Introduction
Business negotiations between China and America have over the recent past decade increased due to the economic rise of China. Business dealings between the two countries present an avenue where practitioners from both countries come together and discuss terms of business in negotiation forums. This paper examines the effects that diversity in different aspects between the two nations has had on successful business negotiations between American and Chinese business people.
The range of differences among business partners, colleagues or networks is the focus of this paper with an examination on the impact that these differences impart on the success of business negotiations in the United States of America and in China. According to (Jenssen&Greve 2002: 3) diversity in business refers to the differences in the background of entrepreneurs; specifically their education, experiences, occupation, and their ability to provide resources or other contacts in developing business networks.
According to (Chang 2006, p. 135) negotiation is the process through which all forms of consultation, communication, discussion, exchange of views, and consensus is carried out. Further, negotiations differ from culture to culture which requires that correlation of the structure of negotiation of one’s culture to another be done in a manner that puts into considerations the expectations of each cultural ways of doing business. More significantly, understanding a cultures` negotiation trait helps in comprehending their cultural influences on decision making with respect to the negotiation process. Further, by understanding different cultures negotiation norms, one is in a position to anticipate the strengths and weaknesses of their propositions during the negotiation process.
In the context of business relations, (Jenssen & Greeve 2002, p. 4) point out that the essence of entrepreneurship is to acquire supporting knowledge, complementary resources, and access to distribution channels through social networks which translates to the success of the businesses. Thus, the impact of diversity on successful of business negotiations is such that a business would stand a better chance of penetrating market segments and spreading its percentage stake in the market if more diverse networks are developed rather than depending on the same networks.
Drawing a line between the differences within Chinese and American’s negotiation practices, it is apparent that Americans are specifically preoccupied with grammatical articles during negotiations with a notion that their culture is superior and negotiations must be done on their own terms. In addition, Americans believe that all people in the world strive to become like them and hence markets should be kept open for them to make investments. Americans also love conflict during negotiations and do not conceal their desire to dominate the discussions. Ultimately, they are not the socializing type and would rather strike a deal than waste time in delays through salutations and entertainment .
On the other hand, the Chinese find it very essential during negotiations to build rapport between themselves and the negotiating partners. Secondly, the Chinese also value morality and the rule of law. Therefore, the business relationship between them is foremost significant when Chinese are negotiating business with foreigners. For this reason, the Chinese are usually hesitant to appear that they are neglecting their relationship. They are very willing to shake hands reaching out to shake the foreigners hand but wait for the foreigner to stretch out their hands first.
However, the warmness of the Chinese should also not be mistaken for adopting the norm that is American culture where there it’s okay for Americans to shake hands or waving, blowing kisses, high fives, snapping fingers, crossing fingers etc. For the Chinese a simple head bow is the conventional mode of greeting and they may shake hands for cultural sensitivity purposes in respect for American’s culture. Nonetheless, they may regard say finger snapping or blowing kisses as disrespectful to their culture and hence may not entertain this during negotiations .
The impact of diversity in business is such that there are networks created between business people with the common aim of sharing information, financial resources and motivational support leading to the success of a business venture . Similarly, in situations where a business creates partnerships it becomes crucial that such a partner has superior strategic traits coupled by strong organizational and financial characteristics. In a market that is diverse such as China and the USA, it becomes paramount for any organization to diversify its contacts and networks in order to ensure that the interests of different market segments are effectively met. Hence, negotiations with different business partners must incorporate this diversity to ensure that the interests of each segment of the market is catered for .
Successful business negotiations depend on the level of information sharing and resource acquisition that benefits the business in one way or the other. Business people, therefore, in making negotiations will attempt to do so in a manner that will benefit them the most. Hence, the variety of contacts that a business person possess may serve to provide them with a myriad of resource and information sources that help in developing the business.
Information exchange during negotiations depends on communication techniques that require that negotiators have an understanding of each other’s different cultures. Successful intercultural communication requires that parties in negotiations understand business partners cultures well enough to make cultural adjustments. These adjustments are crucial in enabling mutual understanding of the negotiation interaction to avoid any misconceptions or misunderstandings that would lead to the breakdown of the negotiations .
In a situation where a business has redundant contacts implying that the business relies on the same people for information and resources, it’s more often than not that the contacts provide the same information and also have access to the same resources which then renders the business redundant. On the other hand, a diverse network of contacts where the business is in touch with several stakeholders from different market segments places the business at a very competitive position in the market. This success is attributable to the fact that the business has access to a number of business sources of information and resources.
The Chinese market is one that has over the last decade risen to become the world’s largest and fastest growing economy attracting investments from Multinational Corporations (MNCs) from all over the world. The implications for this has mostly been unprecedented given that MNCs overlooked the diversity aspect of the Chinese market. The result of this is such that the MNCs predictions on profit margins did not translate to actual profits while some MNCs failed to meet the needs of different segments of the market altogether leading to their failure. The most significant challenge for MNCs especially the ones from the west is the misconception that the Chinese economy is one that is homogeneous and hence their aim as any population would be to aspire to better their living standards by consuming high quality goods just as is the case in the west. On the contrary, the MNCs found that the Chinese market is one that does not necessarily replicate the development in western countries. Therefore, understanding the consumer attitudes of the Chinese towards western products becomes paramount for the success of the product in the different segments of the Chinese market.
