UNIVERSITAS INDONESIA

CASE STUDY 1: DMG-SHANGHAI

Group 5 - International Business (A)

ANANGGADIPA G. 1606895644
CATTLEYA PAMELA 1706019532
RYAN RAKA SURYA 1606910506
SASI WALIYUL AHAD 1706982084
SHANATA SARASWATI 1706982102
VADYA AMALIA S. 1706057846
WIBISONO HARDAWIBAWA 1706056635

FACULTY OF ECONOMICS AND BUSINESS

DEPOK
SEPTEMBER 2019
 DMG-Shanghai
Case Discussion Question :
1. Why do you think that it is important to cultivate guanxi and guanxiwang
in China?
It is important to cultivate guanxi (relationship) and guanxiwang (relationships network)
because China as a country, is a country which strongly emphasizes reciprocal relationships.
Based on the case, we understand that guanxi and guanxiwang follows the teaching of
Confucian ideology that has been around for more than 2000 years. Confucian ideology teaches
that people aren’t created equal. Therefore, it is important for people as a social being to
cultivate good relationships between each other. As for this case, in business, especially in
China, its is clear, to be able to success, it is important to establish connections in relationships.
Because by doing so, it would help the business to do a better job, to find a better opportunity
and also overcoming some thread and obstacle along the way. Confucian guanxi and
guanxiwang becomes necessary because in this kind of relationship, it forms a development
from two partners to respect each other and help each other out in an unspecified time in the
future. It creates some kind of social investment in which people can cultivate its benefit by
knowing the right people to contact for the right cause. Moreover, China also has a weak rule
of law and legals. Things especially in business get done based on partnerships/friendships and
mutual interest, not by law or legal regulations. Chinese people had been practicing this kind
of business partnership, and always live up to their obligations between their partners, because
they fear that nobody will go into business with them if they didn’t do so. In conclusion, having
a good guanxi and guanxiwang is necessary if we want to be able to maintain our business in
Chinese business world, because knowing the right people and making the right people know
you in business, opens up a lot of opportunities and will help you maintain your business.

2. What does the experience of DMG tell us about the way things work in
China? What would likely happen to business that obeyed all the rules and
regulations, rather than trying to find a way around them as Dan Mintz
apparently does?
Dan Mintz as the founder of DMG had no experience in the advertisement sector nor contact
in China, even the language itself. However, he had guanxi with two young Chinese who have
connections with diverse levels of people so they were able to be one of China's fastest growing
advertising agencies. The DMG experience in China shows that culture matters as an important
thing in China.
Guanxiwang refers to the relationship network that companies cultivate. Both of these are
important in dealing with others that drives business in China. Dan Mintz has a believe that
guanxi and guanxiwang can help companies get around restrictions that limit the ability of
companies to function so it is very useful in delivering a good job.
Business in China without the relationships network threatened to fail because it is almost
impossible for us to get a triumph if we can't work around the law and have doors opened.
Culture in China has a role as an imperative factor when conducting business (Foreign or
domestic). The guanxi and guanxiwang factors are very important pieces of China's culture.
Both are essential to someone who is trying to start a successful business in China. Overall this
is an advantage that DMG was able to acquire due to the fact that Wu was a recognized national
champion and Xiao has political connections.

3. What are the ethical issues that might arise when drawing upon guanxiwang
to get things done in China? What does this suggest about the limits of using
guanxiwang for a Western business committed to high ethical standards?
When talking about ethical issues, the practice of guanxiwang (network/networking) practiced
by DMG might be classified as unethical or even borderline corrupt seen from the Western
perspective. The Western culture and perspective in general (not only in the business world)
highly values equal chances. Had this case happened in the Western business world, it wouldn't
only concern ethical values but also a number of laws. Due to this reason Western businesses
committed to a high ethical standard and high compliance to law would refuse the practice of
guanxi. However, this might become a barrier for them when trying to expand to China, as they
might come across regulations that limit them from doing certain business practices.