Asian countries have a history of business networks and other forms of organizations inter-linkages. China has a business network that encompasses the family business. The essay will discuss whether business networks in China are still important in the running of businesses in Asia. Business networking in various Asia countries especially the East Asian ones has a great impact in the running of businesses. Some of these impacts are positive while others are negative. due to the failureof adapting to the business cultures or networks in these countries. The Chinese business network discourages Chinese from engaging in large manufacturing and servicing industries that require decentralized decision making a feature that it limits business operation in China. These networks also limit the maximum size of a Despite the few limitations of business networks in China, theyare still important in the running of the business in Asia.

Introduction

East Asian Countries have substantial knowledge with business networks and other structures of inter-organization linkages. The business networks history in the East Asian Countries has been lengthy in both the field of business and in East Asian society. the developments of the business networks. Other countries in Asia like Korea have diverse strategies to business networking. China has business networking that involves the family businesses. These family businesses demonstrate close linkagesbetween establishments that are possessed by a single householdfrom a single neighborhood or share a mutual language. Business networks in sia. The essay will discuss whether the business network in China is still important in doing business in Asia.

Discussion of Chinese Business Networking Systems

The market potential of China is unparalleled, although many overseas business operators have suggested that operating profitably in China is hard, it is also more complicated and time consuming than expected. Provided with those fact, a lot of studies have been carried out on doing business in China, and most of them gives recognition to the idea of guanxi as stated by Chan (2000). Quanxi is a business and social relationship network which act as the primary concept of performing successful business in China.Quanxi can be interpreted to mean connections or relationships as stated by Vanhonacker (2004). In most Chinese dominated countries in Asia, people use the term guanxi to describeings done not essentially via formal channels as uttered by Halinen & Törnroos (2005). Foreign business people in China find it hard run a successful business in this country due to its social business network (Standifird & Marshall, 2000). Foreigners especially those from the west doing business in China must, therefore, adapt to the Chinese business culture for their business to be successful. Business networking, therefore, is a significant aspect of doing successful business in China and many Asian countries such as Korea, Taiwan, Japan and many others.

Quanxi is mostly linked to the Chinese in the mainland China; however, it is also related to those economies that have a primarily Chinese culture like Singapore, Hong Kong or Taiwan. The effects of the Chinese culture and consequently the phenomenon of guanxi stretch throughout the countries in East Asia. Chan (2000) indicated that over 52 million overseas Chinese in Asia were the greatest entrepreneurs in the whole world. The study also found out that they control about 91% of the small and medium-sized organizations in the Asia-Pacific Economic field. Another study about the overseas Chinese indicated that they control asset worth about $1.5 trillion, and they produce a yearly economic output of about $500 billion (Halinen & Törnroos, 2005). Vanhonacker (2004) ranked the overseas Chinese as number four in the economic power after the US, Japan, and Europe. It also summarized that the overseas Chinese are united together by guanxi; they also share a common tradition and a key entrepreneurial relationship network. These studies show that business networking in China and another Asian country is very significant in the success of the business in these countries. Chinese business culture is very influential in ensuring success in business in Asia.

The primary basis of networking is founded on connections made via religion, race, family or profession. This concept also relates to the Chinese business networks. In Hong Kong, most networks in business are centered on familial and ethnic links as stated by Chan (2000). Chinese business networks have been widened effectively in most parts of Indochina and South East Asia. In most of the time, it becomes the dominant economic force. The EAAU report on Chinese Business Networks in Asia states that normally, small and medium sized traditional businesses are owned by the family. These businesses are involved in petty R & D according to Vanhonacker (2004). They also possess a moderately uncomplicated organizational structure encouraging the centralized decision-making process. Mostly the concentration of the business is on a single product with the manager or the owner near to the market in which the operation of the firm take place. This strategy to the management of the business frequently implies that Chinese businesses avoid areas of business like complicated manufacturing and servicing industries. These areas of business are avoided because they need decentralized decision-making. This scenario implies that Chinese do not prefer in running large businesses that require decentralized decision-making. These large corporations fetch the owners a lot of revenues which help in improving the economy of the involved country (Chan, 2000). Concentrating in operating small and uncomplicated business enterprises indicate that business networking in China is not effective in doing business in Asia. This business culture has a probability of promoting slow progress in business growth. Chinese should consider changing their business culture if they want to experience tremendous growth in business.

