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China's economic rise is partly fueled by its strategic use of outsourcing combined with the unique concept of guanxi. Outsourcing allows China to leverage lower production costs abroad, while guanxi, a network of relationships built on reciprocity and trust, fosters smooth collaboration with foreign companies and suppliers.
Guanxi acts as a social lubricant, facilitating communication, resolving issues, and ensuring reliable service beyond formal contracts. This relational approach complements outsourcing by building trust and commitment, leading to efficient production and a competitive edge.
For instance, a Chinese company outsourcing manufacturing might develop guanxi with the factory owner. This could involve social gatherings, favors exchanged, and a focus on long-term benefits. This fosters a sense of obligation and ensures the factory prioritizes quality and timely delivery.
However, it's important to note that guanxi can be a double-edged sword. Overreliance can lead to a lack of transparency and hinder competition. As China's economy matures, the role of guanxi might evolve, but its influence in outsourcing China's success story remains undeniable