{"id":1262,"date":"2013-05-12T19:46:34","date_gmt":"2013-05-12T23:46:34","guid":{"rendered":"http:\/\/businessconflictmanagement.com\/blog\/?p=1262"},"modified":"2013-05-12T19:46:34","modified_gmt":"2013-05-12T23:46:34","slug":"chinese-negotiation","status":"publish","type":"post","link":"http:\/\/www.businessconflictmanagement.com\/blog\/2013\/05\/chinese-negotiation\/","title":{"rendered":"Chinese Negotiation"},"content":{"rendered":"

The second student paper addresses negotiation in China. \u00a0The author, Justin Shain<\/strong>, lived in China for a period. \u00a0What makes this paper so appealing is the ease and authority with which various strains of the robust Chinese culture are woven into a clear and useful piece of guidance for the business person and counsel.<\/p>\n

How to Successfully Negotiate in an Ever-changing Chinese Business Culture<\/b><\/p>\n

\u00a0<\/b>Justin Shain<\/p>\n

INTRODUCTION<\/b><\/p>\n

As the ancient Chinese military general and strategist, Sun Tzu, wisely coined, \u201cHe who knows his enemy and himself well will not be defeated easily.\u201d[1]<\/a>\u00a0 This proverb has stood the test of time. \u00a0For example, this saying continues to apply to many negotiators today\u2014specifically, negotiators finding themselves in the middle of cross-cultural business dealings between Chinese companies and companies from the West.\u00a0 In order to be successful in these negotiations, western negotiators have extensively studied Chinese business culture.\u00a0 Likewise, the Chinese are increasingly sending their youth to be educated by western business schools.[2]<\/a>\u00a0 First, this paper will explore the widely accepted Chinese business culture framework, called the \u201cPing Pong Model,\u201d in order to establish a better understanding of the Chinese negotiator, followed by how, in practice, these widely accepted generalizations of the Chinese business culture framework do not always hold true because of changes in attitudes among China\u2019s younger generations.\u00a0 The essay concludes by providing a guide on how to apply negotiating to this evolving Chinese business culture.<\/p>\n

THE \u201cPING PONG MODEL\u201d<\/b><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 In 1999, Tony Fang established a framework for Chinese business culture called the \u201cPing Pong Model.\u201d[3]<\/a>\u00a0 This model is now widely accepted by academics and business people alike.[4]<\/a> \u00a0It is also widely accepted that China is, as Hofstede theorized in a 1980 study, a \u201chigh context culture,\u201d meaning that there is more focus on the group rather than individual interests.[5]<\/a>\u00a0 The \u201cPing Pong Model,\u201d which is a model that supports China being characterized as a high context, establishes an explanation of Chinese business culture. \u00a0This Chinese business culture consists of three main components: (1) the concept of guo qing<\/i> or the PRC Condition; (2) Religion; and (3) Sun Tze\u2019s 36 Chinese stratagems.[6]<\/a>\u00a0 These three components should help us better understand a Chinese negotiator\u2019s way of thinking.<\/p>\n

Guo Qing<\/b><\/p>\n

Regarding the first component, guo qing<\/i> is the concept of China\u2019s cultural heritage as a result of rapid political, economic and social change during the 20th<\/sup> century.[7]<\/a>\u00a0 In other words, guo qing<\/i> is a contemporary social and institutional factor influencing China today.[8]<\/a>\u00a0 Guo qing<\/i> can be broken down into eight distinct variables.\u00a0 (1) Politics.\u00a0 As a socialist state, politics plays an influential role on every aspect of Chinese life.\u00a0 Thus, business and politics cannot be separated.\u00a0 (2) Economic planning.\u00a0 Chinese enterprises are not independent, private economic entities.\u00a0 The Chinese economy is quite centralized, and hence, there is strong government control.\u00a0 (3) Legal framework.\u00a0 China\u2019s legal system is still unstable.\u00a0 Therefore, it is unwise to rely on the law to solve business disputes.\u00a0 (4) Technology.\u00a0 China wants advanced western technologies.\u00a0 (5) Great size.\u00a0 China\u2019s state policy is to exchange China\u2019s large market (1.3 billion plus population) for advanced foreign technologies.\u00a0 (6) Backwardness.\u00a0 China is still relatively poor, with 300 million people living below the UN poverty level.\u00a0 Furthermore, the disparity of wealth is alarming, with most of the wealth falling only into the hands of the very rich.\u00a0 (7) Rapid change.\u00a0 Today, Maoist and traditional Chinese cultural values are forced to coexist with western ideas and lifestyles.\u00a0 (8) Bureaucracy.\u00a0 There is red tape for everything.\u00a0 Negotiators must comply with Chinese government policies in order to plan their business.[9]<\/a><\/p>\n

