Introduction China is one of the world’s major countries. It’s situated in central and East Asia. It’s known because of its rich population, a rising economic super power and its different style of management. China is a country with golden history. Especially, its Chinese Revolution brought a lot of progress in all its sectors. . World politics is becoming even more dynamic and different blocs are emerging in the world.
These blocs are of multiple nature, among them are the countries, which are although included in developing countries, but they are trade winners. Their G. D. P rate is increasing continuously. So is the case with china. China is an emerging nation. Experts say that its GDP rate will cross the GDP rate of America until 2001. With more than 4000 years of history, China has the oldest civilization. In Ancient times, Xia Tribe, establish a state in the area of the Huang He River (Yellow River) basin. The tribesmen, believing that this was the center of the world, called this state the “Middle Kingdom” and regarded the surrounding areas as peripherals. Thus China has been known by this name even after the 1911 Revolution which abolished the feudal monarchy and gave birth to the Republic of China. Further again in 1949, after a long struggle, the Chinese communist party under the leadership of chairman Mao Zedong led the Chinese people of all nationalities to over throw the rule of imperialism, feudalism, and capitalism, gaining victory for the new democratic revolution and establishing the “People’s Republic of China”. From then Chinese people took control of their country’s fate and became its masters. For centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences, but in the 19th and early 20th centuries, the country was beset by civil unrest, major famines, military defeats, and foreign occupation.
After World War II, the Communists under MAO Zedong established an autocratic socialist system that, while ensuring China’s sovereignty, imposed strict controls over everyday life and cost the lives of tens of millions of people. After 1978, MAO’s successor DENG Xiaoping and other leaders focused on market-oriented economic development and by 2000 output had quadrupled. Main Facts about China Official Name | People’s Republic Of China| Capital | Beijing | Area | total: 9,596,961 sq kmland: 9,569,901 sq kmwater: 27,060 sq km| Population | 1,330,141,295 (July 2010 est. ) | Population growth rate| 0. 494% (2010 est. )| Birth Rate | 6. 89 deaths/1,000 population (July 2010 est. ) | Death Rate| 6. 89 deaths/1,000 population (July 2010 est. )| Currency | Chinese Yuan | Religion | Taoism; Confucianism; Buddhism; Christianity; Islam. | Literacy | total population: 90. 9%male: 95. 7%female: 87. 6%| Source: www. cia. gov Economic overview China’s economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy.
Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. Now China is characterized as a potential superpower by a number of academics, military analysts, and public policy and economics analysts. It is now the world’s third largest economy, after the United States and Japan. Below is the economic overview of China GDP( Purchasing Power Parity | $8. 789 trillion (2009 est. )| GDP- Real growth rate| 8. 7% (2009 est. )| GDP- Per Capita (PPP)| $6,600 (2009 est. )| GDP- Composition By Sector| agriculture: 10. 6%industry: 46. 8%services: 42. 6% (2009 est. )| Stock of money | $2. 434 trillion (31 December 2008)| Unemployment rate| 4. 3% (September 2009 est. | Current account balance | $297. 1 billion (2009 est. )| Source: www. cia. gov Culture of China The Culture of China is one of the world’s oldest and most complex cultures. The area in which the culture is dominant covers a large geographical region in eastern Asia with customs and traditions varying greatly between towns, cities and provinces. Chinese culture has several distinct elements. In this report we are going to cover the following elements of Chinese culture.
Language Religion Values Customs Language(Verbal)
 Chinese now has earned itself greater status in the World. About one-fifth of the world’s population, or over one billion people, speak some form of Chinese as their native language. The Chinese language has over 400 dialects in continental China alone. The people of each province have a special dialect, and then the people of each city, town, and village have their own special dialect as well. However the official national spoken language of China (except in Hong Kong and Macau) is Standard Mandarin. Over 90% of Chinese people speak Mandarin, but also may very likely speak another dialect.
