In China, guanxi is a very important phenomenon for Westerners to be aware when doing business as it can be the difference between a successful and unsuccessful partnership. This research explores why guanxi is a recurring challenge to Westerns doing business in China. In order to carry out this research, a qualitative research strategy has been used by using an interview and various written data on the concept of guanxi. The data hereof is analyzed by Western theories on interpersonal relationships, including social exchange theory and social capital. Through the analysis, it becomes clear that there are both cultural and institutional explanations for why guanxi is a recurring challenge. Guanxi is culturally embedded in most Chinese, which is why it occurs as second nature to them, while Westerners must be aware and use a lot of resources in order to learn these skills. Furthermore, guanxi can be seen as an addition to contract law as both terms are very important when closing a deal in China.
Keywords: Guanxi, social capital, social exchange theory, bridging and bonding, business, challenge, qualitative research, cultural explanation, institutional explanation