Guanxi, Mianzi, and Business: The Impact of Culture on Corporate Governance in China
Private Sector Opinion 26: Before taking advantage of the growing opportunities of the Chinese market, investors will do well to understand the strong influence of Chinese culture on the way businesses operate, how they govern themselves, and how they interact with each other. David Smith identifies two key cultural and sociological issues of particular interest - guanxi (relationships and networks) and mianzi (face). He analyzes their most common implications for investors in areas such as related-party transactions, board composition and deliberations, and shareholder engagement.
“Successful communication with companies and individuals across borders, therefore, requires a nuanced understanding of the way people think and how they like to interact in social and business relationships.” From the foreword by Jamie Allen, Secretary General, Asian Corporate Governance Association.