Standard Mandarin has eight dialects. They are— Beijing Mandarin Northeastern Mandarin Ji Lu Mandarin Jiao Liao Mandarin Xhongyuan Mandarin Lan Yan Mandarin Southwesten mandarin Jianghuai Mandarin 1. Source:en. wikipedia. org Chinese spoken language The Sinitic languages, often synonymous with the Chinese languages, are a language family frequently postulated as one of two primary branches of Sino-Tibetan. The Bai language may be Sinitic (classification is difficult); otherwise Sinitic is equivalent to the Chinese languages, and often used in opposition to “Chinese dialects” to convey the idea that these are distinct languages rather than dialects of a single language. There are Chinese spoken languages and the number of people who are using these languages in speaking. Differences between English and Mandarin language There is a very clear distinction between English and Chinese language.
The two languages are of two different language families, English comes from Indo-European and Chinese from Sino-Tibetan, this gives rise to many more differences in mode of expression, grammar, syntax, meaning system. The major differences between Chinese and English are as follows. Point of Differences| Mandarin| English| Phonology| It uses the pitch of a phoneme sound to distinguish word meaning. In English, changes in pitch are used to emphasize or express emotion, not to give a different word meaning to the sound. | Alphabet| Chinese does not have an alphabet but uses a logographic system for its written language. | There have specific set of alphabets| Tense ; Verbs| Uninflected language and conveys meaning through word order. | English much information is carried by the use of auxiliaries and by verb inflections: is/are/were. | Articles| Don’t use| Use Articles| Phrasal Verbs| Don’t use | Use Phrasal Verbs e. g. give in, put on etc. | Source: https://esl. fis. edu Language(Non-verbal)
 Nonverbal language is the process of communication of sending and receiving wordless messages through gestures, posture, touch or by facial expression and eye contact. Every culture has some form of non-verbal language that conveys certain messages to other people which if not understood, can be quite confusing for the people of another culture. Chinese non-verbal form of communication has a few distinguishing signs which are quite shocking for a culture like ours.
For example To show curiosity When Chinese people find something is curious, they may glare blankly at it for too long. For mourning In China, people will cry sadly at the funeral rites.
According to Chinese culture, people who don’t cry when attending the funeral are not filial persons. To show anger When people get angry or irritated over someone’s craziness or foolishness they usually make a circular motion near the temple or ear to show that someone is crazy, because to the psychology, crazy man is something wrong with his brain. But in China it is just a gesture of thinking. To point at something Where we use the index finger to point at something. Chinese people use an open palm. It is considered offensive to point a finger at someone in China. . Source: (Cultural differences in Body Language — Huan Jianfei) Religion
 The People’s Republic of China was established in 1949. Its government is officially atheist, which viewed religion as emblematic of feudalism and foreign colonialism. Religious belief or practice was banned because it was regarded as backward and superstitious by some of the communist leaders, from Vladimir Lenin to Mao Zedong, who had been critical of religious institutions.
This policy relaxed considerably in the late 1970s at the end of the Cultural Revolution and more tolerance of religious expression has been permitted since the 1980s. The 1978 Constitution of the People’s Republic of China guarantees “freedom of religion”. However, the Chinese government has also banned certain new religious movements such as the Falun Gong and Xiantianism in recent times. At present there are five recognized religions by the state, namely Buddhism, Taoism, Islam, Catholicism, and Protestantism. The religious practice called as Confucianism is now regarded as an ethical and philosophical system rather as a religion. Religious Distribution & Description 3. Source:https://en. wikipedia. org/wiki/Religion_in_china, https://www. mf. org/omf/uk/asia/china/about_china/china_profile, https://www. mapsofworld. com/china/china-culture/religion-in-china. html Buddhism is a religion and philosophy encompassing a variety of traditions, beliefs and practices, largely based on teachings attributed to Siddhartha Gautama, commonly known as the Buddha. Buddhism spread from India to China some 2,000 years ago and is the largest organized religion in China since its introduction in 1st Century Confucianism is a Chinese ethical and philosophical system developed from the teachings of the Chinese philosopher Confucius. It is a complex system of moral, social, political, philosophical, and quasi-religious thought that has had tremendous influence on the culture and history of East Asia. It might be considered a state religion of some East Asian countries, because of governmental promotion of Confucian philosophies. Taoism (or Daoism) refers to a variety of related philosophical and religious traditions that have influenced Eastern Asia for more than two millennia.