With the rise of China, a surmountable number of western companies are increasingly finding their way into the Chinese market making investments in various sectors of the economy. As a result, there is a growing concern that such organizations carry out a research on the ethical differences that the Chinese people ascribe to in order to understand the foundations of their ethical systems. Thus, it is very essential that westerners understand the ethical behaviors of the Chinese so as to foster smooth business relations. Similarly it is also significant that Chinese business people make efforts to understand America’s ethical standards. This in the end would ensure that the knowledge gained about ethical structures of both cultures provide an avenue on which negotiations can be successfully executed.
Differences between the Chinese and the Americans also prop up during negotiations especially on the issue of truth and lies. Whereas it is okay for the Chinese to twist the truth or lie during negotiations, if such truths or lies may favor their negotiations it is unacceptable for American’s to take lightly deceit and hence require that conversations during negotiations be truthful. An understanding of both the Chinese and American’s conceptualization of truth and lies is essential during business negotiations to ensure that they are successfully accomplished. Hence, it is significant that both the Chinese and the Americans make deliberate efforts to comprehend each other’s diverse views on truth and lies before setting out to negotiate business. This is because a clear understanding of this would ensure that the negotiations run smoothly without unnecessary confrontations. Moreover, parties involved in the negotiations can spell put the rules of engagement regarding truths and lies in the negotiations to mitigate any controversies
Further, the element of building trust between negotiating parties is essential in developing a productive relationship between the negotiating parties. In a world where conflicting cultures such the American and Chinese cultures interact in the business environment it is essential that the negotiating parties share trust in order to effectively carry out business negotiations. For instance, the perception of trust inadequacy of Chinese business people regarding their competence and reliability by western executives may serve to cripple negotiation efforts between the two parties .
Business negotiations between China and the USA have been marred by controversies that have to do with inherent attitudes of either Americans or the Chinese about their negotiating parties. The Chinese, for instance, perceive their western counterparts to be aggressive, impersonal and insincere. Westerners, on the other hand, deem the Chinese to be inefficient, indirect and dishonest. Notwithstanding, Chinese negotiators can be warm hosts and friends while at the same time very tough bargainers. The Chinese also are accustomed to unique cultural behavior such as reliance on interpersonal relationships as opposed to legal action preferred by westerners when handling business negotiations. These aspect bring about an array of differences between negotiating parties that in turn influence business negotiations between the Chinese and North Americans.
An analysis of consumer segmentation in China reveals that a vast majority of the Chinese are geographically and economically diverse. This presents differences and disparities in cultural, linguistic and economic development. Other disparities include imbalance in infrastructural development, consumer purchasing power and distribution channels. All these combined pose a challenge for MNCs when structuring appropriate managerial strategies in assessing risks and opportunities that would ensure the success of the business venture.
(Ciu& Liu 2000, p. 69) conclude that for MNCs eyeing the Chinese economy for investments, it is significant that the firms strike a balance between global orientation and local conditions in the Chinese market in order to maximize market coverage, minimize risks and optimize their overall performance. Therefore, MNCs in china should strive to develop contacts with regional and market segment business people to better understand the orientation of the Chinese market segments. Only then can the MNCs be in a position to gain much needed information and resources the in form of established contacts with regional markets stakeholders. This is particularly crucial during negotiations with business stakeholders to ensure that the business is successful in the regional markets backed with the support from regional businessmen.
The Chinese culture, therefore, must be understood to ensure that negotiations are successful in that they are productive given the ethnic diversities and the vastness of the China territory which makes china’s business environment unpredictable in most circumstances. Therefore, the assumption that the Chinese business environment is one that is homogeneous is misleading and would only serve to cripple successful business negotiations. Hence, MNCs should recognize that the Chinese market is dynamic coupled with paradoxes from modern western cultures that conflict with conventional Chinese values. Consequently, it is vital that businessmen interested in investing in the Chinese market consider the diversity that is present during business negotiations to ensure that interests are catered for across the board if they are to succeed in the business venture .
Conclusion
An understanding of different cultures during business negotiations is central in bringing on board different stakeholders who are diverse in cultural aspect to partake in the negotiation process. The American and Chinese cultures are diverse in culture, language and value systems. Business negotiations between the two countries are characterized by several challenges that require that individual business people involved in the negotiations take particular emphasis in paying attention to the differences that exist between them.
An analysis of the differences between the two countries reveals that there are cultural diversities between the two cultures that more often than not present a situation where there are misunderstandings and misconceptions that can have detrimental effects on the negotiation process. By first understanding the American culture, Chinese business people are in a position to negotiate better with the Americans and vice versa.
Several benefits accrue from understanding diversities in conducting business negotiations. First, one is able to create a variety of business contacts and business networks that provide them with much needed resources and information that would lead to the successful venture of the business in regional and segmented markets. Secondly, the understanding of diversity between Americans and Chinese reveals that there are stereotypes held by either party about the other during negotiations that ought to be addressed first to ensure that negotiations end successfully. Thirdly, an understanding of diversity beyond the negotiation table that incorporates differences between that Chinese market orientation and that of the USA is an important element of understanding how the needs of Chinese markets can be effectively met by the Americans and conversely.
Ultimately, it is crucial that for successful business negotiations to take place between China and the USA both American and Chinese business men have to make deliberate attempts to understand each other’s cultures to ensure that they marry the differences in their orientations in order for the negotiations to be successful.
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