Australasian
Dispute Resolution Journal, Volume 11, Number 3, August 2000, LBC Information Services, Sydney.
NEGOTIATION IN CHINA –
STEREOTYPES AND FALLACIES
Sunny Z Hou, LLM, LLB
Since the
People’s Republic of China implemented its open-door policy and gradually
entered into the world family, there have been many books and articles in
Western countries regarding Chinese negotiation. However, there seem some
stereotyped understandings of Chinese-style negotiation where foreigners always
regard Chinese negotiation in terms of “relationship” or “trust”. Although
these phenomena were often met in Chinese traditional negotiation in the past,
after carrying out 20 years of the open-door policy, the traditional style of
Chinese negotiation has changed to some extent.
1.Introduction
Communication and culture reciprocally influence each other[1].
Different cultures result in completely different communication styles —
low-context communication and high-context communication. High-context and
low-context communications largely reflect social and organisational
behaviours. Normally, a collectivistic society is more preoccupied with
high-context communication and an individualistic society is more attuned to low-context
communication[2].
Most East Asians such as the Chinese and
Japanese, are collectivists, and are used to high-context communication. How
they transmit messages mainly depends on whether it is “in the physical context
or internalised in the person”[3].
This means they always communicate in an implicit way. In a collectivistic
society, people take interpersonal relationships seriously and they tend to
communicate in an indirect, ambiguous and roundabout way[4].
In contrast, low-context communication transmits the messages in a
straightforward and direct way. Most Western people with the trait of egotism
communicate in this way, that is. the information is explicit. The American,
Australian, British are low-context cultures. Table 1 shows the difference between
the two patterns of communication[5]:
Table 1 – High-context and
Low-context Communication
|
High Context (Chinese) |
Low Context (Australian) |
|
•Meaning is implicit in
relationship & situation •Emphasis on the group
(collectivist) •Indirectness valued •Expressive-oriented •Non-confrontational attitude •“face” and relationship-oriented |
•Meaning is explicit in the words
spoken •Emphasis on the individual
(individualist) •Straight talk valued •Instrumental-oriented •Confrontational attitude •Action and solution-oriented |
Avoiding Stereotypes
In cross-cultural negotiation, people in general are governed by
their own cultural norms[6].
Chinese negotiation is typical high-context communication. The way for a
foreigner from low-context culture to make a good negotiation with Chinese
people (that is, Chinese people in China) still involves lots of cultural and
customary factors[7]. However,
after a 20-year open-door policy, even the traditional style of Chinese
negotiation has changed. China-style negotiation may puzzle the Western
negotiators who are used to their customary ways. Therefore, with increased
cross-cultural contact, it has become important for foreigners to understand
China-style negotiation. At the same time, it is also important for foreigners
to avoid a stereotyping China-style negotiation in terms of “relationship” or
“trust”, which are features of Chinese traditional negotiation in the past. How
does a good negotiation in China work?
Educating yourself – Understanding the Changing
Chinese Culture
Undoubtedly, the relational nature of China-style negotiation is
chiefly influenced by the Chinese way of life, customs, philosophies and its
way of dispute settlement[8].
In other words, Chinese culture determines the style of Chinese negotiation.
The traditional Chinese culture is mainly influenced by Confucianism, Taoism,
Mohism and Legalism[9], which took
place before the Qin Dynasty (221 BC)
– the first centralised feudal empire in Chinese history. Since the Wu Di – an emperor of the Han Dynasty (206 BC-220AD) proclaimed
Confucianism as the recognised state cult and forbade other schools of thinking[10],
Confucianism has occupied a dominant position in Chinese traditional culture.
Most Chinese behaviour still reflects the influence of Confucianism. Culture
plays a silent but significant role in negotiation. Informed foreigners and
those seeking to understand the Chinese traditional culture can gain a
comprehension of the Chinese relational approach to negotiation in both
philosophical and practical terms.
Chinese culture, however, was “internationalised during the
eighties, and that experience will change it forever”[11].
“The relaxation of official controls and the open-door policy have fostered a
major new infusion of Western cultural influence”[12].
