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China has been becoming a key player in the world stage since last two decades for her rapid development of economy¼Œmilitary force and so on. More and more countries regard China as an emerging market for her huge potential market and big amount of potential target customers; therefore, many countries want to operate business in China. According to the survey, America is one of the biggest business partners of China; it continues to maintain China's second largest trading partner, bilateral trade amounted to 102.34 billion U.S. dollars, an increase of 11.4%. Among them, China's exports to the U.S. $ 74,300,000,000, an increase of 6.9%,more than a quarter of accelerating 1.5 percentage points over the same period accounted for 17.5% of the total value of Chinese exports; imported 28.04 billion U.S. dollars from the United States, an increase of 25.6%, trade surplus of 46.26 billion U.S. Dollars.
As trade increases, more and more American companies have chosen to develop the Chinese market. While the problem also appears, it is difficult to negotiate with the Chinese. With the 5,000 years Chinese traditional culture, many multinational firms realized that China has her own negotiation style. This issue was mentioned by Lucian Pye (1992, p.74, cited by Tian, 2007), "the Chinese may be less developed in technology and industrial organization than we, but for centuries they have known few peers in the subtle art of negotiating . When measured against the effort and skill the Chinese bring to the bargaining table, American executives fall short."
From the above background, we can see that if the foreign business people want to do business in China, learning Chinese negotiation style is very important. With inadequate knowledge and skills of Chinese negotiation style, it will be difficult for Americans to succeed in striking a desirable deal with Chinese partners and in developing business in China. For this aim, this essay will do a systematically analysis on how to negotiation with Chinese, particularly for the Americans.
This essay aims for set out how to understand Chinese negotiation style and find out the differences of negotiation styles between Chinese and Americans, to provide useful information on how to achieve a win-win object. In this essay, the main body will be the analysis of Chinese negotiation style. Section one will introduce some fundamental information of negotiation; in section two, the Chinese culture roots will be illustrated; in section three, the comparison of negotiation style between Chinese and Americans will be indicated; in section four, the conclusion will be given which is even though there are many differences among negotiation styles, the common rules still existed among these countries.
Based on Tian (2007), there are two parts contribute to negotiation process, which are common interests and conflicting interests. However, many scholars hold divergent views from different perspectives. From the social exchange theory, it defines negotiation as a process, which focus on problem-solving communication for both parties aims for a 'win-win' agreement (McCall and Warrington, 1984; Graham, 1986, cited by Tian, 2007). Which means it focuses on how to maximize the benefits accruing to all parties. Therefore, it can be seen there is a positive relationship between two parties without hurting each other, the conflicts will also be addressed in a way that benefits all.
Specifically, social exchange theory insists on a cooperative strategy of negotiation. This implies that both parties need to collaborate with each other and unify the interests of all aim for achieve mutual benefits. The cooperative strategy is illustrated as 'principled negotiation'. As a principled negotiation, it focuses on: separate the human from the problem; focus on benefits rather than positions; options for mutual benefits; insist on objective criteria and no tricks and posturing. In all, the negotiation parties can gain from negotiation in a decent and fair manner. (Tian, 2007).
Another theory is the game theory. This theory emphasizes on a 'win or lose' agreement. It considers negotiation as a process that both parties communicate with each other in a competitive manner. (Raiffa, 1982; Siebe, 1991, cited by Tian, 2007). It defines negotiation as each party wants to maximize its own benefits at the cost of the other side. During negotiation all the parties can fight with one another in order to maximize their own interests. Hence, we can see that game theory is based on a competitive strategy.
The third theory is called "cross-cultural" theory. This theory focuses on a specific type of negotiation, which is the different culture background. It indicates that different cultures may lead to different negotiation styles. Based on Tian (2007), game theory and social exchange theory have few implications on negotiation process, while the most influential factor is negotiators from different culture backgrounds need to have a basic understanding of each other's cultural environments and negotiation styles; this will very helpful on the success of negotiation. In this essay, we will focus on the cross-cultural negotiation style to analysis the Chinese and Americans negotiation.