creases past a particular level (Vanhonacker, 2004). This size limitation becomes a challenge due to the absence of the willingness of the Chinese business people to look for outside help for restructuring or legal services. Restructuring and legal services are needed to change the businesses from the business network into a larger enterprise. Often Chinese tries to incorporate other activities into their business instead of contracting out as asserted by Halinen & Törnroos (2005). The group of the business may be large, but its individual constituents may be moderately small.

Most of the time, the business networking of the Chinese is compared with those of other countries especially western ones to assess its ethicality. A major foundation of the western ethical system is collective applicability to all individuals (Halinen & Törnroos, 2005). From this aspect, justice means equal access, equal treatment, and equal opportunity. This equality aspect is part of the thinking by the westerns. The perfect example of how this aspect is deep-rooted in the psyche of the westerns is on how various economic textbooks define the model of a perfect competition. The participants in such an economy should not only possess the equal access to trading partners, but they should also have equivalent access to the components of production. They should also have access to the same business information so that they can compete favorably and fairly as uttered by Peng (2000).This perspective makes guanxi or Chinese business networking seem unethical, and this interpretation affects the westerns doing business in China. From the westerns perspective, the Chinese business networking is not just as it fails to offer everyone a fair competition. Hence, Chinese business networking is not effective in doing business in Asia according to the westerns owning businesses in China.

Still comparing the ethicality of the business networking of the Chinese and the Westerners, the ethicality of the guanxi can be understood in another manner. First, these two business cultures propose different methods and steps in doing business (Vanhonacker, 2004). The Chinese believes that one should concentrate on building a relationship first, and if it succeeds, a transaction will follow automatically. According to the Chinese, a signed contract simply indicate the end of the first phase of the dealing of the business. Specific changes are supposed to be made in the future as unpredicted challenges arise as affirmed by Rauch & Trindade (2002). business partners. In contrast, the westerns management model places the transaction first. Relationship with the trading partners is only regarded as fulfilling secondary consequence of the transaction (Peng, 2000). According to the westerners, promises are only kept as evidence of the recorded business agreement but not as the creation of the relationship with trading partners. Westerners owning businesses in China and other East Asian countries find it difficult to succeed in business due to the Chinese business culture.

The small to medium-sized business ventures of Hong Kong tend to be possessed and managed by Cantonese Chinese families. Hong Kong presents an illustration of arrangements of networks undertaking a process of change particularly as the country moves towards restoration with China in 1997 (Halinen & Törnroos, 2005). Most companies in Hong Kong have formed relations with the mainland China to benefit from the great growth opportunities and make their transition process easier. The SME sector of Taiwan and Japan is especially strong in Hong Kong (Rauch & Trindade, 2002). The function of the personalism and family in Chinese business has managed to form a large number of small and medium business ventures in the economy of China. The method of business of the Hong Kong Chinese is qualitatively distinctive from the Chinese of South East Asia and China. Despite the fact that most Chinese of Hong Kong remain mainland China-centered (Rauch & Trindade, 2002). The increased growths in business opportunities even in other countries in Asia that have a high population of Chinese indicate the success in Chinese business networking. This growth implies that East Asian countries such as Singapore and Hong Kong (Peng, 2000). The Chinese business culture in these countries has contributed to the success of many small and medium-sized enterprises. Customers identify with this business culture that encourages humanity and they lead to success in businesses established in these countries. Hence, this growth in small and medium-sized enterprises is a clear indication that Chinese business

