The Chinese paradigm of global supplier relationships: Social control, formal interactions and the mediating role of culture

This paper reports the results of a study that examined how firms can establish successful business relationships with Chinese suppliers. Its aim is to explore salient characteristics of the nature of buyer supplier relationships with the emergence of China as a dominant economic power. Two surveys have been conducted that investigated several factors that inhibit and enable effective supplier relationship management (SRM) between organisations sourcing from China and Chinese suppliers, and explored the impact of cultural characteristics of Chinese management on the nature and performance of supplier relationships. The research highlights the importance of the social control aspect of governance structure of supplier relationships and stresses that both social and formal control mechanisms should be implemented for more effective relationships with Chinese suppliers. It also demonstrates the need for companies to recognise the importance of guanxi and several cultural characteristics of the Chinese style of management in SRM and advocates the need for the development of a hybrid Sino-Japanese and global supplier relationship management paradigm that incorporates elements from the existing SRM models. It generates insights into how the cultural context of emerging markets affects the nature of business relationships and generates a research agenda in the field of supply chain management that can explore the development of new paradigms in supplier relationships management. The main theoretical argument put forward centres on the need for the development of a new global supplier relationship management paradigm that will take into account the cultural elements of the Chinese society.