SOAS Research Online

Abstract

International companies are increasingly concerned with the success of their business exchanges in China. Whilst understanding and adapting to local cultures has long been considered as an important part of successful localization, extant literature has not discussed how the adoption of local cultural-specific relationship construct, such as guanxi in China as a tool of localization, facilitates foreign firms’ b2b relationships with local counterparts in their respective markets. This study argues that international firms need to engage the cultural-specific concept of guanxi as a tool of localization when interacting with Chinese counterparts for better financial performance and long-term orientation. With data collected from 299 Chinese buyers regarding their business relationships with US suppliers, the results reveal that the relations between trust and financial performance and between uncertainty and long-term orientation are contingent to the levels of guanxi. The study aids further light to localization literature with evidence highlighting the impact of guanxi in localizing b2b relationship activities in China.