Western-Chinese Business Negotiations: Understanding Cultural Differences

Introduction: The Challenge of Cross-Cultural Negotiation

It is easy for Westerners to blame the Chinese side when contract misunderstandings occur. Unfortunately, Western management has often been its own worst enemy in China. If managers do not understand the cultural nuances of the country in which they negotiate, they will fail to secure contracts advantageous to them. While this may seem straightforward, Westerners constantly fail because they cannot step outside their own worldview and place themselves in the position of those on the other side. The Chinese negotiator does not possess a single, fixed negotiating style; instead, they embrace several roles at once—Confucian and Maoist elements combined. Socialist and communist tendencies still weigh heavily from the pre-1980s period. The Chinese negotiating strategy is a combination of cooperation and competition. Trust is the ultimate indicator of Chinese negotiating propensities and role choices, and it is gained only after a long process of bargaining.

The Yin-Yang Nature of Chinese Negotiating Style

What Westerners must learn in China is that progress comes slowly rather than quickly. Advancement is measured in centimeters eked out gradually, not large strides. As revealed in the Fang article, the Chinese negotiator does not possess an absolute negotiating style but rather embraces a complex mixture of different roles. The Chinese negotiating strategy combines cooperation with competition. Westerners tend to universally depict the Chinese negotiator as either hostile and manipulative or, conversely, naively straightforward. There is a double-think process at work. In actuality, the truth is paradoxical: the Chinese negotiating style reflects a type of Yin and Yang thinking. A Chinese negotiator has a built-in cultural capacity to negotiate simultaneously sincerely and deceptively. They change their coping strategies based upon situation and context on the ground. This reflects the level of trust or mistrust between the negotiating partners (Fang 52-55). Mastering this negotiating style is the key to winning in negotiating sessions with the Chinese.

During business-to-business negotiations, experts suggest first asking many questions such as "I did not get that" or "Can you go over that again?" This approach can expose weaknesses in the other side's arguments. Once vulnerabilities emerge, opposing negotiators may have to concede or yield. Chinese negotiators very much admire and respond to relentlessness rather than resignation and weakness. To show endurance by going to great lengths is admired. Additionally, the Chinese rarely make concessions immediately following persuasive appeals without broader consultation. The combination of group decision-making and social status can make things quite complicated on the Chinese side. Moreover, the Chinese are skilled in using delay as a persuasive tactic. Therefore, you need the full backing and understanding of your home office so you can bide your time. Meanwhile, the Chinese can use apparent lulls in the negotiation cycle to consider new information or develop more questions. In the end, the investment in time pays off (Ghauri and Fang 303-305).

Practical Strategies for Western Negotiators

The old Chinese adage that a picture is worth a thousand words is appropriate here. The experience of Ericsson in China exemplifies what businesses need to accomplish successful negotiations in the Chinese market. This company exhibited what Ghauri and Fang called the 4 P's of effective management in China: priority, patience, price, and people. Companies like Ericsson apply these principles in all stages of the negotiation process successfully. What Western companies fixate upon is price. However, this is not the whole picture. The Chinese ability to patiently integrate and weigh priorities and to assign the best people at the best times has assured their dominance in negotiations. The Ericsson company has adopted this approach to their advantage, and successful companies in the Chinese market are adopting this as their own standard (ibid 323).

Western businesses negotiating with Chinese corporations face many challenges, beginning from the initiation and continuation of negotiations to the establishment of long-lasting relationships based upon mutual trust. These challenges range from bargaining and drafting agreements to securing their implementation. Chinese negotiators can be at once warm hosts and friends and tough bargainers. A unique group of Chinese cultural elements all add to the complexities of Sino-foreign business negotiations and can make the process tiresome and protracted. For these reasons, Chinese and Western negotiators often harbor mutually unfavorable perceptions. Western negotiators need to become accustomed to the indirect Chinese manner and realize that it is not deceptive but simply different. While Westerners are naturally direct, Chinese negotiators are more polite, at least on the surface (Graham and Lam 4-5).

Key Cultural Elements in Sino-Foreign Negotiations

This can of course bring up serious issues of tension and trust. These issues are caused by not understanding the elements of Chinese negotiating, which include personal connections, the use of an intermediary, the importance of social status, social harmony, holistic thinking, thrift, allowing the other side to save face, and patience. Executives who understand these qualities and apply them consistently throughout the negotiation process will find that tension and trust are reduced considerably. The trust that is built up will pay off in terms of a long-term business relationship (Lee, Kam-hon, Yang and Graham 624-637).

Chinese business negotiations are heavily influenced by the philosophies of Confucius and Lao Tzu, with their core values of collectivism, honor, respect, obedience, and harmonious relationships. Due to China's negative history and its past humiliation at the hands of Westerners, Chinese negotiators tend to be very firm in negotiations with foreigners. This history interweaves in a complex fashion that puzzles many Westerners but is critical to understand. For those who do understand it, trust is established with their Chinese contemporaries across the table. After all, given their circumstances, Chinese negotiators are simply being pragmatic. When studied and appreciated by the Westerner, positive results and responses usually come from the Chinese side (Sebenius and Qian 1-3).

Historical Context and Philosophical Foundations

Conclusion: Adopting a Multi-Layered Approach

To recap, it is very easy for Westerners to blame the Chinese side when misunderstandings of the contract negotiating process occur. Unfortunately, Western management has often been its own worst enemy in China. It is very often a lack of focus brought on by an addiction to instantaneous gratification, as well as a simple matter of insufficient attention. If they do not understand the cultural nuances of China, they will fail in negotiating contracts that are advantageous to them. While this may seem simple, Westerners constantly fail in the process because they are not able to step out of their worldview and place themselves in the position of those on the other side. The multi-layered approach has made the Chinese competitive in world business markets. This Yin-Yang and Confucian methodology balances out extremes and maps out a very pragmatic middle path that brings flexibility to the negotiation process as well as to the end product. Western negotiators will have to adopt this approach if they hope to succeed in the era of globalization in which we find ourselves. If this approach is not adopted, the Western negotiator will not be on a par with their Chinese contemporaries.