The word Tao roughly translates as, “path” or “way” (of life). Taoism has a history of over 1,700 years in China. There are numerous Taoist temples and priests in China even now Islam is followed by ten National minorities in China . Islam was introduced in China in the 7th Century and even now there are several mosques in China served by the Imams. Catholicism is the term referring to Christians and churches belonging to the Roman Catholic Church. Catholicism was introduced in the 7th century; it became popular only after the Opium War. There are around 4,600 churches now in China. Protestantism is one of the four major divisions within Christianity. Protestantism gained ground in China with the end of the Opium War and presently there are around 10 million Protestants in China.
Values and Beliefs
ong Values and Beliefs
 The Chinese people have strong values and beliefs that have been developed for thousands of years. The Chinese are strongly influenced by the Confucian Philosophy. As a result their values and beliefs reflect Confucian beliefs and values. The chief values of Chinese people that can be pointed out are —– * Moralities: Chinese develop their moralities into several areas: for the nation, for the family, for the friend, for others, and for the society. They have been taught to be loyal to their nation, and even the leader of the nation. * Charity: Chinese believe that all humans are born with kindheartedness, so they treat others peacefully and their ideal society is the world without arguments, fighting, stealing, and robberies. * Ethic of the family: Everybody is raised by the family. The family becomes the center of Chinese people’s life. The influence of the concept is that there are seldom arguments in the family.
Children are filial and respect their parents, show love and respect to brothers and sisters. Parents get taken good care by their children when they are old.
Veneration for intellectuals: In traditional Chinese social position, the intellectual is always in the highest level, then the farmer, the worker, and the businessman is the lowest. 4. Source: https://cid-b1ed5e535d30c0d7. spaces. live. com/blog/cns! B1ED5E535D30C0D7! 453. entry Chinese business culture and practice The Chinese business practice is vastly different from the Western method that most of us may be used to. Nevertheless, with the reform of Chinese economy in the past 30 years Chinese business practice are now beginning to align with more conventional methods. However, China will always have their own unique business culture and etiquette, given their unique history and background. In this section we are attempting to illustrate the Chinese business culture and practices. This section contains: Geert Hofstede analysis of China, Chinese business customs, management practices, negotiation tactics. Geert Hofstede Analysis of China
 Geert Hofstede is an influential Dutch organizational sociologist, who studied the interactions between national cultures and organizational cultures. Geert Hofstede found five dimensions upon studying the culture of different societies. Analysis of China by Geert hofstede reveals the following characteristics of Chinese people.
Power Distance: This dimension measures how much the less powerful members of institutions and organizations expect and accept that power is distributed unequally. China scores 80 in Power Distance which is very high if compared to other countries of the world. Because of this high score — * Decisions are taken mainly by top management. * Decisions taken by top management are readily accepted by employees. * Moving up the corporate ladder becomes very hard. 5. Source: https://www. geert-hofstede. om/hofstede_china. shtml, Cross-cultural challenges when doing business in China by Zhang Zigang Singapore Management Review January 1 2004 Individualism: This dimension measures how much members of the culture define themselves apart from their group memberships. China is low in individualism. Individualism score is only 20. As a result— * They follow “we” concept rather than “I” concept. * Depend more on groups or institutions to determine what they should do and emphasise loyalty to the group. * More likely to cooperate with others to avoid risks and reduce responsibilities.