This has produced some changes in the China-style negotiation
Several
Typical Characters of Today’s China-style Negotiation
Guan
Xi
“Chinese generally expect foreigners to understand “guan Xi” and behave according to its
rules” [13]. “Guan Xi” is a term that literally means
“relationships”. It is very difficult to find one book about Chinese
negotiation that does not mention “guan
xi”. Many commentators stress the importance of social functions when doing
business in China, particularly their role in building and reinforcing
relationships. However, “Guan Xi”
involves double meanings: one is “Ren Qing”-, which in this context
translates as “connections”, and
involves favours based on personal relations; another is friendships, which means the normal relationship in social
communication. This term is now mostly used in political and diplomatic
language. The two meanings, however, sometimes are mixed together for they have
extremely similar meanings on some occasions.
Influenced by Confucianism, the “relationship” in “Ren Qing” (connections) always plays an
important role in Chinese citizen’s ordinary lives. Rather than detailing how
the “relationship” works in Chinese traditional negotiation or Chinese lives (including
the gift-giving),[14] this
article looks at “Guan xi” from three different angles in order to
explain its role in today’s China.
Why do the
Chinese business people often show friendship and even ingratiation sometimes
to their Western counterparts?
A major reason is that Chinese
traditional culture determines their decision making, process and negotiation
style. Most important, however, with the long-term acceleration of experience
in negotiating, Chinese business people recognise that when their counterparts
are moved by their hospitality and friendship, they will easily control the
negotiation.
Why Chinese
work hard to cultivate the “connections”---- The essential nature of “Guan Xi” in today’s China.
Most books about Chinese negotiation
take delight in talking about the “Guan
Xi”, but usually they only pay attention to the outside appearance of “Guan Xi”. The main purpose of working
hard to establish and maintain “connection” is to get important things
accomplished and promote more convenience when doing business. “Connection”
involves reciprocity, which is a strong factor in business dealings. From one
angle, the reason people establish and maintain this kind of personal
relationship is in order to use each other’s power. More particularly, the
intricate “relationships” make-up of the “relationship network” (“Guan Xi Wang”) is well known in Chinese
society. The establishment of the “relationship network” is based on
“connection” or “Ren Qing”. In the
centre of the “relationship network” is “central man” and around the person are
his or her “relationship liaison person”, who are composed of his relatives,
classmates, neighbours, colleagues, friends, friends’ friends and relatives’
relatives, as Figure 1 shows:
Figure 1 – Relationship Networks
“Guan Xi” link
In the “relationship network”, one can
get things accomplished by taking advantage of another’s power, and one has to
incur some form of obligation to others in order to keep one’s “relationship
network” alive. On one view, the pervasiveness of “Guan Xi” in China demonstrates that the lack of a reliable legal
system so that personal power has always been the key to getting things
accomplished[15].
The perniciousness of “Guan
Xi” in China
In most circumstances, the application of “connection” or “Ren Qing” is beyond general friendship
and it often results in an unhealthy, even illegal tendency (“Bu Zheng Zhi Feng”) in social
intercourse. Some people may take advantage of a “relationship” to seek
personal gain or illegal business advantage. These unhealthy “relationships” do
exist in business negotiations and government organisations. When a
businessperson pays heavily to establish and maintain a relationship with the
tax bureau, with local industry, with a commerce bureau or with influential
people, corruption can result.
Even in normal “Guan XI”
or “friendships”, there can be negative effects. In many cases, agreements and
negotiations based on “Guan Xi” often
cause the decline of an enterprise and even bankruptcy. The reason is simple:
if you focus on this kind of
"relationship” and sign contracts to avoid hurting other person’s
feelings, regardless of the real value of such contracts, you cannot avoid
disater sooner or latter.
“Friendship” is also embodied in Chinese political
negotiation. The Chinese government’s diplomatic approach is shaped by China’s
Confucian political tradition. Its fundamental negotiation style and most
distinctive qualities are based on China’s own traditional culture and
political practices. The most distinctive characteristic is the effort to
cultivate and manipulate “friendship”. This is evident from some political
slogans. “Friendship first, competition second”, which, it is recalled, came
from the period of “Ping Pong diplomacy[16]”
between China and USA in the 1970’s, has become a pet phrase of ordinary
citizens.
The Chinese style of expression
Verbal
expression – Indirectness
One characteristic of high-context communication is the
speaker’s tendency to express their meaning indirectly or implicitly. Traditional
culture means that Chinese people are accustomed to avoiding loss of face.
Thus, the Chinese style of expression is indirect in most circumstances. For
instance, when the Chinese response to your request is “under consideration” or
“being discussed”, it generally means that your request is unlikely to be
satisfied. The distinction between Chinese and Western culture is so large that
many misunderstandings occur. Chinese negotiators may feel that their hints are
so obvious that their counterparts should understand very well, while Western
listeners may remain very much in the dark.
