Negotiations Between Chinese and Americans: Examining the

Cultural Context and Salient Factors

Asuman Akgunes, Stephen F. Austin State University, USA
Robert Culpepper, Ph.D., Stephen F. Austin State University, USA

ABSTRACT

There is a vast chasm between the American and Chinese cultures regarding foundational philosophical
assumptions, historical influences, economic systems, business strategies and tactics, and myriad business-related
interpretations and understandings. These differences create a great challenge for achieving successful outcomes as a
result of business negotiations. This paper examines differences in the cultural contexts of China and the US as they
relate to business negotiations, and investigates differences in negotiating styles and practices. Recommendations for
avoiding pitfalls and maximizing negotiating effectiveness are offered.

INTRODUCTION

Cross-border negotiations face the challenge of completely different negotiating processes and styles, based on
local history and culture. Negotiators are often tempted to consider the traditional way of doing business in a foreign
country with different traditions and customs inappropriate or even rude. Historical backgrounds with differing
events/timelines have created cultures that are very rich and distinct from one another. These cultural patterns are
woven deep in the fabric of business negotiations, impacting success and failure in often subtle ways. This article will
examine and compare negotiation styles from two of the most disparate cultures in the world, those of the United States
and China.
The Chinese market has become more and more open during the last three decades. An understanding of cultural
differences between the US and China has become increasingly important for companies in both countries. Though
successful negotiations are often predicated on cultural understanding, differences impacting business negotiations are
not easy to sort out. While negotiation strategies developed by the each cultural group are conceptually consistent with
their shared values, culture is based on much more than values. It involves a vast array of behaviors, institutions, norms
and assumptions (Hofstede, 1980).
The first order of business in our explanation of cultural effects on U.S.-Chinese negotiations will be to examine
more distal elements of the cultural context in which negotiations take place, and then we will discuss specific proximal
cultural factors which influence the negotiation process directly.

CULTURAL CONTEXT

Education
Education in China incorporates direct instruction and students do not ask a lot of questions. This has lead
Chinese people to accept things without asking too many questions. The Americans use a constructivist approach to
education and questioning things is encouraged. The differences in education styles have led the Chinese to be
overconfident in their discussions and draw hasty interferences from things said during negotiations, which are not
warranted (Li, Chen, & Yu, 2006). This may explain why the Chinese have to be careful not to read too much implied
meaning into spoken and written words that make up negotiations, and rely instead on a more literal interpretation.

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Non-verbal communication
In non-verbal communication Americans tend to make a lot of eye contact. This is considered to be a way of
showing interest and good will. The Chinese like to show respect by doing exactly the opposite and avoiding eye
contact (Pye, 1992). They believe that too much eye-contact is considered staring. This disparity in a fairly minor area
of body language can lead to major misreading of the attitudes and intentions of the other party. This in turn can injure
trust, so crucial to success in negotiating with the Chinese.

Xenophobia and xenophilia

Xenophobia is a distrust of all things foreign to one’s own culture. Xenophilia is a lust to obtain all things new
and or foreign. The Chinese have become inclined to distrust anything and everyone from foreign lands due to their
history of violent revolutions and government seizures and changes (Pye, 1992). On the other hand, they have also seen
the new technologies and high standard of living in the West, and many Chinese struggle with these mixed feelings as
they pursue business opportunities with foreigners and seek to acquire western technologies (Pye, 1992).

Philosophical foundations
There are three main philosophical foundations of Chinese culture, Confucianism, Taoism, and Buddhism (Fang,
2006). Famous in China, the Chinese philosopher Confucius lived 2000 years ago and taught about the importance of
human relationships and their hierarchy. The second philosophical foundation is Taoism which deals with life being in
harmony with nature. Within Taoism there is a concept of dualism, or the need for two opposing forces to work in
harmony. Finally, Buddhism deals with the immortal world or religious aspects of the Chinese culture (Fang, 2006).
Though all of these philosophies may influence the thoughts and behaviors of Chinese, perhaps the greatest influence is
wielded by China's Confucian legacy. For example the widely discussed and researched phenomenon of Chinese
overconfidence, discussed above, is thought by some to descend from Confucianism.

