Economic subjects | World economics » Akgunes-Culpepper - Negotiations Between Chinese and Americans, Examining the Cultural Context and Salient Factors

Source: http://www.doksinet Negotiations Between Chinese and Americans: Examining the Cultural Context and Salient Factors Asuman Akgunes, Stephen F. Austin State University, USA Robert Culpepper, Ph.D, Stephen F Austin State University, USA ABSTRACT There is a vast chasm between the American and Chinese cultures regarding foundational philosophical assumptions, historical influences, economic systems, business strategies and tactics, and myriad business-related interpretations and understandings. These differences create a great challenge for achieving successful outcomes as a result of business negotiations. This paper examines differences in the cultural contexts of China and the US as they relate to business negotiations, and investigates differences in negotiating styles and practices. Recommendations for avoiding pitfalls and maximizing negotiating effectiveness are offered. INTRODUCTION Cross-border negotiations face the challenge of completely different negotiating processes

and styles, based on local history and culture. Negotiators are often tempted to consider the traditional way of doing business in a foreign country with different traditions and customs inappropriate or even rude. Historical backgrounds with differing events/timelines have created cultures that are very rich and distinct from one another. These cultural patterns are woven deep in the fabric of business negotiations, impacting success and failure in often subtle ways. This article will examine and compare negotiation styles from two of the most disparate cultures in the world, those of the United States and China. The Chinese market has become more and more open during the last three decades. An understanding of cultural differences between the US and China has become increasingly important for companies in both countries. Though successful negotiations are often predicated on cultural understanding, differences impacting business negotiations are not easy to sort out. While

negotiation strategies developed by the each cultural group are conceptually consistent with their shared values, culture is based on much more than values. It involves a vast array of behaviors, institutions, norms and assumptions (Hofstede, 1980). The first order of business in our explanation of cultural effects on U.S-Chinese negotiations will be to examine more distal elements of the cultural context in which negotiations take place, and then we will discuss specific proximal cultural factors which influence the negotiation process directly. CULTURAL CONTEXT Education Education in China incorporates direct instruction and students do not ask a lot of questions. This has lead Chinese people to accept things without asking too many questions. The Americans use a constructivist approach to education and questioning things is encouraged. The differences in education styles have led the Chinese to be overconfident in their discussions and draw hasty interferences from things said

during negotiations, which are not warranted (Li, Chen, & Yu, 2006). This may explain why the Chinese have to be careful not to read too much implied meaning into spoken and written words that make up negotiations, and rely instead on a more literal interpretation. The Journal of International Management Studies, Volume 7 Number 1, April, 2012 191 Source: http://www.doksinet Non-verbal communication In non-verbal communication Americans tend to make a lot of eye contact. This is considered to be a way of showing interest and good will. The Chinese like to show respect by doing exactly the opposite and avoiding eye contact (Pye, 1992). They believe that too much eye-contact is considered staring This disparity in a fairly minor area of body language can lead to major misreading of the attitudes and intentions of the other party. This in turn can injure trust, so crucial to success in negotiating with the Chinese. Xenophobia and xenophilia Xenophobia is a distrust of all things

foreign to one’s own culture. Xenophilia is a lust to obtain all things new and or foreign. The Chinese have become inclined to distrust anything and everyone from foreign lands due to their history of violent revolutions and government seizures and changes (Pye, 1992). On the other hand, they have also seen the new technologies and high standard of living in the West, and many Chinese struggle with these mixed feelings as they pursue business opportunities with foreigners and seek to acquire western technologies (Pye, 1992). Philosophical foundations There are three main philosophical foundations of Chinese culture, Confucianism, Taoism, and Buddhism (Fang, 2006). Famous in China, the Chinese philosopher Confucius lived 2000 years ago and taught about the importance of human relationships and their hierarchy. The second philosophical foundation is Taoism which deals with life being in harmony with nature. Within Taoism there is a concept of dualism, or the need for two opposing

forces to work in harmony. Finally, Buddhism deals with the immortal world or religious aspects of the Chinese culture (Fang, 2006) Though all of these philosophies may influence the thoughts and behaviors of Chinese, perhaps the greatest influence is wielded by Chinas Confucian legacy. For example the widely discussed and researched phenomenon of Chinese overconfidence, discussed above, is thought by some to descend from Confucianism. Economic systems Chinas economic system differs quite substantially with those typically found in the West, and is very different from the US system in particular. The Chinese have a socialist government with a socialist economic system, focused on promoting the well being of all the people (Ralston, Holt, Terpstra, & Kai-Cheng, 2007). Socialist countries may have only one business in a given industry, owned by the state, while Americans employ a capitalist economic system with numerous privately-owned companies competing for the same sales in the