Cultural roots of the Chinese negotiation style
Lots of scholars argued that Chinese culture can be divided into two aspects; one is traditional Chinese culture, the other one is contemporary Chinese political culture (Tian, 2007; Fang and Ghauri).
Traditional Chinese culture
Confucianism is one of the most influential factors on Chinese negotiation style. There are six basic Confucian values. Firstly it emphasizes on moral cultivation. It regards trust and sincerity as the most important qualities. Secondly, it thinks highly of interpersonal relationships. Guanxi is a major mechanism in the Chinese social psychology. Thirdly, Confucianism pays attention on family and group orientation. The fourth factor is the respect of the age and hierarchy. Being a Chinese who needs to show respect to the aged people; for hierarchy, people should does his duty to contribute to social harmony and stability. The fifth factor is harmony first. Confucianism highlighted the need aim for harmony in the whole society by moral conduct in all kinds of relationships. The last factor is face, Confucianism educated the people they all should have 'a sense of shame' in their minds. Face is a fundamental moral mechanism on Chinese way of life. (Fang and Ghauri).
Sun Tzu's stratagems: which known as "Ji" or Chinese stratagems, has a huge impact on Chinese strategic business behaviour. Sun Tzu's provides Chinese with various kinds of solutions when facing different situations; how to gain psychological and material advantage to achieve one's purpose. Chinese negotiator is often Sun-Tzu-like strategist, seldom wages a physical business war but rather might be keen on a psychological wrestling of wit to create a favourable situation to manipulate his/her counterpart into doing business his/her way. (Fang and Ghauri; Chas.W, 1999). The most popular part of Sun Tzu's stratagems is the Thirty-six ancient Chinese stratagems.
Agrarian mentalities: China has a large agrarian population fir over 4,000 years. Even during the Cultural Revolution during 1966-1976, millions of students in urban areas were sent to the countryside by Mao Zedong to let them re-educated by the peasants. Even though most of the students went back to the city they still passed their re-educated values gained from countryside to their off springs; which is completely different with western countries. Based on many scholars research, (Tian, 2007; Graham and Lam; Pye, 1992), thrift and endurance are the most outstanding characteristics of the agrarian mindset when Chinese negotiating. So the agrarian mentalities continue to have a big influence on the way of thinking of the Chinese.
Mao Zedong's bureaucratic heritage and Deng Xiaoping's pragmatism are the most important political cultures in China.
Mao Zedong's bureaucratic heritage: this political culture based on orthodox Marxist-Leninist ideology with three main features. Firstly, the leader of the party has the biggest power on political and personnel. Secondly, fragmented and stratified bureaucratic agencies. Different ministries, province governments, government departments and agencies bargain and compete with each other over allocation of limited resources. Bureaucrats typically have good skills of bargaining within the system. Thirdly, the art of survival in the bureaucracy was responsibility avoided. The reason for this is how the unique bureaucratic system works. In China, power means everything especially in political, therefore, everyone tried very hard to avoid mistakes so they can stay at the office as usual. Some of them do everything based on orthodox Marxist-Leninist doctrines, some shifting responsibilities onto the others.
Deng Xiaoping's pragmatism: Deng is the leader of China economy reform which begun with market-oriented economy reform. During the reform period, Deng had to overcome the political barriers left from the previous period. Therefore, Deng promoted a pragmatist ways of thinking within the Party leadership, which has fundamental changed the political beliefs, attitudes, values and feelings of Chinese society at larger ever since. Deng's theory emphasized on practice rather than theory means. Moreover, Deng also promoted that "white or black, it is a good cat as long as it catches nice", in his view, as long as China can achieve economic development and modernization, no matter what kinds of the measures are, the measures should be taken.