Appreciate duty to the group and harmony among its members while pursuing personal goals is viewed rather negatively Masculinity: The value placed on traditionally male or female values and the role differentiation in a society. China scores 66 in Masculinity. This shows there is still differentiation and discrimination between male and female. Uncertainty Avoidance: How much members of a society are anxious about the unknown, and as a consequence, attempt to cope with anxiety by minimizing uncertainty.
China is low in uncertainty avoidance. Uncertainty avoidance score is only 30. Therefore—- * Managers don’t plan much; when they plan it tends to be much relaxed. * Don’t think much about minute details of the contractual relationship. * More readily accepts change * They prefer more experimental jobs. Long-Term Orientation: A society’s “time horizon” or the importance attached to the future versus the past and present. Chinese people are very long term oriented. Their score in this dimension is 118. * They prefer to know a client well at first then they starts dealing. * Initially focus more effort on building social relations. * Tend to continue relationship with a business partner for a long period of time. Chinese business customs
 Chinese business customs differ greatly from the west.
They have specific decorum for every aspect of business related tasks like greeting, seating, dress code, gift giving, eating etc. Greetings: When greeting each other or meeting acquaintances nodding of the head or shaking hands is acceptable.
This applies to greetings between the same sexes and the opposite sexes. A handshake may linger for longer than is normal in Western culture – this is a gesture of respect. Dress: Chinese tend to dress formally. Therefore when they say `informal’, they expect you to wear a shirt, tie and pants, but never shorts. White is used for funerals it is to be avoided. Red, suggests power, prosperity and authority, and is the preferred color in China.
Names: Chinese place the surname (family name) first then the personal name. Women normally keep their own family name. Unless invited to do so use of personal names or nicknames should be avoided. Punctuality: Punctuality is important, as it can be interpreted as a measure of courtesy and professionalism. Gifts: It is appropriate that gifts should be given on the appropriate occasion, such as the farewell banquet or at the conclusion of an important introductory meeting. The gift should be made as a formal presentation to the entire group as a gesture of goodwill and friendship.
Extremely valuable gifts shouldn’t be given because; the Chinese may take it with suspicion which can cause undesirable consequences. Additionally, there are certain things that should never be given as gifts. Such as a clock, a handkerchief, an umbrella, or any white flowers. All these objects represent death in the Chinese culture.
Business cards: The Chinese are very keen about exchanging business cards. When presenting or receiving a business card, both hands should be used. It is considered rude to write on the business card. It is polite to admire and read what is on the card before putting it away. The business card’s one side should be in English and the other in Chinese. Eating: While eating, the host usually serves food for the guest, introduces the origin of special food and indicates how to eat it. Start eating when the host starts. One may leave food on the plate by making excuses or politely refusing.
Drinking: It is customary for guests to drink only when making or receiving toasts. When the Chinese make toasts, both parties are expected to drink. The cup is held in the right hand, and it is polite to place the left hand as if supporting the cup.
The first toast is frequently a general one with everyone drinking together, perhaps with the arrival of the first dish. After this, it is standard practice for everyone at the table to toast all others. Conversation: Controversial issues like Taiwan, Tibet should be avoided in conversation. Although Japan and China are neighboring countries praising Japan too much in front of Chinese people can make conversation argumentative so this should be avoided as well. Saying ‘No’ is normally regarded as Impolite. So Instead of saying ‘No’ one should respond to Chinese with answers like ‘Inconvenient’ “Under consideration’ ‘Maybe’ or ‘That might be difficult’ etc.
