NUST Business School

International Business
WHAT means WHAT in different cultures?
Assignment 1

Submitted to;
Ms. Ayesha Pervaiz

Submitted by;
Asadullah Sher
Dure Sameen
Kainaat Zulfiqaar
Muhammad Ahmad Sami
Muhammad Ali Qasim
Rafay Ahmad

BS ACF 2K16 A
Date: 6 March, 2019
 Chinese Business Negotiations
It seems like China is growing to be more confident day by day, we don’t think so it is too strong
to say that China is regaining its historical strength as strong global economy. China is one of those
countries, where the government is very active in economic consolidation and international
engagement. Chinese investment and influence can be seen in any part of the world. For an
effective business engagement and especially when they are cross cultural, negotiations skills are
very important. With booming economy of China and its growing international consumer
influence, the role of negotiation in international business of china is getting more and more
important and negotiation skills important for Chinese culture are in high demand. Negotiation is
constant for various multinationals working in China in whatever way they want to expand their
business and market i.e. acquiring new businesses or managing the on-going ventures effectively.
If any multi-national that seeks to gain competitive advantage in China, their senior management
should have skills to negotiate their important deals in line with Chinese culture. Different
aspects/factors are discussed below that how a multinational or any person can close a successful
deal in China by keeping in mind the following factors.
Negotiating Goal in Chinese Business:

