Assessing the relationship between networking and the business performance of suppliers to the motorbike industry in the main zones of Chongqing with a special emphasis on Guanxi

Abstract

In the Chinese business environment, owner-managers of SMEs emphasize engaging in networking and are good at developing networks, especially personal networks (Guanxi). The primary purposes of the research were to ascertain whether there is a relationship between networking practice and business performance in the main city zones of SMEs making motorbike components in Chongqing; which types of networking are perceived to be more important and effective to improve business performance; and which types of networking are less likely to contribute to the business performance. The Chongqing motorbike industry is the predominant industry in Chongqing and is also the largest motorbike manufacturing cluster in China. The Chongqing motorbike components SMEs also produce the most motorbike components in China. Over 90 per cent of the required components can be locally supplied (Tzswj, 2004: Online). Therefore, the primary motivation for conducting this research comes from the recognition of the importance of networking practices (Guanxi) in the Chinese business environment and the realisation of the importance of the Chongqing motorbike components SMEs to the Chongqing motorbike industry. This research is to assist Chongqing motorbike components SMEs to improve business performance through appropriately engaging in networking practices. In turn, the Chongqing motorbike industry can be expected to consolidate and improve its market position in the long term. This research first discussed the related theories about networking and Guanxi. This is followed by the description of the Chongqing motorbike industry and its component industry, with specific description of the major problems associated with both industries as well as those associated with the external environment. Thereafter, the descriptive chapter is followed by the methodology used for the research and research findings and discussion. Finally, the recommendations and conclusions are followed. Findings from this research indicated that networking practices have a positive relationship with business performance of the motorbike component SMEs of the main city zones in Chongqing. In addition, each type of networking practice has a potential to facilitate business performance. In terms of the four types of formal networking: customer, supplier, competitor, and supporting networking, these were respectively realised as the first, second, third, fourth most contributive and effective type of networking. However, the respondents also considered that personal networking (Guanxi) was one of the most significant and essential networking activities that can facilitate the process of business performance. Based on the findings and the key problems of the Chongqing motorbike component industry, recommendations can be made to the SMEs on how to effectively engage in networking practices with all possible networking participants in order to obtain required resources that are essential to sustain and improve business performance of the motorbike industry of the main city zones in Chongqing.