Negotiations with the Chinese: Expectations and Preparation - Case Study Example

NEGOTIATING WITH THE CHINESE By Student’s Name Code + Name of Course Professor/Tutor Institution City/State Date Negotiations With the Chinese: Expectations and Preparation. Executive Summary There is an immense rift between Australia’s and culture of the Chinese concerning the historical influences, assumptions, business strategies, systems of economy, tactics, and varied business-linked understandings and interpretations. These dissimilarities pose an immense challenge for attaining workable outcomes in business negotiations. This report examines how the Australian business can enter negotiations within Chinese cultural contexts as they relate to business discussions, and examines the expectations and the preparations for the negotiations. The report provides recommendations for averting pitfalls and increasing effectiveness in the negotiations. Table of Contents Executive Summary 1 Introduction 3 Cultural Effects on Negotiation 4 Major Roots of Chinese Culture 5 Elements of Chinese Culture Critical in Business Negotiations 6 Some Practical Recommendations 7 Conclusion 9 References 9 Annotated Bibliography 10 Introduction Negotiations across borders often face the hurdle of completely dissimilar negotiating styles and approaches grounded in culture and local history. Arbiters are usually inclined to factor in the customary mannerisms in business in an alien state with dissimilar customs and traditions that are rude or inappropriate (Akgunes, Culpepper & Austin 2012, p. 191). Historical settings with divergent timelines or events have developed rich and highly distinct cultures. These cultural trends are deeply woven in the business negotiations fabric influencing failure and success in often-subtle ways. Notably, the Chinese negotiators are some of the finest worldwide and given the significance of the Chinese market to numerous sectors and businesses, it is crucial to comprehend the procedure of Chinese negotiation. The Chinese negotiators usually like developing a relationship and getting to know an individual or company before committing much exertion in to the details of the business. The preparation of business with the Chinese follows Deresky (2003, p. 4) proposition of preparation, relationship development, exchanging related information, persuasion, and concessions. Thus, business negotiations with the Chinese will necessitate a careful preparation comprising the familiarization with the Chinese cultural context and background in addition to the subject of discussion. Tactical preparations need to be made to avoid negotiation challenges, which are caused by distinctions in environment, language, culture, etc. Cultural Effects on Negotiation Hofstede’s framework on culture considers China as a high context culture. In such a culture, more focus is placed on taking care of the interests of groups as opposed to individual interests (Ghauri & Fang 2001, p. 306). Colleagues are expected to assist one another. Mangers from China and Australia managers have dissimilar anticipations regarding the setting, which should dominate for negotiations. Many people usually come from firm meeting to deliberate on matters that concern the talks in China. In the Chinese high context culture, personal relations, non-verbal behaviour, and social context are collectively significant in talks (Zhao 2009, p. 211). These are additionally vital in comparison to the lawful agreement, which comes from the negotiations. Some words could suggest much. The set up for instance harmony or tension of the talks can make or jeopardize the discussions. In China, the team is often accorded more importance as opposed to individual interests. The Chinese’s belief in acting right as opposed to just following legal demands. They often sacrifice outcomes expected in the short run for the powerful long-run objectives (Culpepper, Austin & Akgunes, 2012, p. 192). Major Roots of Chinese Culture The main roots of China’s culture is grounded in factors that characterize the region for more than five thousand years (Lam & Graham, 2003, p. 82). A major factor is the Chinese sense of morality grounded on Confucianism. Confucius, an ancient Chinese philosopher wrote books that have influenced the Chinese culture of morality. His lessons have maintained the definition of Chinese morals. For instance, potential employees of the government are obligated to learn Confucianism before assuming office. Confucius's key philosophical principles comprise the establishment of an organized society, which operates under a humane moral code (Akgunes, Culpepper & Austin 2012, p. 194). According to the philosophy, there are five main relationships i.e. the ruled and the ruler, the wife and husband, parents and their kids, friend and friend, and elder and younger relations. These relations have a hierarchical relation to each other. The teachings still take a key role in influencing the attitudes of the Chinese toward authority. Therefore, reciprocity, hierarchy, and interdependence are the key elements of Confucianism’s interpersonal relationships (Sebenius 2002, p. 78). Failure to honour the attributes can threaten interpersonal relationships and mutual trust among negotiating partners. Hierarchy is mirrored in the manner the Chinese people greet and address one another, the speakers