Religion<\/b><\/p>\n

The second component, religion, is a combination of the three major \u201creligions\u201d or philosophical foundations that influence Chinese thought: Confucianism, Daoism, and Buddhism.\u00a0 It is well settled that there are six core values of Confucianism from the perspective of negotiation: moral cultivation; importance of interpersonal relationships; family orientation; respect for seniority and hierarchy; pursuit of harmony and avoidance of conflict; and the concept of face.[10]<\/a>\u00a0 In addition to these six core Confucian values, the three philosophical foundations together provide for two other cultural elements that contribute to Chinese negotiation styles: being thrifty; and enduring to the end and being relentless.[11]<\/a><\/p>\n

Starting with the six core Confucian values, the first is (1) Moral cultivation.\u00a0 This value deems trust and sincerity among the most important qualities of being human, and it expects that a ruler govern his or her state by means of moral persuasion instead of law.[12]<\/a>\u00a0 The second value, (2) Guanxi, is one of the most influential factors.\u00a0 Guanxi is this idea of the need for interpersonal relationships.\u00a0 Guanxi roughly translated is relationships, connections, contacts.[13]<\/a>\u00a0 Guanxi derives from the cultural necessity of living in self-supporting communities.[14]<\/a>\u00a0 In China, it\u2019s all about who you know, and developing these relationships can happen anywhere from attending school with someone, to knowing the family, to business networking.[15]<\/a>\u00a0 The third value is (3) Family orientation (Zhengti guannian<\/i>).\u00a0 This involves thinking about the whole country and not the individual business, or individual person.[16]<\/a>\u00a0 Eastern cultures think more about the community, while western cultures emphasize the importance of the individual.\u00a0 The next core value is (4) Respect for seniority and hierarchy (Shehui Dengji<\/i>).\u00a0 This is the simple concept of showing great respect for one\u2019s superiors; casual business relationships do not fare well in China.[17]<\/a>\u00a0 (5) Pursuit of harmony and avoidance of conflict (Renji Hexie<\/i>) make up the fifth core Confucian value.\u00a0 This involves the need for interpersonal harmony by being charismatic and easy-going.[18]<\/a>\u00a0 The last core value is (6) The preservation of \u201cface\u201d or mianzi<\/i>.\u00a0 This is the preservation of composure and lack of embarrassment.[19]<\/a><\/p>\n

Two additional elements contribute to Chinese negotiation style, as well.\u00a0 These are the concepts of jiejian <\/i>and chiku nailao<\/i>.\u00a0 Jiejian<\/i> means thrift.\u00a0 It has been embedded in Chinese culture because China was once a very poor nation where families had little belongings.\u00a0 In fact, the Chinese save almost four times as much as the typical American.\u00a0 This means that the Chinese often leave more negotiation room in their offers than Americans.\u00a0 Chiku nailao<\/i> means enduring to the end and being relentless.\u00a0 This is evidenced by the work ethic of the Chinese.\u00a0 The Chinese tend to be very diligent, tenacious and persistent.[20]<\/a><\/p>\n

Chinese Stratagems<\/b><\/p>\n

The last major component that makes up Chinese business culture derives from Sun Tzu\u2019s treatise, The Art of War<\/i>.\u00a0 In this treatise on military strategy, Sun Tzu lists 36 stratagems for gaining material and psychological advantage over one\u2019s adversary.[21]<\/a>\u00a0 It is important to note that this method of negotiation is usually invoked only when trust between the parties is low.[22]<\/a>\u00a0 The use of these stratagems is used to handle hostile opponents or outsiders.[23]<\/a>\u00a0 Keeping all of this in mind, it is important to be cognizant of these stratagems in the event one is confronted with this negotiation style.<\/p>\n

The main idea behind these 36 stratagems is how to \u201csubdue the enemy without fighting.\u201d[24]<\/a>\u00a0 The Chinese negotiator will employ these tactics to psychologically wrestle his opponent to create a favorable situation to manipulate his counterpart into doing business his way.[25]<\/a>\u00a0 To do this the Chinese negotiator will try to manipulate the western side through cooperation, flattery, and deception, among other things.[26]<\/a>\u00a0 For example, Stratagem 10 is \u201chide a knife in a smile,\u201d meaning manipulation of friendship and hospitality, and Stratagem 3 is \u201ckill with a borrowed knife,\u201d meaning to play the competitors against each other.[27]<\/a><\/p>\n

Although western negotiators may consider these tactics as \u201ctricky\u201d or unethical, things like diverting attention, misrepresenting information, and making false promises is not considered unethical within negotiations.[28]<\/a>\u00a0 In eastern societies, in which ethical duties are viewed as contextual, the motives for it and existing relationships can sometimes render deception virtuous.[29]<\/a>\u00a0 For example, Chinese negotiators might be under considerable pressure from their superiors to deceive the other side in order to advance the interest of the company.[30]<\/a><\/p>\n