same businesses. In general, cultures found in socialist countries tend place a higher priority on cooperation both within and between business entities, while cultures found in highly capitalist countries place greater value on competition. CULTURAL INFLUENCES ON NEGOTIATION Cultural dimensions Hofstede’s (1980) study on culture identified several dimensions of culture, and his thinking has led to a framework called high and low context cultures. In a high context culture such as the Chinese, there is more focus on taking care of the group rather than individual interests (Ford, LaTour, Vitell, & French, 1996). Friends are expected to help each other and there is a mistrust of authority. Americans have what is called a low context culture and see themselves as individuals. They use the legal system to enforce contracts in lieu of trust-based relationships Chinese and American managers have very different expectations about the atmosphere that should prevail for business

negotiations. In China there are usually many people from both companies meeting to discuss topics within the negotiations, while in America typically only one person or a very few from each company meet to work out a deal. In a high context culture like the Chinese, social context, personal relations and non-verbal behavior are all very important in negotiation (Zhao, 2000). These are more important than the legal contract that materializes from the negotiation. A few words can mean quite a lot The atmosphere, eg, tension or harmony, of the meeting can make or break the negotiations. The group is always more important than individual interests in China The Chinese believe in 192 The Journal of International Management Studies, Volume 7, Number 1, April, 2012 Source: http://www.doksinet doing what is right, not just following legal requirements. Their typical view of time horizon is fifty to a hundred years They will sacrifice short term results for the stronger long term goals

(Zhao, 2000). When a high context culture such as the Chinese is negotiating with a low context culture such as that predominate in the U.S, special care should be taken in the words chosen Words have very specific meanings in low context cultures and virtually all of the meaning in communication is transmitted through them. What can be implied or inferred from words is less important, rather the focus is on the words themselves (Zhao, 2000). In a low context culture, the written contract or legal document is what counts (Palich, Carini, & Livingstone, 2002). Contracts tend to be quite lengthy and wordy in order to cover every possible contingency with precision, leaving as little ambiguity as possible. Thus, in low context cultures it can take many words to convey very little meaning. In addition, contracts tend to be focused on the short term, typically around five to ten years (Ford et al, 1996). Long-term goals sometimes are given short shrift by Western negotiators when the

negotiators themselves are compensated according to short-term achievements and companies are focused on short term profits. When managers from low context cultures, such as that of the U.S, encounter high context cultures they should focus on a few critical key aspects of cultural variation. First, there is a high need for harmony in the negotiation meetings, and care should be taken to preserve good will and avoid unnecessary tension (Zhao, 2000). There is also a strong distinction in seniority within the high-context culture and ample respect should be offered to elders and authority figures. Finally, one should be very careful about being blunt when talking to members of high context cultures (Zhao, 2000). Four key roots of culture Chinese culture is rooted in four major factors which have bound the Chinese together for about 5000 years (Graham & Lam, 2003). The first is agrarianism--most of the Chinese people still live in rural areas and cultivate either wheat or rice. The

Chinese agrarian culture is rooted in more than just farming China has historically been characterized by peasant farming, which has been communal and not individualistic. Farming is dependent on the cooperation and harmony of everyone involved. The family farm has a hierarchical labor group that has been held together by obedience and loyalty (Graham & Lam, 2003). Many of the urban people in China today have come from the country side and retained many of the values that they learned while living in the country. The second factor/root is their sense of morality - writings of the great philosopher Confucius, discussed above, have influenced the Chinese culture morality for over 2000 years (Graham & Lam, 2003). Though Confucius wrote his books two millennia ago, his teachings continue to define much of Chinese morality even to the present day. For example, prospective government officials are required to study Confucian moral teachings before they are allowed to take office.

