In accordance with our theories, it is necessary for Western exporters to learn about the Chinese business culture in order to be successful in marketing in China. There is an old Chinese proverb, “Enter village, follow customs”. The Chinese civilization has a long history and evidence shows that the way to get things done in China is to do it in the Chinese way. Chinese business culture is the key to the Chinese way of doing business and their style of negotiating (Fang 1998, p.71). In this chapter, we aim to provide a framework to help those Western exporters get a better understanding of Chinese people’s business culture.

1.0 Influence of Confucianism

The Chinese culture encompasses diverse and competing philosophies, of which, Confucianism has been identified as the foundation of China’s great cultural tradition. Confucian values emphasis on interpersonal relationship and has provided Chinese business people with a relationship-based business approach (Bond & Wang 1983). An ordinary Chinese person would also agree that business and marketing in China is about relationships to a great extent. The principle of harmony and trust in Confucianism reflects an aspiration toward a conflict-free and group-based system of social relations, and also means that communication in a business negotiation should be harmonious. Further, the principle of hierarchy emphasizes that each individual should be conscious of her or his position in the society, which is also evident in a business negotiation in China, especially in a decision-making process. (Bond & Wang 1983)

2.0 Guan Xi

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The Chinese term guan xi, rooted from Confucianism and translated into relationships or connections, is one of the most important traits of Chinese business culture, referring to the concept of drawing on connections or networks in order to secure favours in personal or business relations (Davies et al. 1995). It is a set of concentric circles of contacts, typically stretching from close family, to distant, to more distant relatives, to classmates, to friends, to friends’ friends, and so forth. In the Chinese business world, networking of guan xi is a peculiar advantage which can contribute a variety of commercial privileges and a great deal of business potentials for the marketer. This approach contrasts sharply with the deal-focused, task-oriented business cultures of North America and northern Europe (Gesteland & Seyk 2002). Therefore, to establish a great guan xi with the Chinese counterpart, partners, customers, even the Chinese authorities and government should be an extremely important marketing strategy of Western exporter that wants to be successful on the Chinese market.

3.0 Establishing a relationship

Being relationship-focused, Chinese prefer to deal with family, friends, and persons who they know well and who they can trust. They are uncomfortable talking business with strangers, especially strangers who also are foreigners (Gesteland & Seyk 2002). For this reason, the first step of business negotiation in China takes a lot of time outside of the office for socializing. The Chinese invite foreign guests for dinners, sightseeing, and other activities in order to facilitate the process of getting to know each other. The Chinese will want to know about this foreign company, its reputation and its management, and will be especially interested in the background, rank and personality of the individual foreign executives making the visit. A Western executive may become impatient with this step, both out of pressure to reach a deal quickly and out of the desire to separate business from the private aspect. However, what the Chinese are really doing at this stage is to test the sincerity, intelligence and deference of their prospective business partner before considering doing business with him or her. (Fang 1998)

4.0 Attitudes to contracts

Confucianism’s principles of interpersonal relationship and trust can even make many Chinese business people put relationships before contract (Alston & He 1996). Many Chinese believe that risk in the business can be minimized by developing a quality relationship of guan xi with their business partners. They are more likely to see a contract as a basis of relationship rather than a legal document. Most of the Chinese executives involved in international business realize that Western executives require formal documents in which delivery dates, responsibilities and procedures are explicitly stated and will respect the clauses which they have agreed to. While the Chinese tend to think that, once a relationship has been established, future problems can be solved without legal recourse. And the Chinese are inclined to prefer agreements that are less detailed than the Westerner. Because, for them, changes are anticipated and those detailed contracts can become relatively useless. (Alston & He 1996) Therefore, for a Western exporter, it would be wise to follow the Chinese model and only enter into business relationships with partners one knows and trusts.

5.0 Face

Another important Chinese cultural trait is the Chinese concept of face. In China, face is one’s good reputation in others’ eyes, one’s self-respect, dignity and prestige. If a Chinese is insulted, embarrassed, shamed or criticized in public, he or she will lose face. People can also give their counterpart face by making compliments and doing small favours. Giving face is an effective way to build a solid relationship (Gesteland & Seyk 2002). Face issue is also evident in a Chinese business negotiation context. In the business world, negotiations should be conducted to assure that the Chinese counterparts keep face. Because of face consciousness, a Chinese negotiator would refuse to make any concession. Some of the many delays that Western business negotiators encounter are caused by the Chinese counterpart’s unwillingness to risk losing face. A lot of evidence has shown that a great deal will be gained by helping the Chinese to win face and a great deal will be lost by any slight action which may cause the Chinese losing face. As a result, cognition of the Chinese concept of face plays a critical role in successfully doing business with the Chinese. (Fang 1998)

6.0 Holistic thinking

In general, the Chinese have a deductive cognition, which means reasoning based on theory and logic (Brake et al. 1995). The Chinese are highly deductive in their assessment of opportunities and problems. They usually want to be introduced to a new product, service or other business opportunity by way of a theory. This theory should provide them with a straightforward overview of the opportunity. The meaning and application of the principles of this theory should then be demonstrated with data and facts, although quantitative justification and analysis play a less important role in China than in many inductive Western business environments. Chinese people are likely to be resistant to business proposals which are not presented first in a logical form. (Brake et al. 1995)

7.0 Speech acts

As China has a high-context culture, hinting is an exceedingly common way of communication for the Chinese. Sometimes, Chinese speakers feel that they have been very frank with a clear hint, while the Western listeners still can’t catch the point at all. Elements of “atmosphere” surrounding the conversation, such as previous experience, hierarchy and many other cultural factors modify the literal meaning of a Chinese speaker’s sentences. For example, “I agree” might mean “I agree with 15 percent of what you say”. And “We might be able to” could mean “Not a chance”. What is said is often not what the listener is expected to understand. This is one of the biggest culture shocks in many business negotiations between the Westerner and the Chinese (Johnston 1991, p.209).

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