This Chinese business culture framework suggests that Chinese negotiators have a three-in-one negotiation style: that of being a \u201cbureaucrat\u201d (guo qing); that of being a \u201cgentleman\u201d (Confucianism); and that of being a \u201cstrategist\u201d (Sun Tzu\u2019s Chinese stratagems).[31]<\/a>\u00a0 Trust will determine what role the Chinese negotiator is going to play.\u00a0 When mutual trust is high, Chinese negotiators will negotiate as \u201cgentlemen,\u201d and when trust is low, they will negotiate as \u201cstrategists.\u201d\u00a0 When politics is heavily involved, they will negotiate as \u201cbureaucrats.\u201d[32]<\/a>\u00a0 Thus, keeping all three concepts of this cultural framework in mind will only help the western negotiator understand their Chinese counterparts.<\/p>\n

CHANGES IN CHINESE BUSINESS CULTURE<\/b><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 On the one hand, the \u201cPing Pong Model\u201d certainly provides western negotiators with a thorough guide on the way many Chinese negotiators operate.\u00a0 On the other hand, there is no way the \u201cPing Pong Model\u201d can apply to every single Chinese businessperson. This is particularly noticeable amongst today\u2019s younger Chinese generations.\u00a0 Ever since Deng Xiaoping\u2019s \u201cOpen Door Policy\u201d with the West, China has become flooded with western ideas and concepts.\u00a0 In particular, many aspects of western business culture have left their footprint on China.[33]<\/a>\u00a0 The West has influenced Chinese business culture in three ways: (1) as China moves closer to a capitalist economic structure, the Chinese government has responded by decentralizing many enterprises; (2) Today\u2019s Chinese have a more materialistic world view; and (3) The younger generations are becoming more and more aware of international business rules and cultural differences.<\/p>\n

Before discussing these three western influences, I think it is important to point out that it is the younger generations who are particularly affected by these western influences. Within this business culture context, there is a generational distinction between older and younger Chinese.[34]<\/a>\u00a0 The younger generations are not as responsive to Chinese custom as their elders, and their ambition is western focused.[35]<\/a><\/p>\n

Decentralization<\/b><\/p>\n

Concerning the first western influence, China has seen rapid economic growth once it joined the world economy.\u00a0 With that, China has adopted some western business practices\u2014most notably Chinese enterprises are working under and increasingly capitalist-oriented Chinese government.\u00a0 PRC policy now allows for limited decentralization.[36]<\/a>\u00a0 Cities like Shanghai, Shenzhen, and Guangzhou have been designated as Special Economic Zones where private industries there are given greater latitude and flexibility in the management and operation of their businesses.[37]<\/a> \u00a0As such, these economic policies are at odds with the guo qing<\/i> or \u201cPRC Condition\u201d discussed earlier.\u00a0 The Chinese government has less control in some industries.\u00a0 Therefore, there may be less red tape involved and less government control in closing a business deal within these Special Economic Zones.<\/p>\n

Materialistic Worldview<\/b><\/p>\n

The second western influence affects today\u2019s Chinese worldview.\u00a0 Today\u2019s Chinese are more capitalist and less ideology-oriented that the Chinese under Mao\u2019s time.[38]<\/a>\u00a0 It\u2019s this drive to get rich by whatever means necessary.[39]<\/a>\u00a0 \u201cForeigners are often stuck by the spread of a grasping, money-seeking mentality that was a far cry from the \u2018serve the people\u2019 sloganeering of the pervious period, or even what passes for normal, competitive business ethics in the West.\u201d[40]<\/a>\u00a0 Furthermore, there is a gross inequality of the distribution of wealth in China, and this will challenge the political stability of the country as the rich get richer and the poor get poorer.[41]<\/a><\/p>\n

This money-hungry mentality is quite contrary to the components laid out in the \u201cPing Pong Model,\u201d in two ways.\u00a0 First, this shifting mentality is contrary to Chinese philosophical foundations of Confucianism, Daoism, and Buddhism.\u00a0 Second, this mentality, which is causing more instability within the once very stable Chinese Communist Party, is altering our assumptions about guo qing<\/i>.<\/p>\n

Getting rich by whatever means necessary has caused the younger generations to stray from some Confucian core values.\u00a0 For example, the Confucian principle of family orientation is fading.\u00a0 This communal mindset seems to be diminishing in favor of an individualistic mindset of gaining more wealth for oneself.\u00a0 Additionally, as the rich continue to get richer, the Chinese Communist Party is becoming less stable as frustration grows amongst China\u2019s poor.\u00a0 With an unstable government comes an unpredictable business landscape.\u00a0 For example, guo qing<\/i> tells us that the CCP has tight economic planning.\u00a0 However, that assumption will change if the CCP becomes upended by an unstable domestic situation.<\/p>\n

Conforming to International Business Rules<\/b><\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/b>In order to join the WTO, Chinese businesses were forced to make adjustments needed to gain a competitive advantage under international business rules.[42]<\/a>\u00a0 Having to adjust, the Chinese have become more aware of and have been utilizing western business practices.\u00a0 This has been accomplished by the Chinese becoming increasingly exposed to international practices through studying abroad and being educated in western universities.[43]<\/a>\u00a0 As a result, Chinese negotiators have become more dynamic, which can be evidenced by the following three examples: (1) Western education has produced the Chinese \u201ctechnocrat\u201d; (2) Guanxi is less important than it was before; and (3) China is now characterized as a less \u201chigh context\u201d culture.<\/p>\n

