Reference no: EM133203175 , Length: Word count: 1 Page
Case study:
Reread the Management Focus on"China and Its Guanxi", and answer the follow questions:
China and Its Guanxi
By 2009, DMG had emerged as one of China's fastest growing advertising agencies with a client list that includes Budweiser, Unilever, Sony, Nabisco, Audi, Volkswagen, China Mobile, and dozens of other Chinese brands. DanMintz, the company's founder, says that the success of DMG was connected strongly to what the Chinese call guanxi. Guanxi literally means relationships, although in business settings it can be better understood as connections. Guanxi has its roots in the Confucian philosophy of valuing social hierarchy and reciprocal obligations. Confucian ideology has a 2,000-year-old history in China. Confucianism stresses the importance of relationships, both within the family and between master and servant. Confucian ideology teaches that people are not created equal. In Confucian thought, loyalty and obligations to one's superiors (or to family) are regarded as a sacred duty, but at the same time, this loyalty has its price. Social superiors are obligated to reward the loyalty of their social inferiors by bestowing "blessings" upon them; thus, the obligations are reciprocal. Chinese will often cultivate a guanxiwang, or "relationship network," for help. There is a tacit acknowledgment that if you have the right guanxi, legal rules can be broken, or at least bent.
Mintz, who is now fluent in Mandarin, cultivated his guanxiwang by going into business with two young Chinese who had connections, Bing Wu and Peter Xiao. Wu, who works on the production side of the business, was a former national gymnastics champion, which translates into prestige and access to business and government officials. Xiao comes from a military family with major political connections.
Together, these three have been able to open doors that long-established Western advertising agencies could not.
They have done it in large part by leveraging the contacts of Wu and Xiao and by backing up their connections with what the Chinese call Shi li, the ability to do good work. A case in point was DMG's campaign for Volkswagen, which helped the German company become ubiquitous in China. The ads used traditional Chinese characters, which had been banned by Chairman Mao during the Cultural Revolution in favor of simplified versions. To get permission to use the characters in film and print ads-a first in modern China-the trio had to draw on high-level government contacts in Beijing. They won over officials by arguing that the old characters should be thought of not as "characters" but as art. Later, they shot TV spots for the ad on Shanghai's famous Bund, a congested boulevard that runs along the waterfront of the old city. Drawing again on government contracts, they were able to shut down the Bund to make the shoot. Steven Spielberg had been able to close down only a portion of the street when he filmed Empire of the Sun.DMG has also filmed inside Beijing's Forbidden City, even though it is against the law to do so. Using his contacts, Mintz persuaded the government to lift the law for 24 hours. As Mintz has noted, "We don't stop when we come across regulations. There are restrictions everywhere you go. You have to know how get around them and get things done."Today, DMG Entertainment has expanded into being a Chinese-based production and distribution company. While it began as an advertising agency, the company started distributing on-Chinese movies in the Chinese market in the late 2000s (e.g., Iron Man 3, the sixth-highest-grossing film of all time in China) as well as producing Chinese films, the first being Founding of a Republic in 2009. This is a movie that marked the 60th anniversary of the People's Republic of China. In these activities, DMG is also enjoying guanxi in the country. Variety reported that DMG benefited from"strong connections" with Chinese government officials and the state-run China Film Group Corporation.
Assignment Question(s):
Q1. Why do you think it is so important to cultivate guanxi and guanxiwang in China?
Q2. What does the experience of DMG tell us about the way things work in China? What would likely happen to a business that obeyed all the rules and regulations, rather than trying to find a way around them as Dan Mintz does?
Q3. What ethical issues might arise when drawing on guanxiwang to get things done in China? What does this suggest about the limits of using guanxiwang for a Western business committed to high ethical standards?