Guanxi and Salesforce Management Practices in China

Executives in 111 foreign enterprises selling within the People's Republic of China completed questionnaires examining the extents to which guanxi was recognized as a critical factor in salesforce marketing, and the influences of such recognition on their companies' local salesforce remuneration policies. The results suggest that businesses which did regard guanxi as important for Chinese salesforce marketing were more likely to employ behaviour-based than outcome-based reward systems. This finding is compatible with the proposition that the banking and recall of personal favours, network integration, willingness to rely on partners and other guanxi-related characteristics can lead to sales performances for which outcome-based remuneration systems may not be appropriate. Notwithstanding the influence of guanxi on the manners in which salespeople were paid, volatility in the business environments within which firms operated encouraged their managements to adopt more market-led approaches to remuneration. Differences in the perceptions of the role of guanxi held by managers in foreign firms based in Chinese commonwealth and in other countries were also investigated. It emerged that companies based in the Chinese commonwealth acknowledged the importance of guanxi to a greater extent than companies with headquarters in Western nations. The longer a company had operated in China the more likely it was to incorporate guanxi considerations into its local management systems.