Confuciuss central philosophical principles include the following (1) A society that is organized under a humane moral code will be prosperous and stable. (2) There are five central relationships: the ruler and the ruled, the husband and the wife, parents and their children, older and younger siblings, the friend and friend. There is a hierarchy relation to each of earlier mentioned relationships except the last one. These teachings still play a role in Chinese attitudes toward authority (Graham & Lam, 2003). The third root of Chinese culture is their pictographic language (Graham & Lam, 2003). Chinese children learn thousands of pictorial characters in their alphabet at a young age, while American children learn the relatively few characters in the Greek alphabet. These highly visual nature of these pictorial characters are thought to enable the Chinese faculty for thinking about the big picture, mentioned above. The American children are taught subtle differences in

characters, which perhaps contributes to the relative tendency of American business negotiators to focus on details. The fourth major root in Chinese culture is wariness of foreigners, based on invasions from all directions throughout their history (Graham & Lam, 2003). The "Great Wall" was built as a fortification against invasions from the north. There have been a number of different empires and political structures in what is now present-day China, and power struggles have often been accompanied by military conflict. There have also been numerous internal conflicts The Journal of International Management Studies, Volume 7 Number 1, April, 2012 193 Source: http://www.doksinet and wars over the thousands of years of Chinese recorded history. This has fostered the Chinese tendency keep within small, familiar, and close-knit communities. Eight Cultural Elements The four cultural roots have given rise to a distinct set of eight cultural elements (Graham & Lam,

2003). First, Guanxi was derived from the cultural necessity of living in self-supporting communities. The lifelong connections and sometimes cross-generational connections have held family units and friends together for millennia and are still an integral part of the Chinese culture (Buttery & Leung, 1996). Who you know in China is much more valuable than what you know how to do. If the Chinese don’t know you, they will not do business with you--no matter your intelligence, achievements, and/or qualifications. How exactly relationships develop and work within guanxi is not very well understood. Some of it has to do with the people one knows growing up and attending school with, while others in the network are friends who may have done some favor, even a fairly minor one. Zhongjian ren refers to the customary intermediary who befriends both parties involved in negotiations (Graham & Lam, 2003). The Chinese wariness of foreigners has lead them to need an intermediary when

doing any kind of business. The typical trust that the Americans extend, until they have a reason not to, has never been enjoyed by the Chinese. Business in China would not be possible without a trusted intermediary In China the custom practiced in business is to pass along trust through business associates that have some common background such as hometown, school or family (Graham & Lam, 2003). Those links must be based on personal experience, and this is crucial Expensive meals at nice restaurants are a way of initiating contacts with a former classmate that might know a person that you need to do business with. This will get your friend to act as zhongjian ren and allow for the initial meetings to take place. The zhongjian ren is not expendable at this point. The intermediary is needed to interpret the slight changes in body cues that the Chinese use to say no since saying no outright is very taboo in Chinese culture. It is also traditional for the zhongjian ren to act as a

mediator and settle any disputes that may arise. These zhongjian ren should also have a deep understanding of the background and operations of the Chinese state owned enterprises so that they will know whom to contact, or who has controlling interest (Zhang, 2008). Shehui Dengji is an element that refers to social status, and is about showing great respect for ones superiors (Graham & Lam, 2003). Casual business relations, common in America, don’t fare well in China The writings of Confucius, which influence the morality of the Chinese, say that obedience and deference to one’s superiors is required. This has also made the Chinese prefer to have meetings with people of higher and equal social and business status. This means that the head of the Chinese company will want to meet with the CEO of the American firm. Renji Hexie involves the need for interpersonal harmony (Graham & Lam, 2003). This means that one should be charismatic and have an inviting and easy going

personality. Friendships of equals are held together by renji hexie, while hierarchy is held together by respect and responsibility (Graham & Lam, 2003). This makes trust and harmony more important than any piece of paper. There must be a feeling that the business counterparts are human beings and not machines in service of giant corporations. Being able to socialize together, not tend to business all the time, and merely enjoy life is expected by the Chinese of their business associates. Zhengti guannian is the complete or whole thinking that is customary within the Chinese culture (Graham & Lam, 2003). This involves thinking about the whole country and not the individual business, or individual person The major Chinese industries are state owned and have to think about how their actions might affect the other state owned enterprises. This style of thinking seems to frustrate most westerners, but it has brought good things to the Chinese, who seem to get extra concessions out

of the Americans just before they announce their decision to accept or reject the deal. The Americans like to break things down into individual elements and look at them one at a time while the Chinese will jump from one subject to the other and talk about everything all at once. The jumping around seems to never settle anything from the American point of view (Graham & Lam, 2003). Some say that it is really hard to know if the negotiations are proceeding. All one has to do is pay attention to the high Chinese executives at the meetings As long as they stay, then the meetings are proceeding along just fine. 194 The Journal of International Management Studies, Volume 7, Number 1, April, 2012 Source: http://www.doksinet Jiejian means thrift and has always been a part of the Chinese culture (Graham & Lam, 2003). This has been the norm because they have had very few belongings for long periods of time. The Chinese save almost four times as much as a typical American does