Chinese people also do the same in this case. 6. .Source:https://www. austcham. org/page/china-business/doing-business-in-china/understanding-business-etiquette-in-china/ Differences between business culture of East and West
 The following table presents some of the differences between how the Chinese and the Western individuals think about culture and values. Cultural Values Expressed| West (America & most European countries)| East (The Chinese and Most Asian cultures)| Type of Logic| Linear (More causal relationships and direct associations between A and B)| Spiral (more roundabout and subtle) | Expression of Agreement and Disagreement| More argumentative, willing to express disagreement verbally| More difficult to say no even if one means no, disagreement expressed nonverbally| Communication of Information | More meaning is in the explicit, verbal message. Use of direct language| Meaning is often implied or must be inferred Use of indirect language patterns| Expression of Honesty | More overt, one is more likely to ask the person to “speak their mind” or “get it out on the table” | Subtle, nonverbal | Expression of Self | “I”-oriented | “We”-oriented| Thinking Orientation | More rule based or based on application of abstract principles such as regulations or laws | Tends to take context and the specific situation into account in rule interpretation | The Individual | Has to have rights and greater need for autonomy and individual achievement | Group duty ,preservation of harmony | Nature of the Business Relationship| Less important, tend to substitute relationship for written agreement, superficial, easy to form, not long lasting | Most important business cannot occur until relationship if sound, written agreement secondary to quan xi, hard to form, long lasting| Conflict Resolution | Trial or confrontation, use of lawyers and courts| More mediation though trusted third parties| 7. Source:https://www. legacee. com/Culture/CultureOverview. html Management practice in China
 Management is a set of activities (Including planning, organizing, leading and controlling) directed at an organization’s resources with the aim of achieving organizational goals in an efficient and effective manner. Chinese management practice is described in brief below. Planning in China Planning organization| Long-term orientation. | Decision Making| Centralized decision making by few people. | Level of Involvement? | Involvement of few people at higher level. | Where are decisions initiated? Decisions flow from the top to down| How quickly are decisions made| Slow decision-making : fact implementation of the decision| How quick is the decision implementation| Quick Implementation| Organizing in China Who is responsible for activities? | Collective responsibility and accountability| How clear are the responsibilities| Clear and specific decision responsibility| Structure of organization| Formal organization structure | Nature of Organizational Culture| Well-known common organization culture and Philosophy| Identification with what? | Identification with the company but not so much with profession| Staffing in China When are people hired ? Young people hired out of school, no mobility of people among companies| How much advancement wanted? | Slow promotion through the ranks| Loyalty is to whom? | Loyalty to the company| How is performance evaluation done? | Very infrequent performance evaluation for new employees| What type of results are appraised ? | Appraisal of long-term performance| How are promotion allowed? | Promotion based on multiple criteria| How is training and development done? | Training and development considered a long-term investment| What is the basis of remuneration? | Lifetime employment common in large. | Level of Job security| High| Leading in China How does the leader react? Leader acting as decision-maker and head of the group| What style of management is followed? | Participative style| How do values of individuals function in teams? | Common values facilitating cooperation| How is confrontation done? | Communication primarily top-down. | Nature of communication| Up-bottom communication| 8. Source: www. amcy5. com/projects/marketing/amcy37. htm Controlling in China Who Controls? | Control by superior| What is the focus of controlling? | Control focus on group performance| Is blame fixing done? | Blame fixing is avoided; rather face saving is done. | Use of Quality Circles| Increasing use of quality control circles| Decision making
 Decision making is vastly different in western and Chinese business cultures * In the West it is seen as positive if you can gather and process information quickly for rapid decision making. * The Chinese prefer instead to deliberate, even on decisions that may seem simple, which can cause decisions to take a long time * It is unlikely you will convert a prospect at the first meeting * Decisions are unlikely to be made during the meetings you attend * Ask for feedback, discuss the issue and explain your thinking to avoid looking as though you have made a snap decision * Being included in the decision-making process is important to the Chinese culture 8. Source: https://www. rsmi. om/attachments/approved/chinese-business-practices etiquette/en/Chinesebusinesspractices_w. pdf Negotiation in China
 Chinese Negotiation practice contains eight elements they are — Guanxi (personal connections) Chinese businesspeople prize relationships among friends, relatives, and close associates. Favors are always remembered and returned, though not necessarily right away. Ignoring reciprocity is considered immoral.