In China, the word used for negotiation is 谈判 (tan pan). The word is divided into characters
meaning “to discuss” and “to judge”. The Chinese negotiating style is flexible, situation-related,
and paradoxical in nature. If we see from Chinese perspective, negotiation is a mechanism for
building trust and a good relationship with the counterparty to hold business efficiently and to
work in the benefit of both. Dialogue is very important in Chinese business because it lets the both
parties judge and evaluate their counter party’s capabilities and skills and assess whether they are
capable of conducting a healthy and long-term business (China Business Review, 2019). The real
purpose of negotiation is gaining trust of the other party for the long-term business and creating a
framework for long term cooperation and problem solving much more than the one-time
agreement. Challenge of mutual understanding is great in Chinese culture e.g. Chinese and
American approaches are very incompatible, Americans think that Chinese negotiators are
inefficient, indirect and even dishonest while Chinese think that Americans negotiators are
aggressive and impersonal. (Harvard Business Review, 2019). Reciprocity is one of the main
purposes of Chinese negotiations. They work on mutual gains. Reciprocity is very common in
Chinese negotiations. The Chinese negotiators routinely examines the state of guanxi (a Chinese
term used for network and connections) to ensure and evaluate the trust between both sides of
negotiations and implement the strategies that are based on Confucian principle of reciprocity in
which parties use the cooperation strategy to ensure the maximum win for both sides (Fang &
Tony, 2006).
Protocols:
If a multinational sends its team in any country for negotiating a deal, it is important that they
should be aware of their business etiquette’s. For China it is very important that we take care of
their culture and make them and their culture very important to us. For that it is necessary for a
negotiating team to take care of different business manners and etiquettes that are followed by
Chinese.
 Dress code is an integral part of daily business routine in China. If we walk down on the
streets of China, it is most likely to see men with at least a good shirt with collar and cuffs
and a good dress pant. Business costumes in China are very conservative and modest. For
men, the most commonly used dress code is dark colored and traditional suits and for
women suits with high neckline. Tuxedos and dresses of flash/loud colors are considered
unacceptable for formal events. It is very important to keep in mind that shorts, jeans and
dress that is revealing is considered to be offensive among Chinese business men.
 Selecting an appropriate team for negotiating is also very important. There is a very famous
Chinese phrase “Foreign guests first”, this not just an open invitation but it should be taken
as a strategic consideration. For that purpose, it is important that the status of your
negotiating team should be quite acceptable and of higher level. Chinese may feel insulted
or humiliated if the team includes young employees from the company. In order to make
them feel important, it is very important that important officials of the company should
take part in the meeting themselves. Team should be constituted of technical and financial
experts to cope up with their questions regarding innovation, technology and financing the
project/deal. A lawyer with sound knowledge of Chinese law should be present at the time
of meeting (Fang & Tony, 2006).
 First, Chinese organizations often do not like to conduct business with unfamiliar people.
As such, having a mediator is very important for successful business. When attempting to
communicate with a Chinese company, work through another company because to do
otherwise is rude and can quickly lead to a failed business attempt. (York, Francisco and
LLC, 2019)
 As such, you should leave room in your offers for negotiation. Bargaining is a part of many
customs in China. To avoid winding up in a stalemate or giving up more than your group
would like, make your first offer far less than you find necessary. In time, a better deal can
be reached. (York, Francisco and LLC, 2019)
 In Chinese culture, lavish gifts were very common. But today their official policy forbids
any type of gift giving as it comes in to illegal offence of bribery. If we wish to give a gift
to any person, it should be done privately in a friendly gesture not for the business means.
Chinese decline the gift three times and then they accept it in order to not appear as greedy
(1worldglobalgifts.com, 2019) Giving a gift to entire company rather than an individual is
somehow acceptable if following conditions are fulfilled
 All business negotiations are concluded before the gift.
 It is very important to specify that gift is for the company.
 Present the gift to the leader of Chinese negotiating team.
 Gifts should be wrapped in red color, as it is considered lucky in Chinese
culture. Yellow color with black writing should be avoided because it is just
given to dead.
 A fine pen, solar calculators, kitchen gadgets or stamps are few of the
acceptable gifts in Chinese culture.
  Gifts for the company could include special items of your city or country
like handicrafts or books.
 Scissors, knives and gifts wrapped in black, blue or white color should be
avoided.
Communications:
China is one of those countries that are modernizing very fast, still there are lot of difference in
western and Chinese style of communication. The key function of Chinese communication strategy
is to maintain the existing relationships and develop new long-lasting relationships with ultimate
aim to preserve harmony and peace within the group.
China ranks lowest among other Asian countries in terms of individualism, and long-term
orientation is the highest-ranking factor very similar to Hong Kong. China mainly focus on being
attributed to the collective society. This indicates that China values being a member of family or a
group. Pakistan and China relationship can be taken as example as China has been supporting and
investing Pakistan since its independence. Main aim of Chinese communication is to strengthen
these relationships not to destroy them.
Chinese culture has complex communication patterns. Movement of body parts, facial expressions
or even the style of dress affects how Chinese communicate and how a person from other culture
responds to them
Non-Verbal Communication in China:
1. Polite nods are very common when greeting and use of a complete hand while pointing
rather than fingers.
2. Chinese people prefer not to be touched but acceptable where it is unavoidable. Minimal
physical contact and formal recognition of space is much preferred.
Chinese people value a slower and less aggressive approach while communicating, they need time
to understand the idea before commenting on it. Indirect communication is very common, you
need to read between the lines and try to understand too know what they are implying.
Chinese prefer one on one interaction rather than communication on a telephone or written
communication and communication informally with them can easily ruin the deal. So, we should
never forget to communicate in a formal and official manner especially when we are directed
towards the senior persons in hierarchy. (Khlystov, 2019)
Risk taking propensity:
According to (Cheng, 2010) if we see comparison of American and Chinese people in terms of
risk taking, Chinese are very less risk averse in personal finance but more risk averse in non-
personal finance.
Due to their approach towards making long lasting relationships with their counter parties, it is
very easy to trust Chinese people because of their history. If we are able to gain trust of them, then
it is the nation that is famous for its risk-taking propensity.
Chinese people actually pay more focus on innovation and creativity rather than following western
trends, so this makes them very prone to risk and Chinese are very good at taking risk. They are
moving away from copying the popular western products and creating their own products that
meets the demand of large domestic population. This shows that Chinese aren’t afraid of taking
risks and their propensity to take risks is which is driving new initiatives.
View of time:
Perception of time changes between cultures, and this is particularly the case in Chinese culture.
The Chinese focus on one task and getting it perfect and then moving to the next. To the Chinese,
Time is a very valued commodity. For example, after a meeting, the Chinese will express the
sentiment of gratitude that you have taken your time to meet with them, moreover so it is important
not to be late to a meeting with the Chinese. To Chinese, being late to a meeting is a grave insult.
The meeting is a critical time for the businessperson and so to disregard the importance of being
on time is a kin to shooting yourself in the foot. It is best to plan an agenda to get to the meeting
early to avoid any pitfalls that could happen due to traffic or last-minute tie-ups. At the end of a
meeting in China, it is customary to thank the participants for contributing their valuable time.
Punctuality on arrival is also considered important. It is not unusual for a Chinese to arrive 15 to
30 minutes early "in order to finish the business before the time appointed for its discussion," so
not stealing any of the other person's time! It is also considered polite in China to announce, 10 or
15 minutes after a meeting has begun, that one will soon have to be going. (Business Insider, 2019)
The time orientation issue is a lifestyle and in particular with the Chinese. These values are deep-
seated in the Chinese culture, and as we learn from Confucius, the cultural legacy transcends the
individual’s time sequence. It is the process through which generation after generation passes
through their time on earth.
Understanding the Chinese belief of the importance of time and its value to life it visualizes
punctuality in different cultures in of important so some cultures and not to others. What comes
along with the understanding of the philosophy of time trickles down to the decision in a meeting.
The Chinese are not prone to a commitment after the first or second meeting, and they tend to take
their time to decide. A hierarchy of decision makers is often used to come to the result.
Remembering the monolithic nature of the view of time and the process of values that the various
cultures have will help to understand why it takes so long in Western terms to make a decision.
Perceptions of time are different for cultures and for the international business to proceed in a
precise manner all must understand and respect the cultural differences of those in attendance. The
issue of respect clears up when you are on time or even early for a business meeting. You are
respecting the time of others. Thanking them after the meeting for sharing of their time is another
method of showing abatement with the members of the meeting. As a rule of thumb arrive at least
15 minutes before the scheduled time of the meeting.
Decision making:
The Chinese, like most Asians, "walk around the pool" in order to make well- considered decisions,
but they also have a keen sense of the value of time. This can be noticed especially in their attitude
toward taking up another people's time, for which they frequently apologize. (Business Insider,
2019)
The Chinese-dominated societies scored much higher on power distance. The power distance is
inversely correlated with the degree to which subordinates participate in the decision. Thus,
Chinese managers will tend to be more hierarchical, shunning employee participation in the
decision-making process. Moreover, Individualism is said to be low in china therefore decision-
making processes is not encouraged in china. (Martinsons, Maris. (2006)
The subordinates acknowledged the authority of managers to make decisions in organizations. The
decision-making was a top-down process. The mind-set of the employees was “follow my leader”.
The employees would not disagree with managers in front of their colleagues. If they had questions
or disagreements, they would approach managers on one-to-one basis. In Chinese culture people
know superiors have final authority to make decisions. They build good social and interpersonal
relationships in work area. People focus on developing mutual trust, loyalty, and cooperation. Its
values harmony and avoiding uncertainties in life, managers in China make relatively safer and
less risky decisions. They also keep in mind that decisions are aimed at promoting group
cooperation and harmony. It is clear and simple in explaining the implementation of decisions.
They make decisions that reflect achieving long-term goals versus short-term goals and rely on
guidance from past experiences and knowledge rather than solely on reason and objectivity.
(Ijbhtnet.com, 2019)
Form of Agreement
High commitments and Loose contracts is the Chinese way. In the Chinese culture the form of
agreement is different from the traditional contract-based absolutes and is focused primarily on
creating a framework for long term cooperation. The Chinese use the negotiations time to establish
the relationship’s dynamics and determine its character. Formal one-time agreements and contracts
are not the way of the Chinese people as they believe in flexibility in contacts without fixed terms
so they can adapt their agreements with the changing environment. They focus primarily on
building relationships with social gatherings usually involved in the negotiation process rather than
on contracts which prolongs the negotiation process. Chinese step back from the fixed contracts
agreements and usually begin negotiations on basis of a signed letter of understanding that has a
general understanding and principles mentioned in it in a really vague manner. (Harvard Business
Review, 2019)
However, because China is the new grand market place of the world many foreign investors may
feel secure with contracts thus to make contracts enforceable in China there are certain rules that
need to be considered when devising a contract that are as follows (China Law Blog, 2019)
 Enforcement is in China through litigation in the Chinese court system
 Governing law is Chinese law
 Governing language is Chinese language