From the above analysis, we can say that China not only has her own traditional culture, but also has her complicated political culture. All of the factors have big impact on Chinese negotiation style.
The differences between Chinese negotiation and Americans negotiation
Politics influence¼šLots of scholars pointed that, China always has a huge negotiation team but with little power on decision-making. (Adair, et al, 2001; Ghauri and Fang). To be specific, this power refers to the negotiation team power. The key reason to this phenomenon is in China, it is hardly to separate business from politics. In the Chinese Communist culture, they think politics is all-pervasive while on the contrast, Americans believe that business and politics should be separated (Pye, 1992). Ghauri and Fang also pointed that, if you want to do business in China, you should pay enough attention to the Chinese government because the government is the "biggest boss" and Chinese enterprises are just their "factories". Chinese economic structure is more centralized while Americans' is more open and free. They also indicated foreign firms should be sensitive to the "guiding principles of China's social and economic development set forth by the Chinese Communist Party and the Chinese government, and also, should make a careful study of the Chinese government's priorities and implementation policies". In the contrast, Americans regard business is business and politics is politics, which are totally different aspects in the negotiation process.
Legal Influence: The Chinese consider the interpersonal relationship is more important than legal contract, which is totally different from Americans. As Pye (1992) mentioned, "Chinese culture traditionally shuns legal considerations and instead stresses ethical and moralist principles, whereas Americans are thought to be highly legalistic." So historically, Chinese and western cultures has quite different views about the importance of legal process. The Chinese seem to be bound by their tradition non-legalistic practices. Tian (2007) also indicated that, the Chinese negotiators do not pay much attention to legal agreement as western people do. They focus more on interpersonal trust, friendship and guanxi. Some American businessmen argued that they learned that among Chinese it was a traditional way to seal agreements with only the oral commitment, a nod of the head, or a handshake (Pye, 1992). This Chinese negotiation style is closely related to the Confucianism that required people to appreciate interpersonal relationships rather than laws and legal regulations; and also, it is a reflection of emphasizes on the harmony. In the contrast, Americans consider legal contract is much more persuasive than personal relationship. As Pye (1992) indicated that the majority of American negotiators are lawyers, which means that the Americans consider the contract is the most important part of negotiation.
Holistic Thinking: Graham and Lam pointed that; the Chinese always consider the question from a whole picture; however, the Americans think sequentially and individualistically. Chinese negotiators always start negotiations on the general principles first and leave details to the later stages (Tian, 2007). Also, Pye (1992) pointed "the Chinese seek agreement on generalities, dwelling on overall considerations, and avoiding specific details as much as possible, leaving, as they like to say 'concrete arrangements' to later negotiations." But the Americans are more in favour of solve problems one by one. Why the Chinese like use this negotiation style? The reason can be considered consistent with Mao's bureaucratic heritage; the party leaders always set the general principles and the followers had to agree upon before any details can be discussed. According to Pye (1992) and Tian (2007), some western businessmen argued this as a negotiating ploy. They argued that Chinese negotiators can take advantages of the signed general principles at the later stage of negotiations. This ploy is quite obvious when it comes to the specific details. Assume that both parties were arguing about details while at this moment, Chinese negotiators can attack the other side for not complying with the general principles signed earlier. Therefore this can be called one of the thirty-six stratagems-"shut the door to catch the thief." Nevertheless, even the western businessmen consider this as a ploy it still has its advantages. Pye (1992) said that "Chinese can quickly turn an agreement on principles into an agreement on goals and then insist that all discussion on concrete arrangement must foster those agree-upon goals." This measure is useful during negotiation process approved by a American: "by making each agreement between us move from a more general to a more technical level, the Chinese can constantly argue that what they were insisting upon in operating procedures was logically consistent with all that had been agreed to before....they sure taxed out patience and always put us on the defensiveâ€¦"
Information exchange (emotional aspect): the Americans pay more attention on the information exchange during negotiation process; they can accept the discussion as main method to solve the problems, even the discussion is very intensive. In contrast, the Chinese are focusing whether the counter party gives their "face" or not. In Chinese business culture, one's reputation and social standing rest on saving face. Assume that foreign businessmen cause the Chinese embarrassment or lose face, even unintentionally; it can be disastrous for negotiation process. Moreover, Tian (2007), Ghauri and Fang, found that face is extremely important for Chinese. They argued that if someone gives enough face to the Chinese negotiators, they will behave as a "Confucian gentlemen" otherwise they will return you back or set block in the negotiation process. Therefore, from this perspective we can see that compared with the Americans, the Chinese are thinking highly of "face".
