negotiating with chinese: a cultural perspective

Negotiating With Chinese: A CulturalPerspectivePaul Her big and Drew Mar tin

The authors

Paul Her big is Man ag ing Di rec tor of Her big and Sons, Mar ket ing Con sult -ants, 13818 Sha vano Ridge, San An to nio, Texas 78230.

Drew Mar tin is Pro fes sor of Mar ket ing and In ter na tional Busi ness, and canbe con tacted at the Uni ver sity of Ore gon.

Abstract

This ar ti cle is about the cul tural as pects of ne go ti at ing in China. Chi neseand West ern ap proaches in ne go tia tions are dif fer ent. There fore, un der -stand ing Chi nese ne go ti at ing tech niques and mo ti va tions may save muchfrus tra tion and money. Moreo ver, a solid ap pre cia tion for Chi nese be hav -iour and cul ture can help a for eign com pany use the Chi nese ap proach tone go ti ate to its own ad van tage.

The first sec tion is about the cul tural fac tors which in flu ences Chi nesebe hav iour. This ba sis is mainly grounded on Con fu cian ism. This in flu ence is shown in sev eral as pects of Chi nese life, such as in the per son to per son re -la tion ships, the form of ad dress ing one an other, and the ex tended fam ily.The fam ily has al ways been a cele brated in sti tu tion in China, and its hi er ar -chy is care fully pre served. Also, peo ple are taught to be hum ble and un de -mand ing since mod esty is a vir tue in China. The loss of face is a ter ri bleem bar rass ment for any Chi nese, so they will never in sult or openly criti ciseany body. Fi nally, per sonal re la tion ships are very im por tant, pow er ful, andlong last ing in China.

The sec ond sec tion is about the Chi nese ne go ti at ing pro cess. Chi nesedo not do busi ness with peo ple they do not know or trust. So, it is very im -por tant to de velop a sta ble and friendly re la tion ship based on mu tual trustand ad mi ra tion be fore reach ing an agree ment. Sev eral top ics that help tobuild this re la tion ship are the ef fects of a po lite con ver sa tion, credi bil ity and re li abil ity, the ef fect of hint ing, mod esty, and the role of ban quets. The Chi -nese ap proach to ne go tia tions fo cuses on per sonal re la tion ships in stead ofthe West ern ap proach of re ly ing on con trac tual re la tion ships. West ern ex -ecu tives gen er ally try to re solve all is sues through le gal stipu la tions in thecon tract, while the Chi nese will try to rely on friendly ne go tia tions. China isa col lec tive so ci ety; there fore, con sen sus build ing is a ne ces sity for Chi nesene go tia tors, and this con sen sus takes time, so West ern ne go tia tors must bepa tient and un der stand that there is no in cen tive for in di vid ual de ci sions on the Chi nese side. Moreo ver, other as pects such as fair ness, ini tial meet ing,in ter pret ers and spe cific is sues are stud ied in this sec tion. Fi nally, the Chi -nese are the mas ters of ne go tia tions for two rea sons. First, they un der standthe im por tance - and pres sures - of time, and they ex ploit them. Sec ondly,they hold tightly to their ne go ti at ing stance to the point of in tran si gence.There fore, be ing aware of these tac tics and know ing the Chi nese ap proach

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Cross Cultural Management

to ne go tia tions will help in reach ing an agree ment and con duct ing busi nessin China, an in ter est ing cul ture.

In tro duc tion

China is a group- oriented so ci ety and any ne go tia tion must cover the in ter -ests of many dif fer ent par ties. The Chi nese rank among the tough est ne go -tia tors in the world, but they are repu ta ble and hon our able.1 In ad di tion,China is proba bly one of the most dif fi cult coun tries to un der stand andadapt to. An un der stand ing of the Chi nese style of do ing busi ness is es sen -tial be fore be gin ning one’s pur suit of busi ness in China.

The Con fu cian Leg acy

The Chi nese at ti tude to ward life is in flu enced by Con fu cian eth ics, whichteach Chi nese to re spect and love their fel low Chi nese.2 Chi na’s tra di tionalval ues were con tained in the or tho dox ver sion of Con fu cian ism, which wastaught in the acade mies and tested in the im pe rial civil serv ices ex ami na -tions. These val ues are dis tinc tive for their this- worldly em pha sis on so ci etyand pub lic ad mini stra tion and for their wide dif fu sion through out Chi neseso ci ety. Con fu cian ism, never a re lig ion in any ac cepted sense, is pri mar ilycon cerned with so cial or der.

The Con fu cian ists claimed author ity based on their knowl edge, whichcame from di rect mas tery of a set of books, the Con fu cian Clas sics. The mas -tery of the clas sics was the high est form of edu ca tion and the best pos si blequali fi ca tion for hold ing pub lic of fice. Con fu cian ism put great stress onlearn ing, study, and all as pects of so ciali sa tion. Con fu cian ists pre ferred in -ter nal ised moral guid ance to the ex ter nal force of law, which they re gardedas a pu ni tive force ap plied to those un able to learn mo ral ity. Con fu cian istssaw the ideal so ci ety as a hi er ar chy, in which eve ry one knew his or herproper place and du ties. The ex is tence of a ruler and of a state were takenfor granted, but Con fu cian ists held that rul ers had to dem on strate their fit -ness to rule by their “merit.” The es sen tial point was that he red ity was anin suf fi cient quali fi ca tion for le giti mate author ity. As prac ti cal ad min is tra -tors, Con fu cian ists came to terms with he redi tary kings and em per ors butin sisted on their right to edu cate rul ers in the prin ci ples of Con fu cianthought. Tra di tional Chi nese thought thus com bined an ide ally rigid and hi -er ar chi cal so cial or der with an ap pre cia tion for edu ca tion, in di vid ualachieve ment, and mo bil ity within the rigid struc ture.

