German military history buffs will recognise much of author Fu Shi’s advice in the classic strategy of “Flucht nach vorn”, or the “flight forward”. When under unbearable pressure, rush forward. Attack is the best form of defence.
The advice forms part of Fu’s new ‘how-to’ manual, called Chinese Guanxi.
The Oxford English Dictionary defines guanxi as “the system of social networks and influential relationships which facilitate business and other dealings.”
Of course, guanxi can be innocent, a case of people preferring to deal with those who they know and trust.
But, as Fu made clear in an interview with WiC last week, it can just as easily slide into corruption, with the hosting of banquets, or the giving of hongbao – red packets stuffed with money – and gifts.
“I don’t really approve of the whole ‘building guanxi’ thing,” says Fu. “I think society is very conflicted.”
Still, the practice is widespread. “When economic reform started in 1978, the old rules were broken and the new ones aren’t established yet. Or they haven’t been broadly accepted. People rely on guanxi to get things done.”
For now, there seems little alternative, Fu says. So why not throw open the secrets of the art, at least making it accessible to all, and create a kind of level, if twisted, playing field?
“It’s a virus, and we have to understand how it works. I want everyone to understand, and when they do, they’ll all be equals.”
Fu says this is important becaussome are simply much better at using guanxi than others – and get enriched as a result.
“In this way, it’s as if you’re telling the masters of guanxi: ‘I know what you’re doing.’ It’ll give them something to think about,” he reckons.
Fu’s book has already attracted crowds at book signings in Changsha, his hometown and the capital of Hunan province. His first two novels – both about guanxi too – made him a renminbi millionaire, he says. They were based on a decade’s experience of doing business. That era ended abruptly (for him) when he was jailed in 2003 for 300 days, sold out by “brothers” connected to a high-profile corruption case involving officials from the Ministry of Justice.
His study of guanxi deepened in jail, Fu remarks.
Now, his crusade is to turn guanxi back wherever he can. He wants others to do the same.
“They may begin to think, do I really want this ‘building-guanxi’ society? And if I don’t, then I have to begin to build a different society that relies on other values.”
Of course, government policy targets the corrupting influence of guanxi as a practice. Last December an inaugural anti-corruption White Paper was issued, supposedly a major step forward. For the first time, the government spelled out what it regarded to be corrupt behaviour, and how it planned to fix it.
In the eleven months prior to the paper’s release, from January to November 2010, the Party’s anti-corruption watchdogs had investigated 119,000 graft cases. This resulted in 113,000 people being punished, of whom 4,332 were prosecuted in criminal cases, Xinhua reported, citing Wu Yuliang, secretary general of the party’s Central Commission for Discipline Inspection.
And yet despite these efforts, there’s widespread cynicism about whether the problem is genuinely being addressed, not least because so many officials themselves are involved, as the figures above show.
Foreign firms have an obligation here too, Fu insists. “It’s inevitable that big foreign companies who come here start doing things the Chinese way,” he warns. “And the other way round. When Chinese companies invest overseas they have to learn the ways of people there.”
Fu’s advice can seem obvious, but does provide some basic rules for things that can otherwise seem baffling, even to Chinese.
In any society, the separation between guanxi and corruption is rarely as straightforward as one might think, as shown by an old, Communist-era Polish saying: corruption isn’t as simple as knowing who to bribe to get what you want; it’s knowing who to bribe in order to find out who to bribe, to get what you want.
The rules of the game appeal to core human instincts, but they can also be culturally specific.
But an essential first step: don’t be shy. “At any time and place you can use people, and at any time or place they can use you,” writes Fu.
Secondly, put your guanxi where your mouth is. When people meet they exchange information about where they’re from, where they attended university, where they have worked, and so on. “Don’t overlook the value of these exchanges,” says Fu, as they inform the other person what social capital you have and what you can offer them. Nor should you tell people about experiences or contacts that aren’t impressive or potentially valuable to the other person. “It reduces your value and causes you to lose face.”
Still, you have to pitch it right. Show off subtly. Braggadocio annoys people.
“You shouldn’t too crude about it, or too casual, or others will just think you’re a boaster or a lightweight. And at the same time you have to persuade the other person that your guanxi is unusual and valuable, and that you can deliver.”
Fu then has three main chapters examining each of guanxi’s three major avenues: dinners, hongbao, and gifts.
Here WiC must issue a disclaimer. We are not recommending the book as a ‘how to’ guide to getting things done the guanxi way! Many of the topics that Fu mentions are illegal under Chinese law. US and European nationals – should they engage in such practices – will also fall foul of legislation aimed at preventing corrupt practice overseas.
Yet much of what Fu covers is interesting purely as an observer, such as the longstanding connection between food and power in China.
For instance, the art of a guanxi dinner. Firstly the venue must be convenient for the guest to get to and leave. A senior bureaucrat may not want to go to a very public venue, whereas that may not be a problem for the businessman. Then seat people properly. The guest should always be given the seat opposite the door. The second guest of honour should sit to his right, and the aide to the left.
Choose the dinner companions carefully. For a business dinner, they might be business colleagues, friends with social status or young women.
Apart from the young women – Fu says they are “essentially decorative” – the companions should not be too quiet. Nor should they be too talkative. They must know how to hold their own in conversation but also know when to shut up and listen.
The menu is also important. Ideally, research should be completed into what the guest likes to eat. Don’t expect the guest to indicate this himself – he won’t want to look greedy. The host will still need to order, though, before checking with the guest if the choices were acceptable.
How about envelopes stuffed with cash? In overseas Chinese communities the hongbao was a traditional New Year and wedding gift. But in recent times it has become more of a metaphor for corruption, Fu writes. That started in about 1978, he judges, when the government began economic reforms, and cash became the basic unit of exchange once again.
Either way, hongbao are now so widespread that there is a clear going rate for the different situations in which a surreptitious envelope is expected for services rendered.
Take journalists. A couple of thousand renminbi is considered enough for a positive story from a reporter covering a major story for a large company, whereas Rmb500 will probably do if the firm is a smaller start-up. But if a coalmine owner gets wind of a reporter writing about bad news, like an accident, the offer may move upwards of Rmb10,000.
Of course, in its more positive, non-criminal manifestation, guanxi behaviour bears resemblance to relationship-building the world over (or ‘networking’ in business parlance).
What is perhaps more interesting is why Chinese guanxi seems more likely to spill over into darker areas. China’s critics point to the absence of the checks and balances needed to keep the practice on the straight-and-narrow, as well as issues like the concentrated power of officialdom, and the rapid economic ascent that has opened up an era of wealth, aspiration and temptation at warp-factor speed.
All of these mean guanxi can take on much more significance than it might in other countries.
This negative connotation is the one that Fu is concerned about. However effective it might sometimes seem in getting things done between individuals, guanxi soon becomes morally corrosive, he warns. And it is also bad for business at a wider level, in making everything more expensive in the longer run. “If you use guanxi, I’ll use guanxi, and in the end the price of everything rises,” he writes.
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