The Ethical Challenges of Corporate Governance in the Chinese Context: The Guanxi Perspective

As China increasingly integrates with the world economy, business ethics becomes a focal research topic.  Researchers started paying attention to the correlation between ethics and guanxi, which is often regarded as a special business relationship in the Chinese context that often leads to insider-based actions.  This paper reviews the competing concepts on guanxi, its roles and challenges in the Chinese corporate governance, and its dynamics with Confucianism.  Specifically, this paper argues that the Confucian values of a virtuous and benevolent mind in guanxi have been neglected.  This sunny side of guanxi, apart from mere reliance on hard rules and laws, should help enhance the Chinese corporate governance.  In addition, ethics education if consolidated well in management training can help mitigate the dark side of guanxi.  It is believed that Chinese influences on corporate governance norms will spread and prevail in the future.