Tra di tion val ues have clearly shaped much of con tem po rary Chi neselife. The be lief in rule an edu cated and func tion ally un spe cial ised elite, thevalue placed on learn ing and pro pat ing an or tho dox ide ol ogy that fo cuseson so ci ety and gov ern ment, and stress on hi er ar chy and pre emi nent role ofthe state were all car ried over from tra di tional so ci ety. Some of the moreradi cal and ex treme poli cies of the Mao ist 1950s and 1960s, such as at tackson in tel lec tu als and com pul sory man ual la bour for bu reau crats, can only beun der stood as re sponses to deep- rooted tra di tional at ti tudes. The role ofmodel work ers and sol diers, as well as of fi cial con cern for the con tent andform of popu lar lit era ture and the arts, also re flects char ac ter is ti cally Chi -nese themes. In the mid- 1980s a number of Chi nese writ ers and po liti callead ers iden ti fied the lin ger ing hold of “feu dal” at ti tudes, even within theChi nese Com mu nist Party (CCP), as ma jor ob sta cle to mod erni sa tion. Theyiden ti fied such phe nom ena as authori tari an ism, un think ing obe di ence tolead ers, de pra ca tion of ex pert knowl edge, lack of ap pre cia tion for law, and

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Volume 5 Number 3 1998

the fail ure to ap ply laws to lead ers as “feu dal” lega cies that were not ad -dressed in the early years of Chi na’s revo lu tion.3

Per son to Per son Re la tion ship

Chi nese will go to ex treme means not to em bar rass an other per son, whether friend or foe.4 The con cept of face is very im por tant in deal ing with oth ersin or der to avoid loss of self- re spect or pres tige by ei ther party. It also re -fers to one’s abil ity to deal smoothly with peo ple face to face.5 Chi nesenever say “no” to any re quest or out wardly dis agree with any thing. If some -one re sponds to a re quest with “later” and later for gets, it proba bly meansthat he or she can not do the fa vour. The Chi nese have been brought up tomask their feel ings, of ten by smil ing or laugh ing. Chi nese fre quently re -spond with laugh ter or smil ing when a per son speaks of an em bar rass ingtopic or in the wrong, which will per sist if the talk does not shift top ics.

When two Chi nese get to know each other, they have es tab lishedguanxi, or re la tions. Guanxi con tains im plicit mu tual ob li ga tion, as sur ancesand in ti macy, and is the per ceived value of an on go ing re la tion ship and itsfu ture pos si bili ties that typi cally gov ern Chi nese at ti tude to ward long- termbusi ness; there fore, Guanxi is much more im por tant than only “hav ing con -tacts” as Ameri cans be lieve.6

Chi nese are also su per hosts. Ta bles are of ten filled with food even af -ter din ner is through. This seems like an in credi ble waste, but to the Chi -nese, empty plates mean their guests are still hun gry and they have failed as hosts. Chi nese mod esty does not al low them to re ceive flat tery, but to giveit. Com pli ments are of ten brushed aside with an em bar rassed laugh and are turned com pli ment.

Forms of Ad dress ing One An other

The Chi nese have a ti tle for every mem ber of the house hold. This cameabout be cause his tori cally the Chi nese fam ily was an ex tended one with sev -eral gen era tions liv ing un der one roof, and one had to be able to iden tifyeve ryo ne’s po si tion in the fam ily.7 Chi nese never ask how many broth ersand sis ters one has, but how many are older or younger than one. Elderbroth ers are called “gege” while younger ones are “didi”. “Jei jie” re fers toelder sis ters while younger ones are called “mee mei”. Dif fer ent sets of names are given to each ma ter nal and pa ter nal grand fa ther and each aunt and un -cle.

Out side the fam ily, Chi nese of all ages are known by their sur name.Most of the time, “xiao” mean ing “lit tle,” is used as a pre fix for younger peo -ple and “lao,” mean ing “old,” is put in front of the sur name of a middle- aged per son to show re spect for his or her age and ex pe ri ence. These pre -fixes are used only for per sons one is fa mil iar with. In for mal ad dress, thesur name is put be fore “xi ansheng” (mister). Women keep their maidennames af ter mar riage, re plac ing “miss ing” with “madam” be hind their sur -names.

Teach ers are well re spected and “laoshi,” mean ing “teacher,” is al waysadded be hind their sur names. Of ten, peo ple in the streets ad dress strang ersas “tong zhi,” or “com rade,” when ask ing for di rec tions or buy ing things.

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The Ex tended Fam ily

In China, life re volves around the fam ily. It is of ten com mon to find threegen era tions liv ing to gether un der one roof in the city, while in the coun try -side it can be ex tended to in clude un cles, aunts, nu mer ous cous ins and in- laws.8 The old est rela tive in the fam ily is al ways looked upon as a per son ofwis dom whose word is usu ally law. Eld ers are re spected even if they are illor bed rid den. They are only sent to hos pi tals or in sti tu tions if the fam ilycan not pro vide them with the proper care.