Zhongjian ren (the intermediary) An intermediary is essential during meetings with strangers. This trusted business associate connects you with his trusted associate, creating a personal link to your target organization or executive. Intermediaries interpret negotiators’ moods, body language, and facial expressions. They—not the negotiators—first raise business issues for discussion, and often settle differences. Shehui dengji (social status) Casualness about social status doesn’t play among people who value obedience and deference to superiors.
Sending a low-level representative to a high-level negotiation can kill a deal. Renji hexie (interpersonal harmony) Relationships of equals are cemented through friendships and positive feelings, generated during months of home visits and long dinners. Any attempt to do business without first establishing harmony is rude. Zhengti guannian (holistic thinking) Chinese discuss all issues simultaneously in apparently haphazard order—emphasizing the whole package over details. Nothing is settled until everything is. This holistic thinking contrasts with Westerners’ linear approach— Westerner’s think sequentially and individualistically, breaking up complex negotiation tasks into a series of smaller issues: price, quantity, warranty, delivery, and so forth.
Chinese negotiators tend to talk about those issues all at once, skipping among them, and, from the Western’ point of view, seemingly never settling anything and spawns the greatest tension between negotiating teams. Jiejian (thrift) Chinese bargain intensely over price, padding offers with room to maneuver and using silence and patience as tactics. They expect both sides to make concessions—often after weeks of haggling. 9. Source: The Chinese Negotiation by John L. Graham and N. Mark Lam Harvard Business Review article Mianzi (“face” or social capital) A broken promise or display of anger or aggression causes mutual loss of face—disastrous to any deal.
Chiku nailao (endurance, relentlessness) Chinese prize relentless hard work. They prepare diligently for negotiations and expect long bargaining sessions. Demonstrate your endurance by asking many questions, doing your research, and showing patience. Suggestion for negotiating with the Chinese * The Chinese are renowned for being tough negotiators.
When negotiating one must show compromise so their negotiators feel they have gained concessions. * Only senior members of the group should speak during Negotiations. * Short, simple, sentences should be used when speaking and jargon and slang should be avoided. * A great deal of research regarding subject matter should be done prior to meeting. * Use of high pressure tactics should be avoided. * Decisions may take a long time. So one should refrain from mentioning deadlines, be patient, show little emotion and calmly accept that delays will occur. Conclusion China is a country with lots of unique features. It is quite unique in many aspects. It has a very long golden history behind it. The history goes beyond even the birth of Christ. It has a very strong and deep-rooted cultural and historical background. In addition to this the country have a very different life style. Its religions, customs, and its society are much different than the other parts of this world. Apart from its social, historical and traditional aspects China has got a unique way of managing things and doing the business. It has its own set of norms and values that are very much deep rooted in its every day life. The Chinese way of managing the things have got a deep impact of culture on them.
Chinese plan, organize and work in a very different manner. Their way of interacting with each other and their way of evaluating each other is also very much different. Chinese give more importance to known material than the material values as they evaluate and get work from others. Chinese management style is very much different than the rest of management styles in the world. Their management style has different criteria of managing the things, doing the things and evaluating the things.
There work pattern and working environment is also much more different than the rest working environments of world. Chinese attitudes and there orientation towards management is very much specific and it has got a different way of achieving results. Chinese are very much conscious about their values and it is very much opposite to the west. Chinese give more importance to norms and values than money. In west money is the god but Chinese will never be ready to sacrifice their any of value, norm or tradition just for the sake of money. The final lesson that we can derive from Chinese is that only continuous hard work in a proper direction will lead to happiness and prosperity.
There is no short cut to continuous handwork. Appendix Mao Zedong: A Chinese revolutionary, political theorist and communist leader. He led the People’s Republic of China (PRC) from its establishment in 1949 until his death in 1976. His theoretical contribution to Marxism-Leninism, military strategies, and his brand of Communist policies are now collectively known as Maoism. Deng Xiaoping: A Chinese politician, statesman, theorist, and diplomat. As leader of the Communist Party of China, Deng was a reformer who led China towards a market economy.
