Skip to main content

Advertisement

Log in

Gift Giving, Guanxi and Illicit Payments in Buyer–Supplier Relations in China: Analysing the Experience of UK Companies

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract.

This paper explores the relationship between gift giving, guanxi and corruption through a study of the relationships between UK manufacturing companies in China and their local component suppliers. The analysis is based on interviews in the China-based operations of 49 UK companies. Interviews were carried out both with senior (often expatriate) staff and with local line managers who were responsible for everyday purchasing decisions and for managing relationships with suppliers. The results suggest that gift giving is perceived to be a significant problem in UK-owned companies in China. However the relationship between these payments and established understanding of gift giving within guanxi-networks appears to be weak. Gift giving appears to be associated with illicit payments, corruption and the pursuit of self-interest. Firms seek to reduce the incidence of illicit transactions by changing staff roles, instituting joint responsibilities, which include the separation of different aspects of sourcing/purchasing, ineasing the involvement of senior staff in the process and through the education of employee and suppliers.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or Ebook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Y. Bian (1994) ArticleTitle‘Guanxi and the Allocation of Urban Jobs in China’ China Quarterly 140 971–999 Occurrence Handle10.1017/S0305741000052863

    Article  Google Scholar 

  • Y. Bian (1994b) Work and Inequality in China State University of New York Press Albany, NY

    Google Scholar 

  • Y. Bian (1997) ArticleTitle‘Bringing Strong Ties Back In: Indirect Ties, Network Bridges, and Job Searches in China’ American Sociological Review 62 366–385

    Google Scholar 

  • I. Björkman S. Kock (1995) ArticleTitle‘Social Relationships and Business Networks: The Case of Western Companies in China’ International Business Review 4 519–535

    Google Scholar 

  • V. Brand A. Slater (2003) ArticleTitle‘Using a Qualitative Approach to Gain Insights into the Business Ethics Experiences of Australian Managers in China’ Journal of Business Ethics 45 167–182

    Google Scholar 

  • Chen, K.: 1995. ‘As China Prospers, So Do the Children of Communist Leaders’, The Wall Street Journal (July 1st 1995), A1, A4

  • H. Davies T. Leung S. Luk Y. Wong (1995) ArticleTitle‘The Benefits of “Guanxi” – The Value of Relationships in Developing the Chinese Market’ Industrial Marketing Management 24 207–214

    Google Scholar 

  • T.W. Dunfee D.E. Warren (2001) ArticleTitle‘Is Guanxi Ethical? A Normative Analysis of Doing Business in China’ Journal of Business Ethics 32 191–204

    Google Scholar 

  • T. Fang (1999) Chinese Business Negotiating Style Sage Thousand Oaks, CA

    Google Scholar 

  • K.Y. Fock K. Woo (1998) ArticleTitle‘The China Market: Strategic Implications of Guanxi’ Business Strategy Review 9 33–43

    Google Scholar 

  • S. Ganesan (1994) ArticleTitle‘Determinants of Long Term Orientation In Buyer–Supplier Relationships’ Journal of Marketing 58 1–19

    Google Scholar 

  • D. Guthrie (1997) ArticleTitle‘Between Markets and Politics: Organizational Responses to Reform in China’ American Journal of Sociology 102 1258–1304

    Google Scholar 

  • D. Guthrie (1998) ArticleTitle‘The Declining Significance of Guanxi in China’s Economic Transition’ China Quarterly 154 254–282

    Google Scholar 

  • D. Guthrie (1999) Dragon in a Three-Piece Suit: The Emergence of Capitalism in China Princeton University Press Princeton

    Google Scholar 

  • B. Harvey (1999) ArticleTitle‘“Graceful Merchant”: A Contemporary View of Chinese Business Ethics’ Journal of Business Ethics 20 85–92

    Google Scholar 

  • D. Lee J.H. Pae Y.H. Wong (2001) ArticleTitle‘A Model of Close Business Relationships in China (guanxi)’ European Journal of Marketing 35 51–69

    Google Scholar 

  • J. Liedtka (1992) ArticleTitle‘Wounded But Wiser: Reflections on Teaching Ethics to MBA Students’ Journal of Management Education 16 405–416 Occurrence Handle10.1177/105256299201600401

    Article  Google Scholar 

  • S. Lovett L.C. Simmons R. Kali (1999) ArticleTitle‘Guanxi Versus the Market: Ethics and Efficiency’ Journal of International Business Studies 30 231–248

