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wongh09
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Name: Louis
Country: Australia
Metro: Perth
Birthday: 12/20/1983
Gender: Male
Interests: business,researching, reading, chatting, surfing, play ps2, go gym and beach, bbq, cars and catch up with friends..=)
Expertise: making friends and clowning.. =)
Occupation: Retired
Industry: Nonprofit
Message: message me
MSN: w_heng_kui@hotmail.com
Member Since:
4/5/2004
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| Astray
It's dark, I am cold and hungry. Alone I drive without knowing where I
am heading. Should I proceed or should I turn back. There might be a
path that frees me from this ordeal. But if I continue to risk it , I
might get even lost. Tough decision time. Should I brave up to embrace
Robert Frost's poem "The Road Not Taken"? Am I really that brave or am
I playing stupidity. I am lost. My head started spinning and soon
panick attacked. My cellphone is low in batt, I am virtually in the
middle of noway. Fear slowly taking over me as I slowly sucumbed into
giving up.
Crestfall en, I am lost.. I am really lost. I am tired of looking for
the path that gets me out from here. Suddenly I felt distituted, feels
like everything's gona end...........
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| It's Finally Over!
My final semester examination is officially over yesterday and
Organisational Structure and Design was my last paper. I think I did
alright and should be able to pass .. =) Went out with my brother,
Azrul, Bryan and Jerry to Carrousel after that.. playing at Rebel
testing the jersey available there from Real Madrid to England. Lols..
it was heaps of fun but at the end althought the jersey is much more
cheaper, none of us purchase any. Guess I am not a football fan after
all. I was tempted at first but after contemplating for a while,
decided not to spent too much of my parents hard earn money....it cost
more than RM300 for a jersey. We had our dinner at Carousel food court
and discuss about who is Raul and who is Zidane , both name that I never heard of but apparently very popular
 and both are great football players in the world.
From left: Zidane and Raul
Divorce
Divorce apparently become a hit issue recently. My first encounter
with the divorce topic is when Diana sent me an email detailing what
occured between a couple of hectic city lifestyle and how the husband
betrayed his wife by having an affair with some other women. The main
reason for the divorce is due to the lack of intimacy of husband and
wife due to increasing busy lifestyle. Thenceforth, the television had
raised the divorce issue in several current affair program prompting
discussion and debate from all walks of life. This morning as I was
driving my Kuching mate Sim to the international airport, my buddy Han
also raises the issue of divorce and we had quite an interesting
dialogue togather with Nick who is heading home to Singapore later this
evening. The discussion really prompt me thinking about marriage and
how time passes so fast that soon it will be the time when I have to
decide. It really freaks me out and suddenly I felt that I am getting older every second that
responsibilities and burdens started to piled up day by day on my
shoulders. *sigh*
Gift and Souveneir Shopping
After coming back home, I took a quick shower and rush down to the
city with my brother to buy gifts and presents for my two sisters who
are desperately waiting for us to come back and plus Christmas is
coming soon. We went to Target, Myers then to Toys R' Us and it took us
quite a while to reckon which is the most valuable gift.
Last day of Uni Exam
Today
is the final day for uni exam and every uni student is partying wild.
As I am writting this entry, I can hear my nearby neighbour blasting
their hi-fi playing rock and roll music drinking as well as cursing
each other .*sigh* I still got heaps of packing and cleaning to do
before leaving Perth but I am feeling totally exhausted now.. So I will
leave it here for now. For those who finished ur exam, happy holiday!
For those who are graduating, happy graduation! =)
Cheers~! | | |
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Moon Cake/ Lantern Festival
Celebrated by nearly 2 billion chinese worldwide, the moon is
unusually round and bright on 15th of August (Chinese Calender / 17th
September Normal Calender). Sweet memories of childhood where u display
and compete with ur friends or neighbour for the most colourful lanterns comes rolling in.
