China experienced a growing economy with a huge market and business
potential and became the second biggest country in terms of GDP. However, because
of the limitation of coherent business laws and government supervision, entering the
Chinese market became a severe and complicated problem for different kinds of firms.
Empirical papers show that networks, called guanxi in China make a primary
contribution to the success of the business. This paper contributes to the guanxi in China
and discusses what kind of firms are more likely to develop guanxi. Using enterpriselevel
data on business-government relationships among 2700 firms in China, I reached
the conclusion that capital city located firms, foreign-owned firms, national-markettargeted
firms and large size firms have demands to build "guanxi" and also have the
potential possibility to do the corruption.