The great est joy for the older gen era tion is to see the whole fam ilyaround them, the more males the bet ter, as they are se cure that the fam ilyname will be car ried on. The fam ily hi er ar chy is care fully pre served andeach mem ber of the fam ily knows where he or she stands even if the dif fer -ence in age is only a few days. The younger gen era tion is not ex pected totalk back or dis obey or ders. Ba bies are well- loved in any Chi nese fam ily.With the one- child pol icy im ple mented across China, the pre cious child isdoted on and given al most eve ry thing it asks for. In the ex tended fam ily, ba -bies are cer tainly king.

Adult Chi nese live with their fam ily un til the time they get mar ried.Upon mar riage, the woman moves into hus band’s par ents’ home. The mainrea son why a Chi nese man lives at his par ents’ home is that it is a child’sduty to look af ter his par ents un til their death.

Ne go ti at ing with Chi nese

A good ne go tia tor in China must un der stand not only the Chi nese ne go ti at -ing tac tics but also the im pact of the hu man be hav iour over the ne go tia -tion’s evo lu tion in or der to con clude in a good deal. There fore, due to theChi ne se’s em pha sis upon per sonal re la tion ships this sec tion has been di -vided mainly in two parts. The first part stud ies how to build a good re la -tion ship with the Chi nese and the sec ond dis cusses the pro cess ofne go ti at ing.

Build ing an Inter- Cultural Re la tion ship

The Chi nese peo ple are very sen si tive to lin guis tic ex pres sion and cour te -sies. Dur ing your as so cia tions with Chi nese peo ple, you will quickly learnthat what they say, and how they say it could im ply many sub tle mean ingswhich dif fer from yours. In ap pro pri ate lan guage, ex pres sions, or man nersmight bring fail ure to your busi ness; on the con trary, a proper word or man -ner is likely to make a “cloudy day” be come “like the sun.”9

The Ef fects of Po lite Con ver sa tion

“Hi!” is usu ally the way Ameri cans greet each other. If you greet a strangerin China this way, it would re sult in one of two pos si ble out comes. First, the per son may be shocked. Sec ond, the per son might con sider you to be warmand po lite and that you will talk with eve ry body. There fore, a way to solvethis situa tion is just mod estly smil ing a lit tle or nod ding slightly to the other per son.

Of course, if you are in tro duced, the re sult is com pletely dif fer ent. Even in this situa tion, you still need to be aware of your ac tions. If a friend in tro -duced you first, you would be the first to greet and stretch out your hand; if you were in tro duced later, you should fol low the other’s be hav iour. Af ter

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be ing in tro duced, if you meet this per son again, greet him or her on yourown ini tia tive, then speak some po lite words. [Po lite Chi nese greet ings areusu ally, “Where are you go ing?”, “What are you do ing?”, “Are you busy?”,“Have you eaten?”. Those com mon and nor mal phrases are not an in va sionof pri vacy, they just em pha sise the Chi nese con cern for oth ers. Thus, you do not need to an swer them in a se ri ous man ner]. Of ten, when you are ex -tended an in vi ta tion it is dif fi cult to iden tify whether it is a real one or just a cour tesy. The best way to know this is to tact fully say, “Thank you, I do notwant to bother you.” If your friend in sists, you could re spond by de clin ingagain. But if your host in sists again that means that he or she really want toin vite you. There fore, if you de cline one or two times, and are not in vitedagain, you know the in vi ta tion was just a cour tesy.

When you help some body in China, and he or she says “thanks” to youyou should re ply, “Not at all. I am sorry I did not do a bet ter job.” If you re -spond with the clas si cal Ameri can phrase “Sure!” peo ple will think that youare im mod est, be cause your re sponse may mean, “Yes, since I did some -thing for you, you cer tainly should thank me.” There are some deli cate top -ics for Ameri can that are more openly dis cussed in China. For in stance,Chi nese peo ple like to talk openly about sala ries, age, prices, and other peo -ple. So, do not feel un com fort able when these top ics show up or when youare ask ing about your age.

Keep Your Credi bil ity, Do Not Speak Too Much

Credi bil ity and re li abil ity are the fun da men tal prin ci ples for con duct ingbusi ness with the Chi nese peo ple. In a sense, your credi bil ity and re li abil ityare judged by how you talk. For ex am ple, when a Chi nese com pany ex -pressed in ter est in buy ing ma chine tools from a Japa nese com pany, theJapa nese staff spoke too much, boast ing about their prod ucts. The Chi nesecom pany be gan to sus pect the qual ity of the ma chine tools and sus pendedcon tract ne go tia tions. On the other hand, a Ger man com pany un der stoodthis cul tural tra di tion when they ini ti ated their ne go tia tions. The staff of the Ger man com pany did not de scribe their ma chine tools as su pe rior andnumber one in the world as the Japa nese did, but rather ana lysed thestrengths and weak nesses of their prod ucts in com pari son with the Japa nese prod ucts. As a re sult, the Chi nese com pany viewed the Ger mans as credi bleand re li able and signed a con tract with them. The Chi nese peo ple dis likeboast ing and ex ces sive de scrip tions be cause it makes them be lieve you mayhave some thing to hide.

The Magi cal Ef fect of Hint ing

Very of ten, the Chi nese peo ple drop hints to oth ers about what they reallywant to say. One of the rea sons that the Chi nese hint arises from their self- control and the mode of think ing rooted in the doc trine of the golden meanin tra di tional Chi nese Cul ture. In fact, one con se quence of this doc trine isthat peo ple dis like ex press ing them selves too ob vi ously. Ad di tion ally, self- control tends to make peo ple shy in openly re veal ing their needs andthoughts. For these rea sons, hint ing be came a char ac ter is tic of the Chi nesepeo ple.