during meetings, and decision-making processes. Addressing senior memberships of a Chinese group by name, without their formal title, during a meeting with the entire group, would be regarded highly impolite. The immense expectation of the Chinese concerning reciprocity in business negotiations grows from Confucius’ admonition. Elements of Chinese Culture Critical in Business Negotiations Guanxi, a cultural root in China was created from the cultural need of residing in self-supporting societies (Graham & Lam 2003, p. 83). The lifetime links relations across generations have cemented families and friends for years and continue being a crucial Chinese culture element. Whom one knows in China is much more important than what one knows. The Chinese do not engage in business with persons unknown to them no matter the qualification, intelligence, or achievements of an individual (Buttery & Leung 1998, p. 375). Zhongjian ren connotes the customary intermediary that befriends both groups engaged in negotiations. The Chinese are often very wary of foreigners leading them to need an arbitrator when doing business of any kind. Commercial activities in the country would be impossible with no trustworthy intermediaries. In the country, the tradition done in business needs trust among the business colleagues with some mutual history such as family, home area, or faculty. The links must be grounded on personal experience (Akgunes, Culpepper & Austin 2012, p. 194). The Chinese also have a social standing often called “face” or lian. “Face” is critical to the attainment power and wealth. Face comprises both public standing and prestige. Failure to adhere to Confucius’ morality code in business will culminate to public disapproval, a compelling force, which can negatively influence both aspects of face, threatening prestige. Face can also be weakened by criticism, deliberate or accidental, which is the reason why it is always hard for the Chinese to acknowledge the “constructive criticism” tactic often adopted by westerners during public meetings (Sebenius & Qian 2008, p. 4). Shehui Dengji in Chinese connotes social status, and concerns demonstrating maximum respecting an individual’s seniors. Casual business associations, common among westerners are unwelcome in China. The Confucius writing on the Chinese morality state that obedience and respect to one’s seniors is mandatory (Graham & Lam 2003, p. 83). This makes the Chinese to prefer having talks with individuals of higher business and social say. Thus, the leader f the Chinese firm will expect meeting Josh Sutherland, the Australian business CEO. ‘Renji Hexie’ comprises the necessity for relational unity. The Australian business entourage should show charisma and have an easy going and inviting personality. Renji hexie holds together friendships of equals whereas hierarchy is held by responsibility and respect. Thus, harmony and trust more important than writings. Building trust in the Chinese context is a time-consuming and delicate process. Western firms might begin the process of trust building by providing highly respected firms known to be trusted by the Chinese as references (Sebenius & Qian 2008, p. 5). Some Practical Recommendations The process of negotiations should incorporate mechanisms for developing trust to ensure that the negotiating parties can work in collaboration for both of them to gain. In Chinese, talks is termed “tan pan” meaning literally to critiquing and discussing. Preparation: There is a need to set extra time in the planning for business talks with the Chinese (Neidele 2010, p. 32). At this point, adequate knowledge of the Chinese situation, capabilities, and intent should beobtained. The Australian firm needs to learn the significant dissimilarities in expectations and culture before negotiations. The expectations is that the alien will shows his intent first when pursuing business in China. The company will need to write a letter of intent needed to open the opportunities to more productive negotiations. After writing the proposals, the negotiations commence with the general principles and proceed into deeper details. China’s high context culture necessitates care so that the transition is not rushed from overall to particular. The Deal Context: Being aware of the context of the arrangement is very crucial. An Australian with plenty of knowledge concerning the involvement of the administration in local business is highly reliable. It is even better where the foreigner learns the policies and regulations, which relate to the industry pursuing business in China. Operative Readiness: The Australian firm has to align to working with China’s styles of negotiation. The groups negotiating should show discipline and cohesive. They must never display their disagreements openly, or in the behind-the-scenes discussions, which occur away from the major meeting (Neidel 2010, p. 34-35). One speaker should be designated. Anyone else talking should recite from prepared notes to ensure that it demonstrates census with the firm. Giving a lot of information can be ruinous (Gelfand & Dyer 2000, p. 88). It is advisable to let the other side ask questions as opposed to giving what they might take as irrelevant information. Getting a cultural translator can assist provide understandings to unfamiliar body language as well as non-verbal cues. The company also