Chinese business networks are sustained by Chinese cultural values and tradition. When these values disappear, the networks will collapse. Trust, reciprocity, face, time, harmony, hierarchy, power distance, long-term orientation have been identified as the key Chinese cultural values.
These Chinese cultural values are the main representations of the seven core rituals of Confucianism: Benevolence, Harmony, Midway,Forbearance, Filial Piety, Trust and Cautious Words.
In China, chronic suspicion prevails. Chinese 'appear to be quite suspicious and cold towards strangers with whom relationships have not been established'. Nobody could be trusted except one's kinfolk in the form of the extended family. As Chinese do not trust outsiders, a social network consisting of family members, relatives, friends, classmates, colleagues etc is the immediate sphere on which trust can be established, reciprocated and developed. Such an obsession with trust is caused by another, often neglected, phenomenon in China, dishonesty. In business transactions, a great deal of adulteration of goods is practised, for example, weights and measures are juggled. To protect one's interest and ensure that opportunistic behaviours such as cheating are kept to a minimum, trust must be established before any serious business relationship can be cemented. Trust-based 'guanxiwang' is the alternative to the market which is often riven by opportunistic behaviours.
Not coincidentally; for both transaction cost theory and network theory, trust has been also regarded as a critical component of the network (Thorelli 1986; Jarillo 1988; Williamson 1988). Williamson advocates that exchange relationships based on personal trust will survive greater stress and display greater adaptability. Thorelli observes that trust in Oriental cultures may even take the place of contractual arrangements.
Face, Hierarchy and Power Distance
Face is a concept of central importance because of its pervasive influence in interpersonal relations among Chinese. Chinese face can be classified into two types,'lian' and 'mian-zi'. 'Lian' represents the confidence of society in the integrity of ego's moral character, loss of which makes it impossible for him to function properly within the community, while 'mian-zi' stands for the kind of prestige that is emphasised, a reputation achieved through getting on in life, through success and ostentation'. When 'lian' is lost, the person will feel that he/she can no longer live in the world.
Loss of 'lian' within a guanxiwang as a consequence of opportunistic behaviour means that peers will no longer have confidence in the persons or firms concerned. As a result, their membership within a 'guanxiwang' and in society will be untenable. Therefore, face can be another hostage which minimises the possibility of opportunistic behaviour within a guanxiwang. This is another reason why 'guanxiwang' cannot merely survive but can also develop in mainland China and overseas Chinese communities.
'Mian-zi' can also be used to form new guanxiwang. One of Confucius' virtues is to respect authority and the elderly. Someone with authority, often elderly and with a good reputation, can ask favours of others. The person may act as a common agent to start a new exchange relationship. Favours can also be asked between friends. It is an accepted norm that as 'old friends' one should give face to the other when favour is requested. Once again, it has been shown that the Chinese cultural values such as face, hierarchy, power distance are closely related to the creation and development of the business network.
Guanxi cannot be sustained between two parties if there is no need of reciprocity. Like face, the principle of reciprocity is universal but, in the Chinese case, the concept has particular salience. When internalised in both parties, the norm obliges the one who has first received a benefit to repay it at a later time. Consequently, there may be less hesitancy in being the first and a greater facility with which the exchange and the social relation can get underway. For most Chinese, a transaction or exchange will only take place when there is mutual benefit for both parties involved. As indicated earlier, reciprocity is a 'hostage' which sustains a network relationship. Without reciprocity, established guangxi will elapse.
Time/Long Term Orientation
The time dimension for Chinese has two orientations: past-time orientation and community. This implies that for Chinese, once a relation is established it is hard to break and once a relation is broken, it is very difficult to reestablish.
Continuity indicates that Chinese people are long-term oriented. Once guangxi is established, both parties will try their best to keep this relationship by reciprocating benefits. Compromise is found to be the preferred solution by Chinese to an unsettled conflict. Future business opportunities also act as hostages to a business relationship. The benefits of establishing a long-term supplier and buyer, relationship have been regarded as one of the pillars of Japanese management styles which is now being enthusiastically followed by western firms. An emphasis on long-term relationships is also essential to the development of trust which is considered as a critical component of network.
The Confucian 'Doctrine of the Mean' urges individuals to avoid competition and conflict, and to maintain inner harmon. It has been found that traditional Chinese cultural values and cognitive orientations have influenced the Chinese people to preserve overt harmony by avoiding confrontation and to adopt a non-assertive approach to conflict resolution. Guanxi cannot survive without harmony between two parties in a relationship. Without harmonious relationships, trust cannot be established, face cannot be saved, reciprocity will not continue and no further guanxi can be established.
It is now evident that the key factors which help sustain and develop networks overlap with the key Chinese cultural values. This is why the network as a form of organisational governance is so widespread in both China and overseas Chinese communities.
Chinese today, as back then, have had a deep belief in the forces of death, and of a life after death. For the ancient Chinese, from emperors to peasants, life and death were inseparable and continuous. One reason is that the Chinese believed their ancestors' souls could do them great good or harm according to how well - or how poorly - they revered them. Post-mortem rituals that society today regards as ancient Chinese religious practice were merely threads of everyday life, woven into a cultural fabric as spiritual as it was secular. Chinese religion wasn't like attending church, synagogue or mosque, but rather carrying out duties that honored previous generations of one's kin. So imperial tombs were filled with fabulous riches, sealed with human sacrifice - in the earlier dynasties, at least - and guarded like the palaces of the living. Peasants, meanwhile, buried their dead with far more modest accompaniments: crops from their farm fields, perhaps, or other symbols of good will, but no less devotion. Intermingled with such piety were beliefs in spirits that governed the stars, the weather, forces of nature and animals, among others. There were, as in many cultures, guardian gods for local areas or regions. Despite a strong cultural emphasis on magical and mystical forces, ancestral worship wasn't merely folk religion. Chinese monarchs believed imperial ancestors dwelled in Heaven with a supreme spirit and ruler called Ti, who also determined the fate and success of each royal administration. This seemed to tie in extremely well with Mencius' interpretation of the mandate of heaven, of which his branch of Confucianism was adopted during the Western Han Dynasty.