Un doubt edly, Chi nese peo ple use hint ing when con duct ing busi ness.For ex am ple, two com pa nies that had es tab lished a good re la tion ship werene go ti at ing the price of ma chine tools. The Chi nese com pany thought theprice was a lit tle bit higher than they were will ing to ac cept. They hoped the

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other side could re duce the price, but they did not wish to ex press this di -rectly. Dur ing their con ver sa tion, the Chi nese staff men tioned the pos si blede vel op ment of a big ma chine tool plant in China. This re mark was really ahint im ply ing that a busi ness deal may be pos si ble when the ma chine toolplant is built if the price of ma chine tools was low ered now. If the prices are too high for a Chi nese com pany to ac cept, they may openly dis cuss this factwith you; how ever, if there is a change of con duct ing busi ness, they will not risk hurt ing your feel ings by dis cuss ing price with you. In stead they willdrop hints.

Of course, in many cases, Chi nese are likely to speak openly, frankly,and di rectly. Gen er ally speak ing, Chi nese will not hint if an im por tant prin -ci ple or criti cal mat ter is at stake. The Chi nese will speak openly, frankly,and di rectly if it will not hurt oth ers and if they are deal ing with in ti matefriends.

Mod esty and Brag ging

In the lat ter part of the 1970s, when the Chi nese be gan to as so ci ate withAmeri can visi tors, both groups of ten had a di lemma in un der stand ing mod -esty and brag ging. For ex am ple, when a Chi nese praised an Ameri can bysay ing, “How beau ti ful your cloth ing is!” the Ameri can said, “Thank you.”How ever, when an Ameri can praised a Chi nese per son in the same way, theChi nese would say, “No, no, no, yours is more beau ti ful than mine.” TheChi nese re ply to an other’s praise by first stat ing “NO,” and then prais ingthat per son or ac knowl edg ing a weak ness in them selves. Typi cally, they will not ac cept an other’s praise di rectly.

On one hand, tra di tional Chi nese civi li sa tion ad vo cates mod esty, andon the other hand, the tra di tional dia lec ti cal mode of thought of Yin andYang in flu ences Chi nese be hav iour. For ex am ple, Con fu cius ad vised peo pleto pre vent four faults: “Do not fab ri cate with out foun da tion; do not makean ar bi trary de ci sion, do not stick stub bornly to one’s own opin ion; do notbe too self- important.” The fourth was to ad vise peo ple to be mod est. All inall, mod esty is a vir tue in China; there fore, when you hear some body praiseyou, you must re spond to him or her with a ne ga tion.

The Role of Ban quets

The Chi nese are look ing for a long re la tion ship in volv ing mu tual friend shipand mu tual trust. They need to de velop con fi dence in their pro spec tive part -ners be fore com mit ting them selves. For this one needs a strong head andstrong stom ach, be cause ban quets and other so cial oc ca sions are a vi tal part of do ing busi ness in China - bond ing through glasses of le thal Mao Tai liq -uor.10 Any for eign busi ness man who tries to cir cum vent this pro cess is un -likely to get very far. To the “time- is- money” West ern busi ness man, thispro cess may seem frus trat ing and old- fash ioned, but that is the way theChi nese do things. It is con ge nial, and to their way of think ing, likely to cre -ate a more- last ing re la tion ship.

In China, there are many com pli cated eat ing ritu als. For ex am ple, if the Chi nese have an im por tant guest vis it ing from far away, they hold a wel -com ing ban quet. The guest might then give a re cip ro cal ban quet. When theguest leaves, the Chi nese host pro vides a send- off ban quet, and he or shemay hold a ban quet for the suc cess of your visit. Dur ing the ban quet, eat ingis very com pli cated.11 As a guest, you should wait un til your Chi nese hosts

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in vite you to sit at a seat ac cord ing to their ar range ment. Af ter eve ry onetakes their seats, the cook starts to make the first course, and only when the first course is al most fin ished will the cook start the sec ond course, and soon, un til at least eight courses and two kinds of soup are con sumed. Peo pleuse chop sticks for their meal in China, but a for eigner does not have to feelguilty for not know ing how to use them. Be fore the ban quet you can tellyour host that you want to use a fork and spoon.

Al though many Chi nese peo ple do not drink al co hol as of ten as someEuro pe ans, wine is ab so lutely nec es sary at a ban quet. In terms of Chi nesetra di tion, a ban quet is not com plete with out wine. Peo ple usu ally evalu atethe qual ity (or level) of a ban quet by the kind of whisky served. When theban quet starts, each man is given a cup of whisky. Women may have whisky too, if they want, but gen er ally they drink wine. Eve ry one stands up andlifts his or her cup to drink. The host pro poses a toast, and the peo ple re -spond by say ing, “Gan bei!”. You should only take a sip of your whisky orwine, then sit down and slowly en joy your drink with your meal. You musten gage in lively con ver sa tion with your friends and click glasses with eachother. Hav ing a si lent drink, as some Ameri cans do, is im po lite. If peo plepro pose a toast to you, you must ac cept each other’s toasts, but you may not ap pear drunk, so just sip a lit tle bit. If you are able to hold a lot of whisky,peo ple will re spect you as a hero.