Economic systems
China's economic system differs quite substantially with those typically found in the West, and is very different
from the US system in particular. The Chinese have a socialist government with a socialist economic system, focused
on promoting the well being of all the people (Ralston, Holt, Terpstra, & Kai-Cheng, 2007). Socialist countries may
have only one business in a given industry, owned by the state, while Americans employ a capitalist economic system
with numerous privately-owned companies competing for the same sales in the same businesses. In general, cultures
found in socialist countries tend place a higher priority on cooperation both within and between business entities, while
cultures found in highly capitalist countries place greater value on competition.

CULTURAL INFLUENCES ON NEGOTIATION

Cultural dimensions
Hofstede’s (1980) study on culture identified several dimensions of culture, and his thinking has led to a
framework called high and low context cultures. In a high context culture such as the Chinese, there is more focus on
taking care of the group rather than individual interests (Ford, LaTour, Vitell, & French, 1996). Friends are expected to
help each other and there is a mistrust of authority. Americans have what is called a low context culture and see
themselves as individuals. They use the legal system to enforce contracts in lieu of trust-based relationships. Chinese
and American managers have very different expectations about the atmosphere that should prevail for business
negotiations. In China there are usually many people from both companies meeting to discuss topics within the
negotiations, while in America typically only one person or a very few from each company meet to work out a deal.
In a high context culture like the Chinese, social context, personal relations and non-verbal behavior are all very
important in negotiation (Zhao, 2000). These are more important than the legal contract that materializes from the
negotiation. A few words can mean quite a lot. The atmosphere, e.g., tension or harmony, of the meeting can make or
break the negotiations. The group is always more important than individual interests in China. The Chinese believe in

192 The Journal of International Management Studies, Volume 7, Number 1, April, 2012
doing what is right, not just following legal requirements. Their typical view of time horizon is fifty to a hundred years.
They will sacrifice short term results for the stronger long term goals (Zhao, 2000).
When a high context culture such as the Chinese is negotiating with a low context culture such as that
predominate in the U.S., special care should be taken in the words chosen. Words have very specific meanings in low
context cultures and virtually all of the meaning in communication is transmitted through them. What can be implied or
inferred from words is less important, rather the focus is on the words themselves (Zhao, 2000).
In a low context culture, the written contract or legal document is what counts (Palich, Carini, & Livingstone,
2002). Contracts tend to be quite lengthy and wordy in order to cover every possible contingency with precision,
leaving as little ambiguity as possible. Thus, in low context cultures it can take many words to convey very little
meaning. In addition, contracts tend to be focused on the short term, typically around five to ten years (Ford et al.,
1996). Long-term goals sometimes are given short shrift by Western negotiators when the negotiators themselves are
compensated according to short-term achievements and companies are focused on short term profits.
When managers from low context cultures, such as that of the U.S., encounter high context cultures they should
focus on a few critical key aspects of cultural variation. First, there is a high need for harmony in the negotiation
meetings, and care should be taken to preserve good will and avoid unnecessary tension (Zhao, 2000). There is also a
strong distinction in seniority within the high-context culture and ample respect should be offered to elders and
authority figures. Finally, one should be very careful about being blunt when talking to members of high context
cultures (Zhao, 2000).

Four key roots of culture

Chinese culture is rooted in four major factors which have bound the Chinese together for about 5000 years
(Graham & Lam, 2003). The first is agrarianism--most of the Chinese people still live in rural areas and cultivate either
wheat or rice. The Chinese agrarian culture is rooted in more than just farming. China has historically been
characterized by peasant farming, which has been communal and not individualistic. Farming is dependent on the
cooperation and harmony of everyone involved. The family farm has a hierarchical labor group that has been held
together by obedience and loyalty (Graham & Lam, 2003). Many of the urban people in China today have come from
the country side and retained many of the values that they learned while living in the country.
The second factor/root is their sense of morality - writings of the great philosopher Confucius, discussed above,
have influenced the Chinese culture morality for over 2000 years (Graham & Lam, 2003). Though Confucius wrote his
books two millennia ago, his teachings continue to define much of Chinese morality even to the present day. For
example, prospective government officials are required to study Confucian moral teachings before they are allowed to
take office. Confucius's central philosophical principles include the following.
(1) A society that is organized under a humane moral code will be prosperous and stable.
(2) There are five central relationships: the ruler and the ruled, the husband and the wife, parents and their children,
older and younger siblings, the friend and friend.
There is a hierarchy relation to each of earlier mentioned relationships except the last one. These teachings still
play a role in Chinese attitudes toward authority (Graham & Lam, 2003).
The third root of Chinese culture is their pictographic language (Graham & Lam, 2003). Chinese children learn
thousands of pictorial characters in their alphabet at a young age, while American children learn the relatively few
characters in the Greek alphabet. These highly visual nature of these pictorial characters are thought to enable the
Chinese faculty for thinking about the big picture, mentioned above. The American children are taught subtle
differences in characters, which perhaps contributes to the relative tendency of American business negotiators to focus
on details.
The fourth major root in Chinese culture is wariness of foreigners, based on invasions from all directions
throughout their history (Graham & Lam, 2003). The "Great Wall" was built as a fortification against invasions from
the north. There have been a number of different empires and political structures in what is now present-day China, and
power struggles have often been accompanied by military conflict. There have also been numerous internal conflicts

