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Comment by newy | Hacker News Reader

"Guanxi" is a huge factor in dealings involving the Chinese government, and even in day to day Chinese business. One difference between the Chinese and American system of connections and favors may be that Chinese put a heavy emphasis on family relations, which doesn't seem overly prevalent here. Well, save for certain notable exceptions.

On another note, the problem of "guanxi" extends to the microlending arena. China's lending capital for microloans is small, and even then, the funds are generally directed to those with connections to the government. I'm working with a nonprofit called Wokai (http://www.wokai.org), and we're working to raise loan capital from people around the world for microloans to Chinese farmers. We operate pretty similarly to Kiva, except that due to Chinese regulations we can't return money to lenders - therefore, we solicit contributions that turn into perpetual loan capital.

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I don't think outsiders grasp how much of an impact the emphasis on "guanxi" and family relations has on everyday life in China. On one hand, you can see this as 90% of Chinese billionaires are the kids of high ranking officials.

Bot on the other hand, you can see this as 90% of Chinese kids of high ranking officials are expected to marry someone who is successful/will make them look good. Anyone who's dated an Chinese girl whose parents are relatively successful (especially if they are East Asian themselves) will probably tell you a thing or two about having to measure up to standards.

In Chinese society, people use their relationships to leverage life (and by extension, business and politics) to the full. Thus, it's not acceptable to marry below you because if you do, you may be forced to hire the relatives of your lowly mate. It is shameful if your family is not doing well, and it is shameful if your close relatives don't have a job. This is the cost of sticking together, having strong friendship and family bonds-- you do not want any relationships that are too one-sided or unsustainable.

While modernization has weakened this system nontrivially, it does feel that it is still the norm, and we have reason to believe it will continue (at least to a greater extent than here in the West). The reason is that China has too many people, too many mouths to feed. China produces many more engineering students than does the US. But most of them aren't hireable. There's a reason why we're still "better".

Finding the right talent in China is even more formidable than it is here, and it always has been, thanks to the fact that China has 3x more people per acre of arable land than the average country (cited from Stratfor but I can't find the link).

Now I'm not saying that the system is fair or even efficient compared to the Western system, but using the family to extend one's goals is a byproduct of Chinese society.

I would argue there is some wisdom in what they do. Here in the West, our HR departments often prefer to hire people who are referrals. There's an implicit understanding that good workers like to hang out with other people who are good workers. In this light, the Chinese are merely extending that wisdom beyond the workplace.

There may be some wisdom, but not a whole lot. Hiring on referrals is based on the idea that people will not refer idiots to you for fear of depleting their social capital, providing you with a fairly strong selection mechanism for talented candidates. Being forced to hire the relatives of your mate regardless of their skills does not strike me as very beneficial.

Hiring on referrals is tricky. It's like what Steve Jobs and Joel Spolsky have said. The A ppl hire the A ppl but the B ppl hire the C ppl. So yes, it's less than ideal when you can be already be reasonably certain that credentials mean something (i.e. someone with a degree in chemical engineering is at least halfway capable of maintaining a part of a chemical plant), or you can look at things like what sort of papers they've published, what OSS projects they've contributed to, etc.

As for the hiring relatives regardless of their skill... this matters when skill really matters. When you're in a winner-takes-all field like finance or tech, it can be very much less than ideal and we myopically don't recognize that the rest of the world gets on without being exceptional at problem solving.

The flip side to the hiring relatives bit is that native-born Chinese are generally able to extract higher loyalty and work ethic from their relatives because of these same bonds. There is the feeling that you are all together.

So for all the talk of China steamrolling the world, I just don't believe it. You have to look at what benefits and costs this sort of culture provides. You get high societal stability, and a caring family that will support you, but one that can in some ways hold you back as well. Their societal structure may have worked extraordinarily well with manufacturing, but tech? I refuse to ever say that someone, or some group can't do X, however I will say the jury is still out on this one.

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