Chinese business people, as they are getting better at communicating in English and as they continue to be educated by western business schools, are more receptive to \u201carms-length\u201d negotiations, especially among technocrats, or technically competent officials.[44]<\/a>\u00a0 These technocrats are attaching greater importance to economic performance; so non-personal factors such as products, technology, and financing are becoming more important than personal or cultural factors like Guanxi.[45]<\/a><\/p>\n

This leads me to my next point\u2014that Guanxi is not as important as it was in the past.\u00a0 Guanxi relies on the principle that deals grow out of relationships.[46]<\/a>\u00a0 Today, these relationships are still present, but not necessarily \u201csuperior\u201d to Chinese local law.[47]<\/a>\u00a0 Contracts, for example, are still the basis for running a business.[48]<\/a>\u00a0 Guanxi is also changing because, with the insertion of western business ethics into the international community, the Chinese are becoming more cognizant of Guanxi\u2019s negative impacts, such as Guanxi causing unfair competition, or the implications of ignoring corruption committed by someone in your Guanxi network.[49]<\/a> A study in the Journal for International Business Studies <\/i>found that \u201cno support was found for the proposition that Chinese care more about relationships because those relationships, in turn, provide payoff in terms of Guanxi, favors, or the potential to be treated as an outsider if the relationship is damaged.\u201d[50]<\/a>\u00a0 Thus, Guanxi may not be as important for Chinese business deals as the \u201cPing Pong Model\u201d may suggest.<\/p>\n

As stated earlier, it is widely accepted that China is characterized as a \u201chigh context culture,\u201d which means that the culture emphasizes group interests above individual interests. However, in a 2009 study by Clyde A. Warden and Judy F. Chen, China was characterized as less \u201chigh context\u201d than its Asian neighbors, such as Japan.[51]<\/a>\u00a0 With the growing presence of western business ideas in China, Chinese negotiators are increasingly accommodating western culture in their negotiations. The study showed that the Chinese respondents exhibited increased cultural accommodation when the counterpart\u2019s culture was more distant (e.g. United States)\u2014paying more attention to sacrificing self-interest and saving face for the other side.[52]<\/a><\/p>\n

Although many western negotiators rely on the widely supported \u201cPing Pong Model\u201d when negotiating with Chinese negotiator, it should not be the only source to rely on when studying Chinese business culture.\u00a0 In fact, Chinese negotiators are learning western techniques, and hence, the Chinese business culture is evolving.\u00a0 Chinese business culture, instead, should be seen as a combination of modern western ideas and traditional Chinese values.[53]<\/a><\/p>\n

APPLYING THE \u201cPING PONG MODEL\u201d AND THE CHANGING CHINESE BUSINESS CULTURE TO NEGOTIATION<\/b><\/p>\n

\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0\u00a0<\/b>So, how then do we apply what we just learned about Chinese negotiators?\u00a0 Well to start, the first thing a western negotiator must recognize is that you may dealing with, on one extreme, a Chinese negotiator who believes that they are really predestined by heaven to rule above the barbarian horde, on the other extreme, a Chinese negotiator who believes the West surpassed them long ago and that western methods are genuinely better, or a Chinese negotiator that falls in the middle of these two extremes.[54]<\/a>\u00a0 Once the western negotiator realizes this, we can begin to analyze how to succeed in negotiating with a Chinese firm.\u00a0 If negotiating with a person of traditional Chinese values, it would be wise to review the \u201cPing Pong Model\u201d extensively.\u00a0 If negotiating with a person who follows modern western ideas, be prepared for the Chinese negotiator to employ methods similar to your western methods.\u00a0 However, you are most likely going to be in a room with several business people.\u00a0 Everyone is unique in his or her own way.\u00a0 Thus, they may very well all retain different negotiation tactics.\u00a0 Therefore, one should be prepared to apply, not just the \u201cPing Pong Model\u201d to their negotiation, but also the western negotiation tactics we, as westerners, are already familiar with, noting that you may have to use a combination of both the \u201cChinese\u201d and \u201cWestern\u201d models.<\/p>\n