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and wars over the thousands of years of Chinese recorded history. This has fostered the Chinese tendency keep within
small, familiar, and close-knit communities.

Eight Cultural Elements

The four cultural roots have given rise to a distinct set of eight cultural elements (Graham & Lam, 2003). First,
Guanxi was derived from the cultural necessity of living in self-supporting communities. The lifelong connections and
sometimes cross-generational connections have held family units and friends together for millennia and are still an
integral part of the Chinese culture (Buttery & Leung, 1996). Who you know in China is much more valuable than
what you know how to do. If the Chinese don’t know you, they will not do business with you--no matter your
intelligence, achievements, and/or qualifications. How exactly relationships develop and work within guanxi is not
very well understood. Some of it has to do with the people one knows growing up and attending school with, while
others in the network are friends who may have done some favor, even a fairly minor one.
Zhongjian ren refers to the customary intermediary who befriends both parties involved in negotiations (Graham
& Lam, 2003). The Chinese wariness of foreigners has lead them to need an intermediary when doing any kind of
business. The typical trust that the Americans extend, until they have a reason not to, has never been enjoyed by the
Chinese. Business in China would not be possible without a trusted intermediary. In China the custom practiced in
business is to pass along trust through business associates that have some common background such as hometown,
school or family (Graham & Lam, 2003). Those links must be based on personal experience, and this is crucial.
Expensive meals at nice restaurants are a way of initiating contacts with a former classmate that might know a person
that you need to do business with. This will get your friend to act as zhongjian ren and allow for the initial meetings to
take place.
The zhongjian ren is not expendable at this point. The intermediary is needed to interpret the slight changes in
body cues that the Chinese use to say no since saying no outright is very taboo in Chinese culture. It is also traditional
for the zhongjian ren to act as a mediator and settle any disputes that may arise. These zhongjian ren should also have a
deep understanding of the background and operations of the Chinese state owned enterprises so that they will know
whom to contact, or who has controlling interest (Zhang, 2008).
Shehui Dengji is an element that refers to social status, and is about showing great respect for one's superiors
(Graham & Lam, 2003). Casual business relations, common in America, don’t fare well in China. The writings of
Confucius, which influence the morality of the Chinese, say that obedience and deference to one’s superiors is required.
This has also made the Chinese prefer to have meetings with people of higher and equal social and business status. This
means that the head of the Chinese company will want to meet with the CEO of the American firm.
Renji Hexie involves the need for interpersonal harmony (Graham & Lam, 2003). This means that one should be
charismatic and have an inviting and easy going personality. Friendships of equals are held together by renji hexie,
while hierarchy is held together by respect and responsibility (Graham & Lam, 2003). This makes trust and harmony
more important than any piece of paper. There must be a feeling that the business counterparts are human beings and
not machines in service of giant corporations. Being able to socialize together, not tend to business all the time, and
merely enjoy life is expected by the Chinese of their business associates.
Zhengti guannian is the complete or whole thinking that is customary within the Chinese culture (Graham & Lam,
2003). This involves thinking about the whole country and not the individual business, or individual person. The major
Chinese industries are state owned and have to think about how their actions might affect the other state owned
enterprises. This style of thinking seems to frustrate most westerners, but it has brought good things to the Chinese,
who seem to get extra concessions out of the Americans just before they announce their decision to accept or reject the
deal.
The Americans like to break things down into individual elements and look at them one at a time while the
Chinese will jump from one subject to the other and talk about everything all at once. The jumping around seems to
never settle anything from the American point of view (Graham & Lam, 2003). Some say that it is really hard to know
if the negotiations are proceeding. All one has to do is pay attention to the high Chinese executives at the meetings. As
long as they stay, then the meetings are proceeding along just fine.

