxi”
web, failure to reciprocate is considered an unforgivable offense. The more you
ask of someone the more you owe them. “Guanxi” can perpetuate a never ending
cycle of favors.
The term is not generally used to describe relationships
within a family, although “Guanxi” obligations can sometimes be described in
terms of an extended family. The term is also not generally used to describe
relationships that fall within other well-defined societal norms (e.g.
boss–worker, teacher–student, friendship). The relationships formed by “Guanxi”
are personal and not transferable.
This is so powerful in China so that many a big companies
had to wrap up their operations in China. It’s still a growing market
requirements in China so that it’s a huge financial loss for a business entity
if they no longer functioning in China.
For an example Internet giant Google went many hardships in
China 2002 onwards due to government’s censorship over internet. Apart from
that Google’s China rival Baidu.com was behind the scene as they intended to
grab the market share which hold by the Google.com.
Google had to undergo not a good time at all during
2002-2010 period of time in China.
Obvious point to strike is Google didn’t understand the market culture
of China. As a result of the pressure that Google faced in China, ultimate
decision was to pull out and established company’s search engine in Hong Kong
as Google.com.hk. For not maintaining a good relationship with Chinese
government let Google in a terrible position as they had to pull out from a
well growing Chinese internet market, which was a huge blow in Google’s
financial perspectives. In the sense that by 2006 China’s internet usage was
105 million, this represents just 8% of the Chinese population.
The concept of Guanxi is the idea of "saving or
preserving face." When doing business in China it is very important that
both partners in a negotiation maintain their pride, regardless of the outcome.
In this situation it appears that Google caused its own loss of face, in
addition to 338 million customers. No company
can go far unless it has extensive Guanxi in this setting. In China's new,
fast-paced business environment, Guanxi has been more entrenched than ever,
heavily influencing Chinese social behavior and business practice.
