"There are three words that I think are essential to any business person as they grow their business globally and they are: 'Seek to understand.' With a deeper understanding of the people and environments in which business people are operating, businessmen and women will be in a better position to make decisions and success rates will grow. It is that simple."

Kronick also points out in his column with colleague Olivia Fang (See page 9) on mianzi that "giving face, or avoiding loss of face is the first golden rule you will read in almost any handbook on doing business in China".

Citing US missionary Arthur H. Smith's book Chinese Characteristics, which was published 120 years ago, Kronick recalls how Smith "relayed the story of a Chinese District Magistrate who, 'as a special favor, was allowed to be beheaded in his robes of office in order to save his face'."

"While it is difficult to understand how in the face of death the discussion of face was such an issue ... such extremes can be imagined. Delving deeper, we asked a Chinese colleague about the topic of face as it related to this story, who explained that face is fundamentally about dignity. That's why even a death row inmate is entitled to have face. Every human being has this right, regardless of wealth, status, or culture," writes Kronick, who has been with Ogilvy PR for more than two decades and oversees all of its operations in China.

"Face is also a cultural marker of respect both the respect of others and of self."

Hong Kong-based sociologist Chan Kwok-bun makes the point that the Chinese emphasis on social networks and guanxi is certainly not exclusive to the business world but actually "part and parcel of the cultural makeup and social fabric of Chinese society".

"For thousands of years, it has infiltrated every nook and corner of the everyday life of the Chinese. As an ethos, it is perhaps more intensely embraced and more frequently practiced by the economic and political elites, sometimes in partnership. Culture is a way of life, a pattern of living, accepted, assumed, taken-for-granted by most, if not all, people in society," says Chan, who is the first chair professor of sociology at Hong Kong Baptist University as well as the chairman and founder of the Chan Institute of Social Studies. He has written more than 40 books, many of them focusing on the evolving Chinese community in and outside the mainland.

"China is a conforming society. It rewards the conformists and disciplines the independents, the innovators, certainly the rebels, in and out of the business world. One then begins to socialize oneself into the business world and learns to cultivate the habits of using guanxi, networking, participating in the politics of the gift economy and social exchange not necessarily because one wants to, but because one must or one is out of the game," Chan says.

But Salat adds that these Chinese characteristics are also not totally exclusive to Chinese or Eastern societies.

"Relationships are one of the most important things in other societies as well. For example, while it is not openly discussed, it is a fact that most Western political and business leaders come from the same handful of elite schools of the world, and know each other personally since youth. Personal rela-tions are especially important in Eastern European countries where the shock of rapid democratization and economic collapse were accompanied by the strengthening of old personal relations.

"For example we, in Hungary, have a word for 'relation' that we use in exactly the same way as the Chinese use 'guanxi': 'he is my relation in that ministry', 'he has a lot of relations', 'I go to the party to build relations', 'do you have any relation at the district traffic police department?' However, I believe that in China guanxi is still more important, and also more reliable than here.

"Mianzi is also not an exclusively Chinese concept; however, it is taken much more seriously by the Chinese."

Some also point out that these cultural values are not necessarily all-important for the Chinese especially so with an increasingly globalized world that China must adapt to.

Laurel Herman, managing director of Positive Presence, a London-based image consultancy, writes in a corresponding piece (See page 8) on mianzi that "it is not for Westerners to decide whether mianzi is outdated, any more than it is for Chinese to convey that we have unacceptable customs and behavior".

"At present, it is for us both to understand and respect the differences between the two cultures and do what we can to minimize any challenges that result. Meanwhile, be aware that the variations are now eroding and blending naturally through globalization," she says.

Left: Image consultant Laurel Herman. Center: Beijing-based business consultant Colin Friedman. Right: ELTE University professor Gergely Salat.

Aside from these values continuing to affect business relations in China in one form or another, are they good or bad in today's increasingly interconnected world?

"On the low levels and in the initial phases of development, guanxi is a good thing, as you don't have to pay the price of the lack of trust. The Chinese miracle mostly comes from the millions of small- and medium-size enterprises that are based on family ties and relationships between people of the same locality, forms of guanxi," Salat says.

"However, guanxi is also an impediment: if you, let's say, choose the manager of your company on the basis of personal knowledge, and not on talent and skills, then you may not choose the best person, which has a bad effect on the efficiency on your company. Or if you buy the parts your factory needs from your cousin's workshop, just because he is your cousin, then you may not get the best quality for the best price. After initial rapid development many Chinese companies stop growing, just because they run out of relatives and other guanxi for the leading positions, and they are afraid of hiring talented outsiders for leading positions.

"That's one of the reasons why China has only a few real great global companies (in spite of the enormous economic weight of the country), and the State needs to give tremendous support to Chinese companies to expand. Another problem with guanxi is that the line between guanxi-based functioning and corruption is quite blurred. If a government or a State organ makes decisions based purely on guanxi, that is, on the one hand, unfair, and on the other, a waste of public resources."

"I think some good compromise could be found between a guanxi-based economy and society, and a law and contract-based one," Salat says.

"The legal culture of China should be strengthened, but I think guanxi cannot and should not be eliminated. Western societies cannot exist without it, either. Building a society that holds personal ties is very important, but also ensures the fairness coming from a solid legal system and culture - this can be an ideal Chinese way," he says.

In the meantime, many Chinese companies are also getting in on the act and doing what they can to "close the gap".

"I have seen Chinese companies in greater number working to understand the nuances of other cultures. They are doing this to ensure success as they expand into other countries. This is just the beginning, however. Due to a fear of failure, we have seen Chinese companies reaching out for advice in greater numbers from markets all over the world," Ogilvy's Kronick says.

Scott Kronick of Ogilvy Public Relations Worldwide says knowing Chinese culture is crucial for success. Feng Yongbin / China Daily