What are the potential benefits and pitfalls to western firms when deploying guanxi connections in China? Under what conditions would you recommend the use of guanxi?
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What are the potential benefits and pitfalls to western firms when deploying guanxi connections in China? Under what conditions would you recommend the use of guanxi? Guanxi can be described as a "system of personal connections that carry long-term social obligations" (Millington et al., 2004), and, according to Seligman (1999), without guanxi "your life is likely to be series of long lines and tightly closed doors, and a maze of administrative and bureaucratic hassles". This essay introduces the above question by first describing guanxi and its importance in Chinese business, then discussing the benefits and pitfalls of guanxi to western firms. It will conclude by reviewing the optimum conditions, in my opinion, in which western firms should deploy guanxi. Guanxi is deeply embedded in Chinese history with strong links back to times of Confucianism, thus is a prominent feature in today's Chinese business environment. Parnell (2005) suggests that "perhaps [guanxi is] the...