Huang He River: The second-longest river in China and the sixth-longest in the world at the estimated length of 5,464 kilometers (3,395 mi). Falun Gong: A system of beliefs and practices founded in China by Li Hongzhi in 1992. Western academics have described Falun Gong as a “spiritual movement” based on the teachings of its founder. Xiantianism: A religious system that encompasses five religious groups of Chinese origin. They claim to strive for the unification of Confucianism, Taoism, Buddhism, Christianity and Islam. Quality Circles: A volunteer group composed of workers (or even students), usually under the leadership of their supervisor (but they can elect a team leader), who are trained to identify, analyze and solve work-related problems and present their solutions to management in order to improve the performance of the organization, and motivate and enrich the work of employees. Quality circles were first established in Japan in 1962; Kaoru Ishikawa has been credited with their creation.
According to Wikipedia there are more than 20 million Quality Circles in China. Case Study-1: Chinese Negotiation Volkswagen (VW), the first overseas carmaker in China, is the only foreign manufacturer to have been making a profit in China over the past ten years. It all began in October 1984, when VW signed a joint venture agreement with China. One of the country’s first major joint venture agreements, it involved several government authorities, including the Ministry of Foreign Trade and Cooperation (MOFTEC, now MoCom), the State Planning Commission, the State Economic Commission, the Ministry of Finance, the Bank of China (BOC), the Municipal Government of Shanghai, and the China National Automobile Industry Corporation (CNAIC). A manufacturing facility was built in Shanghai, and VW’s partners were Shanghai Tractor and Automobile Corporation (STAC), with a twenty-five percent share, as well as the BOC, Shanghai Trust and Consultant Company, and the CNAIC, which together had a twenty-five percent share. VW was approached by the China National Technical Import Corporation in 1977, and in 1978 a Chinese delegation visited VW headquarters in Wolfsburg, Germany. The first VW delegation went to Beijing in 1979. So there were six years of negotiations, involving at least seven parties on the Chinese side, and major contracts were negotiated, including a joint venture contract, a technology transfer agreement, articles of association, supply agreements, and a planning agreement. According to Heinz Bendlin, one of the original VW negotiators with China, even in the early days the Chinese behaved courteously. He has commented as follows: “I learned in China that foreigners tend to have a typical mode of behavior. They want to achieve results quickly, get answers to all their queries, and immediately come up with solutions to problems.
But in China one has to be patient and be prepared to spend considerable time solving problems step by step, or ibu ibu, as the Chinese say. Setting deadlines or showing impatience leads to disadvantages in negotiations. ” “The Chinese like to negotiate in rather large groups. Fairly frequently, three or four VW people negotiated with ten to twenty Chinese. However, typically only one would speak while the others took notes. They were all very disciplined. ” “There were times when they would cultivate a friendship, seemingly to manipulate situations.
Our Chinese partners also frequently asked us to explain matters several times. This was not a sign of insufficient professional knowledge on their part, but just a tactic, as are the meticulously organized extras during negotiations, such as banquets, toasts, and sightseeing. ” We should listen carefully to the Chinese. Never try to convince them by saying that only your products or plans are outstanding. Instead, explain the facts and figures as often as they require; explain why you believe yours is the best offer; and explain why you are asking for certain payments. ” “Do not show that opinions are divided on a given topic within your team, and avoid discussions in front of them. They cannot understand such behavior and will interpret this as a sign that you lack clarity about your concept. ” Source: https://www. negotiations. com/case/well-managed-negotiations/ Case Study-2: Chinese Culture (Guanxi—Ties That Bind) In 1992, McDonald’s Corporation opened its first restaurant in Beijing, China, after a decade of market research.
