Claudia Dreizler, IB4 How to negotiate with Chinese managers

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Good negotiation skills are very important when doing business with people from other cultures. ¹ People from different cultures have different expectations about negotiation outcomes and therefore use different negotiation styles. 2

If you compare negotiation styles in Germany and China you will discover many differences. Most of these differences are due to the very different cultures of Germany on the one side and China on the other side.

The German culture is, referring to Fons Trompenaars, universalistic, collectivistic, diffuse and achievement- oriented.

The Chinese culture is characterized as particularistic, collectivistic, very diffuse and ascriptive culture.

In universalistic cultures such as Germany, there is only one truth and people rely on contracts. This means that focus is more on rules than on relationships. ³ Particularistic cultures such as China put focus more on relationships than on rules that means that people rely on relationships rather than on contracts. ⁴ China tends to be collectivistic. ⁵ China depends on collectivistic culture in all spheres of society and life for instance due to the Communist Party. In Germany, collectivism can be seen in the social system, especially during trade union negotiations. ⁶ Business life in Germany relies more on individualistic culture. ⁷ China is a very diffuse culture. This can be seen in the point that business and private life are closely linked in China. ⁸ Germany tends to be a rather specific culture compared to China.

The last dimension I want to mention is ascription versus achievement- orientation. Germany is an achievement-oriented culture. This is shown by the fact that “Respect

¹ Adler, p.191

² Adler, p. 223

³ Trom penaars, p. 48

⁴ Trom penaars, p. 48

⁵ Trom penaars, p. 57

⁶ Nees, p.108

⁷ Lang, p.122

⁸ Trom penaars, p. 101

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Claudia Dreizler, IB4 How to negotiate with Chinese managers

for superior in hierarchy is based on how effectively his or her job is performed…” ¹ In China as ascriptive- oriented culture “Respect for superior in hierarchy is seen as a measure of your commitment to the organization…” 2

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This paper analyzes possible steps in a negotiation between Germans and Chinese. It also gives some guidelines on how to avoid possible conflicts during such negotiations.

In the following I will assume that a young German manager visits China to sign a contract. Both the German and Chinese have never met before and have never had intercultural training. Since the Business English of all participants is good, a translator is not needed.

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Both Chinese and German managers usually use name cards. When creating name cards Chinese use as much titles as possible to clarify their status in the organization. ³ In China being an ascriptive culture there is much emphasis on status. As Trompenaars points out, “Ascriptive cultures must be assured that your organization has great respect for you…” ⁴ In diffuse cultures such as China it is significant to connect someone’s status with his or her organization. ⁵ The Germans, coming from an achievement- oriented culture, use titles “…only when relevant to the competence…” 6

¹ Trom penaars, p. 118

² Trom penaars, p. 118

³ Professor Yuan Libin

⁴ Trom penaars, p. 111

⁵ Trom penaars, p. 111

⁶ Trom penaars, p. 118

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Claudia Dreizler, IB4 How to negotiate with Chinese managers

In China as ascriptive culture status is due to seniority. Experience is highly valued. This relates to the high- power distance of ascriptive cultures. ¹ Therefore Chinese managers are confused when German companies send a young person to sign an important contract. ² The German achievement- oriented culture is performance-oriented and therefore probably sends a dynamic young person who will do his best. The Chinese as collectivistic culture don’t understand why the German travels on his own. Unaccompanied managers are supposed to lack status and are therefore undervalued. 3

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“Since hierarchical relationships are very important to the Chinese, seating arrangements are rigidly adhered to. The leader of each group sits at the center of the negotiation table, … ”. ⁴ This is also a sign of collectivism. For Germans, seating arrangements are not as important when doing business.

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Chinese managers often use small talk in front of and during the negotiation to build up a relationship with the foreign manager. ⁵ They are particularistic and focus more on long- term relationships. According to Yuan Libin, good relationships are very important when doing business in China. The Chinese call this guanxi. Chinese need this small talk to get acquainted with the business partner and to foster the relationship. Through small talk Chinese try to learn as much as possible about the German manager and his aims. ⁶ Universalistic German managers are sometimes confused about this talk as they want to maintain a more impersonal relationship with their counterparts. 7

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As mentioned above, Germans tend to keep the talk as objective and impersonal as possible. Since polite talk is very important for Chinese managers it can take very

¹ Hofst ede in Hale, p. 64

² Trom penaars, p. 113

³ Trom penaars, p. 111

⁴ Lafayet t e de Ment e, p.115

⁵ Lafayet t e de Ment e, p.113

⁶ Professor Yuan Libin

⁷ Nees, p. 143

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