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 Jiejian means thrift and has always been a part of the Chinese culture (Graham & Lam, 2003). This has been the
norm because they have had very few belongings for long periods of time. The Chinese save almost four times as much
as a typical American does (Graham & Lam, 2003), and they typically have had to work very hard for the things they
have. Because of jiejian the Chinese often use a little more negotiation room in their offers than do Americans. It is
wise to be careful about asking for price concessions from the Chinese, as they get offended easily and may then
attempt to give you the silent treatment when negotiating. This will make for even longer negotiations.
Mianzi is an element of Chinese culture that refers to one’s “face” or the preservation of poise (Graham & Lam,
2003). The preservation of composure and lack of embarrassment, or face, forms an underpinning of a business
person's reputation in China. If a CEO or delegate from China feels embarrassed, or if they lose composure, they lose
respect--and this is an item that can be sold, bought or traded in the Chinese culture. Displaying anger, frustration or
aggression at the negotiation table will cause both parties to lose face and it is disastrous to negotiations (Buttery &
Leung, 1996).
Chiku Nailao means enduring to the end and being relentless (Graham & Lam, 2003). The work ethic of the
Chinese is well respected around the world. The Chinese are very diligent, tenacious and persistent. They send their
children to school year round, not the case for most western cultures. The Chinese do a lot more research about the
opposing company than Americans typically do when preparing for negotiations. They expect to be at the negotiation
table longer than do the Americans. There are three things that can demonstrate a person's chiku nailao, (1) asking lots
of questions, sometimes more than once, (2) educating the Chinese about your company’s needs, preferences and
situation, and (3) by showing patience. Be careful not to come across as condescending (Graham & Lam, 2003).

The importance of relationships in negotiations

Americans believe that the relationship develops after a contract, while the Chinese believe that there needs to be
a relationship before a contract gets signed. Building a relationship takes time and is a drawn out process and can cause
negotiations to take longer than expected. The Chinese believe personal relationships build trust and should take
precedence over the contract (Friedman, 2007). They also believe that a strong relationship leads to a successful
contract. Contrary to America, in China there is a belief that partnering companies and individuals should have a strong
mutual commitment, but be loose in their contracts.
There are pre-existing relationships that take precedence in the Chinese culture. These relationships include those
with schoolmates, family, relatives, superiors and subordinates (Friedman, 2007). The hierarchal structure of this
network of relationships is based on “face” and favor (Wong, Tam, 2000).

Chinese business culture

Zhang (2008) has described three components of Chinese business culture. The first involves the influence of the
nation state on the culture, namely the People’s Republic of China and what is sometimes termed the "PRC condition."
This term refers to the influence that the socialistic government puts on trade and negotiations. The government enjoys
owner’s rights, interests and privileges of most of the big industries (Zhang, 2008). The country has a planned
economic system, legal framework, and planned technology development.
The second cultural component, Confucianism (mentioned above) is about moral cultivation, how important
relationships are, the importance of family, respect for age and hierarchy, and the avoidance of conflict (Fang 2006). A
third component is Chinese stratagems, thirty-six in all, that provide insightful ways to reach a goal. Some of these
involve deception and underhandedness. When negotiators start to use these stratagems, harmony is no longer
prevailing and the negotiation is probably not going to go well (Zhang, 2008). Chinese stratagems often favor the
optimization of long-term outcomes (Ford et al., 1996) .

American business culture

Individualistic cultures tend to place greater emphasis on personal needs than that of the group. In the
individualistic American business culture, immediate returns are what count the most. Managers seek to make the deal

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and go home (Ford et al., 1996). Rapid closure is favored to allow for moving on to the next deal. Typical American
deal-makers aim to further their personal interests through commissions and compensation (Tinsley & Pillutla, 1998).

