(Closing Case) DMG Shanghai Page:1171. Why do you think that it is so important to cultivate guanxi and guanxiwangin

China?

Ans: There are so many laws that without guanxi and guanxiwang nothing would get done and a business would go out of business. The connections that a businessman makes can either make or break a deal. A deal gone well will give that businessman prestige and allow for him easy access to other resources in the future.

2. What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all the rules and regulations, rather than trying to find a way around them as Dan Mintz apparently does?

Ans: China is a country filled with people who will not do anything for free. There is always a cost. This is called bribery in the United States and is a crime under bribery law as well as white-collar law. The business that tried to follow all of the rules would never get any business.

3. What are the ethical issues that might arise when drawing upon guanxiwang to get things done in China? What does this suggest about the limits of using guanxiwang for a Western business committed to high ethical standards?

Ans: The ethical issue is also a law in the United States, bribery. The question is should we do business with people who expect favors in turn for a favor? What if that is the only way to do business? These are hard questions. A Western business could never follow through with guanxiwang if they were committed to high ethical standards. They would have to go against their beliefs to work in China.

4. What is happening today? Is Shanghai different or the same?Ans: Guanxi and guanxiwang is still the way businesses go about their business. It is the way it works and everyone is expected to give back when given to. It is not bribery in China as it is in the United States. This is a quote on guanxi:Keep in mind that “Guanxi” can take on many forms. It does not have to be based on money. It is completely legal in their culture and not regarded as bribery in any way. So, there is no need to feel uncomfortable about it. Trustworthiness of both the company and individual is an important component. Following through on promises is a good indication of this. Treating someone with courtesy while others treat him or her unfairly is another aspect. Frequent contact fosters friendship as well. Chinese feel obligated to do business with their friends first. There are risks with this system, as well. When something goes wrong, the relationships are challenged, and friendships quickly disappear. “Guanxi” can also be very one-sided. When “Guanxi” is involved, there is a risk of obtaining an invoice of twice the amount that you bargained for.