As the Chinese market economy continues to gather momentum, how are the methods of producing guanxi in State Owned Enterprises (SOE) evolving in response to privatisation? Qualitative research conducted between 1999 and 2007 at an SOE in south-west China found methods of producing guanxi are changing due to the modernisation of management methods, increasing market forces and family based work cliques being replaced by professional work based relationships founded on employees providing quality services. The findings suggest that stakeholders involved in takeovers or joint ventures concerning SOE need to be aware of the new management methods and ways of harnessing guanxi if they are to fully realise the profitability of their newly privatised firm.

Keywords: Guanxi, State Owned Enterprises, Reform, Management, China.

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