THE NEGOTIATION PROCESS: SOME PRACTICAL RECOMMENDATIONS

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 a mutually acceptable agreement. The process may or may
not 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 (Neidel, 2010). Some practitioners say that
negotiation is an art form that takes many years to perfect. Others believe that successful negotiations can stem from a
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 (Neidel, 2010). Americans
should also try to gain as much knowledge about the partner’s situation, intent and capabilities. As mentioned above,
they need to study the fundamental differences in culture and expectations before negotiating (Ford, LaTour, Vitell,
French, 1996).
It is customary that the foreigner shows his hand or proposal first when visiting the Chinese (Pye, 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 negotiations start with the general principals and then move to the details.
In high context cultures 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 (Neidel, 2010).
Your Negotiating Partner. You should do a background check and know whom you are doing business with in
China (Zhang, 2008). In addition, the Chinese government owns or directs all state owned enterprises. This makes it
critical that you know current People’s Republic policy’s plans and priorities (Neidel, 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 that the Chinese company has made with other
companies.
Know yourself. Knowing the “big-picture” of your own company and how the deal will affect your company will
help you look more credible to the Chinese (Neidel, 2010). Being aware of how government regulations in your own
country may influence your company is very important to the Chinese. This is because the Chinese are used to having
government involvedn in all parts of business in their country (Zhang, 2008).
Strengths and weaknesses of each company. Be ready to show how each side will benefit from the deal in both
social and economic value. Show the weaknesses and strengths of each company in both social and economic terms.
Be sure to put the associated strengths and weaknesses in the local context of the proposed deal. It is worth noting that
businesses which have gone through internal and external analysis have a much better advantage when it comes to
closing the deal (Neidel, 2010).
Operational Readiness. The American company needs to be aligned to work with Chinese-style negotiations.
The negotiation teams need to be cohesive and disciplined (Neidel, 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 much can be
disastrous (Neidel, 2010). It is better to have the Chinese asking 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.

196 The Journal of International Management Studies, Volume 7, Number 1, April, 2012
 Never-ending negotiations. Negotiations in China are never final (Zhang, 2008). The Chinese use negotiations as
a way to build relationships 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 their customs are far more important
than any written piece of paper. A contract starts a long-term commitment and they assume that it will be revisited
every now and then (Zhang, 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 to expensive restaurants, and later send
them expensive gifts (Zhao, 2000). After the restaurants and gifts, some free samples 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 most of the time the subtle “no” that 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 causes distrust, emotional turmoil and poor outcomes (Zhao, 2000). The nonverbal
and personal relations are far more important than any signed contract because Chinese contract law allows contracts to
be in written, oral or other forms. Due to Chinese companies being owned by the 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.
American 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 abandon a
deal if a sweeter one opens up (Friedman, 2007). It is critical to have a predetermined method for resolving any
disputes that arise. This is usually done through the use of clauses at the end of the contract. These clauses satisfy the
Chinese need to practice Confucian aversion to law, and may involve arbitration (Zhang, 2008).
There are certain “why” questions that are taboo in Chinese culture. It takes some tacit knowledge to figure out
whom you should ask, and which questions to ask. One should ask particular “why” questions to certain individuals
and not others, or these questions can offend some of your Chinese counterparts (Zhang, 2008).

Tactics
The Chinese Negotiator. As discussed above, the Chinese negotiator is guided by the three cultural dimensions
that are apparent in their culture. The PRC condition, Confucian philosophy, and Sun Tzu stratagems all play an
influence in their negotiations. These are underlying concepts that are very different than the ones known by western
negotiators.
The Chinese like to ask many questions during the negotiations and they also interrupt very frequently (Ghauri &
Fang, 2001). The Chinese will often settle all suspending items of the deal in a package deal. They prefer to only make
concessions at the end of the negotiations. In China concession for concession is expected. Although these
reciprocating concessions may not follow immediately, the Chinese will expect them over time. The Chinese have
different types of negotiations that they use with different types of firms (Pye, 1992). The type of product being sold
and the supply chain of the product influence these negotiation tactics. The Chinese like to make their issues seem very
important compared to the westerner’s issues. The agreement or contract is almost always signed in front of a
government official.
The Chinese like to try to manipulate the American side through cooperation, assertiveness, defensiveness,
flattery, identifying the opponent’s problems, deception, shamming and pitting foreign companies against each other
(Ghauri, Fang, 2001). Carrying on long negotiations on the part of the Chinese, is a tactic to try and get concessions,
and is very common. They very seldom give indications when the negotiations are reaching their end (Zhao, 2000).
The Chinese like to use stalling tactics frequently. The Chinese will try and have you make concessions and sign the