(Graham & Lam, 2003), and they typically have had to work very hard for the things they have. Because of jiejian the Chinese often use a little more negotiation room in their offers than do Americans It is wise to be careful about asking for price concessions from the Chinese, as they get offended easily and may then attempt to give you the silent treatment when negotiating. This will make for even longer negotiations Mianzi is an element of Chinese culture that refers to one’s “face” or the preservation of poise (Graham & Lam, 2003). The preservation of composure and lack of embarrassment, or face, forms an underpinning of a business persons reputation in China. If a CEO or delegate from China feels embarrassed, or if they lose composure, they lose respect--and this is an item that can be sold, bought or traded in the Chinese culture. Displaying anger, frustration or aggression at the negotiation table will cause both parties to lose face and it is disastrous to

negotiations (Buttery & Leung, 1996). Chiku Nailao means enduring to the end and being relentless (Graham & Lam, 2003). The work ethic of the Chinese is well respected around the world. The Chinese are very diligent, tenacious and persistent They send their children to school year round, not the case for most western cultures. The Chinese do a lot more research about the opposing company than Americans typically do when preparing for negotiations. They expect to be at the negotiation table longer than do the Americans. There are three things that can demonstrate a persons chiku nailao, (1) asking lots of questions, sometimes more than once, (2) educating the Chinese about your company’s needs, preferences and situation, and (3) by showing patience. Be careful not to come across as condescending (Graham & Lam, 2003) The importance of relationships in negotiations Americans believe that the relationship develops after a contract, while the Chinese believe that there needs

to be a relationship before a contract gets signed. Building a relationship takes time and is a drawn out process and can cause negotiations to take longer than expected. The Chinese believe personal relationships build trust and should take precedence over the contract (Friedman, 2007). They also believe that a strong relationship leads to a successful contract. Contrary to America, in China there is a belief that partnering companies and individuals should have a strong mutual commitment, but be loose in their contracts. There are pre-existing relationships that take precedence in the Chinese culture. These relationships include those with schoolmates, family, relatives, superiors and subordinates (Friedman, 2007). The hierarchal structure of this network of relationships is based on “face” and favor (Wong, Tam, 2000). Chinese business culture Zhang (2008) has described three components of Chinese business culture. The first involves the influence of the nation state on the

culture, namely the People’s Republic of China and what is sometimes termed the "PRC condition." This term refers to the influence that the socialistic government puts on trade and negotiations. The government enjoys owner’s rights, interests and privileges of most of the big industries (Zhang, 2008). The country has a planned economic system, legal framework, and planned technology development. The second cultural component, Confucianism (mentioned above) is about moral cultivation, how important relationships are, the importance of family, respect for age and hierarchy, and the avoidance of conflict (Fang 2006). A third component is Chinese stratagems, thirty-six in all, that provide insightful ways to reach a goal. Some of these involve deception and underhandedness. When negotiators start to use these stratagems, harmony is no longer prevailing and the negotiation is probably not going to go well (Zhang, 2008). Chinese stratagems often favor the optimization of

long-term outcomes (Ford et al., 1996) American business culture Individualistic cultures tend to place greater emphasis on personal needs than that of the group. In the individualistic American business culture, immediate returns are what count the most. Managers seek to make the deal The Journal of International Management Studies, Volume 7 Number 1, April, 2012 195 Source: http://www.doksinet and go home (Ford et al., 1996) Rapid closure is favored to allow for moving on to the next deal Typical American deal-makers aim to further their personal interests through commissions and compensation (Tinsley & Pillutla, 1998). THE NEGOTIATION PROCESS: SOME PRACTICAL RECOMMENDATIONS Negotiations are the talks that take place before a contract, deal or covenant is reached. Negotiations represent the process by which two or more parties are able to meet a mutually acceptable agreement. The process may or may not incorporate mechanisms for building trust so that two parties can work