Time issue: Americans in favour of fast meeting when negotiation, while the Chinese need much more time to build the trust with counter party before negotiation. The reason is influenced by Confucianism; Chinese only do business with someone they can trust; while trust building is a time-consuming issue. As one Chinese negotiator said "they [western firms] want to come and sign the contract quickly and do not know that [if] we do not understand each otherâ€¦there is no business relationship first, we have to know and trust each other, and then we sign the contract!"(Ghauri and Fang).
Patience: Compared with the Chinese, Americans are more impatient. As long as an initial agreement has been reached, the American negotiators become more than ever impatient for the consummation of a deal, for they tend to assume that the step from general agreement to detailed substantive negotiations should be a short one (Adair et al, 2001). In many cases, the impatience of the Americans is fuelled by the fact that it is not convenient, or economical, to keep their entire negotiating team in China doing nothing (Pye, 1992). For the Chinese, however, this may be the time for substantial delay. The officials who have been talking with the Americans may not have the authority to go further and must wait for the further instructions. The Chinese are also short of expert talent and thus lower officials may have to await the clearing of bottlenecks in their own hierarchies. Also, Chinese cadres often seem genuinely to feel that once there has been an agreement in principle, congratulations are in order, and therefore, they are in no hurry to get into the potentially troublesome haggling over details.
Negotiation team: the Chinese negotiation team tends to be a large one but indecisive compared with Americans'. According to Tian (2007), a western businessman pointed that it is common that lots of people from carious government departments and commissions (such like planning, economic and foreign trade commissions and the like) get involved in the negotiation team. Apart from government officials, some representatives from various departments of the Chinese company are often also invited to participate in the negotiating team, aims for avoid possible" non-collaboration" in the long term. The feature of the Chinese negotiation style is related to Mao's bureaucratic heritage. Economic planning has been playing a key role even after reform since 1978; consequently, fragmented bureaucratic institutions have to maintain control over specific resource, which is even true at the enterprise level. As a Chinese negotiator admitted "when it comes to negotiation of a lager project in which various departments are involved, if you do not ask each of these departments to come, they will probably make complaints and won't support your work very much in the futureâ€¦therefore, in order to coordinate our work, we asked every department to send one representative to form our negotiating team" (Fang, 1999, p.208, cited by Tian, 2007).
Nothing is ever final: Americans hold the view that once the contract being signed, then all the parties should show up the expected behaviour in a fixed time; aims for perform the contract in time. The Chinese seem to have less feeling for the drama of agreement and little expectation that any formalized contract will end the process of negotiations. Lots of western negotiators argued that the Chinese brought up proposals for revising what had been agreed upon, right on the heels of signing a contract. Thus although they are reportedly scrupulous in adhering to agreements, they have no inhibitions in proposing changes. What is more, the Chinese officials do not seem troubled by the thought of suddenly terminating contracts; or in other words, the Chinese do not stick to the contracts as Americans do. As mentioned above, the Americans are more legalistic, but the Chinese think the sudden change or termination of the contract do not have influence on the relationship between the westerners while this is completely different compared with the Americans. In Americans' view, once the agreement being signed, the negotiation process is over while the Chinese always tend to continue the process with continuously new questions (Pye, 1992).
