In China, the Practice of Using Guanxi Is an Integral

question 64

Multiple Choice

In China, the practice of using guanxi is an integral part of doing business both to those firms already in the country and those working to get their firms into the country. Guanxi is built on reciprocity meaning:

• A) You pay for another person's business debts to help them get back on their feet.
• B) That certain parts of businesses must be registered first with the government.
• C) Paying a bribe to an official is acceptable as part of the company's first obligation to enter the country.
• D) If someone does a favor for you, you will be expected to return that favor in the future including access to partnerships, contracts and government officials.
• E) Not paying a bribe and convincing a local company to illegally sell materials to them, since demanding bribes is unethical behavior.

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Definitions:

Periodic Interest Payments

Regular payments made to a lender by a borrower, covering the interest incurred on the borrowed funds.

Installment Note

A debt that requires regular payments, or installments, of principal and interest until it is paid off.

Present Value

The present value of a future amount of money or series of cash flows, discounted at a certain rate of return.

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of retirement strategy.