Power Distance
Power Distance refers to the extent to which the less powerful members of the society accept and
expect the unequal distributed power. Asian countries on average stand at 64 on the PDI Power
Distance Index whereas China alone stands at 80 which makes it a high-power distance country.
This means that Chinese people believe that inequalities among people are acceptable and there is
no such concept of defense against power abuse. Chinese believe that believe that each person has
a rightful and protected place in the social order, that the actions of authorities should not be
challenged or questioned, and that hierarchy and inequality are appropriate and beneficial.
(Hofstede Insights, 2019)
In the Chinese business world, every single member in Chinese companies is willing to follow
office regulation and work guidelines made by the owner. Employees do not want to challenge
their senior workers or supervisors and just want to obey the decisions or orders their superiors
make. That is, the order of rank is anchored firmly, and Chinese workers do not want to
insubordinate occupational hierarchy. In Chinese culture, rank is extremely important in business
relationship and you must keep rank differences while communicating. For example, when you go
to a place where Chinese business partners are gathering, you have to find someone of higher rank
and greet to them first. Plus, when meal is ready, you cannot start eating before the highest person
start.
Personal Style
In the Chinese culture it is vital that we treat the people highest on the hierarchy in an extremely
formal and official manner. Since the Chinese are greatly influenced by Confucius’s philosophical
thinking, they’re more reserved and their gestures less expressive. Informally treating them before
their peers would probably ruin a prospective deal. The Chinese are cultured to avoid the display
of emotions and are often perceived as reserved people. They are highly concerned about their
image and tend to avoid all possibilities of embarrassment and humiliation. Blunt communication
makes Chinese quite uncomfortable, so they prefer the subtle, indirect ways of delivering their
opinions and thoughts and they prefer one-on-one meetings rather than telephone or written
communication.
In China, background information is assumed depending on the nature of the relationship. When
developing a relationship with the Chinese, no topic is actually off limits from what business you
are in and how much money you make to family life. The Chinese value relationships and
networking are highly regarded, especially in the business world, commonly referred to as
guanxi. The Chinese people value a slower, less aggressive approach, and would prefer to slowly
conceptualize an idea before commenting on it. For the Chinese minimal personal contact is most
preferable and formal recognition of space is the norm, particularly for the elderly who are treated
with reverence. Also due to the reserved style of Chinese people gestures are not so frequent.
(Khlystov, 2019)
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