ABSTRACT
How much of an executive’s working time should be spend cultivating personal relations to a potential business partner? An illustrative case study by Merchant (2008: 60–71) tells the tale of a Chinese executive trying to create good relations with a key manager in a state-owned company, in the process logging several months worth of working hours, spending much money and at least rubbing against several ethical guidelines. Among the activities are researching the manager’s background in minuscule detail (looking for a guanxi basis as described in Chapter Two), helping the manager’s wife with shopping trips and helping his son getting access to a good school to realise his education ambitions. Certainly, developing mutual trust and good social relations with important customers and stakeholders is a major object for most people working in sales or any other form of interface between a firm and its external stakeholders anywhere on the globe. And certainly, these activities often involve drawing on expense accounts and giving gifts. Yet, the case can be made that both the scope and intensity of these practices in the Chinese context, and the fact that often the relation building is with people working in government, put China in a category of its own. In Chapter Two we explored theoretically some of the reasons why guanxi ties are of a different kind and degree. In subsequent chapters we explore how enterprises in China are closely tied up with local governments. This chapter takes a break from the on-the-ground qualitative studies of such enterprises, instead investigating through quantitative analysis whether having political ties brings benefits to Chinese firms. Several such studies exist but none distinguish between ties to central and local government. Precisely because ties to the latter are of particular interest in the context of this book, we here attempt to distinguish between these different types of government.