Cross- Cultural Dif fer ences in Ne go tia tions

In ne go tia tions, Chi nese and West ern ers of ten find the other’s ap proachmad den ing. West ern ers gen er ally want to charge into town, ham mer out aquick deal, sign the con tract, then head home to pro claim vic tory at head -quar ters. The Chi nese ap proach is to ar rive in town when con ven ient,slowly build con sen sus for a proj ect, get to know and trust the part ner fully, ac quire as much tech ni cal in for ma tion as pos si ble, hope fully get some bodyelse to sign the con tract, then head home to worry about what they mighthave lost.12

For the West ern firm, there fore, un der stand ing Chi nese ne go ti at ingtech niques and mo ti va tion may save a lot of frus tra tion and money. Moreo -ver, a solid ap pre cia tion for Chi nese be hav iour can help a for eign com panyuse the Chi nese ap proach to ne go ti ate to its own ad van tage.

Un til Death Do Us Part

A busi ness re la tion ship in China is of ten lik ened to a mar riage, and the Chi -nese part ner wants to know if the West ern part ner will make a good spouse. In the West, a busi ness re la tion ship is of ten re garded as lit tle more than amar riage of con ven ience, and the mar riage con tract is more im por tant thanthe per sonal feel ings of bride and groom. For the Chi nese, the per sonal re la -tion ship is of para mount im por tance and de fines the pa rame ters withinwhich busi ness can be con ducted. The role of ne go tia tions is not merely tocome to an agree ment on spe cific terms, but to learn more about the otherside and de cide if there is a ba sis for trust and true col labo ra tion. If a con -tract is sub se quently signed, it is largely con sid ered just one more event inthe course of build ing the re la tion ship.

West ern ex ecu tives, how ever, gen er ally con sider the con trac tual re la -tion ship to be the most im por tant ele ment in for mal busi ness deal ing. Thegoal of ne go tia tions is the signed con tract, and the con tract de fines the pa -

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rame ters of the busi ness re la tion ship. Since the con tract is con sid ered theprize, West ern busi ness ex ecu tives are natu rally im pa tient to reach the goal. But the Chi nese are ex tremely dis trust ful of for eign firms seek ing to make afast deal. This is slowly chang ing; the trend among younger Chi nese is tocon clude busi ness deals much more quickly than their elders. But trustbuild ing is still es sen tial.

This dif fer ence in ap proach also af fects how par ties at tempt to solveprob lems. West ern ex ecu tives gen er ally try to re solve all is sues through le -gal stipu la tions in the con tract, while the Chi nese will try to rely on“friendly ne go tia tions.” In fact, the Chi nese gen er ally in sist that a “friendlyne go tia tions clause” be put into the con tract, which ob li gates the par ties tomake a good faith ef fort to re solve any dif fer ences be fore they en ter for malar bi tra tion. Given the em bry onic state of busi ness law in China, for eign ersmay do well to rely as much as pos si ble on such “friendly ne go tia tions.”

Group vs In di vid ual

Chief ne go tia tors for most West ern com pa nies are of ten em pow ered tomake many criti cal de ci sions on the spot dur ing ne go tia tions. They have lit -tle need for ex ten sive con sul ta tions out side the ne go ti at ing room to con -clude a deal. Among Chi nese ne go tia tors, how ever, the situa tion could notbe more dif fer ent. In large part, this is be cause the struc ture of the Chi nesesys tem makes con sen sus build ing a ne ces sity. The ne go tia tions with the pro -spec tive West ern part ner is just one piece of all the ne go tia tions the Chi nese firm must con duct to get the whole deal ap proved and im ple mented. Typi -cally, the Chi nese firm must also ne go ti ate for po liti cal and fi nan cial sup -port among a wide group, which in cludes all pos si ble cus tom ers,pro spec tive ven dors, avail able sup pli ers and lo cal gov ern ment of fi cials, allof whom must be con vinced they will not lose out if they join the proj ect.

An other fac tor is that in di vid ual Chi nese ne go tia tors (typi cally be ingbu reau crats) gen er ally have lit tle in cen tive to put them selves on the line for a deal, they will cer tainly be pe nal ised for mak ing the wrong de ci sion, andnot nec es sar ily re warded for mak ing the right one. Also, Chi nese ne go tia -tors rarely re ceive any sort of bo nus or raise for con clud ing a deal quickly.

Such con sen sus build ing takes time, spe cially in the state- run sec tor,and can be a very con ten tious pro cess. Many West ern ers get ter ri bly frus -trated when they are sent off to see the sights yet again. But of ten, the Chi -nese side is us ing this time to hold very deli cate in ter nal ne go tia tions, and it may be best to re lax and don a good pair of walk ing shoes.

At tempts to dis cuss an item not listed on the agenda also can be frus -trated by the need for con sen sus. The re sponse to un ex pected sub jects willlikely be stony si lence, if it is not down right nega tive. Ob vi ously, one rea son is be cause a Chi nese ne go tia tor can not re ceive ap proval to dis cuss an is suenot in cluded on the planned agenda. But af ter the ini tially cold re cep tion,West ern ers of ten find that such is sues emerge as a popu lar topic of dis cus -sion a few days later.

An other frus tra tion for many West ern ers is that their Chi nese coun ter -parts of ten ask for a great deal of tech ni cal in for ma tion, and very of ten they ask for the in for ma tion re peat edly. In the West, as noted Ernest De Bel lis, aformer gen eral man ager of the Shang hai joint ven ture of Mas sa chu setts’Fox boro Com pany, “if you re peat your self, eve ry body falls asleep. In China

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repe ti tion means that you are really se ri ous, repe ti tion is im por tant in thatcul ture. It is in credi ble how much you re peat your self to be ef fec tive.”

