Negotiation in China

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Introduction

As new markets open up for world trade and global competition intensifies, businesses of all kinds are expanding their operations overseas at unprecedented rates, which necessitate an increase in strategic alliances and hence intercultural negotiations.  Intercultural negotiation involves discussions of common and conflicting interests between persons of different cultural backgrounds trying to reach an agreement or mutual benefit.^[1]  It is, in some generalization, a basic means of getting what we want from others.  

As straightforward as it may seem, the process of intercultural negotiation can become complicated, challenging and sometimes tricky to internalize when values, attitudes, beliefs, and traditions rooted in the cultural context of negotiators influence various stages of the negotiation.  Though successful negotiations are often predicated on cultural understanding, differences impacting business negotiations are not easy to sort out.  Therefore, negotiators who display an understanding of one another’s behaviors and idiosyncrasies achieve better outcomes when negotiating with an opponent of similar culture.

        Culture is the distinct character of a social group.^[2]  It emerges from the patterned ways that people in a group respond to the fundamental problems of social interaction.  Cultures in particular can have a large impact on the success of international business.  Historical backgrounds with different events and timelines have created customs that are very rich and distinct from one another.  These cultural patterns are woven deep in the fabric of how business is conducted, impacting success and failure in often subtle ways.^[3]  Whether it will succeed, or not, depends largely on ones understanding of cultural diversity.  

        With the forces of globalization shrinking the gap in between nations, economic activities are easily stretched out across national borders.  Anyone hoping to have global business success in the 21st century must engage with China.^[4]  The Chinese market has become more and more open during the last three decades and understanding of cultural differences between the United States and China has become increasingly important for companies in both countries.^[5]  Despite the fact that over half a million foreigners visit China each year, many know very little about the Chinese’s business, life, language, and culture.^[6]  As China takes a more prominent role in the global hierarchy and rewrites many of the rules of the business, it is essential for Western businesspeople to learn about China, and their strategies on negotiation.

 “Tan Pan” is the Chinese word for negotiation, and it combines characters meaning of, “to discuss” and “to judge”.^[7]  Negotiation in the Chinese perspective exists primarily as a mechanism for building trust so that two parties can work together for the benefit of both.  Trust is built through genuine dialogue that allows each party to evaluate their party’s capabilities and assess each other’s relative status.  The Chinese business acumen combines two very distinct negotiation approaches when dealing with foreigners: (1) highly cooperative win-win strategy based on strong personal relationships and expectations for long-term interactions; and (2) highly competitive win-lose strategy with foreign party defined as an adversary, allowing the use of tricks and shrewd tactics.^[8]  Since culture impacts the strategic elements of negotiation, understanding the cultural roots of these negotiation choices provides insight into the motivations and potential to bypass the tactic while resolving the root end.          

II. History  

There has been an international consensus that the Chinese are skillful negotiators possessing a unique negotiating style despite their isolation for many years from the rest of the world and the lack of international business experience.^[9]  To further understand the dynamics of culture on business interactions with a Chinese counterpart, it helps to first get a generalized idea of the broad context of Chinese culture.  The Chinese culture is said to be unique and consistent, molded by a tradition of four thousand years of history, including more than two thousand years of uninterrupted influence of Confucianism, and Taoism.^[10]  Although differing in many fundamental ways, Confucianism and Taoism share similar elements, and together governs today’s Chinese cultural value system that is embedded in their way of conducting business.  

Confucianism is a form of moral ethics and practical doctrine of interpersonal relationships, encompasses from the perspective of negotiations six core values: moral cultivation; interpersonal relationships; family orientation; respect for seniority and hierarchy; pursuit of harmony and avoidance of conflict; and the concept of face.^[11]  All approaches in which are important in terms of negotiating with the Chinese due to the cultural roots of high power distance, a Confucian inclination for honoring elders and commitment to relationships.  Failure to honor these characteristics can jeopardize interpersonal relationships as well as mutual trust amongst negotiating parties.^[12]   

Taoism, on the other hand, emphasizes creativity of life and harmony with nature.  Conceptually, it posts as the key to life, finding the Tao, that is, “the way,” meaning the general law of changing forces Yin and Yang, the negative and positive, of the same phenomenon, through Wu Wei, which translates as “action less activity,” “to act without acting,” or “letting go,” which is to say, by finding a middle ground or compromise.^[13]  Both Confucianism and Taoism have shaped the design of China’s political, educational, and economic systems, and influenced the behavioral thinking patterns of the Chinese people.^[14]  Though both ethics are still being widely practiced in all of China, Confucianism is still the practical doctrine that governs the Chinese’s way of living.

Moreover, Confucianism is more concerned with righteousness and human-heatedness than profit, which explains why Chinese negotiators do not rush into formal contract discussions, but take considerable time to build up trust with their negotiating partner.  Furthermore, Confucianism considers that business is governed more by moralistic notions of sincerity and trust, than by the legalistic concept of contract, Chinese business is mostly built on trust instead of law.^[15]  Confucianism also advocates for the relative importance of knowing others and the relative unimportance of being known, which is the reason why Chinese negotiators are so attentive to discern the interests and personalities of their negotiation partners and defensive about freely disseminating information about themselves.^[16]