together for the benefit for both. Negotiation is called “tan pan” in Chinese and literally means to judge and discuss (Neidel, 2010). Some practitioners say that negotiation is an art form that takes many years to perfect. Others believe that successful negotiations can stem from a natural talent that is inherent to the makeup of some personalities. The Chinese concept of negotiation rests on creating a framework for long-term cooperation and problem solving. The American negotiation concept is to create a onetime agreement between two parties (Lee, Yang, Graham, 2006). Preparing. Americans need to take more time than usual in preparing for negotiations (Neidel, 2010) Americans should also try to gain as much knowledge about the partner’s situation, intent and capabilities. As mentioned above, they need to study the fundamental differences in culture and expectations before negotiating (Ford, LaTour, Vitell, French, 1996). It is customary that the foreigner shows his hand or

proposal first when visiting the Chinese (Pye, 1992). Letters of intent are necessary to open the doors to more fruitful negotiations. These letters have no binding ability according to the Chinese. After the letters of intent, the negotiations start with the general principals and then move to the details In high context cultures such as Chinas, Americans should be careful not to rush the transition from general to specific. Context of the Deal. Knowing the context of the deal is very important A westerner who has a lot of knowledge about local government involvement in local business is very credible. It is also very helpful if the westerner knows the regulations and policies that pertain to the industry that it is doing business with in China (Neidel, 2010). Your Negotiating Partner. You should do a background check and know whom you are doing business with in China (Zhang, 2008). In addition, the Chinese government owns or directs all state owned enterprises This makes it critical

that you know current People’s Republic policy’s plans and priorities (Neidel, 2010). American firms need to pay close attention to the direction the Chinese communist party is taking in regards to social and economic development. They should verify credibility by looking at past dealings that the Chinese company has made with other companies. Know yourself. Knowing the “big-picture” of your own company and how the deal will affect your company will help you look more credible to the Chinese (Neidel, 2010). Being aware of how government regulations in your own country may influence your company is very important to the Chinese. This is because the Chinese are used to having government involvedn in all parts of business in their country (Zhang, 2008). Strengths and weaknesses of each company. Be ready to show how each side will benefit from the deal in both social and economic value. Show the weaknesses and strengths of each company in both social and economic terms Be sure to

put the associated strengths and weaknesses in the local context of the proposed deal. It is worth noting that businesses which have gone through internal and external analysis have a much better advantage when it comes to closing the deal (Neidel, 2010). Operational Readiness. The American company needs to be aligned to work with Chinese-style negotiations The negotiation teams need to be cohesive and disciplined (Neidel, 2010). They must never disagree with each other openly, or in off the record talks that take place away from the main meeting. There should be one designated speaker, and if anyone else talks they should read from a script so that it shows company consensus. Saying too much can be disastrous (Neidel, 2010). It is better to have the Chinese asking questions, rather than processing what they may consider useless information. Having a cultural interpreter can help give insights to non-verbal communications and body language that is not familiar. The company should also

have its own interpreter in addition to any “official” interpreter that has been assigned. 196 The Journal of International Management Studies, Volume 7, Number 1, April, 2012 Source: http://www.doksinet Never-ending negotiations. Negotiations in China are never final (Zhang, 2008) The Chinese use negotiations as a way to build relationships over long extended periods of time. The signing of a contract in China signifies the beginning of a long term relationship with the Chinese. The Chinese believe that their customs are far more important than any written piece of paper. A contract starts a long-term commitment and they assume that it will be revisited every now and then (Zhang, 2008). Places. The Chinese like to conduct business negotiations in their offices and this is often the venue that is chosen by both parties. However, to start negotiations, take the Chinese out to expensive restaurants, and later send them expensive gifts (Zhao, 2000). After the restaurants and

gifts, some free samples and proposals should be sent in the pre-negotiations stage. All of these steps are required when building the trust that is needed in the Chinese-style negotiations. Reputation. The Chinese are advocates of sincerity (Lee et al, 2006) They believe that all communication should be kind and well intentioned with lots of complements. Saying no directly is very taboo in the Chinese culture and most of the time the subtle “no” that the Chinese give is only recognizable by a Chinese cultural interpreter. The Chinese will give concessions sometimes just to avoid any embarrassment and save their reputation or face (Lee et al., 2006) . Communication. Americans need to make sure that communications between the parties are understood and clear Miscommunication in negotiations causes distrust, emotional turmoil and poor outcomes (Zhao, 2000). The nonverbal and personal relations are far more important than any signed contract because Chinese contract law allows