Chinese stratagems: The Chinese more likely to use stratagems during the negotiation process, while the Americans always being honest and humorous. Lots of scholars pointed that the Chinese in favour of using stratagems (Ji) during negotiation, which is too hard for them to identify (Tian, 2007; Fang, 2006; Miles, 2003). For example, when Ericson entered China during pre-negotiation stage, the Chinese changed negotiators suddenly, was being regarded as " steal the beams and change the pillars", as mentioned above, the Chinese only doing business with the people they can trust with, without solid trust it is hardly for them to be truly honest, therefore they will use stratagems. As one negotiator admitted that they used the stratagems unconsciously but the stratagems occupied more than 10% in the negotiation process. Using stratagems, for the Chinese, is deeply influenced by the traditional Chinese culture.
Risk-taking: Americans are the risk-takers compared with the Chinese. They are often prepared to put forward new and innovative ideas, suggestions. This is often done without prior approval from headquarters and represents the risk the head of delegation is prepared to take, in order to reach consensus. This trait is widely recognized and highly respected by other delegations. Compared with the Americans, the Chinese negotiators are more conservative during negotiation, without any back guarantee or the higher direction from the upper level, the Chinese negotiators tend to be very careful, speak and act cautiously (Adler et al, 1992).
Price-sensitive: the Chinese are sensitive to price. Lots of foreigner negotiators said that the Chinese often keep asking for lower price during the whole negotiation process. This difference compared with Americans discussed in almost all the influential studies on Chinese negotiation styles. Such like Tian (2007), Pye (1992). This sensitivity closely related to the Chinese agrarian mentalities, which emphasized thrift. It also related to Deng's pragmatism, based on the backward reality of China, which is, the resource is very limited that the Chinese have to pay attention to the cost issue. Moreover, the Chinese would think that we have provided you with a huge market with huge potential profits; you need to give us favour back.
The similarities between Chinese negotiation and Americans negotiation
Protectionism: some scholars argue that the Chinese always being protective to the local industries, especially for the national key industries, such like IT, telecommunication industry. It is probably the common phenomenon in every country. Lately Huawei, the Chinese telecommunication enterprise wanted entered America but rejected by the national security department for the reason that the telecommunication is a key industry and it also consistent with the national security (Xu, 2011). From this we can see that, no matter China or America, both of them pay special attention to the key industries.
Pragmatic: The Americans tend to be very practical, pragmatic ones. They do not interest in high-flown rhetoric or speeches in the negotiation process. As the Chinese, they are very practical people as well. They have the clear purpose when negotiation, which is obtain the favour and reach the win-win result.
In this essay we mainly analyzed the differences and the similarities of the negotiation style between Chinese and Americans. It is hardly to give a definite conclusion which is better than the other one. But for China, there are four points for them to amend compared with the Americans in the negotiation process in the future. Firstly, the Chinese should learn from the Americans they prefer the legal contract rather than the personal relationships. Since nowadays, China is getting more involved in the world business, facing various kinds of counter negotiation parties, different cultures around the world, the business need to base on the legal contract. It should be seen as a secure for the business. With the rapid development of economic and culture, legal, is becoming a main method to protect the rights and interests between the people, the Chinese should recognize this. Secondly, the huge but indecisive negotiation team should be improved. Due to the unique culture of China bureaucracy, the Chinese negotiation team always bigger than its actual needed. This is a waste of human resource; also, each department of the government should be separate from each other, each performs its own functions, if so, the efficiency of negotiation will be enhanced better. But to achieve this target, it will take a long time and the joint efforts of all departments. Thirdly, the Chinese always behave "nothing is ever final" even the contract signed already. This is a performance of bad faith; it is harmful for the Chinese to continue doing business with the foreigner partners. In other words, the root cause of this phenomenon is the indifference of Chinese legal concept. For the Americans, they should learn from the Chinese being patient when negotiating, it is easy to make loss due to the decision made when lost impatience.