The Chinese society views the family as the primary institution with powerful boundaries between the members of the family and the outsiders as well as the requirement to retain harmony and solidarity within the family. The categorizing of ethnic Chinese families into a variety of market niches both in and through the countries has facilitated the formation of business networks as affirmed by Vanhonacker (2004). These business connections are protected from variations in the economies of one country by cross-border connections. This observation is different from a Japanese family where members of the family may break away from the family and begin their autonomous enterprise. The Confucianism role in the business networks of the Chinese is significant due to the effects that the Confucian set of practical rules has on making decision and dealings of the business. The teaching of Confucian encompasses several principles according to Rauch & Trindade (2002). One of these principles states that the strength of the society is founded on the unequal relationship between people. Another principle states that the family is the model of all social organizations. The Confucianism principlesplay an important role in shaping of the Chinese business culture. Confucianism emphasizes the significance of love for humanity and harmony in conduct and thought (Tan & Yeung, 2000). Confucianism teachings are widely accepted and applied in China. These teachings have helped in the creation of the strong Chinese business networking. They also assist in making business decisions and dealing with various business issues. Hence, it is clear that the Chinese business networking is significant in the operation of the business in Asia.

The business networks of the Chinese family do not depend on formal contracts. However, trust is the basis for financial arrangements and other network business transactions. Peng (2000) found that a society that is founded on mutual trust has lesser costs of the transaction than those founded on mistrust. The Chinese society forms a perfect illustration of this scenario where violations of spoken promise can result in alienation from the society. The development of mutual help societies by the Chinese settled in various parts of Asia has assisted them in business networks development (Möller & Svahn, 2004). It has been linked of being competitive in parts where the administrative and legal infrastructure is not developed. Chinese associations are established around crafts and dialect, locality, kinship and widens past the field of business to involve fields such as education and religion (Möller & Svahn, 2004). Frequently, the networks in business are not operational, however if a business opportunity arise, they can be swiftly utilized to benefit from any opportunity. The Chinese business culture emphasizes the importance of trust while carrying out business transactions. Mutual help societies assist Chinese business people to compete favorably and fairly even in areas that have underdeveloped administrative and legal infrastructure. Thus, the Chinese business networking helps in the running of businesses in Asia.

Chinese dialects outline a significant created a decrease in boundaries between business networks that are founded on dialect (Tan & Yeung, 2000). ,due to the complexity of obtaining all customers and suppliers within a single dialect group. The extent of formalityvaries between Chinese business networksjust like other business networks all over the world as stated by Carney, M. (2005).It ranges from relationships between the business individuals who possess prolonged business relationships to formalized associations of international dialect. These associations look to evade competition between Chinese companies from the same sub-dialects and purpose to form informal accommodation that forms gains through the joint power of the market (Michailova & Worm, 2003). From the above discussion, it’s clear that Chinese dialects have a significant role in consolidating the market which ensures increased revenues and improvement of the business. Chinese dialect ensures that there is no business competition between the same sub-dialects. Hence, the Chinese business networks have a vital role in ensuring the success of the business in Asia.

Conclusion

Asian countries have a history of business networks and other forms of organizations inter-linkages. China has a business network that encompasses the family business. Quanxi is as a business and social relationship network that acts as concept of determining the success of the business in China. Business networks in China have some negative impacts in the running of the business. They include challenge faced by overseas business owners due to failure in adapting to these business networks. They also encompass failure to encourage Chinese business owners from engaging in large manufacturing and servicing industries that require decentralized decision-making.These networks also limit the maximum size of affirm which has the negative impact on the growth of large businesses in China. They also fail to offer everyone a just and fair competition. However, these business networks prove to be very effective in running businesses in Asia. They help in improving the economy of China and other East Asian countries. They also help in creating a business relationship with the business partners which create trust and loyalty. The teaching of Confucianism helps business owners in decision-making and handling various business dealings. Promotion of trust among customers and business owners create consumers’ loyalty. The use of same dialect helps in reducing unnecessary competition between the same sub-dialects. Despite the few limitations of business networks in China, theyare still important in doing business in Asia.

References

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Standifird, S. S., & Marshall, R. S. (2000). The Transaction Cost Advantage of Quanxi-Based Business Practices. Journal of World Business, 35(1), 21-42.

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