\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 I stress the need to be prepared for both a traditional Chinese negotiation style and a modern western negotiation style because Chinese business culture is always changing.\u00a0 As Andrew Hupert states, \u201cif the wind blows from the West, they\u2019ll do their best to follow the conventions and role models of the US (when it comes to business).\u00a0 If China is ascendant, they become super-nationalists. \u00a0(Ask an old-timer who was in Hong Kong when it was handed over from British control to China).\u00a0 Both impulses are always present.\u201d[55]<\/a>\u00a0 We can never predict how political and economic factors will affect someone\u2019s mindset in the future.\u00a0 We can only be prepared for both scenarios.\u00a0 Moreover, there are conflicting reports on the current state of Sino-American business relations.\u00a0 On the one end, the China Daily reports that Chinese firms in the US are upbeat, promoting how successful Chinese firms are there and espousing how easy it is to invest in the US.[56]<\/a>\u00a0 At the other end, the ChinaLawBlog.com submits that American companies are the ones adjusting to do business in China, but the Chinese companies refuse to do the same in the US.\u00a0 An interviewee continues, \u201cI am treated as suspect when I try to point out how things should be done in the United States, as though my believing there might be a better, non-Chinese way of doing something makes me anti-China.\u201d[57]<\/a>\u00a0 In addition, in an article written by Maria Lai-Ling Lam, she explains that most Chinese expatriate interviewees \u201cexpect Americans to have a better understanding of the Chinese way of doing things,\u201d and that \u201cit\u2019s much easier to educate the Americans than for the Chinese to change.\u201d[58]<\/a>\u00a0 Given all of this, it only makes sense for the American negotiator to be educated in this subject.\u00a0 One will never know what kind of negotiator he or she will be up against or what kind of environment one will find him or herself in.<\/p>\n

Because this paper is geared towards the western negotiator, I will not address strategies for negotiating the western way.\u00a0 Instead, I will provide a brief guide to applying negotiating strategies to the \u201cPing Pong Model.\u201d\u00a0 I will give advice in the order I laid out the \u201cPing Pong Model\u201d above: addressing guo qing<\/i> first, followed by religion, and then the Chinese stratagems.<\/p>\n

To recall, Guo qing<\/i> is China\u2019s social and institutional factor.\u00a0 Very generally, this means that the Chinese government is most likely involved with the Chinese enterprise you are negotiating with.\u00a0 Since this is likely the case, one of the most important things the western negotiators should do is lobby before Chinese government authorities.\u00a0 You will broker a successful deal with the Chinese firm if you can first show the government you are worth investing in.\u00a0 You must convince the Chinese government that you are financially stable; that you have cutting-edge technologies; and that you are in it for the long haul.[59]<\/a>\u00a0 Additionally, part of guo qing<\/i> is the recognition of the rapid change and backwardness of China, today.\u00a0 Be cognizant, as mentioned previously, that the money-grabbing, nouveau-riche may utilize a more western-style, pragmatic, results-driven approach to business negotiations.[60]<\/a><\/p>\n

The next component of the \u201cPing Pong Model\u201d is religion.\u00a0 Specifically, I will address how to conduct negotiations with regard to the six core values of Confucianism: moral cultivation, guanxi, family orientation, respect for seniority, pursuit of harmony\/avoidance of conflict, and the preservation of \u201cface.\u201d<\/p>\n

First, moral cultivation requires trust and sincerity.\u00a0 Thus, trust building is essential.\u00a0 Doing something like inviting a Chinese delegation to view your U.S. factories or inviting your Chinese counterparts to a concert or sporting event are appreciated ways of building trust.[61]<\/a>\u00a0 Also, a part of moral cultivation is the aversion to law.\u00a0 Problems are better solved when you have a conversation as opposed to threatening legal action.[62]<\/a>\u00a0 This also applies to written contracts.\u00a0 Elaborate written contracts and \u201caggressive, classical contracting\u201d are considered rude and distasteful to Confucian ethical sensibilities.[63]<\/a><\/p>\n

Second, Guanxi, despite recent trends, is still an important cultural influence on Chinese society.\u00a0 Guanxi is this idea of having close relationships and connections with the people you do business with.\u00a0 To do this, you continue the trust building, as set forth in the paragraph above.\u00a0 You will get deals from relationships in China, rather than getting relationships out of deals.[64]<\/a>\u00a0 Moreover, continue to convince your Chinese partners of your goodwill and good intent, and you should be golden.[65]<\/a>\u00a0 Guanxi is also a concept of reciprocity. \u00a0The Chinese will expect you to make concession for concession.[66]<\/a>\u00a0 So, do not enter a negotiation without being prepared to concede something.<\/p>\n

Third, the Chinese have a group\/family orientation.\u00a0 Negotiating there is a team sport.\u00a0 There will be any associates around the negotiating table.\u00a0 Do not be intimidated.\u00a0 Simply be prepared for a large group of constituents.\u00a0 The key, however, is to identify the real decision maker.[67]<\/a>\u00a0 This family orientation also applies to the Chinese way of thinking.\u00a0 While westerners like to break everything down into individual elements and discuss them one at a time, Chinese people jump all over the place and ask many questions.[68]<\/a>\u00a0 It is their way discussing the big picture all at once.<\/p>\n

Fourth, the Chinese have a great respect for their seniors and for hierarchy.\u00a0 Americans tend to be adversarial and rude in negotiations.[69]<\/a>\u00a0 You must check this attitude at the door.\u00a0 The senior business associates will not take kindly to this attitude.\u00a0 Be polite and respectful.<\/p>\n

