An increasing amount of attention is being paid in the literature to business Guanxi or relationship in Asia particularly in the business dominated economies of the Hong Kong, Singapore, Taiwan and the People’s Republic of China. Chinese business relationships and contracts that needs to be understood and worked within to successfully conduct business and management in most countries in the region. However, the attention is directed to the different perspective on the importance of guanxi to business practices and possible impacts of the guanxi on western firms’ success in China.
In order for western firms to enter China market, they have to confront with complex and constantly changing ethical percepts in China (Wu, 1999) and different types of guanxi not only exist but also can be harnessed in an ethical fashion to create wealth (Leung et al., 1999). Dates back to the mid 1980s, Motorola’s presence operates the largest owned subsidiary in China and had moved their country from a centrally planned economy to a market economy. The Motorola has invested in China for a decade and is so far the largest foreign investor in China. Therefore, guanxi has an impact on Motorola to be an established company in China compared to their competitors, Siemens and Nokia.
The limitation on this research is addressed. The continuous development and changes in market condition in China is of a certain period of time. This is because it needs to be adapted to fit the prevailing situation at that time. Moreover, interview session is difficult to conduct as the research is on Motorola-China and therefore it is heavily rely on secondary sources.
2. Guanxi’s implications to practices
In recent decades, there have been several fundamental concerns for western companies in China. For the Motorola, they learn how to manage a socialist workplace culture in which employees depend on their state-run employers for housing, food transportation and other necessities. The managers also have to baffle by guanxi, the vulnerable Chinese practice of developing and nurturing intricate networks of personal relationship. Nevertheless, priority is sometimes given to them over bottom-line performance.
As China is admission to the World Trade Organisation (WTO) in 2001, it has reduced tariffs and business prospects are likely to grow even more promising. In China, standard incentives given to foreign enterprises include a complete income tax exemption for three years with a fifty percent exemption for a further two years and a business tax rebate. According to sales volumes, China’s high-tech parks and zones usually offer faster customs clearance and other shortcuts through red tape that makes life easier.
For instance, it allows Motorola to generate greater market access for lower tariffs and guanxi for further flexibility. For example, Motorola managed to cope with the tight market in part by utilizing the Chinese practice of guanxi...