Understanding “Ke Qi”
One typical expression is Chinese-style modesty – “Ke Qi”. Most foreigners are at pains to correctly
fathom what a Chinese person’s real meaning is when he or she uses the
expression, “Ke Qi”. For example,
when one praises a neighbour’s son and says, “Your son is very clever and he
got the best prize in the school”, the Westerner might answer, “Sure, I am very
proud of him”. A Chinese, however, might answer like this, “You are
overpraising, what he did is far from good,” and sometimes go even further to
say, “Compared to your son, he is nothing”. In fact, the Chinese parent is very
proud of his or her son. When negotiating with Chinese, Westerners will often
meet a similar situation and may find it difficult to discern whether a Chinese
actually means “yes” or “no” when he or she says “yes”[17].
It is very difficult for a Western business person to
study every aspect of Chinese culture and ascertain the Chinese party’s real
meaning every time so the Chinese party should try to avoid using too many
Chinese hints or implicit language. As for the Western party, he or she should
remind their counterparts to explain the meaning by use of explicit language
when they are confused. It is hardly realistic for one to understand a foreign
culture in a short time.
Non-verbal
expression – Body language
Compared with Westerners, Chinese body language is less
important. In Chinese traditional culture, personal demonstration or show in
public is not regarded as good manners. Traditional Chinese are never
demonstrative in public, either in words or deeds. However, Chinese body
language in today’s social intercourse is generally similar to that of
Westerners. For example, Chinese do not greet with a bow at the waist like
Japanese. They will expect Westerners to shake hands or nod and will do
likewise.
According to Bee Chen Goh[18],
I do not quite agree with the opinion that “Chinese consider a general lack of
eye-contact as social courtesy” and that “talking to someone without looking
straight into another’s eyes is regarded as showing respect and politeness”.
However, in most circumstances, good eye-contact and sometimes looking straight
into the speaker’s eyes demonstrates your respectability and that you are
paying attention to what the speaker is saying. Of course, prolonged staring
causes embarrassment to anyone, not just Chinese. It may be inappropriate to
make prolonged eye-contact with Chinese women. This may result in shyness and
discomfort.
Important
Aspects of the “Li Jie” (etiquette)
“Li jie”, in its literal
meaning is “etiquette” or “manners”. The term evolved from “Li”— one of essences of Confucianism. It is beyond the scope of this article
to describe all of Chinese etiquette which might be encountered on a visit to
China. The following is a brief account.
“Etiquette”
for Chinese people is “more a matter of form than substance[19].
As Seligman describes:
“In a Chinese home, an obligatory glass of tea is immediately
set out in front of every arriving guest, no questions asked. Even the
strongest protest is essentially ignored. And the fact that the tea may never
even be tasted in no way negates the propriety of the gesture.”[20]
Western friends who have been to China often complain of
the tedious formalities of China-style etiquette, and especially that, when
attending a Chinese banquet, they were often at loss what to do. That is true,
and many modern young Chinese often tire of the commonplace etiquette also. I
disagree with the view that a foreigner must learn a lot of Chinese etiquette
before visiting China. No foreigner has the ability to master this in a short
time and, in addition, it seems unnecessary. Many Chinese, however, do judge
Westerners and their behaviour according to their own norms, so displaying some
knowledge of Chinese customary etiquette can earn you admiration[21].
There are several particular aspects of Chinese etiquette to take seriously
when negotiating in China.
·
Establishing
how to address someone during the first meeting. Chinese are seldom called by their given name, except by close
relatives or extremely intimate friends. You can call a Chinese person by the
surname, together with a title such as Mister or Miss or even Director or
Manager[22].
Chinese place much emphasis on “social status”, especially the “leader”. One’s
place in the hierarchy directly influences how one treats others and how one
expects to be treated oneself.
·
Minding
your behaviour. Chinese especially emphasise
that one’s behaviour reflect one’s upbringing. Physically demonstrative
behaviour is regarded as normal in the West, but it may offend Chinese
counterparts, for example, touching Chinese persons of the opposite sex or
those of an advanced age or high rank. In China, rank distinctions are
important and one must be careful to behave correctly with those of a higher
station. In addition, Chinese emphasise that one should carry oneself with
dignity. Do not be too casual. Behaviours such as fidgeting or sitting on
tables will be regarded as a lack of manners
·
Dress
rules.
