Negotiation styles in China

Written by Tamara Hagethorn, Nikola Milošević, Jessica Blo January 2014. Posted in Int. Skills, Negotiations

Negotiation styles in China

Before the negotiations start, it is important to analyze the Chinese company’s structure and to find the right person to initiate negotiations with. According to Todaro and Smith (2011), since 1970’s and one child policy, Chinese have decreased fertility rates which increased individualism. As a result, there are more educated women on high positions within the companies. However, this is not the case with the old fashioned firms, which try to keep their male dominance and high masculinity. In light of this, Chinese negotiators tend to exclude female proposals from the opposite party and do not have direct contact with them. As a solution, Westerners have to build their teams according to the Chinese company’s structure. In case there is male dominance, women should be excluded from the team. According to SengWoo and Prud’homme (1999), negotiation usually requires the meeting of equals, so that more cooperation is visible. Therefore, it is wise to create a list of all members of delegation with their titles, so that the Chinese know their counterpart’s status. This is illustrated when the highest ranking official enters the room first followed by the subordinates. This protocol prevents confusion (Graham and Lam, 2003).

Long process
The negotiation process itself lasts longer than usual. Firstly, it starts with numerous informal meetings allowing Chinese to gain more insight into the personal values of the other party’s members. Therefore, they might ask personal questions, such as, marital status, number of children etc. The reason for this, according to Alon (2003), is their focus on creating sustainable long-term relationships, named Guanxi. In order for Westerners to be effective during negotiations, they have to be open and flexible about reviving information. While personal questions are regularly asked, showing emotions are not an accepted part of negotiations. Chinese are neutral negotiators, and they tend to see the other party as the same. Therefore, if Westerners become over emotional, they can be seen as being rude. During negotiation there might be a conflict between holistic thinking from the side of Chinese and a linear way of thinking represented as the Westerners’ point of view. Based on a theory of Graham and Lam (2003), it is explained that Chinese use characters instead of a phonetic alphabet. Therefore, their words often have multiple meanings. Also, they tend to jump from idea to idea without making straightforward links between the ideas. On the other hand, Westerners tend to look at something from one point of view. In other words, they firstly respond to one stimulus before respond to the next. In that way, they tend to be more logical and orderly.
According to the theory of Trompenaars, Hampden & Turner (2013), China scores high on “Communitarianism”, which indicates that Chinese firms’ main focus is to create agreements that will reduce uncertainty about their long term goals. More specifically, Chinese want to satisfy not only their own requirements but also those of their children and grand children. Therefore, for Western teams is important to provide agreements for 3 years and more. In addition, contracts are diffuse, flexible, and influenced by changes in the external environment.
The agreement itself is seen as a win-win solution, which focuses on mutual gain. For this reason, negotiations can be a very lengthy and time-consuming, since Chinese are focused on trust building. For them, deadlines are flexible and they are not supposed to be met strictly because, as emphasized by SengWoo and Prud’homme (1999), patience is a virtue.