The dark side of a guanxi-based society

Fifteen years ago, I delivered a paper at an international scholarly conference on Chinese business and economy in Beijing organized by an academic institution from the West. Then teaching sociology and doing research at the National University of Singapore, my paper was based on in-depth interviews with Singaporeans doing business in China. Among other things, I reported that the Chinese language-educated Chinese Singaporeans fared much better than their English language-educated colleagues in making business transactions and closing deals because they were far more proficient in the Chinese ways of doing business.

These practices included treating business relations as social relations, drinking and eating as business etiquette, exchanging gifts and donations for favors, especially access to privileged information (as knowledge is power), kickbacks, collusion with government officials, recruitment of family members and kinsmen into key positions in the company - and so on. In other words, the Chinese language-educated Chinese Singaporeans had a business edge because they knew the rules of the game of business in China and were keen players. Language education is rarely about language only. Language is culture.

Speaker after speaker before or after me at the conference, Chinese and foreign, returned to the same theme: capitalism with Chinese characteristics premised on the critical role and functions of guanxi in the business culture of China. As I had the honor of being invited by the organizer to give a reportage on the proceedings of the two-day conference as well as to give the closing remarks, I couldn't resist the temptation of looking at the other side of such a business culture, its downside, even dark side - or what I called the dysfunctions of a guanxi-based culture and society. My list of dysfunctions is well-known by now: corruption, bribery, collusion between businessmen and government officials, nepotism, cronyism, and the list continues. As it happens, on the macro-structural level, the social exclusion of those without guanxi in the business game results in a serious compromise of the rule of law and the erosion of healthy and open competition, fairness, equity and equality, vertical social mobility - all of which are integral to business development and economic growth.

I then edited the conference papers into a book. I, perhaps appropriately, called it Chinese Business Networks: State, Economy, Culture. In a way, the book opens up a discourse among the academics on the functions and dysfunctions, the boon and bane, of a guanxi-based culture and society. I am glad I did it.

Social scientists in the past 30 years have distinguished several types of capital: financial (cash), human (qualifications, skills, abilities) and social. In fact, a whole field of expert studies called social networks and social capital was invented, supported by courses in the university, academic journals, international conferences and book series. The underlying idea is that social ties to society serve two functions, instrumental and expressive, or practical and psychological. The former enables one to get things done better, faster, while the latter is conducive to happiness and wellbeing.

We are told by the social science specialists that we need guanxi to find work, get a promotion, see a doctor, get medical prescriptions, obtain public housing, get admitted into a hospital, kindergarten, school and university, and infinite things in life. As the field grows, we have come to our shock discovery that there is not a single matter about life and living - from birth, through aging and becoming ill, to dying and death - in a Chinese society that is not decided and shaped by whom one knows - and doesn't know.

It is not about who and what you are, not about your abilities and values, not even your academic qualifications. It is about who knows you, and whom you know - or one's social location and position in the vertical hierarchy of society. It is about one's adjacency and access to the rich and the powerful. The possession of social resources has critical economic consequences. The social is the economic. At critical times, it may even be a matter of life and death.

The important point to make here is that this emphasis on social networks and guanxi is not unique to the business world, not at all; it is part and parcel of the cultural make-up and social fabric of the Chinese society. For thousands of years, it has infiltrated into every nook and corner of the everyday life of the Chinese. As an ethos, it is perhaps more intensely embraced and more frequently practiced by the economic and political elites, sometimes in partnership.

Culture is a way of life, a pattern of living, accepted, assumed, taken-for-granted by most, if not all, people in society. If using guanxi and social networking have long been intrinsic to the Chinese culture, and if these practices have their dark side and impact negatively on China's economic and social development, several all-important questions present themselves.

When foreign capitalists, like the English language-educated Chinese Singaporeans mentioned earlier, doing business in China reject the indigenous Chinese business culture, is it their loss or that of China herself? Or should they assimilate into the local culture, play by the rules of the natives, become sinified, conform, obey? Or should they question the local ethos and practices, argue, debate, seek change - but run the risk of being labeled non-conformist, combative, rebellious, and thus excluded, disciplined and punished? What if and when mainland businessmen desire to be global players in the world economy where the rules of the game lean more on the legal-rational than on the artificial-social? Will they then be smart-worldly enough to follow two sets of rules, one for China, and one for outside China - as "flexible citizens" on the world stage?

China is a conforming society. It rewards the conformists and disciplines the independents, the innovators, certainly the rebels, in and out of the business world. One then begins to socialize oneself into the business world and learns to cultivate the habits of using guanxi, networking, participating in the politics of the gift economy and social exchange not necessarily because one wants to, but because one must - or one is out of the game.

Being different, unusual, non-conformist, deviant has its own costs in a society where following others or being loyal is rewarded and harmony has quickly become a buzz word - which puts the creative and innovative people in place. Nonconformity in the Chinese business world often means business failures and loss of billions of dollars.

Throughout my life, I got my academic appointments in universities in Canada, Singapore, Hong Kong by "going in cold"; I knew nobody. I am proud of such a personal record. It is a deviant case in the field of studies of social networks and social capital.

In the past four months, I taught two courses at a university on the Chinese mainland. Three weeks into my teaching there, students asked me out for dinner, gave me small gifts, sent me emails - a rare student conduct in universities in Canada, Singapore and Hong Kong, at least not long after the courses were over and grades were given. Before I knew it, I was asked by many students to write reference letters to support their application for admission into overseas graduate school. A well-calculated motive all too obvious and strategic.

Alas, a new generation of Chinese so well trained in the game of social lubrication by their families has been born. The cycle of culture repeats itself and the wheel of civilization rolls on, for better and for worse.

The author is founder and chairman of Chan Institute of Social Studies in Hong Kong. The views expressed in the article do not necessarily reflect those of China Daily.

(China Daily 02/03/2012 page7)