Cross Cultural Business Negotiations

Business negotiation

Is a lengthy, difficult process In Itself, and becomes extremely Intricate when cultural aspects are Involved. However, cross cultural business negotiation is an unavoidable part of international business today, so learning more about the process is an important undertaking. When two negotiating parties from different cultural backgrounds attempt to communicate, the potential for disagreement and misunderstanding is great.

The Chinese are generally recognized to have a tough negotiating style. People from other cultural backgrounds, especially from the West, often find the behavior of Chinese negotiators strange and unintelligible.

This Is why much attention has been given to studying the Chinese negotiation style. So far, most research on the topic has focused on successful negotiations and very little has been done to examine the barriers to negotiation.

Literature Review

This literature review seeks to highlight specific Chinese cultural traits that characterize Chinese negotiation behavior and to Identify possible barriers to negotiating with the Chinese. It begins with a brief outline of negotiations and stagnation theories followed by an examination of cross cultural dimensions.

Three important Chinese cultural traits: Confucianism, face and Guiana are then discussed in detail to complement the universal dimensions.

Negotiation and the Negotiation Process

Negotiation has been a topic of research for several decades and, as a result, many defenseless are available. Grammar understands negotiation as a process of two or more parties combining their conflicting points of view into a single decision of mutual interest. Ferreira defines negotiation as a process between propel who share mom common interests, people who stand to benefit from bringing the process to a successful conclusion.

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The difference between these two definitions exemplifies the development of negotiation studies : Grammar emphasis that negotiation Is mainly used to resolve conflicts, while Ferreira believes negotiation Is an approach to better cooperation.

At the present, although no definition of negotiation is universal, most authors hold the view that any negotiation involves two or more parties who have both common and conflicting interest, and who interacts with one another for the purpose of reaching a mutually beneficial agreement. The negotiation process is also divided differently by individual theorists. McCall and Harrington use three-stage model which Involves pre negotiation, fee to face Interaction and post negotiation.

Graham and Sans Develop a four step negotiation process: Non task sounding: negotiating parties get to know each other. Task related exchange of information: parties subjective needs and preferences open to discussion. Persuasion: parties attempt to influence the other side’s needs and preferences by using persuasive tactics. Concessions and agreement: parties accomplish an agreement which often is the summation of a series of concessions. The above process is referred in the negotiations. Behavior Theory Behavior theory focuses on human behaviors during negotiation.

Rene, Mamba and Jug note that “behavior theory attempts to analyses the negotiation processes in which negotiators influence each other’s expectations, perceptions, assessments, and decisions during the search for an outcome, thereby affecting the outcome. ” They also note three approaches to the study of behavior. The psychological approach focuses on analyzing negotiators personalities, perceptions, expectations and their persuasive techniques. The learning approach views negotiation as a earning process in which each party is largely dependent on its experience of the results of past actions by the two parties.

Last, but not least, the dual responsiveness model shows that a negotiator’s response is a function of his own previous pattern of making concessions as well as the opponent’s concession rate. The physiological approach can be relevant to our analysis since we focus on examining behaviors of people from different cultures. Cross Cultural Negotiation Chaney and Martin define cross cultural negotiation as “discussions of common and conflicting interests between persons of different cultural backgrounds who work to each an agreement of mutual benefits. Cross cultural negotiation is more challenging than mono cultural negotiation.

In a cross cultural environment, the negotiation process increases in complexity with the need to consider the factors of different languages and cultures, which are not relevant in a mono cultural environment. Ferreira states that “when negotiating within our own culture, it is possible to operate effectively at the intuitive and unconscious level. However, when we leave our familiar cultural context and enter into international negotiations, the scene changes dramatically.

There are no longer shared values, interests, goals, ethnically principles, or cultural assumptions between negotiating parties. ” Different values, attitudes, interests, behaviors, and languages may produce different negotiation styles, which, if not managed well, can lead to misunderstanding and disagreement and can even break up business relationships. Confucianism Confucianism emphasis the responsibilities of individuals toward one another within five important human relationships; those between ruler and subject, husband and wife, father and son, brother and brother, and friend and friend.

Confucianism also advocates a social order that values duty, loyalty, honor, filial piety, respect for age seniority, and sincerity. Confucianism has implications for negotiating with the Chinese. According to Fang, Confucianism is more concerned with righteousness and humaneness’s than profit. This explains why Chinese negotiators do not rush into formal contract discussions, but take considerable time to build up trust with their negotiation partners. From the perspective of Western business people, an initial meeting with China individuals is seldom a “successful” one, as the Chinese tend to heir partners.

In addition, because Confucianism holds that business is governed by a moralistic notion of sincerity and trust more than by a legalistic concept of contract, Chinese business sis largely build on trust rather than law. Chinese negotiate deals with their partners most effectively when sufficient trust has been established between the parties. A verbal agreement with Chinese business people is as effective as a written contract. Finally, Confucianism advocates the relative importance of knowing others and the relative unimportance of beige known. This is the reason why

Chinese negotiators are so attentive to discern the interests and personalities of their negotiation partners and defensive about freely disseminating information about themselves. Face Face is described as “a projected social image in a diverse range of communicative situations. ” More specifically, face implies status and prestige and is a mark of personal dignity. The Chinese are invariably characterized by Western business people as being tough negotiators. The factor of face can be important reason for this tendency. Here, two Chinese faced related terms can be crucial for understanding Chinese negotiation: giving face and losing face.