    Google Scholar 

  • X. Lu (1997) ArticleTitle‘Business Ethics in China’ Journal of Business Ethics 16 1509–1518

    Google Scholar 

  • Y. Luo (1997) ArticleTitle‘Guanxi: Principles, Philosophies, and Implications’ Human Systems Management 16 43–52

    Google Scholar 

  • Y. Luo (2003) ArticleTitle‘Industrial Dynamics and Managerial Networking in an Emerging Market: the Case of China’ Strategic Management Journal 24 1315–1327

    Google Scholar 

  • S. Michailova V. Worm (2003) ArticleTitle‘Personal Networking in Russia and China: Blat and Guanxi’ European Management Journal 21 509–519

    Google Scholar 

  • N. Oliver B. Wilkinson (1992) The Japanization of British Industry Blackwells Oxford)

    Google Scholar 

  • S.H. Park Y. Luo (2001) ArticleTitle‘Guanxi and Organizational Dynamics: Organizational Networking in Chinese Firms’ Strategic Management Journal 22 455–477

    Google Scholar 

  • J. Pearce R. Robinson (2000) ArticleTitle‘Cultivating Guanxi as a Foreign Investor Strategy’ Business Horizons 43 31–39

    Google Scholar 

  • S. Standifird R. Marshall (2000) ArticleTitle‘The Transaction Cost Advantage of Guanxi-Based Business Practices’ Journal of World Business 35 21–43

    Google Scholar 

  • P. Steidlmeier (1999) ArticleTitle‘Gift Giving, Bribery and Corruption: Ethical Management of Business Relationships in China’ Journal of Business Ethics 20 121–132

    Google Scholar 

  • A. Strauss J. Corbin (1990) Basics of Qualitative Research: Grounded Theory Procedures and Techniques (Sage Newbury Park)

    Google Scholar 

  • C. Su J.M. Sirgy J.E. Littlefield (2003) ArticleTitle‘Is Guanxi Orientation Bad, Ethically Speaking? A Study of Chinese Enterprises’ Journal of Business Ethics 44 303–312

    Google Scholar 

  • R. Tung V. Worm (2001) ArticleTitle‘Network Capitalism: The Role of Human Resources in Penetrating the China Market’ International Journal of Human Resource Management 12 517–534

    Google Scholar 

  • J. Womack D. Jones D. Roos (1990) The Machine that Changed the World Rawson Associates New York, NY

    Google Scholar 

  • Y.H. Wong R.Y. Chan (1999) ArticleTitle‘Relationship Marketing in China: Guanxi, Favouritism and Adaptation’ Journal of Business Ethics 22 107–118

    Google Scholar 

  • V. Worm (1997) Vikings and Mandarins: Sino-Scandinavian Business Cooperation in Crosscultural Settings Copenhagen Business School Press Copenhagen)

    Google Scholar 

  • P. Wright W. F. Szeto L. T. W. Cheng (2002) ArticleTitle‘Guanxi and Professional Conduct in China: A Management Development Perspective’ International Journal of Human Resource Management 13 156–182

    Google Scholar 

  • K. R. Xin J. L. Pearce (1996) ArticleTitle‘Guanxi: Connections as Substitutes for Formal Institutional Support’ Academy of Management Journal 39 1641–1658

    Google Scholar 

  • M.M. Yang (1994) Gifts, Favors, Banquets: The Art of Social Relationships in China Cornell University Press Ithaca, NY

    Google Scholar 

  • M. M. Yang (2002) ArticleTitle‘The Resilience of Guanxi and its New Deployments: A Critique of Some New Guanxi Scholarship’ China Quarterly 170 459–476

    Google Scholar 

  • I. Y. M. Yeung R. L. Tung (1996) ArticleTitle‘Achieving Business Success in Confucian Societies: The Importance of Guanxi (Connections)’ Organizational Dynamics 3 54–65

    Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Andrew Millington.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Millington, A., Eberhardt, M. & Wilkinson, B. Gift Giving, Guanxi and Illicit Payments in Buyer–Supplier Relations in China: Analysing the Experience of UK Companies. J Bus Ethics 57, 255–268 (2005). https://doi.org/10.1007/s10551-004-6712-y

Download citation

  • Accepted:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-004-6712-y

Keywords

Navigation