Q. When McDonald's initially entered china, it was confident that their successes in or parts of world facilitate its success in china, but y quickly found out that relationships implied by gaunxi are an essential to business success in china. McDonald's lost an attractive store location near Tiananmen Square to a Hong Kong developer who, thanks to relationships also connections developed over years, was able to persuade city officials to overlook lease McDonald's help for property.

Explain concept of gaunxi. Why is it so important to businesses operating in china? How did McDonald's lack of gaunxi raise its cost of doing business in china?