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contract before the government official gets there. You should always approach negotiations as if it were a political
debate and not an intellectual debate (Lavin, 1994).
The Western Negotiator. The western negotiator likes to have cooperation and believes in competition. Their
goal is to create economic wealth and maximize shareholder benefits. Although tension may work in the American’s
favor temporarily, it will damage the overall important interpersonal relationships that bind more strongly than any
contract can (Lee et al., 2006). These relationships are necessary to keep long term contracts going and to form new
ones.
Motivations. The Chinese businessperson is usually in it to advance their personal political career. They want to
be compliant with the current policies and guidelines. They are more likely to avoid risky situations. The westerners
are in it for personal gains, usually monetary. They seek to increase their own compensation (Zhang, 2008).
Business Channels. Chinese business channels follow a certain sequence in how they proceed. The first thing
one must do is build trust. This takes time and one must get to know the business partner personally. During this
process the partner gets to know you too (Zhang, 2008).
Symbolic visits by top executives of western firms can build trust along with banquets and informal
communications. Having the Chinese delegates visit a western firm’s home country can do wonders to build trust. The
intermediary must accompany all of these events since they are is usually the one who introduces the relationship and
builds up all the connections. Sometimes the intermediary is the one who arranges the proper trust- building events.
Intermediaries can also serve as the cultural interpreter (Zhang, 2008). The final negotiators should not be present until
close to the end of the negotiations and these could be government officials. This is usually the case in larger state
owned enterprise negotiations. It also helps if you know who these chief negotiators are (Fang, 2006).
Difficulty. There are three main sources of difficulty that typically arise in negotiations. The inexperience of both
parties and the newness of relationships generate issues on its own (Pye, 1992). The second difficulty is that trying to
synchronize a capitalistic society with a socialistic one going through a very uncertain transition creates a lot of
difficulties in seeing what the future will hold. Finally, cultural differences cause the most difficulty when negotiating
between the Chinese and the westerners (Pye, 1992).

Successful negotiations
Negotiations are usually more successful when the two parties involved are cooperative with each other (Zhao,
2000). Using the cooperative Confucian tactics instead of the warrior-like Sun Tzu stratagems will have better results.
When problem solving strategies are used by both firms there is a higher chance of success (Adler, Brahm, & Graham,
1992). It helps if the western company can show that they have government support--this shows that they are stable,
reliable and credible.
Talking to your counterpart instead of threatening legal action always results 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 guanxi, or friends. The Chinese don’t 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 visiting 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 may get in their way.
Inviting the Chinese to go abroad to your country can add tremendously to your success.
Be careful not to use superstitious numbers or other objects and you will increase your probability of success.
Trust will lead to much better performance. Being patient will be more beneficial to you than any other attribute you
might possess (Fang, 2006). Don’t give in to pressure from your superiors to hurry up and complete the deal. This can
cause problems because the Chinese are not greatly concerned with the time dimension (Bredin, 1998).

198 The Journal of International Management Studies, Volume 7, Number 1, April, 2012
Failures
Failures can come from a variety of unexpected sources. The most common reason for failure is that the Chinese
firm lacks the funds to go through with a deal (Fang, 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 frustration and lack of
cooperation, then failure is almost certain. Showing anger, raising your voice or changing your tone could be seen as
uncooperative behavior (Zhao, 2000). 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.
If you attempt to seek legal help you will most likely ruin any trust that has been built up in relationships. The
Confucian aversion to law causes them to see trouble and relationship failure when the legal system gets involved (Fang,
2006). It should be noted that Chinese law says that one cannot leave a contract unless both sides approve dissolution
(Sebenius, 2002).
Failure to say no to a Chinese negotiator who is using a Sun Tzu-like strategy could be detrimental to your deal,
but on the other hand, saying “no” to a Confucian gentleman could cause a loss of face. This also will be very harmful,
if not fatal, to a successful deal (Fang, 2006).
The Chinese have regional areas just like the United States and there are very different cultures, traditions and
sometimes languages in these regions. Not acknowledging these regions can cause you to have limited success in one
area and a complete failure in another (Fang, 2006).

SUMMARY

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 assumptions, as well as
strategies, tactics, and operational styles. When the two cultures engage, the opportunities for major misunderstanding
are rife. If Americans managers 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 involving
U.S. and Chinese companies. This article sought to further such understanding and aid in bridging cultural differences.
Much more investigation of this crucial topic is needed.

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