Still remember when I was young, I used to display as many laterns around my house and sometime even bur nt
heaps of it due to mishandling of candles. After that, dad finally gave
up on me and baught me an electric lantern that comes with sounds. I
dont really like it cause the battery goes off very fast and the midi
music becomes corny.
That was the old days nostalgia... =) I finally realised that I am
getting older and its simply 'weird' if I starts to play lantern
again. In addition, as I am not at Kuching makes it more difficult as
its hard to buy a lantern at Perth and even if I could.. it would be pretty dear.
Not forgetting the most important part of Mooncake Festival is the moon cake itself..
The
brownish mooncake that consist of a thin crust that is made from eggs
and flour comes with white lotus, red bean, green tea as well as
eggyolks, nuts and new flavours such as mocha.
It is however very sweet and as I am pretty overweight now.. so I can
only have a tiny portion of the tempting moon cakes to avoid too much
glucose in my body that will eventually cause diabetes.
As
for now, I am enjoying my mid semester break. Not really a break for me
though cause I got heaps of assignment due when the school reopens. In
addition, I am far behind from the required readings. So yeah.. no life
for me this semester. I do feel very lucky however that my housemate
and my brother is here to company me during this final quest before I
am out to the working world. With hope and blessings, I will do my
best and wish I could graduate end of the year. =) Thats for now..
needs to help with the cooking.. thank you!
Love,
louis | | |
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Playing the "Guanxi" Game
Some article I wrote for the newspaper in regards to trade in China and 'guanxi'.
Introduction
“Know your enemy, know yourself, and you can fight a hundred battles
with no danger of defeat.” Sun Tzu (Chen 2004 pg. 36). Thus, in order
to successfully operate business in China, understanding how business
is carried out in China is crucial. According to Hutching and Murray
(2002 p.1), “China has a business culture that is based on strong
family networks or cultural ties secured in guanxi connections, which
is underpinned by strong Confucian ethics (that international
businesses and their expatriates ignore at their peril)”.
What is guanxi?
Guanxi or πÿœµin Chinese is explicitly defined as “personal connections
/relationships on which an individual can draw to secure resources or
advantages when doing business as well as in the course of social life
(Ewing, Caruana & Wong 1998 pg 2, cited in Davies 1995).
Implicitly, guanxi includes (Arias & Tomas 1998 p.2, cited in Ambler 1995):
(1) It includes the notion of continuing reciprocal obligation over an
indefinite period of time, fulfillment of the specification of the
agreement.
(2) Favours are bank and repaid when the time is right, if ever.
(3) It goes beyond the relationship between two parties, and is
extended to include other parties within the social network of the
interacting parties (For instance, if A owes a favour to B, and B owes
a favor to C, A can balance his position with a favor to C.
Guanxi is sometime equates with western style relationship marketing as
both stress on fulfilling of promises and develop trust (Arias &
Tomas 1998 p.4). The major differences however, according to Arias and
Tomas(1998) is that on going business relationships are the cause of
social processes from a relationship marketing perspectives whilst for
guanxi , social relationship is a prerequisite to get involved in a
business relationship.
What are the benefits of guanxi?
Outsiders who are aspired to conquest the China economy is hampered by
lengthy negotiation, bureaucratic delays, institutional ambivalence,
lack of stable legal and regulatory environment and concomitant need
for trust-based personal relationship as a means for obtaining
resources or protection (Lee & Ellis 2000 p.1)
Thus, having good guanxi benefits foreign organization operating in
China as it is regarded as “a source of sustainable competitive
advantage “(Fan 2002 p.1).