Fifth is the concept of the pursuit of harmony and avoidance of conflict.\u00a0 This also relates to Americans being adversarial.\u00a0 Having a direct approach, to the Chinese, damages relationships.[70]<\/a>\u00a0 Therefore, when confronting conflicts, the Chinese seek to avoid the conflict in order to seek continued harmony.\u00a0 Western negotiation styles will appear confrontational, competitive, and combative, which does not fare well amongst Chinese negotiators.[71]<\/a><\/p>\n

Last is the preservation of \u201cface.\u201d\u00a0 This is a concept of preventing embarrassment or loss of reputation.\u00a0 By embarrassing a Chinese businessperson or tainting their reputation, would result in the \u201closs of face.\u201d\u00a0 This means westerns should avoid \u201cconstructive criticism.\u201d[72]<\/a>\u00a0 Also, try and avoid saying \u201cno\u201d as this, too, can embarrass your Chinese counterpart.[73]<\/a>\u00a0 Furthermore, the display of negative emotions may be considered a \u201closs of face,\u201d so keep a poker face.[74]<\/a><\/p>\n

One last philosophical foundation in China is the need to be thrifty.\u00a0 This means that negotiating a price will be a delicate subject.\u00a0 One cannot ask for too high a price because it will insult the Chinese on the other side of the table.\u00a0 Also note that because the Chinese are thrifty, they will most likely leave more wiggle room in price negotiations.\u00a0 That means, come with multiple offers.[75]<\/a><\/p>\n

The final component of the \u201cPing Pong Model\u201d is Sun Tzu\u2019s 36 Chinese stratagems.\u00a0 Instead of going through each stratagem, one by one, I will provide a general analysis of the entire concept of these stratagems.\u00a0 As you may recall, the Chinese stratagems are strategies for gaining material and psychological advantage over one\u2019s adversary.[76]<\/a>\u00a0 If confronted with a negotiator using these stratagems, it is important to be firm on your offer and build credibility.[77]<\/a>\u00a0 Do not be fooled by their attempts to woo you with flattery.\u00a0 Recognize these are just tactics and stay strong.\u00a0 To leverage yourself over the Chinese party, you can use techniques such as \u201cbeing indifferent\u201d because indifference can preserve your leverage in any relationship.[78]<\/a>\u00a0 Another tactic would be to build relationships with other Chinese companies, so that if you need to walk away from a disagreeable company, you can fall back onto another company.\u00a0 This would enable you to be self-sufficient.[79]<\/a><\/p>\n

These suggestions are in no way exhaustive.\u00a0 This paper is simply intended to be a brief guide on what a western negotiator can expect when negotiating with a Chinese entity, and what strategies or techniques can be employed in order to negotiate successfully in China.\u00a0 The Chinese business culture I described is also not meant to be universally applicable to all the Chinese people.\u00a0 Obviously, the Chinese are not all the same.\u00a0 Like any other nation, there are people with many different types of personalities and character traits.[80]<\/a> \u00a0\u00a0There is no right or wrong way to negotiate in China.\u00a0 It is all about studying your Chinese counterpart and determining which negotiation style or styles he or she will apply.\u00a0 Your Chinese counterpart may be an older generation who relies on traditional Chinese values.\u00a0 Your Chinese client might be of the younger generation and would prefer do away with the Chinese way of doing things.\u00a0 This task of determining the proper method of approaching a Chinese negotiator is difficult but not impossible.<\/p>\n


<\/p>\n
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[1]<\/a> Sun Tzu translated and annotated by Lionel Giles (2005). The Art of War by Sun Tzu \u2013 Special Edition<\/i>. El Paso Norte Press.<\/p>\n<\/div>\n

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[2]<\/a> Andrew Hupert (2012). \u201cNegotiating to Win in China,\u201d available at <<\/i>http:\/\/www.chinesenegotiation.com\/2012\/10 \/negotiating-to-win-in-china-part-3-sources-of-power\/>.<\/p>\n<\/div>\n

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[3]<\/a> Tony Fang (1999). Chinese Business Negotiating Style<\/i>. Sage: Thousand Oaks, CA.<\/p>\n<\/div>\n

\n

[4]<\/a> Pervez Ghauri & Tony Fang (2001). \u201cNegotiating with the Chinese: A Socio-Cultural Analysis,\u201d Journal of World Business <\/i>303-325 (Vol. 36, Issue 3).<\/p>\n<\/div>\n

\n

[5]<\/a> Asuman Akgunes & Robert Culpepper (2012). \u201cNegotiations Between Chinese and Americans: Examining the Cultural Context and Salient Factors,\u201d Journal of International Management Studies<\/i> 191-200 (Vol. 7).<\/p>\n<\/div>\n

