Foreign Market Entry into China: the Implications of Guanxi on the Network Model of the Foreign Market Entry Process

The purpose of this study is to investigate the market entry process of the Western firms into China from the business network perspective, especially its China-specific features under the influence of the common business practice, guanxi, in the market there. Guanxi is a phenomenon deeply rooted in the Chinese culture. It is the Chinese way of cultivating a relationship. Unlike business relationships created by the Western firms in the western markets, which are the result of the interaction of the firms over time, guanxi functions more like prerequisite of business transactions. Compared with relationships in business network theory, guanxi lays more emphasis on the individual level, the social dimension of the relationships between business entities. The different way of relationship building of the Chinese is therefore supposed to influence the market entry process of the Western firms into China. The process is expected to be more time consuming, involving more non-business actors and non-business activities than the entry process of Western firms into Western countries.