contracts to be in written, oral or other forms. Due to Chinese companies being owned by the state, negotiations may take longer than expected and instant answers may not be available. The government may have to review contracts several times before they allow the business to sign then or make any formal agreements. American contract law is very stringent while China’s is more flexible. Contracts depend more on the relationships than the writing of the contract. The Chinese also like to keep their options open and they will abandon a deal if a sweeter one opens up (Friedman, 2007). It is critical to have a predetermined method for resolving any disputes that arise. This is usually done through the use of clauses at the end of the contract These clauses satisfy the Chinese need to practice Confucian aversion to law, and may involve arbitration (Zhang, 2008). There are certain “why” questions that are taboo in Chinese culture. It takes some tacit knowledge to figure out whom you

should ask, and which questions to ask. One should ask particular “why” questions to certain individuals and not others, or these questions can offend some of your Chinese counterparts (Zhang, 2008). Tactics The Chinese Negotiator. As discussed above, the Chinese negotiator is guided by the three cultural dimensions that are apparent in their culture. The PRC condition, Confucian philosophy, and Sun Tzu stratagems all play an influence in their negotiations. These are underlying concepts that are very different than the ones known by western negotiators. The Chinese like to ask many questions during the negotiations and they also interrupt very frequently (Ghauri & Fang, 2001). The Chinese will often settle all suspending items of the deal in a package deal They prefer to only make concessions at the end of the negotiations. In China concession for concession is expected Although these reciprocating concessions may not follow immediately, the Chinese will expect them over time.

The Chinese have different types of negotiations that they use with different types of firms (Pye, 1992). The type of product being sold and the supply chain of the product influence these negotiation tactics. The Chinese like to make their issues seem very important compared to the westerner’s issues. The agreement or contract is almost always signed in front of a government official. The Chinese like to try to manipulate the American side through cooperation, assertiveness, defensiveness, flattery, identifying the opponent’s problems, deception, shamming and pitting foreign companies against each other (Ghauri, Fang, 2001). Carrying on long negotiations on the part of the Chinese, is a tactic to try and get concessions, and is very common. They very seldom give indications when the negotiations are reaching their end (Zhao, 2000) The Chinese like to use stalling tactics frequently. The Chinese will try and have you make concessions and sign the The Journal of International

Management Studies, Volume 7 Number 1, April, 2012 197 Source: http://www.doksinet contract before the government official gets there. You should always approach negotiations as if it were a political debate and not an intellectual debate (Lavin, 1994). The Western Negotiator. The western negotiator likes to have cooperation and believes in competition Their goal is to create economic wealth and maximize shareholder benefits. Although tension may work in the American’s favor temporarily, it will damage the overall important interpersonal relationships that bind more strongly than any contract can (Lee et al., 2006) These relationships are necessary to keep long term contracts going and to form new ones. Motivations. The Chinese businessperson is usually in it to advance their personal political career They want to be compliant with the current policies and guidelines. They are more likely to avoid risky situations The westerners are in it for personal gains, usually monetary.

They seek to increase their own compensation (Zhang, 2008) Business Channels. Chinese business channels follow a certain sequence in how they proceed The first thing one must do is build trust. This takes time and one must get to know the business partner personally During this process the partner gets to know you too (Zhang, 2008). Symbolic visits by top executives of western firms can build trust along with banquets and informal communications. Having the Chinese delegates visit a western firm’s home country can do wonders to build trust The intermediary must accompany all of these events since they are is usually the one who introduces the relationship and builds up all the connections. Sometimes the intermediary is the one who arranges the proper trust- building events Intermediaries can also serve as the cultural interpreter (Zhang, 2008). The final negotiators should not be present until close to the end of the negotiations and these could be government officials. This is

usually the case in larger state owned enterprise negotiations. It also helps if you know who these chief negotiators are (Fang, 2006) Difficulty. There are three main sources of difficulty that typically arise in negotiations The inexperience of both parties and the newness of relationships generate issues on its own (Pye, 1992). The second difficulty is that trying to synchronize a capitalistic society with a socialistic one going through a very uncertain transition creates a lot of difficulties in seeing what the future will hold. Finally, cultural differences cause the most difficulty when negotiating between the Chinese and the westerners (Pye, 1992). Successful negotiations Negotiations are usually more successful when the two parties involved are cooperative with each other (Zhao, 2000). Using the cooperative Confucian tactics instead of the warrior-like Sun Tzu stratagems will have better results When problem solving strategies are used by both firms there is a higher chance of

