GUANXI: THE PARADIGM OF CHINESE ETHICS AND WESTERN PERSPECTIVE.

This paper discusses the concept of the ethics of guanxi within the Chinese business environment, as well as some of the drawbacks of Chinese business relationships. Guanxi, in the Chinese culture, demands long-term relationships and giving gifts. However, there exists a differentiation between types of guanxi. This paper distinguishes between working guanxi and backdoor guanxi. While the Economic Reforms of 1978 introduced new business practices in China, there remains an imbedded culture based on Confucian values. In addition, the paper explains some of the differences between the American and Chinese culture perceptions, as it relates to business relationships and power distances among leadership. Hofstede's (1983) theory of power distances pinpoints the differences between Chinese and American business culture. The Sarbanes-Oxley Act of 2002, Corporate Social Responsibility, and other forces shape American business ethical culture. The Chinese business culture relies on relationships and often have no code of ethics. Furthermore, it is important to understand the entry modes into the Chinese business culture. This paper discusses entry modes and recommends the preferred entry mode as permanent. It is beneficial to American businesses in China to understand the very different culture. [ABSTRACT FROM AUTHOR]