Giving face during negotiations can be understood as showing respect to negotiators on the other side of the table and recognizing the status and moral reputation of the negotiators in society. It is important for Western business people to protect their Chinese counterparts face, but it is perhaps even more important to give face to the,. Losing faces takes place when one negotiator denounces the status and reputation of another. In negotiations, a Chinese negotiator will lose face if someone is critical of him in front of others.

Treating Chinese negotiators as a Junior in rank when their official status is an organization is higher can also cause them to lose face, therefore, Brahms believes that it is important to give your Chinese counterpart “face” at the negotiation table without losing it yourself. Guiana Guiana,the Chinese term for relationship, is one of the most important Chinese cultural traits. It is also translated as personal contacts or personal connections. The concept of Guiana is not unique to China, but it is closely related to the five relations of Confucianism as part of the socio cultural tradition in China.

The Chinese give considerable effort to developing Guiana, which is usually established among people who share a commonality of certain identities, for example, schoolmates, fellow villagers or old friends. Recommendations for Successful Negotiation with Chinese Negotiations are the talks that take place before a contract, deal or covenant is reached. Negotiations represent the process by which two or more parties are able to meet mutually agreement. The process may or monotony incorporate mechanisms for building trust so that two parties can work together for the benefit for both.

Negotiation is called “tan pan” in Chinese and literally means to Judge and discuss years to perfect. Others believe that successful negotiations can stem from natural talent that is inherent to the makeup of some personalities. The Chinese concept of negotiation rests on creating a framework for long term cooperation and problem solving. The American negotiation concept is to create a onetime agreement between two parties (Lee, Yang, Graham,2006) Preparing Americans need to take more time than usual in preparing for negotiations (Needed, 2010).

Americans should also try to gain as much knowledge about the partner’s tuition, intent and capabilities. As mentioned above, they need to study the fundamental differences in culture and expectations before negotiating (Ford, Layout, Vital, French,1996) It is customary that the foreigners shows his hand or proposal first when visiting the Chinese (Pee, 1992). Letters of intent are necessary to open the doors to more fruitful negotiations. These letters have no binding ability according to the Chinese. After the letters of intent, the negotiation start with the general principles and then move to the details.

In high context culture such as China’s, Americans should be careful not to rush the transition from general to specific. Context of the deal Knowing the context of the deal is very important. A westerner who has a lot of knowledge about local government involvement in local business is very credible. It is also very helpful if the westerner knows the regulations and policies that pertain to the industry that it is doing business with in China (Needed,2010) Your negotiating partner You should do a background check and know whom are you doing business with in China (Ghana,2008).

In addition, the Chinese government owns or directs all state owned enterprises. That makes it critical that you nonoccurrence people’s Republic policy plan and priorities (Needed, 2010). American firms need to pay close attention to the direction the Chinese communist party is taking in regards to social and economic development. They should verify credibility by looking at past dealings in the Chinese company has made with other companies.

Know yourself Knowing the big picture of your own company and how the deals will affect your company will help you look mode credible to the Chinese (Needed, 2010). Being aware of how government regulations in your own country may influence your company is ere important to the Chinese. This is because the Chinese are used to having government involved in all parts of business in their country (Ghana,2008) Strengths and Weakness of each company Be ready to show how each side will benefit from the deal in both social and economic value. Show the weaknesses in the local context of the proposal deal.

It is worth nothing that businesses which have gone through internal and external analysis have a much better advantage when it comes to closing the deal (Needed, 2010) Operational Readiness The American company needs to be aligned to work with Chinese – Style negotiations. The negotiation terms need to be cohesive and disciplined (Needed,2010). They must never disagree with each other openly, or in off the record talks that take place away from the main meeting. There should be one designated speaker, and if anyone else talks they should read from a script so that it shows company consensus.

Saying too questions, rather than processing what they may consider useless information. Having a cultural interpreter can help give insights to non verbal communications and body language that is not familiar. The company should also have its own interpreter in addition to any “official” interpreter that has been assigned. Never ending negotiations Negotiations in china are never final (Ghana,2008). The Chinese use negotiations as a watt to build relationship over long extended periods of time. The signing of a contract in China signifies the beginning of a long term relationship with the Chinese.

The Chinese believe that any written piece of paper. A contact starts a long run commitment and they assume that it will be revisited every now and then (Ghana, 2008) Places The Chinese like to conduct business negotiations in their offices and this is often the venue that is chosen by both parties. However, to start negotiations, take the Chinese out of to expensive restaurant, and later send them expensive gifts (Chaos,2000). After the restaurant and gifts, some preambles and proposals should be sent in the pre negotiations stage.

