Legally demystifying an oriental cultural myth: reinterpreting Guanxi in reference to contract law

ABSTRACT Guanxi is often seen as an oriental cultural myth, because it often led people who are not experienced with the Chinese into confusion while interacting with Chinese people in various social settings. It is because the confusing characteristics of Guanxi, many scholars have dedicated their time to investigate its original and its evolution. However, a mere exploration into Guanxi's cultural and historical origin does not suffice the need for its increasingly diversified audience, especially in times where cross-border interactions are gradually intensified. It is during such a times, the expedition for an interpretation that is more relatable to the diverse audience is necessary. This paper is aiming to draw a novel interpretation of Guanxi by referring to contract and contract law – a universal concept. Meanwhile, this paper would also employ transaction cost analysis as the theoretical link between Guanxi and contract, which would serve as the philosophical foundation for the new interpretation of Guanxi.