The Competitive Advantage with Chinese Characteristics — The Sophisticated Choreography of Gift-Giving

Every firm has a competitive strategy, whether explicit or implicit, that is employed to gain a competitive advantage over competitors. In the malfunctioning market and institutional environment of China, more often than not, the competitive edge is gained through extensive personal connections (guanxi). Gift-giving is perhaps the most consequential method in creating and employing guanxi. On many occasions gift-giving is simply associated with bribing and corruption. However, this chapter illustrates that by approaching the ethically loaded and yet theoretically and, by definition, controversial issue of corruption from a gift-giving approach one is able to unearth the complicated logic, risks and advantages involved in Chinese business networks. Based on ethnographic data, this chapter attempts to provide an insider point of view on the complex mechanisms of gift-giving in Chinese businesses. It shows that, in expanding and utilizing guanxi networks in the increasingly competitive environment, Chinese businessmen are actively competing with each other by differentiating their gifts in the most imaginative ways, thus forming a hidden marketplace of gifts.