In large part, the Chi nese ne go tia tor’s main task is ac tu ally to buildcon sen sus on the Chi nese side. This means they must fully un der stand thetech nol ogy or con tract in or der to con vince oth ers of its value. One way tokeep the pro cess mov ing is for West ern ne go tia tors to fully ex plain all therisks and bene fits of the deal for the Chi nese side. They also should ex plainex actly what the West ern com pany hopes to do, this gives the Chi nese ne go -tia tors the tools to edu cate and con vince su pe ri ors of the merit of the proj -ect.

Po ten tial in ves tors should be aware, how ever, that some West ern com -pa nies found their po ten tial “part ners” were ac tu ally us ing the ne go tia tionssim ply as a boom. Some Chi nese firms will have no in ten tion of buy ing your prod uct, but they wish to gather as much in for ma tion as pos si ble on the lat -est tech nol ogy. To pro tect any com pa ny’s pro prie tary know- how against this type of be hav iour, it is im por tant to be se lec tive in shar ing de tailed in for ma -tion or tech ni cal speci fi ca tions. Even in the world of com peti tive pres sures,for eign firms should have a signed con tract or li cens ing agree ment in handbe fore let ting out any truly pro prie tary in for ma tion.

Fair ness

The is sue of fair ness tends to come up of ten dur ing ne go tia tions with theChi nese. On one hand, the Chi nese want to know that you are treat ing them as fairly as you have treated other part ners else where. On the other hand,the Chi nese mis trust of West ern im pe ri al ism of ten leads them to de mand alevel play ing field, where they are treated as equal to their tech no logi callyso phis ti cated part ner. If the Chi nese be lieve that the for eign part ner is gain -ing a greater ad van tage than they are, it will be dif fi cult to close a deal.

This mis trust in West ern ers comes from both Marx ist- Len in ist andMao ist ide olo gies which have es pe cially af fected Chi na’s in ter pre ta tions ofworld events.

Ini tial Meet ing

Since the Chi nese like to view busi ness re la tion ship as a mar riage, the ini tial meet ing should be viewed as a first date. Like most first dates, it will be anex plo ra tion of mu tual in ter ests and goals, a time for friend ship and trustbuild ing.

If the sched ule and budget al low, it is a good idea to host a ban quet ordin ner the night be fore the first meet ing. This will give you an op por tu nityto be gin build ing trust and to learn more about your coun ter parts. If youcan not host a ban quet, you should start your ini tial meet ings by ask ingques tions about your coun ter parts, their fami lies and their back grounds.Un less your hosts ask you to do so, do not jump straight into busi ness spe -cif ics. You may want to dis cuss your gen eral im pres sions of the Chi neseecon omy and cul ture, and of course, your fam ily and back ground. Do not,how ever, criti cise the Chi nese gov ern ment or bring up sen si tive po liti cal is -sues such as prison la bour or in de pend ence for Ti bet. Also, Chi nese are of -ten un com fort able when for eign ers criti cise their own gov ern ments.

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Set ting the Agenda

When busi ness dis cus sions be gin in ear nest, the Chi nese typi cally like to be -gin with an agree ment on gen eral prin ci ples, to broadly de fine the na ture of the re la tion ship the par ties hope to build. The end re sult of this pro cess willbe a let ter of in tent, a le gally non- binding docu ment filed with the lo calgov ern ment. The let ter of in tent rep re sents a “right of pas sage” that al lowsthe Chi nese en tity to move ahead with se ri ous and de tailed dis cus sions. Atfirst glance, this pro cess may seem in nocu ous. But the Chi nese will usu allysoon there af ter pres ent the for eign party with a pro forma con tract that be -comes the ba sis of fur ther ne go tia tions. Dur ing these ne go tia tions, a stan -dard Chi nese tac tic to as sert the for eign side is not liv ing up to the spirit ofgen eral prin ci ples. It is there fore ex tremely im por tant to care fully con siderwhat prin ci ples you are will ing to ac cept.

A good idea is to draw up your own let ter of in tent or memo ran dum ofun der stand ing (MOU) and fax it to your po ten tial Chi nese part ner be forede tailed ne go tia tions be gin. While not le gally bind ing, the MOU should in -clude the same pro tec tive lan guage you should use any where else in theworld. If you do not then get a gen eral agree ment on the MOU you havedrafted, it may be best to put off your de par ture. Such steps will help putyou in the driv er’s seat dur ing ne go tia tions and may con sid era bly re duce ne -go tia tions time.

In ter pret ers

The PRC’s of fi cial lan guage is Man da rin Chi nese, but there are more than900 dia lects. One mis take for eign firms of ten make is to rely solely on thein ter preter hired by the Chi nese side. Re gard less of this per son’s ca pa bili -ties, it is vir tu ally im pos si ble for some one to trans late for sev eral hours aday, sev eral days in a row, and not make mis takes. For long dis cus sions, it is al ways best to have at least two fully bi lin gual peo ple in the ne go ti at ingroom at all times. In this way they can switch du ties when one is fa tigued,and they can help each other main tain a high stan dard of ac cu racy.