One should not dress too casually. In the West, it is normal that people
were wearing sandals in the airport lounge. In China, however, you will be sneered
at if you wear a pair of sandals in a public place. Western dress is becoming
popular in China, but the Chinese remain uncomfortable with clothing that is
very revealing[23].
Semi-formal clothing is suitable in China and is appropriate on most occasions.
·
Knowing
some Chinese taboos. Compared with the past,
many Chinese taboos are regarded as superstitious especially by young people.
Some traditional concepts have changed after 20 years of open-door policy.
However, some customary prohibitions prevail. For example, do not to send a
“clock” as a gift[24]; or wear a
white flower, both of which symbolise “death” in Chinese custom.
Chinese
negotiation: power and tactics
The Chinese are good at using “power” to serve their negotiation.
Chinese people are best at “environment power”. They try to conduct
negotiations on their own territory, as this gives them maximum control over
the ambience of official exchanges. They seek to establish a positive mood
through meticulous orchestration of hospitality, media play, banquet toasts and
protocol. In the atmosphere of “friendship”, the Chinese are skilled in
protracting a negotiation to explore the limits of their adversary's views,
flexibility and patience.
Secondly, Chinese use pressure tactics in order to
maintain control over the negotiation process. The Chinese will resort to a
variety of tactics to put an interlocutor on the defensive and make the person
feel that he or she has minimal control over the negotiating process. They are
skilled at making a foreign counterpart appear to be the supplicant or demander
in the relationship. Common tactics include threatening to do business
elsewhere if their demands are not met, or showing anger to put pressure on the
opposite side who may be afraid of losing the contract [25].
Thirdly, “patience” is also an important aspect of
Chinese negotiation[26].
When negotiations are held in China, the Chinese are aware that foreigners must
spend a good deal of time and money to go there and that they do not want to go
away empty-handed. The Chinese may appear at the negotiating table seemingly
indifferent to the success or failure of the meeting and then subsequently make
excessive demands on the foreigners. Chinese negotiators are patient and can
stretch out the negotiations in order to wear the opponent down. Excessive
entertaining in the evening can also take the edge off a foreign negotiator's
attentiveness.[27] Agreements
are usually reached at the very last moment of a negotiating encounter—or even
just after a deadline has passed.
Misunderstandings
to Foreigners in Today’s Chinese Negotiation
“Most Chinese businessmen believe in “ trust” instead of
contracting”
This is not absolutely correct in present-day China, although it
was true several decades ago. There were two reasons for this. One was the
influence of Confucian tradition. The Confucian Chinese is trained from young
to subscribe to the notion of “my word is bond” and “living up to one’s word is
a major moral virtue”.[28]
It can be observed that in Southern parts of China, including Hong Kong and
Taiwan, some business people still worship the idol of “Guan Gong”, a hero of
ancient Chinese times who was loyal to his friends and strictly kept promises.
A
further reason why Chinese business people have traditionally believed in
“trust” was to avoid unnecessary
dispute and lawsuit. The Chinese abhor confrontation and most hate going to
court. “The intention of the Chinese is to minimise inter-personal conflict and
observe social harmony”.[29]
The Chinese are averse to going to court because it wastes much time, effort
and money. A Chinese proverb is “win your lawsuit and lose your money”.[30]
There are a belief that if you sign a contract, “written in black on white
paper”, You will run the risk of lawsuits, and that another party may use the
contract as evidence if disputes occur. Therefore, many Chinese business people
would traditionally rather suffer financial loss than spend time and effort in a lawsuit Advocating “trust” by oral rule, not written
in contract, can avoid the unnecessary lawsuits.
This
approach still exists in some very small and simple dealings among Chinese.
With the influence of Western thought and the acceleration of law reform,
however, it is gradually vanishing and it is rare to find it in negotiation
between Chinese and foreigners business people, especially in bigger
co-operation programs.
“ ‘Face’ is very important in
Chinese negotiation”
This saying is half-correct. Like the topic of “relationships”, almost
all books on Chinese culture or negotiation mention the importance of “face”,
as if only the Chinese know of maintaining “face” and have a monopoly on
“face-saving”. To some extent, Chinese take “face” more seriously than
Westerners, but I do not think that “face” is the exclusive domain of Chinese
society. We all act socially, striving to maintain the identity or public
self-image which we create for others to see. To lose face is to publicly
suffer a diminished self-image. This psychology exists in each nation of the
world.
