DEFINITION of 'Guanxi'

A Chinese term meaning "networks" or "connections," understood to be a network of relationships designed to provide support and cooperation among the parties involved in doing business. According to the Los Angeles Chinese Learning Center, by obtaining the right guanxi, organizations minimize the "risks, frustrations, and disappointments when doing business in China."


Guanxi is perhaps best understood by the old axiom, "it's not what you know, but who you know that's important."

In Chinese business, the mentality of "you scratch my back, I'll scratch yours" reigns, and favors are expected to be exchanged regularly and voluntarily.

Guanxi has become increasingly prominent in Western business circles and among academics studying community and social networks.

  1. Brazil, Russia, India And China ...

    An acronym for the economies of Brazil, Russia, India and China ...
  2. Kickback

    The payment of something of value to an individual with the goal ...
  3. Socionomics

    The study of the relationship between social mood and social ...
  4. Tiger Economy

    A nickname given to the economies of Southeast Asia. Some of ...
  5. Social Capital

    An economic idea that refers to the connections between individuals ...
  6. China Investment Corporation - ...

    A government-sponsored entity of the People's Republic of China ...
Related Articles
  1. Investing Basics

    Investing In China

    Investment opportunity is huge in China. However, investors should consider the pitfalls, understand the risks and rewards, focus on shareholder-friendly companies and stick to investments they ...
  2. Forex Education

    Why China's Currency Tangos With The USD

    Investopedia explains: It takes two to tango, but unless both partners move in perfect cohesion, a sequence of graceful maneuvers can be reduced to a series of clumsy moves. The latter depiction ...
  3. Entrepreneurship

    Top 6 Factors That Drive Investment In China

    FDI in China surpassed $100 billion in 2010, certain key factors drive foreign direct investment.
  4. Investing

    What a Family Tradition Taught Me About Investing

    We share some lessons from friends and family on saving money and planning for retirement.
  5. Investing

    Where the Price is Right for Dividends

    There are two broad schools of thought for equity income investing: The first pays the highest dividend yields and the second focuses on healthy yields.
  6. Economics

    Surpassing the World's Toughest Border: China's Great Firewall

    Learn how Baidu and CloudFlare's agreement to work together has tackled China's digital firewall, and how the partnership improves Internet access in China.
  7. Economics

    Virtual Joint Venture: A New Model For US Businesses to Enter China?

    Learn about virtual joint ventures and how these agreements may promote the entrance of American companies into China's vast markets.
  8. Personal Finance

    How Tech Can Help with 3 Behavioral Finance Biases

    Even if you’re a finance or statistics expert, you’re not immune to common decision-making mistakes that can negatively impact your finances.
  9. Economics

    Long-Term Investing Impact of the Paris Attacks

    We share some insights on how the recent terrorist attacks in Paris could impact the economy and markets going forward.
  10. Investing Basics

    5 Tips For Diversifying Your Portfolio

    A diversified portfolio will protect you in a tough market. Get some solid tips here!
  1. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  2. Does a financial advisor need an MBA?

    Obtaining a license as a financial adviser does not require an Master's of Business Administration (MBA) degree. The Certified ... Read Full Answer >>
  3. What is the utility function and how is it calculated?

    In economics, utility function is an important concept that measures preferences over a set of goods and services. Utility ... Read Full Answer >>
  4. How can an investment banker switch to a career in corporate finance?

    It's pretty easy for an investment banker to switch to a career in corporate finance. The career skills are easily transferable, ... Read Full Answer >>
  5. How can I use a regression to see the correlation between prices and interest rates?

    In statistics, regression analysis is a widely used technique to uncover relationships among variables and determine whether ... Read Full Answer >>
  6. What kinds of costs are included in Free on Board (FOB) shipping?

    Free on board (FOB) shipping is a trade term published by the International Chamber of Commerce or ICC, that indicates which ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  2. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
  3. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  4. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  5. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  6. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
Trading Center