All of these steps are required when building the trust that is needed in the Chinese style negotiations. Reputation The Chinese are advocates of sincerity (Lee et al. , 2006). They believe that all communication should be kind and well intentioned with lots of complements. Saying no directly is very taboo in the Chinese culture and almost of the time the subtle “no” hat the Chinese give is only recognizable by a Chinese cultural interpreter. The Chinese will give concessions sometimes Just to avoid any embarrassment and save their reputation or face (Lee et al. 2006).

Communication Americans need to make sure that communications between the parties are understood and clear. Miscommunication in negotiations cause distrust, emotional turmoil and poor outcomes (Chaos,2000). The nonverbal and personal relations are far more important than any signed contact because Chinese contract law allows contracts to be in written, oral or other forms. Due to Chinese companies being owned by a state, negotiations may take longer than expected and instant answers may not be available.

The government may have to review contracts several times before they allow the business to sign then or make any formal agreements. Americans contract law is very stringent while China’s is more flexible. Contracts depend more on the relationships than the writing of the contract. The Chinese also like to keep their options open and they will be abandon a deal if a sweeter one opens up. It is critical to have a predetermined method for resolving any disputes hat arise. This is usually done through the use of clauses at the end of contract.

The clauses satisfy the Chinese need to practice Confucian aversion to law and may involve arbitration (Ghana, 2008). A number of barriers in this business meeting led to a failure in collaboration. Identifying these communication barriers can also be relevant to diplomacy since meetings and negotiations are essential for international relations. We therefore make the following recommendations for both business and diplomacy in order to help overcome these barriers.

1. Make an effort to learn Chinese culture and behavior.
2. Be parent during the non task sounding process. Chinese usually need time to build trust and create Guiana with their counterparts before deciding to move ahead with the negotiation.
3. Make sure that trust has been successfully built into the task related exchange of information process, because Chinese individuals will provide adequate and useful information only to people they trust. This will eventually make the persuasion process easier.
4. Remember that entry to the concessions and agreement process is not the sign of a successful negotiation.

Developing good Guiana with Chinese negotiators and respecting Chinese cultural traits is the basis for moving forward in this process. Successful Negotiations Negotiations are usually more successful when the two parties involved are cooperative with each other (Chaos, 2000). Using the cooperative Confusion tactics instead of the warrior like Sun Thus stratagems will have better results. When problem solving strategies are used by both firms there is a higher chance of success. It helps if the western company can show that they have government support, this is shows that they are stable, reliable and credible.

Talking to your counterpart instead of threatening legal action always result in a better solution given the Confucian aversion to law. Also keeping things as local as possible should pacify the Chinese wariness of foreigners which has great weight in their culture. You should maintain the same team that you start with A successor will not inherit your Guiana, or friends. The Chinese do not do business with your company they do business with you. Always add a cushion to your price. The Chinese are accustomed to haggling over every purchase and expect everyone else to be the same way, especially if you are sitting their country.

Be careful too high of a price could insult your Chinese counterpart, so pad your price wisely and in a culturally appropriate manner. If you can, you should help your counterparts around any bureaucratic obstacles that mat get in their way. Inviting the Chinese to go aboard to your country can add tremendously to your success. Failures Failures can come from a variety of unexpected sources. The most reason for failure is that the Chinese firm lacks the funds to go through with a deal (Fan,2006). Sometimes the cultural interpreter may not realize that the Chinese firm was insincere in their offer.

If the tone of the negotiations becomes one of fluctuation and lack of cooperation, then the failure is almost certain. Showing anger, raising your voice or changing your tone could be seen as uncooperative behavior. Also if you send a low ranking employee, the Chinese will consider you impolite, be insulted and doubt your sincerity. They will send a matching low ranking employee of their own just to match you, but he will not be allowed to negotiate with you. The Chinese have regional areas Just like the United States and there are very different cultures, radiations, and sometimes languages in these regions.

Not acknowledging these regions can cause you to have limited success in one area and a complete failure to Conclusion Culture can have a large impact on the success of international business and negotiations between companies doing business across borders, in particular. The chasm between Chinese culture, business and negotiating practices and that of Americans is vast. The cultures differ in the basic philosophies and deep level assumption, as well as strategies and operational styles. When the two culture engage, the opportunities of major misunderstanding are rife.

If westerns follow their typical manner of doing business and the Chinese followed theirs, there would likely be few deals and two cultures would clash terribly. An understanding of cultural influences and a willingness to bridge and accommodate differences is therefore central to successful business partnerships. This paper explored barriers in negotiating with Chinese business representatives and analyses authentic business meetings across cultures using theoretical framework based on negotiation behavior, discourse analysis and intercultural dimensions.

Confucianism, face and Unix were so incorporated in the framework. Specific barriers relating to different cultural values were identified in each of the process of negotiation. The analysis showed that the major barrier was related to the first process of non task sounding and a series of recommendations were made based on this paper. Since it is a mutual responsibility for both negotiation parties to understand the cultural realities of their negotiation partners, it is worthwhile for Western diplomats and business people to disseminate their cultural values to their Chinese counterparts as well.