Guanxi provides competitive advantage in a number of ways:
According to Hutchings and Murray (2002), guanxi “adds tremendous
flexibility to doing business in a society where the alternative is
excessive bureaucracy or formal hierarchies”. Fan (2002 p. 3) further
adds that guanxi network improves efficiency by reducing transactions
cost. Having guanxi particularly with the local and central
government could greatly assist the operation of foreign organization
and expatriates in China. Seligman (1999 p. 2) provides a story of a
foreign firm that needs to clear shipment of goods through Shanghai
Customs Bureau but the Shanghai customs did not believe itself
empowered to clear the shipment asking the foreign firm to clear the
paperwork at Guangzhou. However, through the help of the foreign firm’s
friends whose guanxi with Shanghai Customs was excellent, all it took
was a quick phone call and the shipment is cleared the next day.
Without guanxi, imagine the time and cost of having to go through all
the paperwork in Guangzhou.
The central and local governments of China still exercise control over
resource redistribution, investment size, industry structure, bank
loans and business formation in strategic sectors (Luo 1997 p.3). Good
guanxi with government provides foreign corporation competitive
advantage over other firms as “whenever scare resources exist,
resources are mainly allocated by guanxi rather than bureaucratic
rules” (Luo 1997 p.3). This is particularly true for Li Ka Shing,
Asia’s tycoon who is also a recognized master of “ the art of guanxi”
(Hon & Wing 2000). Li’s good guanxi with top officials that
includes Chinese Premier Jiang Zemin, enables him to build his $2
billion Oriental Plaza in central Beijing despites McDonald’s refusal
to move with the help of Li Peng (Hon & Wing 2000).
Good guanxi can provide foreign corporation with competitive advantage
where timely market information is shared through guanxihu (guanxi
network).) Market as well as future government policies information
obtained through guanxi is deemed to be trust worthier, richer, and
more useful, saving search cost and enabling decision maker to make
informed decisions (Luo 1997 p.3). A good example is Vincent Lo,
the ”King of Guanxi” and chairman of Shui Onn Group uses information
obtained through guanxi in his investment of cement plant in Chongqing,
a huge inland city of China in 1995 , five years before Beijing
promulgated its “Go West” campaign that significantly increase the
demand for cements (The Economist 2004).
According to Chen (2004 p.45 ), guanxi is related to mianzi and
renqing. Chinese places great emphasis on mianzi or face where he
who has no face is deemed as unsuccessful and low in status (Chen 2004
p. 46). Renqing on the other hand is “a form of social capital that can
provide leverage during interpersonal exchange of favor” (Luo 1997 p.
2). Renqing is deemed to be the foundation of reciprocracy and
equity,
failure to practice reciprocracy and equity results in losing face and
jeopardize the default’s guanxi network.By establishing good guanxi,
foreign corporation is given mianzi and renqing that can provide
long-term benefits to the foreign corporation. Foreign corporation that
has guanxi with other firms can expect reciprocacy that may results
sustainable profits even during time of uncertainty. This is true as
“guanxi had helped many Chinese survive the hardship of deficient
supplied during the Maoist period” (Chen 2004 p.45). If the other
person or corporation defaults, the person or corporation loses face
and suffer the consequences.
Hence, having good guanxi benefit organization through competitive
advantage such as increase in flexibility, acceleration of process,
reducing cost of operating in China, obtaining scare resources and
market information as well as ensuring foreign firm’s long term
benefits. Ewing, Caruana and Wong (1998 p.9) further adds that foreign
corporation that are successful in building guanxi , would be able to
reap benefits in that the relationship as it will continue to prospers and
expand, provide pecuniary and other benefits (leads and referrals).
What are the cost of guanxi ?
Cultivating guanxi is not an easy task, Arias and Tomas (1998 p.2,
cited in Thorelli 1990) stated that establishing guanxi is often
lengthy, complex and time consuming effort. The Economist (2001)
further adds that guanxi is extremely costly, as long as the number of
transaction and business relationships remained comparatively small,
the average cost of the transaction was bearable, however if the guanxi
economies grow and become more complex, the incremental cost of doing
business shot up and posses risk to foreign corporation. Surveys
conducted by the Hong Kong Independent Commission Against Corruption
estimated that guanxi accounted for up to 5% of the total costs of
doing business in China (Fan 2002 p.3). Furthermore, the intended
benefit of guanxi transaction cannot be delivered immediately after the
“payment” or the delivery might never “arrive” and there’s also
no guarantee of the “value” or “quality” of the benefit (Fan 2002
p.3). Hence, there’s always a risk that the cost of cultivating and
maintaining guanxi is greater than the benefit entitlement of foreign
firms.
