Wednesday, February 20, 2008

Guanxi on the Net

From China to Spain is a team buying website in Spain. Consumers who want to buy a particular product, register on the website, the group of consumer interested in the same product then flexes its muscle and wrings the retailer’s arm to secure unimaginable bargains. is managed by Sonia who lives in Alicante in Southern Spain. However you will not find the word “tuangou” in the Spanish dictionary – nor in fact in the Catalan or any of its variations heard in Spain. You will, however, be able to locate “tuan” and “gou” separately in a Chinese dictionary, meaning “group” and “buy” respectively, which have come together to mean group buying, which combines the power and reach of internet with the bargaining power of a group.
Tuan gou (team buying in Chinese), emerged from China in online chat-rooms, and graduated to more organized websites, such as and Tuangou marries innate Chinese propensities for social-networking and haggling in a contemporary bundle to the advantage of the consumer. This has now spread to Spain, indicative of the fact that not only are the Chinese consumers exploiting the power of the Internet to the hilt, they are also setting trends and examples for the rest of the world to follow.
The power of Internet in China

Xu Jinglei, a popular Chinese actress and film director, has the world’s most visited blog ( with 86.97 million clicks in 18 months. Blogging is popular in China as it allows an easy avenue for expression, which has traditionally been hard to find in China. Blogging has caught the imagination of the Chinese who use it to express their views, share their feelings and express their personality. Not surprisingly, the Chinese government felt compelled to make some efforts to contain this phenomenon. In an attempt to tighten its grip on bloggers, it demanded that they register in their own names – a move that the authorities quickly reversed on facing the crying protestations from the blogging sites and the bloggers.

Currently a little over 10% of the Chinese population has access to the internet. However this translates into over 130 million internet users, making China the home to the second largest group of internet users in the world. The penetration in the big cities, rivals that of the Western world and internet has gradually become an integral and all-pervasive part of the lives of the urban Chinese. Today the Chinese buy on the net, sell on the net, watch movies and television on the net, seek employment on the net and look for romance and marriage on the net. The recent stock market boom is greatly fuelled by millions of Chinese betting their savings through their accounts on the net.

Need for information

The explosion of the net and the overwhelming acceptance from the Chinese populace needs to be seen in the context of the enormous amount and the incredible pace of change which has taken place in the Chinese society. Change implies an increase of opportunities, a multiplication of choices and the concomitant need for information and advice to exercise these choices. Unlike the countries which developed gradually over a longer period of time, the traditional Chinese information systems could not keep pace with the change. The traditional information network and media was anyway designed to pass the party doctrines to the citizens, and inculcate values of moderation and conformity, not to inform them about how they can improve their consumption of product and services. In other societies, consumption and choice is guided by experience of others, word of mouth, and experience passed down in families and friends. Today multitudes of Chinese are going abroad on holidays, buying automobiles, buying apartments, and have no one to turn to for information and advice in their immediate family of close circle of friends who have done these before. It is not surprising then that the internet fills this vacuum and takes the role of the source of information and the guide.


To the marketers, the phenomenon of internet offers both an opportunity and a challenge. Clearly no manufacturer can afford to be missing from the net – and that holds true whether the company is a manufacturer of a consumer electronics, household cleaners or a provider of financial services. The presence on the net is required to inform about the products, to advertise their advantages and to encourage user feedback. With the advent of Web 2.0, the flow of information between the manufacturer and the consumer has truly become a two-way phenomenon, and manufacturers need to tap into the enormous bag of consumer creativity and power for innovation. Companies are already using the net to encourage user contribution to the development of the brand, its communication and the product portfolio. The net offers the opportunity to use the consumers, not merely to test products and brands, but to participate in their creation.

Guanxi for sale

It is amazing how China adopts the new while retaining old habits and practices. Guanxi is a much touted concept, and refers to the Chinese predilection for depending upon relationships and connections to move files and get things done. Gaunxi is now for sale on the internet through websites that puts you in touch with the person who could get your child into the best kindergarten in the locality, help in getting an approval secured or a payment expedited or any other similar tasks, both dubious and legitimate, where your normal, unaided efforts may be expected to face difficulties. The opportunities offered by the net are only limited by your imagination – and possibly, your scruples.

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