\n

[6]<\/a> Ghauri & Fang, supra<\/i> note 4, at 308.<\/p>\n<\/div>\n

\n

[7]<\/a> James K. Sebenius & Cheng Qian (2008). \u201cCultural Notes on Chinese Negotiating Behavior,\u201d Harvard Business School Working Paper Series<\/i> 1-10. available at <\/i><http:\/\/www.hbs.edu\/faculty\/Publication%20Files\/09-076.pdf>.<\/p>\n<\/div>\n

\n

[8]<\/a> Ghauri & Fang, supra<\/i> note 4, at 308.<\/p>\n<\/div>\n

\n

[9]<\/a> Id. <\/i>(this citation is for the entire paragraph from note 8 onwards).<\/p>\n<\/div>\n

\n

[10]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 2.<\/p>\n<\/div>\n

\n

[11]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 195.<\/p>\n<\/div>\n

\n

[12]<\/a> Ghauri & Fang, supra<\/i> note 4, at 309.<\/p>\n<\/div>\n

\n

[13]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[14]<\/a> E. Allen Buttery & T.K.P. Leung (1998). \u201cThe Difference between Chinese and Western Negotiations,\u201d European Journal of Marketing<\/i> 379-389.<\/p>\n<\/div>\n

\n

[15]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 194.<\/p>\n<\/div>\n

\n

[16]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[17]<\/a> John L. Graham & N. Mark Lam (2003). \u201cThe Chinese Negotiation,\u201d Harvard Business Review<\/i> 82-91.<\/p>\n<\/div>\n

\n

[18]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[19]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[20]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 194 (this footnote is for the entire paragraph).<\/p>\n<\/div>\n

\n

[21]<\/a> Ghauri & Fang, supra<\/i> note 4, at 310.<\/p>\n<\/div>\n

\n

[22]<\/a> Ghuari & Fang, supra<\/i> note 4, at 312.<\/p>\n<\/div>\n

\n

[23]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 5.<\/p>\n<\/div>\n

\n

[24]<\/a> Chiao Chen (1981). \u201cChinese Strategic Behaviours: A Preliminary List,\u201d Proceedings of the International Conference on Sinology<\/i>. Academia Sinica: Taipei 429-440.<\/p>\n<\/div>\n

\n

[25]<\/a> Ghuari & Fang, supra<\/i> note 4, at 312.<\/p>\n<\/div>\n

\n

[26]<\/a> Id<\/i>. at 311-312.<\/p>\n<\/div>\n

\n

[27]<\/a> Id<\/i>. at 312.<\/p>\n<\/div>\n

\n

[28]<\/a> Cheryl Rivers & Roger Volkema (2012). \u201cEast-West Differences in \u2018Tricky\u2019 Tactics: A Comparison of the Tactical Preferences of Chinese and Australian Negotiatiors,\u201d Journal of Business Ethics<\/i>.<\/p>\n<\/div>\n

\n

[29]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 5.<\/p>\n<\/div>\n

\n

[30]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[31]<\/a> Ghuari & Fang, supra<\/i> note 4, at 312.<\/p>\n<\/div>\n

\n

[32]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[33]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 7.<\/p>\n<\/div>\n

\n

[34]<\/a> F. Peter Phillips (2009). \u201cCommercial Mediation in China: Challenge of Shifting Paradigms,\u201d Contemporary Issues in International Arbitration and Mediation: The 2008 Fordham Papers<\/i> 321-331.<\/p>\n<\/div>\n

\n

[35]<\/a> Id<\/i>. at 329.<\/p>\n<\/div>\n

\n

[36]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 7.<\/p>\n<\/div>\n

\n

[37]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[38]<\/a> Id<\/i>. at 8.<\/p>\n<\/div>\n

\n

[39]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[40]<\/a> J. Frankenstein (1993). \u201cTowards the Year 2000 Some Strategic Speculations About International Business in China,\u201d International Business in China <\/i>1-28, Routledge: London.<\/p>\n<\/div>\n

\n

[41]<\/a> Phillips, supra<\/i> note 34, at 330.<\/p>\n<\/div>\n

\n

[42]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 8.<\/p>\n<\/div>\n

\n

[43]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[44]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[45]<\/a> Fang, supra<\/i> note 3, at 100.<\/p>\n<\/div>\n

\n

[46]<\/a> Heidi von Weltzien Hoivik (2007). \u201cEast Meets West: Tacit Messages about Business Ethics in Stories Told by Chinese Managers,\u201d Journal of Business Ethics<\/i> (Vol. 74) 457-469.<\/p>\n<\/div>\n

\n

[47]<\/a> Id. <\/i>at 461.<\/p>\n<\/div>\n

\n

[48]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[49]<\/a> Id<\/i>. at 463.<\/p>\n<\/div>\n

\n

[50]<\/a> Ray Friedman, Shu-Cheng Chi & Leigh Ann Liu (2006). \u201cAn Expectancy Model of Chinese-American Differences in Conflict-Avoiding,\u201d Journal of International Business Studies<\/i> (Vol. 37) 76-91.<\/p>\n<\/div>\n