needs a translator in addition to any assigned or “formal” translator. Communication: The Company needs to guarantee communication lines of negotiations are clear and understood. Poor communication in negotiations generates mistrust, poor outcomes and emotive disorder (Hutchings, K., 2002, p. 24). The personal and non-verbal relationships are additionally significant than signed contracts. This is because the China contract law permits oral, written, or other types of contracts. Given that the government owns firms in China, business negotiations may take more time than anticipated and prompt responses might be unavailable. The state may be obligated to re-examine contracts severally before permitting their formalization. Conclusion The study has found that culture poses a large influence on the international business success and in negotiations involving firms doing business across borders. The rift between the Australian and Chinese businesses, negotiating practices, and cultures is great. The cultures differentiate in the fundamental philosophies and assumptions, operating styles, strategies, and tactics. The expectations during business with China is that the engagement of the two cultures can create great misunderstanding. There is a need to harmonize the manner in which the countries conduct business to ensure success in negotiations. The harmonization comprises understanding the countries’ cultural effects and having an ability of linking and accommodating dissimilarities to ensure successful business cooperation. References Buttery, A & Leung, K 1998, ‘The difference between Chinese and Western negotiations,’ European Journal of Marketing, Vol. 32, no. 3/4, pp.374-389. Deresky, H 2003. International management: Managing across borders and cultures. Pearson Education India. Gelfand, M & Dyer, N 2000, ‘A cultural perspective on negotiation: Progress, pitfalls, and prospects,’ Applied Psychology, Vol. 49, no.1, pp.62-99. Ghauri, P & Fang, T 2001, ‘Negotiating with the Chinese: A socio-cultural analysis,’ Journal of World Business, Vol. 36, no. 3, pp.303-325. Hutchings, K., 2002. Cross-cultural adjustment of expatriates in organizations in China: Selection and in-post support. Cross Cultural Management, 9(3), pp.15-40. Sebenius, J K 2002, ‘The Hidden Challenge of Cross-Border Negotiations,’ Harvard Business Review, Vol. 80, pp. 76-85. Zhao, J 2000, ‘The Chinese Approach to International Business Negotiation,’ Journal of Business Communication, Vol. 37, pp. 209-214. Annotated Bibliography Akgunes, A, Culpepper, R & Austin, S F 2012, ‘Negotiations between Chinese and Americans: Examining the cultural context and salient factors,’ The Journal of International Management Studies, Vol. 7, no. 1, pp.191-200. The paper has substantive research from highly competent researchers in the field of international business. Published under the International studies management, the article provides a comprehensive examination of the differences in the cultural set ups of the U.S. and China as they relate to negotiations in business. The paper has assisted the study in examining the dissimilarities in negotiating practices and styles. The paper has good recommendations for averting pitfalls and increasing the effectiveness of negotiations in China. The research is credible especially in providing an explanation of cultural impacts on U.S.-Chinese negotiations alongside the more distal attributes of the cultural context for negotiations. Graham, J L & Lam, N M 2003, ‘The Chinese negotiation,’ Harvard business review, Vol. 81, no. 10, pp.82-91. The article is scholarly and is published under by a revered journal series (HBR). The article is powerful and contains intense secondary literature, which provides the background information of Chinese culture which is rooted in ancient Chinese philosophy especially Confucianism. The Confucius’ principles stress the importance of relationships, reciprocity, and integrity in business-cornerstones of the Chinese tactics in negotiations. The strength of the article is its documentation of the distinct set of cultural elements in Chinese culture and stress of relationship development in making business deals. Neidel, B 2010, ‘Negotiations, Chinese Style,’ China Business Review, Vol. 37, pp. 32-35. Niedel’s article is effective in providing effective strategies needed to penetrate the operating environment of China and taking present to the next level. The article asserts that the strategic paths developed will assist the company to go beyond the Beijing and Shanghai to areas that show additional traditional Chinese attributes. The information is credible as it is published under the China Business Review journal and provides information of going about business Chinese style. Sebenius, J.K & Qian, J 2008. Cultural notes on Chinese negotiating behavior. Cambridge. The article presents the challenges likely to be experienced in pursuing business ventures in china. The authors of the article are from Cambridge University suggesting that their research is in-depth and reliable. The information presented shows how heavily business in China is influenced by Confucius and Lao Tzu whose core values stress collectivism, respect, honor, harmonious relations, and obedience. The research shows that smooth communications need to be developed to pave way for better business negotiations. Read More