| Run a Google search on the Chinese phrase "Guanxi" | | | | areas, to provide the world the most innovative |
| will get you over 500,000 hits on topics mostly | | | | products at the most competitive price. The Chinese |
| concentrated on doing business in China. The phrase | | | | auto industry, which has seen an amazing growth in |
| has been over-used, over-quoted, and over-rated, | | | | the past 10 years, is projected to pass the total |
| for the past 20 years since China opened its | | | | production capacity of that of United States within |
| commercial door to the rest of the world. | | | | this decade. |
| Sometimes, the phrase has been hailed as the center | | | | * Rules and regulations advancement: Smart suppliers |
| and the focal point of running a successful business in | | | | are focused on becoming the best of their |
| China. | | | | respective businesses. Many are adopting the rules of |
| Everything else, such as a sound business plan, a | | | | the ISO, FDA, CE, and other government regulating |
| strong financial background, and genuine knowledge | | | | agencies. The notable ones are ISO16949 for the |
| of the industry, becomes only the supporting cast. | | | | automotive industry, ISO13485 for the medical device |
| With Guanxi, some believe that running a business in | | | | industry, and ISO14001 for Environment management. |
| China is as simple as taking a deep breath. Without it, | | | | * Information technology investment: Oracle, SAP, |
| it is deemed that any business will fail even with a | | | | and other ERP software now forms that basis of |
| sound and solid plan. The author is not trying to | | | | many Chinese suppliers IT infrastructure. Further |
| downplay the importance of maintaining a good | | | | investment in IT to fill other needs such as Customer |
| relationship with your business associates in China. He | | | | Relationship Management (CRM) and Supplier |
| believes, however, that a business built only on | | | | Relationship Management (SRM) are now making its |
| Guanxi is doomed to fail in the long run. | | | | way across China. These tools have been widely |
| After years of development, transformation, and | | | | available in United States, and now the Chinese |
| most of all, growth, businesses in China is no longer a | | | | suppliers are quickly adopting them. |
| closely knit society protected by the confinement of | | | | Guanxi may have played an important part during the |
| the Chinese laws and regulations. Instead, they are | | | | growth of the China economy over the past decade. |
| competing in the global economy, where quality, time | | | | It will still play a role in the future. However, Guanxi is |
| to delivery, innovation, and cost competitiveness are | | | | not going to develop the technological advancement |
| the source for success. Instead of a proliferation of | | | | that is required to support the growth of the auto |
| Guanxi, here are a few examples that the Chinese | | | | industry, to help comply with the many rules and |
| suppliers are developing themselves into the world | | | | regulations around the world, nor to transform the |
| class suppliers: | | | | information technology landscape. Instead, a |
| * Supplier transformation: Chinese suppliers are now | | | | successful business in China will require a sound |
| equipped with the latest technologies, armed with the | | | | business plan, strong financial background, and |
| best talents, and sourced from the most competitive | | | | genuine knowledge of the industry. |