This study provides empirical evidence for Cheng’s employee categorization model and improves the understanding of the dynamics of managerial behaviors in the Chinese context. Using a simulation approach and a 2x2x2 within-subject design, the extent to which the three variables (guanxi, zhongcheng, and competence) affect Chinese leaders’ managerial behaviors was examined. Results revealed significant relationships between guanxi, zhongcheng, and competence and several managerial behaviors. In particular, a leader will share more information, provide more opportunities for participation in decision-making, and trust and care more about an employee who is a relative than one who is not related. Similar effects also appear when an employee is highly loyal to the leader or has high competence. Significant two-way interaction effects indicate that guanxi, zhongcheng, and competence interactively affect managerial behavior, and a significant three-way interaction implies that it is possible for leaders to take all these three variables into account simultaneously when categorizing employees. Implications for future research and practice in the Chinese context are discussed.