The restaurant, then the largest McDonald’s in the world, was located on the corner of Wangfujing Street and the Avenue of Eternal Peace, just two blocks from Tiananmen Square, the very heart of China’s capital. The choice of location seemed auspicious, and within two years, sales at the restaurant were surpassing all expectations.
Then the Beijing city government dropped a bombshell; officials abruptly informed McDonald’s that it would have to vacate the location to make way for a commercial, residential, and office complex planned by Hong Kong developer Li Ka-shing. At the time, Mc-Donald’s still had 18 years to run on its 20 year lease. A stunned McDonald’s did what any good Western company would do—it took the Beijing city government to court to try to enforce the lease. The court refused to enforce the lease, and McDonald’s had to move. Chinese observers had a simple explanation for the outcome. McDonald’s, they said, lacked the guanxi of Li Ka-shing. Given this, the company could not expect to prevail.
Company executives should have accepted the decision in good grace and moved on, but instead, McDonald’s filed a lawsuit—a move that would only reduce what guanxi McDonald’s might have with the city government! This example illustrates a basic difference between doing business in the West and doing business in China. In the advanced economies of the West, business transactions are conducted and regulated by the centuries-old framework of contract law, which specifies the rights and obligations of parties to a business contract and provides mechanisms for seeking to redress grievances should one party in the exchange fail to live up to the legal agreement. In the West, McDonald’s could have relied on the courts to enforce its legal contract with the city government. In China, this approach didn’t work. China does not have the same legal infrastructure. Personal power and relationships or connections, rather than the rule of law, have always been the key to getting things done in China. Decades of Communist rule stripped away the basic legal infrastructure that did exist to regulate business transactions. Power, relationships, and connections are an important, and some say necessary, influence on getting things done and enforcing business agreements in China. The key to understanding this process is the concept of guanxi.
Guanxi literally means relationships, although in business settings it can be better understood as connections. McDonald’s lost its lease in central Beijing because it lacked the guanxi enjoyed by the powerful Li Ka-shing. The concept of guanxi is deeply rooted in Chinese culture, particularly the Confucian philosophy of valuing social hierarchy and reciprocal obligations. Confucian ideology has a 2,000-year-old history in China, and more than half a century of Communist rule has done little to dent its influence on everyday life in China. Confucianism stresses the importance of relationships, both within the family and between master and servant. Confucian ideology teaches that people are not created equal. In Confucian thought, loyalty and obligations to one’s superiors (or to family) is regarded as a sacred duty, but at the same time, this loyalty has its price. Social superiors are obligated to reward the loyalty of their social inferiors by bestowing “blessings” upon them; thus, the obligations are reciprocal.
Source:https://highered. mcgraw-hill. com/sites/dl/free/0072973714/214805/Sample_Chapter03. pdf Reference Articles 1. Cross-cultural challenges when doing business in China by Zhamg Zigang Singapore Management Review January 1 2004 2. Bond M and G Hofstede, 1989. “The cash value of Confucian values”, Human System Management, 8, pp 195-200. 3. Hofstede G, 1980. Culture’s consequences: International differences in work-related values. Beverly Hills, CA: Sage 4. “Cultural constraints in management theories”. The Academy of Management Executives, 7(1): pp 81-94. 5. Sosik, John and Jung Dong, 2002. Work-group characteristics and performance in collectivistic and individualistic cultures”. The Journal of Social Psychology. Washington, pp 5-23. 6. Axtell, Roger E. Gestures. The Do’s and Taboos of Body Language Around the world[M], John Wiley ; Son, 1991. 7. RSM International, Chinese Business Practices and Etiquette Vada Ng, Chinese Business Culture, The Confucius Institute, University Of Western Australia 8. John L. Graham and N. Mark Lam, The Chinese negotiation, Harvard Business Review, October 2003 9. Zhang Zigang, Cross-cultural challenges when doing business in China January 1 2004 10. Huang Jianfei. Cultural differences in Body Language 11. International Business Review 17 (2008) Page no. 141-145
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