Once guanxi has been established it can hardly be broken, but once a
relation has been broken it is very difficult to re-establish (Arias
& Tomas 1998 p.4). Thus, guanxi needs to be maintained so as the
relationship will not be broken. This is what happen to the manager in
a private company who has to spend tens of thousands of renminbi each
year improving his guanxi with local officials and the manager would
not be granted export license, get a bank loan and even supply of
electricity and water supply to run the factory if he fails to do so
(Fan 2002 p.4). As mentioned earlier, guanxi emphasis on mianzi (face)
and renqing, foreign firms needs to reciprocrates with firms that have
guanxi even if the transaction is unprofitable or risk “losing face”
and being regard as untrustworthy. Hence, not only the foreign
coperation needs to consider the cost of cultivating a guanxi but also
the cost of maintaining a guanxi.
Using guanxi may expose a foreign cooperation to more risk. In China,
guanxi is the synonym for corruption and other wrongdoings such as
nepotism, bribery and fraud (Fan 2002 p.4). Thus, it is possible that
the prestigious reputation foreign corporation put a lot of effort
building might be ruined being labeled as a corrupted corporation.
Relying extensive on guanxi may secure resources but result in
inefficiency (Dunfee & Warren 2001 p.4) as resources maybe diverted
to other areas that are unproductive lowering the foreign cooperation’s
competitiveness. Foreign cooperation may face difficulties if the only
individual that has guanxi retires or resigns, as it is likely that
guanxi will leave with that individual (Arias & Tomas 1998 p.2).
In short, cultivating and maintaining guanxi is not an easy task as it
is costly in terms of money and time, foreign corporation practicing
guanxi expose to risk. Furthermore, when the “credit and debit” due to
guanxi is calculated, the deal may appear to be unworthy for foreign
corporation (Dunfee 2001 p. 5).
Is guanxi necessary for foreign executives?
Yes because guanxi is Chinese customs that generally benefit foreign corporation.
“Doing business in China is particularly difficult because of the
higher relative importance of personal and trust relationships as
opposed to the specification and enforcement of contract in the west
since commercial law is almost non-existent “(Arias & Tomas 1998
p.2). The reason for the “importance of personal and trust
relationships” is because “Chinese society is particularly marked by
distrust of non-family members, a family-like links that stretches from
close family to include more distant family and people who are
connected to someone in one’s family such as friends of a family is
created to overcome this distrust” (Montagu-Pollock 1991 p.2). Hence,
cultivating guanxi is necessary if a foreign corporation is to carried
out its operation in China as “no company can go far unless it has
extensive guanxi in its setting” (Luo 1997 p.2).
Since 1949, China is a highly centralized bureaucratic state, the use
of personal connection was often the only way to get things done (Arias
& Tomas 1998 p.2). Consequently, Zouhoumen (using backdoor) has
become a popular and often essential way to get things done through
personal connection networks in China (Chen 2004 p.45). As mentioned
above, guanxi also provide benefits to the foreign corporation through
competitive advantage. Guanxi is also deemed to be one of the “key
success factors of Canadian firms operating in China” where guanxi
helps establish effective channels of distribution, making contact with
key group of customers, and establishing connections with person having
political influence that could assist foreign corporation in
negotiating agreement or even the uniform application of governmental
regulations (Ai & Abramson 1999 p.8). Hence, for the above reasons
it is necessary for executives to cultivate and maintain guanxi.
No because China is changing and guanxi might not be significance anymore.
