Dynamic Relationship Changes

Familiar ties generally exist among friends and, as mentioned above, can develop gradually from acquaintance ties instead of members of clans or townsmen. Nonetheless, Chinese often partner with their family or pseudo-family members to make strong instrumental exchanges. In Chinese family businesses, for example, father and son, husband and wife, and brothers tend to become business partners. Moreover, circle members deriving from among family members differ from the ones from acquaintances in that the former ones contain more expressive exchanges and require higher family-ethics. By comparison, as is believed by sociologist Yang Yi-Yin, family ties mixed with instrumental exchanges are less dependent upon affection than are pure family ties, because the rational calculation of personal gains and bargaining will both weaken the affection in expressive ties. In addition, indigenous psychologist Hwang, Kwang-Kuo believes that Chinese are inclined to improve expressive feels while developing strong instrumental ties. Since there are many things that acquaintances have no chance to do, it is necessary to enhance the expressive elements so as to develop the ties with them into familiar ties. Only after that is it possible to make stronger, instrumental exchanges.

By combining the ideas of the two scholars, I proposed a structure for analyzing relationships among Chinese under the instrumental and expressive dimensions, and divided each dimension into strong and weak relationship categories. The model of the four relationship categories built upon these two dimensions is as following figure:

According to this diagram of the path along with interpersonal relationships change, the relationships among Chinese, in this model, can be explained from the instrumental and expressive dimensions. The two dimensions are the two axes, of which the instrumental dimension is characterized by the equity rule and the expressive dimension by the need rule. The relationships at the lower left corner involve acquaintances and obey the equity rule; family ties are at the lower right corner and focus on the need rule.

Instrumental Dimension Strong Exchanges

Weak Exchanges Familiar ties – The favor –exchange rule

Acquaintance ties-The equity rule Family ties with strong instrumental exchanges

Family ties – family ethics

Weak Affection (Neutral) Strong Positive Affection Expressive Dimension Figure 4.1 The Diagram of Guanxi Dynamics Familiar ties combine the former two types by paying equal attention to the principles of equity and need, that is, they obey the favor-exchange rule. There are two different types of familiar ties in this model. Familiar ties built upon acquaintances are in the upper left quarter and are close to the middle line vertical to the axis of abscissa. They realize, under the favor rule, certain instrumental exchanges and lead to deeper expressive ties. By comparison, family ties with strong instrumental exchanges are in the upper right quarter that is close to the middle line vertical to the axis of abscissa. They reflect the assumption that as instrumental exchanges increase, family ties become less expressive.

Accordingly, the arrows in solid lines show the possible path of relationship changes. Building family ties with strong instrumental exchanges is also very risky. Firstly, maintaining such ties takes high expressive and instrumental costs. Secondly, once such ties no longer exist, it will be very difficult to reenter purely expressive family ties and even to maintain acquaintance ties, thereby resulting in negative or even no ties. In addition, the arrows in dashed lines signify that such relationship changes do not exist.

How then do Chinese dynamically change these ties?

From Strangers to Acquaintance Ties: Nine Similarities and Identification

Next, let's explain how these ties change with several observed cases.

In the first case, the process in which the president of CL Industrial Ltd., or Mr. A, relied on universities to virtualize the company and made it go through a crisis fully demonstrates how to build acquaintance ties through ―identification‖ and let them function through instrumental exchanges.

Founded in 1994, CL Industrial Ltd. is in the environmental industry and provides products mainly including oil and water separators and oil interceptors for small to big restaurants, industrial-purpose mineral/light oil and water separators and high-speed leftover fermenters. CL Industrial has its own processing equipment, a headcount of about twelve employees and an annual fixed operating cost of about six to seven million yuan (the Chinese dollar). It was making losses in the 2000-2001 period due to depression and heavy pressure from bank loans. Fortunately, Mr. A was very diligent, open to new knowledge, quick-witted and good at making friends. And he made friends in a very special way – he took delight in sharing his expertise and life experience with others. A professor with the MZ University of Technology learned from Formosa Plastics Group (FPG) – CL Industrial was one of its partners – which CL Industrial specialized in fermenters, so he asked Mr. A for expertise on leftover fermenters. Given their common interests in environmental technologies, Mr. A shared all his expertise with the professor. As they talked, both of them increasingly felt the possibility of cooperation. So they did research together. Later on, they managed to secure a 5,000,000-yuan research subsidy.

There is actually a very important source of relationships – common friends – in addition to the ―nine tungs‖ (similarities) we have discussed above. It may be referred to as ―the tenth tung‖—the common friend. Chinese most often say, when trying to establishing relationships with others, that ―You know Jack? We've been good friend for xx years …‖ We can see, therefore, that common friends are a good medium for establishing minimum trust.

We have all acted as someone who introduces one of our friends to another so as to enable an exchange between them. The introducer plays dual roles – the mediator and the assurer.

To virtualize CL Industrial, the above-mentioned president rapidly contacted the incubation center of the MZ University of Technology thanks to recommendation by the above-mentioned professor. This university provided CL Industrial with big office space, good office equipment, labs and sufficient research HR. Later on, it also employed, for its canteens, oil interceptors produced by CL Industrial. This was a win-win situation between the company and the university resulting from an instrumental exchange. Backed by FPG and the university together, Mr. A was better able to persuade others when carrying out marketing events. The company has seen its annual fixed cost decrease to somewhere between 700,000 and 900,000 yuan after the virtualization. Three years after that, it has not only paid off the debts, but has also increased the gross margin to 20-30%.

Another case was from SF Technologies Co., Ltd. founded in 2001. Specializing high-tech clean room design and supervision over manufacturing, it has customers across the Taiwan Strait, including AU Optronics Corp. (AUO), Wintek, Winbond, Forhouse, H.P.B. Optoelectronics, and Corning and, on the side of the Chinese Mainland, Fortech Optronics (Xiamen) Co., Ltd, United Win Technology Limited, Dongguan Masstop and China Resources Microelectronics Limited. SF Technologies started up with an order worth only 80,000 yuan. The acquisition of this order, plus the subsequent expansion of the corporate business, demonstrates the president's capabilities of establishing relationships with others. The president of SF Technologies, or Mr. B, before joining the company, ran a travel agency and had a habit of playing badminton, by which he made a lot of friends. In 2001, one of such friends who worked at Wintek and who had known him for three years told him that there was a small project within the company and asked if he was interested in it or not. In that period of time, people were suffering a sharp decrease of their wealth due to the bubble in the stock market, especially in the hi-tech investment, so they were unwilling to travel. Since it was difficult to continue his travel business, Mr. B wanted to make a change in his career. He then partnered with his brother, who worked for an air conditioner maker, to found SF Technologies and received their first ever order from Wintek. At that time, Wintek was also building a facility, so it had small or large projects very often. Mr. B spent half a day at Wintek almost every day and, later in the period of cooperation, it looked like he had a small office at Wintek. Since he was in the service industry before this, Mr. B was fully aware of the importance of customer service and satisfaction. He then introduced some service quality-centric ideas and practices into the new company and doubled as a project supervisor to assure good project quality and responsiveness. And he soon established ties with most employees and low-level managers of Wintek's engineering department, which was in the same field as was his company, in the capacity as an outsourcing service provider for Wintek.

We can see from the above example that a Chinese person generally would not act as an introducer for someone else unless they have a sufficiently good tie with each other, because the introducer needs to take part of the resulting risks. Introduction, therefore, can also be regarded as a type of favor exchanges. Next, let us discuss familiar ties and favor exchanges.