Understanding Reciprocity: Avoiding Failure in China

Chinese norms of reciprocity are pervasive with deep roots in the country’s collectivism.

A Chinese businessman in Shanghai, November 15, 2011
A Chinese businessman in Shanghai, November 15, 2011 (Chris Marchant)

How important is the norm of reciprocity in China? The simple answer is extremely important.

The norm of reciprocity — the act of reciprocating a favorable act or returning a benefit for a benefit — is a social norm. In China, the norm of reciprocity — known as guanxi — is quite pervasive, with roots grounded deep in collectivism.

Collective societies such as China tend to place a higher value on relationships and relationship building, harmony and a sense of duty. This is quite different from individualist societies, such as the United States, that tend to place a higher value on individual rights and privacy as well as other traits such as individual heroism. The end result is that the norm of reciprocity is more ingrained in the very fabric of Chinese society which is not necessarily the case in the United States.

As a matter of fact, in the United States, the reciprocity norm has been deemed unfair in the business world as it violates rules of fair competition and, because this norm is not so ingrained, steps have been taken to remove this norm from business practices.

One such step, as Robert D. Behn discusses (PDF), is the formation of the civil service, which has a primary purpose of eliminating reciprocity; this occurred while the United States was developing economically. Therefore in the United States, reciprocity is viewed as more of a hindrance or obstacle to business — an unethical act.

Since China is developing economically and offering many investment opportunities, perhaps the days of rampant reciprocity are in the past? After all, economic development in the United States led to the development of institutions such as the civil service to deal with the reciprocity problem.

The problem with constructing a parallel with the United States is that an individualistic society is fundamentally different from a collective one, as explained above. Therefore, attempting to extrapolate an answer to this question from the American experience is not a worthwhile endeavor, especially considering that China already has a functioning civil service built on reciprocity.

Given that China is a collective society, it is far more prudent to look at another collective society with both significant economic development achievements and historically strong economic ties to the West. Thailand immediately comes to mind. The collective roots in Thai society continue to reinforce the Thai norm of reciprocity — otherwise known as boonkhun — rather than diminishing the reciprocity impact. Moreover, Thailand maintains a well developed civil service system with entrenched reciprocity. If we can extrapolate from the Thai case, reciprocity in China is likely here to stay!

Since guanxi is likely to be a continued part of the Chinese business landscape for quite some time to come, it is prudent that those interested in pursuing opportunities in China understand it.

Not understanding guanxi could have dire consequences. In some cases, when a Chinese counterpart engages in a reciprocal relationship without receiving a benefit, the consequence may be negative reciprocity — that is, a return of a negative or indifferent act. In extreme cases, failure to recognize a reciprocating relationship in progress can cause the Chinese counterpart to lose face — known as mianzi — which effectively dooms the relationship to failure.

In conclusion, a useful heuristic for China is to treat all relationships with care, understand that guanxi is always at work and spend a significant amount of time harnessing positive relationships to prosper in China. While understanding this norm does not guarantee a successful venture in China, ignoring it surely ensures failure.

This article by David A. Owen originally appeared at 2point6billion.com, February 28, 2013.

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