Arias and Tomas claimed that there’s already an emerging trend
indicating the important changes that will erode the structural
foundation of guanxi and its relevance in doing business in China
(Arias and Tomas 1998 p.4).
The trends of economic liberation of China to western countries,
changes in the civil service to a more scientific management,
establishment of a Western-style commercial law and independent
judiciary due to pressure from Western Countries and International
Institutions, emergence of Western style manager with MBA who are more
prone to rely on hard data than on social relationship all contributes
to the downfall of guanxi.
In addition, Ai and Abramson (1999 p.4) clearly states that guanxi is
unnecessary for large foreign cooperation as guanxi automatically exist
as a result of their size and perceived international influence compare
to smaller cooperation who has no guanxi and has to work hard to
establish it. Further more, practicing guanxi is dangerous in light of
new regulation and control against official procedure (Ai & Abramson 1999 p.3). The Citic Pacific is a good example
to show that guanxi doesn’t has significant influence in doing business
in China anymore.
Is guanxi ethical?
Yes, guanxi is ethical as “guanxi” is also practiced in western world.
As mentioned earlier, guanxi is equates with relationship marketing in
western countries. Gift giving and entertainment, upscale restaurants
and major sports stadia are ethical and used as a foundation for future
business relationships, which is common in many cultures (Dunfee Warren
2001 p.5). For instances 'wa' in Japan and 'inhawa' in
Korea are similar concept of guanxi in China (Ewing, Caruana & Wong
1998 p.3). Guanxi is also considered as ethical in the sense that it
acts as the “rule of law” by promoting trust and credibility in a
society as well as by passing of the inefficiencies inherent in a
communist bureaucracy (Dunfee & Warren 2001 p.4). Even Singapore’s Senior Minister Lee
Kuan Yew deemed the use of guanxi is acceptable to “compensate for the
lack of the rule of law and transparency in rules and regulations”
(Ewing,Caruana and Wong 1998 p.2)
No guanxi is unethical as it is unfair to those that have no
guanxi.Fan (2002 p.3) states that guanxi is ethical only when there’s
no third
party none or unkown that is adversely affected as a result of this
guanxi action. Thus, guanxi is deemed to be unethical as most of the
time there will be a third party who is affected by transaction using
guanxi in particular society as a whole (Fan 2002 p.3).Dunfee and
Warren (2001 pp.5) further adds that guanxi results in unfairness where
fine and penalty may be avoided. According to Seligman (1999
pp.3-4), a major multinational corporation who was asked to pay a
confisticatory fine due to failure of filing paperwork in time to
ensure the annual renewal of the registration of its representative
office successfully use guanxi to renewed the registration with no
fines paid. Thus, Fan (2002 pp.4-5) stressed that guanxi is unethical
as not everyone is treated the same and guanxi results in unfair
competition as parties outside guanxi is significantly disadvantaged.
Guanxi is also deemed to be unethical in the sense that it increases
personal gain of parties involved in guanxi but at the mean time
reduces societal wealth due to inefficiency (Fan 2002 p.3).
Dunfee & Warren 2001 pp.6-7) uses “society being forced to accept
lower quality product in high price and selling of public property for
personal gain” as example of the unethically of guanxi that increase
personal gain in the expense of society.
In my opinion…
As an executive of a multinational corporation, I personally think that
guanxi does benefits the corporation more than the consequences of
guanxi if a proper planning in cultivating the “right” guanxi and
precautious being made to minimize the cost of guanxi. Further more
guanxi can also be a source of competitive advantage (Fan 2002 p.1).
Although guanxi is generally deemed to be unethical (Fan 2002 p.3) as
it promotes unfairness (Dunfee and Warren 2001 pp.5), guanxi necessary
is still necessary as “it is identified as the most important success
factors doing business in China” (Fan 2002 p.1), its already part of
Chinese customs to use guanxi (Hutching and Murray 2002 p.1) and “no
company can go far unless it has extensive guanxi in its setting” (Luo
1997 p.1).
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