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Chinese Culture and Living in China - What to know




Negotiating With the Chinese - Enter the Dragon

By Gregor King

It seems obvious, that faced with the prospect of upcoming negotiations with a Chinese company, the foreign company, would undertake some form of specialized preparation and understanding of at least the rudimentary cultural differences of their negotiating counterpart.

So not surprisingly, that is precisely what happens.

Fully equipped, the assuming foreign negotiating party, made up of the most experienced members of their negotiating teams, excitedly boards the business class area of their preferred airline, each with his or her laptop, determined to make full use of the flight time to go over last minute concerns. Each has his “What-to-do” list, itemizing the most essential of symbolic cultural acknowledgements: the dark suit; business cards; an abridged English to Chinese dictionary; gifts of high expense and little thought and, of course, the absence of the most senior member of the company. He or she has been scheduled to arrive later, once the groundwork has been accomplished.

Such a recipe for failure has never been clearer. Making preparations should not be limited to packing your bags. Following are some important misconceptions:

1. Guanxi: Pick up any article on the subject and the most prominent comment you find, will be on the concept of “guanxi”. We may be led to believe that this habit of “guanxi” is a charming vestige of bygone days which still lingers as necessary behaviour in modern day China. This belief would not be accurate. When we read that “guanxi” is about building relationships and friendships, westerners often conclude that once the relationship has been formed and blossomed into a friendship, negotiations and following business events will go smoothly. This is a very misleading interpretation of the facts.

“Guanxi” is less a relationship of friendships than it is an exchange platform for benefits. If the westerner can continue to provide benefits which his or her Chinese partner requires, then continuing “guanxi:” is assured. One benefit deserves reciprocity in perpetuity. And this works vice versa: if your Chinese partner can no longer provide the westerner benefits, then there is no reason to continue the relationship....find another partner. Here is a concrete example of the principle conveyed in the familiar phrase: “Business is Business!”

A cautionary note: don’t ever confuse building “guanxi” with buying favours. If you find your company in the position where an official (especially a government official) has indicated that a monetary contribution will get the wheels rolling, you are in for a sad surprise. Not only is the company faced with contributing to corruption, (which is another chapter) but there will be absolutely no guarantee that you will receive benefits for your contribution. If someone else comes along with a more generous contribution you move to second or third place and are soon forgotten.

2. Preparations: If you are planning a move into China, then make adequate preparations. Begin to look for an employee who is of recent (at least 8 years of residency) immigrant and speaks fluent Mandarin and who has enough western cultural experience. Hire him or her and begin to train the new employee in the complete workings of your company so that they understand the rudiments of the technical and commercial requirements. A year of training is a minimum requirement. This act will result in your most effective investment in China. And it is money well spent...worth the price of a 100 banquets with your Chinese hosts. Beware, the Chinese will have their own interpreter, probably with overseas experience and trained in detecting mendacities and deceit in verbal tones and body language.

Also be prepared to have your most senior executive (if not the CEO or President) attend the first few meetings. This is a necessary display of the level of intent of the western company and a good sign of respect. After that, the executive may give the excuse for his or her absence in future negotiation sessions by feigning having to work on financial preparations for the venture. So often, companies make the mistake of sending over experienced but relatively low-level executives to start the negotiations in the misplaced strategy of having the boss come when the negotiations get down to the “nitty-gritty.”

3. Collectivism and Individualism: The literature on the subject of negotiating with the Chinese abounds with need to recognize, that most Asian countries are culturally collective compared to many western countries, which are familiarly regarded as individualistic. In better explanations these two opposing outlooks will be characterized as “low-context” and “high-context” cultures. But still the comparison is not hard and fast.

The notion of collective behaviour in Asian cultures, specifically in China, as the familiar literature suggests, is rooted in “Confucianism” where decisions are made collectively from the basic family unit to government bodies. But don’t mistake this for decisions made for the ‘common good’. Senior members of the Chinese negotiating team, individually, will be looking to see how the final agreement will personally benefit them. This notion of the ‘common good’ was certainly more a part of the Chinese culture prior to 1949, but since the Great Leap is a very ‘every man for himself’ society.

4. No never means no: Finally, if there is one thing you should keep in mind at all times when negotiating with the Chinese is that “NO”, never means “NO”: it simply means, “not at this time, under these conditions”. And the “NO” will not be expressed verbally; the Chinese are a polite people and avoid confrontational language. The negative aspect of the negotiating proceedings will be displayed as slow progress; missed meetings, postponements; misunderstandings; clarifications and so on, until the westerner retreats with a broken spirit and sense of frustration and failure.

Learn to recognize these signs and change tactics or reconsider your options before proceeding.

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