An im por tant dis tinc tion is made be tween trans la tors and in ter pret ersin the Chi nese con text. Se ri ous mis un der stand ing can erupt if you rely onsome one who is “in ter pret ing” rather than sim ply trans lat ing ver ba tim what is be ing said. Many lo cal Chi nese trans la tors, in their ef fort to add value and to cut across cul tural bar ri ers, fre quently shift roles (with out no ti fy ing thefor eign firm) from trans lat ing in for ma tion to put ting a cer tain spin on it -per haps in both di rec tions. At some point, this may lead to a great deal ofcon fu sion as the in ter preter seems to be come a ne go tia tor. Ac cord ingly, it is es sen tial to ex plic itly com mu ni cate your in struc tions and ex pec ta tions be -fore hand to the in ter preter.

Ex pe ri enced China hands of ten point out that a good in ter preter canpro vide the West erner with an ex cel lent op por tu nity to learn about theneeds of (and pres sures on) the Chi nese. Only a good in ter preter can makesure you really hear all that is be ing said and meant. A good in ter preter canalso serve as an in for mal means of com mu ni cat ing out side the ne go ti at ingroom. The use of se lected in ter me di ar ies is a time- hon oured way of re solv -ing dif fer ences and speed ing the pace of ne go tia tions in China. The Chi nesewill of ten seek out your in ter preter to clar ify is sues, raise new pos si bili ties

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for re solv ing prob lems, ex plain the prob lems they may be fac ing (whichthey could never dis cuss in a more for mal set ting), and to learn more aboutyou and your com pany. West ern firms should learn to make good use of this in for mal ne go ti at ing mecha nism as well.

Con trol the Proc ess

To avoid a bad deal, there are sev eral ba sic steps you can take:13

- Let the Chi nese know you con sider busi ness fail ure pref er able to a baddeal.

The Chi nese can typi cally walk away from any busi ness ne go tia tionwith out pen alty, and they will defi nitely take ad van tage if they thinkyou do not have such free dom.

- Keep your sched ule am bigu ous

It is a com mon ploy by the Chi nese to try to pres sure West ern ers intoan agree ment by de lay ing ne go tia tions on criti cal is sues un til a day ortwo be fore sched uled de par ture.

- If nec es sary let the Chi nese know you are hold ing dis cus sions with sev eralother Chi nese com pa nies.

They will cer tainly try to im press upon you that there are many otherfor eign firms in ter ested in their busi ness, and they may even in viteyour com peti tors to hold ne go tia tions while you are in town.

- Do not make con ces sions too read ily.

Chi nese ne go tia tors tend to adopt a rigid pos ture at the be gin ning ofne go tia tions and only grudg ingly make con ces sions. West ern ers tendto be gin with many al ter na tives in hand but to the Chi nese this ne go ti -at ing flexi bil ity can sig nal in sin cer ity.

- Be ex tremely care ful about what you say and to whom you say it.

The Chi nese take co pi ous notes dur ing ne go tia tions and of ten try tolev er age any per ceived in con sis ten cies by quot ing your words back toyou.

- Do not let the Chi nese be the only rec ord keeper.

You should make sure your side also takes de tailed notes and that youre view them regu larly.

- Re mem ber that from the mo ment you step off the plane in China, you are on stage.

Your be hav iour is be ing moni tored and evalu ated, as are your words.

Ex am ples of Chi nese Ne go ti at ing Prac tices

These three brief an ec dotes il lus trate Chi nese ne go ti at ing prac tices of timepres sures and in tran si gence:14

- Asked about Chi na’s stance on the con tested Sprat ley Is lands in theSouth China Sea, Bei jing re sponded: “China is pre pared to dis cuss is -

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lands which are un der dis pute. But for those is lands where own er shipis in dis put able, China will not ne go ti ate.” What is left un spo ken is thatChina, pre suma bly, de ter mines what is and what is not un der dis pute.

- Chi na’s 5,000- year his tory also pro duces a dif fer ent in ter pre ta tion ofhis tori cal events. Dur ing Nix on’s first trip to Bei jing in 1972, HenryKiss inger asked Zhou En lai, the highly re spected Chi nese for eign min is -ter, his views on the French revo lu tion and Eu ro pe’s age of en light en -ment. “We Chi nese feel it is too soon to tell,” was Zhou’s straight- facedre ply.

- Bei jing Jeep, the joint ven ture be tween Chrys ler and Bei jing Auto In -dus try Corp., took more than five years to ne go ti ate. But, af ter twomonths into op era tion, both sides agreed to throw out the clause which had been the main stick ing point for the fi nal 30 months of talks.

Con clu sion

Prior to busi ness ini tia tives, there must be an un der stand ing of the Chi nesestyle of ne go ti at ing. There are sig nifi cant dif fer ences in ap proaches. InChina, per sonal re la tion ships are a quin tes sen tial ba sis for all busi nesstrans ac tions. The Chi nese do not do busi ness with peo ple they do not knowor trust. Be ing im pa tient, de mean ing, or criti cal is coun ter pro duc tive. De vel -op ing an ef fec tive busi ness re la tion ship based on mu tual trust and ad mi ra -tion takes time. Yet, while slow to de velop, busi ness re la tion ships in Chinacan grow into friend ships that last a life time. In ad di tion, West ern ex ecu -tives gen er ally try to re solve all is sues through le gal stipu la tions in the con -tract, while the Chi nese will try to rely on friendly ne go tia tions. China is acol lec tive so ci ety; there fore, con sen sus build ing is a ne ces sity for Chi nesene go tia tors, and this con sen sus takes time, so West ern ne go tia tors must bepa tient and un der stand that there is no in cen tive for in di vid ual de ci sions inthe Chi nese side.