That is some truth, however, that “face” is more serious to the
Chinese than to Westerners. Unsurprisingly, the nation whose tradition
emphasises hierarchical order and social status must take “face” seriously. But
there is difference between ordinary Chinese lives and the negotiation of
business or related legal issues. Thus, I do not quite agree that Chinese
business people strongly emphasise “face” in negotiation. The interests of
business people or lawyers in negotiation are different from those in their
ordinary lives. There is a famous old saying in Chinese, “a real man can yield
(in a bad situation) and fight (in a good situation)”. This means you should
discard the “face” temporarily in order to win more in the future. This saying
is subscribed to by many business people, and is influenced by Western culture
in today’s China.
“ ‘Feng Shui’ can help you do good work in
negotiation”
“Feng Shui” is ancient Chinese people’s crystallisation of wisdom
and experience of life. It is two-edge knife. Like nuclear power, it will bring
benefit to mankind if it is used to generate electricity, but it will bring
great suffering to mankind if it used to make nuclear bombs. “Feng Shui” is now mostly used by so-called “Feng Shui” masters who are
consult on how to choose the site of building[31],
or to predict one’s fortune. These “masters” profess that it can change one’s
life and lots of Chinese and Westerners who live in modern society accept it as
true. This is a sad thing.
An interesting phenomenon is that those books about Chinese
customs, written by Chinese from China (except Hong Kong and Taiwan) or by
Westerners who know Chinese society and customs well, talk less of “Feng Shui”[32],
while overseas Chinese or non-PRC Chinese take delight in talking about it.
This demonstrates that “Feng Shui” in
China is not popular. Especially in Northern China, Chinese people generally
regard it as a superstition. It is beyond the scope of this paper to analyse
why “Feng Shui” is full of vitality
in Western countries while it occupies little or no status in its place of
origin. However, it illustrates that if foreigners are negotiating in China,
they do not need to worry “Feng Shui”
aspects.
“If I want to negotiate well
in china, I need to master the ‘Art of War’ ”
In China, the Chinese business person often likens the
marketplace to a battlefield. The two
are not same. Sun Tzu’s Art of War (or
Thirty-six Strategies) is a famous
ancient martial strategy book and it still important in modern warfare. Wise
Chinese business people not only use most strategies of the Art of War in their business
negotiation, but also use many strategies from some Chinese classic martial war
novels, such as Three Countries and Shui Hu, and get great benefits. I disagree
on this view, however, that “Westerners who are uninformed of the Thirty-six
Strategies may be at a profound disadvantage in Sino-Western negotiating
situation”[33]. Firstly,
even if foreigners spend a lot of time and effort understanding the theory, it
is still very removed from what is practised. Secondly, as mentioned, Chinese
business people not only master those negotiation skills from the Art of War, and from other materials as
well. Must you look through all Chinese books about martial war before
negotiating with the Chinese? Thirdly, the Art
of War, is after all, a martial
strategy. Therefore, the extent of some strategies’ application in
commercial negotiation is remote. For instance, the strategy of “Catch Fish in
Muddy Waters”[34], if limited
to modern related business laws, seems to encourage unfair commercial
competition.
On the other hand, if one can master some knowledge about
martial arts, it might be useful for negotiating in China. However, one martial
war book could not reflect all the skills of Chinese negotiation and with the
development of the Chinese economy, Western negotiation styles are increasingly
merging into Chinese traditional style. It is unnecessary for foreigners to
spend much time in mastering the Art of
War. More usefully they
should spend time in researching the their counterparts’ background, interests
and possible options.
5. Conclusion
In China, many things are changing, including culture and
customs. An old custom goes, a new one emerges. A example of change is that 20
years ago, few Chinese people believed the number “8” was an auspicious number. But since implement of open-door
policy, especially the growing communication between Hong Kong and mainland,
the number “8”, which is homophonic with “prosperity” in Cantonese, had been
accepted by Chinese who speak in Mandarin and has become popular in China as a
whole.
In today’s world, the
cultures, economies and even customs of different countries are influencing one
another. Chinese and Western styles of negotiation are also impacting on each
other, and some Western negotiation styles are merging into Chinese traditional
styles. Today’s China is very different from China 20 years ago and one can no
longer look at Chinese-style negotiation on the basis of stereotypes.