\n

[51]<\/a> Clyde A. Warden & Judy F. Chen (2009). \u201cChinese Negotiators\u2019 Subjective Variations in Intercultural Negotiations,\u201d Journal of Business Ethics<\/i> 529-537.<\/p>\n<\/div>\n

\n

[52]<\/a> Id<\/i>. at 529.<\/p>\n<\/div>\n

\n

[53]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 9.<\/p>\n<\/div>\n

\n

[54]<\/a> Hupert, supra<\/i> note 2.<\/p>\n<\/div>\n

\n

[55]<\/a> Id<\/i>.<\/p>\n<\/div>\n

\n

[56]<\/a> Chen Weihua & Li Jiabao (Feb. 23, 2013). \u201cChinese Firms in US Upbeat,\u201d China Daily, <\/i>available at <http:\/\/www .chinadaily.com.cn\/cndy\/2013-02\/23\/content_16250226.htm>.<\/p>\n<\/div>\n

\n

[57]<\/a> Dan Harris (May 23, 2012). \u201cWill Chinese Firms Ever be \u2018International\u2019?,\u201d China Law Blog<\/i>, available at <http:\/\/ www.chinalawblog.com\/2012\/05\/will-chinese-companies-ever-be-international.html>.<\/p>\n<\/div>\n

\n

[58]<\/a> Maria Lai-Ling Lam (2000). Working with Chinese Expatriates in Business Negotiations: Portraits, Issues, and Applications<\/i>. Quorum Books: Westport, CT.<\/p>\n<\/div>\n

\n

[59]<\/a> Ghuari & Fang, supra<\/i> note 4, at 312. (footnote is for the paragraph)<\/p>\n<\/div>\n

\n

[60]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 8.<\/p>\n<\/div>\n

\n

[61]<\/a> Ghuari & Fang, supra<\/i> note 4, at 314. (footnote is for the paragraph)<\/p>\n<\/div>\n

\n

[62]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 198.<\/p>\n<\/div>\n

\n

[63]<\/a> Rashmi Prasad & Yong Cao (2012). \u201cImproving Negotiation Outcomes between American and Chinese Partners: A Framwork for Practice,\u201d Journal of Applied Business Research<\/i> (Vol. 28) 1-8.<\/p>\n<\/div>\n

\n

[64]<\/a> Hoivik, supra<\/i> note 46, at 460.<\/p>\n<\/div>\n

\n

[65]<\/a> Prasad & Cao, supra<\/i> note 63, at 5.<\/p>\n<\/div>\n

\n

[66]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 197.<\/p>\n<\/div>\n

\n

[67]<\/a> Jack Perkowski (2011). \u201cNegotiating in China: 10 Rules for Success,\u201d Forbes.com<\/i>, available at <http:\/\/www.for bes.com\/sites\/jackperkowski\/2011\/03\/28\/negotiating-in-china-10-rules-for-success\/>.<\/p>\n<\/div>\n

\n

[68]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 197.<\/p>\n<\/div>\n

\n

[69]<\/a> Hupert, supra<\/i> note 2.<\/p>\n<\/div>\n

\n

[70]<\/a> Friedman, Chi & Liu, supra<\/i> note 50, at 78.<\/p>\n<\/div>\n

\n

[71]<\/a> Prasad & Cao, supra<\/i> note 64, at 4.<\/p>\n<\/div>\n

\n

[72]<\/a> Sebenius & Cheng, supra<\/i> note 7, at 4.<\/p>\n<\/div>\n

\n

[73]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 199.<\/p>\n<\/div>\n

\n

[74]<\/a> Prasad & Cao, supra<\/i> note 64, at 4.<\/p>\n<\/div>\n

\n

[75]<\/a> Akgunes & Culpepper, supra<\/i> note 5, at 198. (footnote for entire paragraph)<\/p>\n<\/div>\n

\n

[76]<\/a> Ghuari & Fang, supra<\/i> note 4, at 310.<\/p>\n<\/div>\n

\n

[77]<\/a> Ghuari & Fang, supra<\/i> note 4, at 316.<\/p>\n<\/div>\n

\n

[78]<\/a> Perkowski, supra<\/i> note 67.<\/p>\n<\/div>\n

\n

[79]<\/a> Hupert, supra<\/i> note 2.<\/p>\n<\/div>\n

\n

[80]<\/a> Duncan Freeman (1994). The Life and Death of a Joint Venture in China. <\/i>Asia Law and Practice Ltd.: Hong Kong. at 10.<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

An excellent and creative study of Chinese negotiation<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,13,37],"tags":[12,31],"class_list":["post-1262","post","type-post","status-publish","format-standard","hentry","category-conflict-resolution","category-international","category-negotiation","tag-culture","tag-negotiation"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1262","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/comments?post=1262"}],"version-history":[{"count":0,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/posts\/1262\/revisions"}],"wp:attachment":[{"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/media?parent=1262"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/categories?post=1262"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.businessconflictmanagement.com\/blog\/wp-json\/wp\/v2\/tags?post=1262"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}