When in tro duc tions take place, po lite ness and for mal ity are criti cal.Never in sult or criti cise a po ten tial busi ness part ner. Los ing face is a ter ri bleem bar rass ment for a Chi nese per son. The Chi nese take their re spon si bili tiesvery se ri ously and con sider meet ing your ex pec ta tions very im por tant.

Busi ness per sons must be aware of and re spect the vast dif fer ences thatex ist be tween the Ameri can and Chi nese cul tures. For in stance, fam ily al -ways has been, and will con tinue to be, an im por tant and highly val ued in -sti tu tion in China. Also, in di vidu al ity has not been re warded. The Chi neseare taught to be hum ble and un de mand ing as mod esty is a vir tue in China.

Fi nally, Chi nese are the mas ters of ne go tia tions for two rea sons. First,they un der stand the im por tance - and pres sures - of time, and they ex ploitthem. Sec ondly, they hold tightly to their ne go ti at ing stance to the point ofin tran si gence. There fore, be ing pa tient and know ing the Chi nese ap proachin ne go tia tions and their busi ness be hav iour, will fa cili tate good agree ments and busi ness re la tion ships in China.

Rec om men da tions

The rec om men da tions for ne go ti at ing with Chi nese peo ple are the fol low -ing:

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- Get a good back ground about cul tural dif fer ences that may af fect abusi ness re la tion ship, which means learn ing the in flu ences of Con fu -cian ism and Com mu nist in the Chi nese so ci ety.

- Be aware of de vel op ing “Guanxi”.

- En joy the so cial events in China which are con sid ered very im por tantby the Chi nese.

- Be care ful with your man ners; po lite ness and for mal ity are criti cal.

- Be mod est, since mod esty is a vir tue in China.

- Never in sult or criti cise your busi ness part ner, since los ing face is a ter -ri ble em bar rass ment.

- Adapt your ap proach to the Chi nese ap proach in ne go ti at ing which isfo cused on the per sonal re la tion ship rather than the con trac tual re la -tion ship.

- Be will ing to talk about your fam ily and back ground be fore jump ing on busi ness it self.

- Re mem ber that the signed con tract is only a means to get a deal. Mu -tual trust and re spect are the para mount of the busi ness re la tion ship.

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End notes

1. Phil ips Har ris, Rob ert Mo ran; Man ag ing cul tural dif fer ences, p.401.

2. Http://1cweb2.loc.gov/cgi- bin/query/r?frd/cs:@field(DO CID+ch0065).

3. Http://1cweb2.loc.gov/cgi- bin/query/r?frd/cs:@field(DO CID+ch0067).

4. Http://sun site.au.ac.th/Neigh bour/china/life style.html.

5. Ka mal Fatehi, In ter na tional Man age ment, p.225.

6. Ex port To day, nov/dic1995, China: of sales plans and planned sales, p.48.

7. Http://sun site.au.ac.th/Neigh bour/china/forms- of- address.html.

8. Http://sun site.au.ac.th/Neigh bour/china/forms- of- address.html.

9. Quanyu, An dru lis, Tong;A Guide to suc cess ful busi ness re la tions with theChi nese, p.163.

10. Geof frey Mur ray, Do ing busi ness in China: the last great mar ket, p.223.

11. Quanyu, An dru lis, Tong; A guide to suc cess ful, busi ness re la tions with theChi nese, p.206.

12. Ex port To day, June 1996, China: cause and ef fect, p.18.

13. Ex port To day, June 1996, China: cause and ef fect, p.20.

14. Ameri can Man age ment As so cia tion, Scal ing the wall of China, p.18.

Bib li og ra phy

Geof frey Mur ray, Do ing Busi ness in China: The last great mar ket. Ch.9, Ne go -ti at ing skills re quired for suc ceed ing in China, p.222- 242.

Quanyu, An dru lis, Tong; A Guide to Suc cess ful Busi ness Re la tions with theChi nese, Ch.7. The skill of talk ing with the Chi nese peo ple, p.163- 179, Ch.9. The role of ban quets, pp.195- 213.

Phil ips, R. Har ris, Rob ert T. Mo ran; Man ag ing Cul tural Dif fer ences, Peo ple’sRe pub lic of China, pp.399- 407.

Ka mal Fatehi, In ter na tional Man age ment: A cross- cultural and func tional per -spec tive, Ch. 6, In ter na tional Com mu ni ca tion, Ap pen dix 1, pp.224- 226.

Ameri can Man age ment As so cia tion, Aug. 95. Scal ing the Wall of China,pp.13- 19.

Man age ment Ac count ing, Aug. 96. A Man age ment Ac count ant’s Guide,pp.22- 28.

Ex port To day, March 96, The Road to China, pp.30- 41.

Ex port To day, June 96. China: Cause and Ef fect, pp.18- 26.

Ex port To day, Feb. 96, China: Les sons Learned, pp.41- 42.

Ex port To day, Apr. 96. Chi na’s Di vided Mar ket, pp.22- 27.

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Ex port To day, Nov/Dec. 96, China: Of Sales Plans and Planned Sales,pp.46- 51.

http://1cweb2.loc.gov/frd/cs/chtoc.html.

http://sun site.au.ac.th/Neigh bour/china/life.html.

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negotiating with chinese: a cultural perspective

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