success (Adler, Brahm, & Graham, 1992). It helps if the western company can show that they have government support--this shows that they are stable, reliable and credible. Talking to your counterpart instead of threatening legal action always results in a better solution given the Confucian aversion to law. Also keeping things as local as possible should pacify the Chinese wariness of foreigners which has great weight in their culture. You should maintain the same team that you start with A successor will not inherit your guanxi, or friends. The Chinese don’t do business with your company they do business with you Always add a cushion to your price. The Chinese are accustomed to haggling over every purchase and expect everyone else to be the same way, especially if you are visiting their country. Be careful--too high of a price could insult your Chinese counterpart, so pad your price wisely and in a culturally appropriate manner. If you can, you should help your counterparts

around any bureaucratic obstacles that may get in their way. Inviting the Chinese to go abroad to your country can add tremendously to your success. Be careful not to use superstitious numbers or other objects and you will increase your probability of success. Trust will lead to much better performance. Being patient will be more beneficial to you than any other attribute you might possess (Fang, 2006). Don’t give in to pressure from your superiors to hurry up and complete the deal This can cause problems because the Chinese are not greatly concerned with the time dimension (Bredin, 1998). 198 The Journal of International Management Studies, Volume 7, Number 1, April, 2012 Source: http://www.doksinet Failures Failures can come from a variety of unexpected sources. The most common reason for failure is that the Chinese firm lacks the funds to go through with a deal (Fang, 2006). Sometimes the cultural interpreter may not realize that the Chinese firm was insincere in their offer.

If the tone of the negotiations becomes one of frustration and lack of cooperation, then failure is almost certain. Showing anger, raising your voice or changing your tone could be seen as uncooperative behavior (Zhao, 2000). Also if you send a low-ranking employee, the Chinese will consider you impolite, be insulted and doubt your sincerity. They will send a matching low-ranking employee of their own just to match you, but he will not be allowed to negotiate with you. If you attempt to seek legal help you will most likely ruin any trust that has been built up in relationships. The Confucian aversion to law causes them to see trouble and relationship failure when the legal system gets involved (Fang, 2006). It should be noted that Chinese law says that one cannot leave a contract unless both sides approve dissolution (Sebenius, 2002). Failure to say no to a Chinese negotiator who is using a Sun Tzu-like strategy could be detrimental to your deal, but on the other hand, saying “no”

to a Confucian gentleman could cause a loss of face. This also will be very harmful, if not fatal, to a successful deal (Fang, 2006). The Chinese have regional areas just like the United States and there are very different cultures, traditions and sometimes languages in these regions. Not acknowledging these regions can cause you to have limited success in one area and a complete failure in another (Fang, 2006). SUMMARY Culture can have a large impact on the success of international business, and negotiations between companies doing business across borders, in particular. The chasm between Chinese culture, business, and negotiating practices and that of Americans is vast. The cultures differ in the basic philosophies and deep level assumptions, as well as strategies, tactics, and operational styles. When the two cultures engage, the opportunities for major misunderstanding are rife. If Americans managers follow their typical manner of doing business and the Chinese followed theirs,

there would likely be few deals and two cultures would clash terribly. An understanding of cultural influences and a willingness to bridge and accommodate differences is therefore central to successful business partnerships involving U.S and Chinese companies This article sought to further such understanding and aid in bridging cultural differences Much more investigation of this crucial topic is needed. REFERENCES Adler, N. J, Brahm, R, & Graham, J L (1992) Strategy Implementation: A Comparison of Face-to-Face Negotiations in the Peoples Republic of China and the United States. Strategic Management Journal, 13, 449-466 Buttery, A., & Leung, T K (1998) The difference between Chinese and Western negotiations European Journal of Marketing, 32, 379-389 Child, J., & Mollering, G (2003) Contextual Confidence and active Trust Development in the Chinese Business Environment Organization Science, 14, 69-80. Fang, T. (1999) Chinese business negotiating style Thousand Oaks, CA: Sage

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