Renzo Riccardo Cavalieri

Fa Versus Guanxi : Legality with Chinese Characteristics and Implications for Italian Business in China

The distinctive features of the Chinese concept of legality, as established and developed through the years in the People’s Republic of China and further defined by constitutional amendments in 1999, give the cue for some reflections with regard to the existing dialectic between legal norms and ‘alternative’ systems of rules and norms, in particular between what is referred to as fa (law) and guanxi (personal relations, personal connections). This relationship has implications also for Western operators conducting business in China: differences between knowing and applying law as formulated in text books together with the difficulty on moving on unknown ground in business operations in China, where history, politics and culture are intertwined, leading to a notion of a ‘fluid’ and pragmatic concept of business ties in general and a contract in particular. This chapter concludes with the analysis of some of the reasons why Western business operators have difficulties negotiating contractual relationships with Chinese counterparts.