Paul Herbig's Working Papers

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1997
NEGOTIATING WITH CHINESE:
by Paul Herbig
EXECUTIVE SUMMARY
This paper is about the cultural aspects of negotiating in China. Chinese and Western approaches in negotiations are different. Therefore, understanding Chinese negotiating techniques and motivations may save much frustration and money. Moreover, a solid appreciation for Chinese behavior and culture can help a foreign company use the Chinese approach to negotiate to its own advantage.
The first section of this paper is about the cultural factors which influences Chinese behavior. This basis is mainly grounded in Confucianism. This influence is shown in several aspects of Chinese life, such as in the person to person relationships, the form of addressing one another, and the extended family.The family has always been a celebrated institution in China, and its hierarchy is carefully preserved. Also, people are taught to be humble and undemanding since modesty is a virtue in China. The loss of face is a terrible embarrassment for any Chinese, so they will never insult or openly criticize anybody. Finally, personal relationships are very important, powerful, and long lasting in China.
The second section is about the Chinese negotiating process. Chinese do not do business with people they do not know or trust. So, it is very important to develop a stable and friendly relationship based on mutual trust and admiration before reaching an agreement. Several topics that help to build this relationship are the effects of a polite conversation, credibility and reliability, the effect of hinting, modesty , and the role of banquets. The Chinese approach to negotiations focuses on personal relationships instead the Western approach of relying on contractual relationships. Western executives generally try to resolve all issues through legal stipulations in the contract, while the Chinese will try to rely on friendly negotiations. China is a collective society; therefore, consensus building is a necessity for Chinese negotiators, and this consensus takes time, so Western negotiators must be patient and understand that there is no incentive for individual decisions on the Chinese side. Moreover, other aspects such as fairness, initial meeting, interpreters and specific issues are studied in this section. Finally, the Chinese are the masters of negotiations for two reasons. First, they understand the importance -and pressures- of time, and they exploit them. Secondly, they hold tightly to their negotiating stance to the point of intransigence. Therefore, being aware of these tactics and knowing the Chinese approach to negotiations will help in reaching an agreement and conducting business in China, an interesting culture.
INTRODUCTION
China is a group-oriented society and any negotiation must cover the interests of many different parties. The Chinese rank among the toughest negotiators in the world, but they are reputable and honorable1. In addition, China is probably one of the most difficult countries to understand and adapt to. An understanding of the Chinese style of doing business is essential before beginning one’s pursuit of business in China.

The Confucian Legacy
The Chinese attitude toward life is influenced by Confucian ethics, which teach Chinese to respect and love their fellow Chinese2. China’s traditional values were contained in the orthodox version of Confucianism, which was taught in the academies and tested in the imperial civil services examinations. These values are distinctive for their this-worldly emphasis on society and public administration and for their wide diffusion throughout Chinese society. Confucianism, never a religion in any accepted sense, is primarily concerned with social order.
The Confucianists claimed authority based on their knowledge, which came from direct mastery of a set of book, the Confucian Classics. The mastery of the classics was the highest form of education and the best possible qualification for holding public office. Confucianism put great stress on learning, study, and all aspects of socialization. Confucianists preferred internalized moral guidance to the external force of law, which they regarded as a punitive force applied to those unable to learn morality. Confucianists saw the ideal society as a hierarchy, in which everyone knew his or her proper place and duties. The existence of a ruler and of a state were taken for granted, but Confucianists held that rulers had to demonstrate their fitness to rule by their “merit”. The essential point was that heredity was an insufficient qualification for legitimate authority. As practical administrators, Confucianists came to terms with hereditary kings and emperors but insisted on their right to educate rulers in the principles of Confucian thought. Traditional Chinese thought thus combined an ideally rigid and hierarchical social order with an appreciation for education, individual achievement, and mobility within the rigid structure.
Tradition values have clearly shaped much of contemporary Chinese life. The belief in rule an educated and functionally unspecialized elite, the value placed on learning and propagating an orthodox ideology that focuses on society and government, and stress on hierarchy and preeminent role of the state were all carried over from traditional society. Some of the more radical and extreme policies of the Maoist 1950s and 1960s, such as attacks on intellectuals and compulsory manual labor for bureaucrats, can only be understood as responses to deep-rooted traditional attitudes. The role of model workers and soldiers, as well as official concern for the content and form of popular literature and the arts, also reflects characteristically Chinese themes. In the mid-1980s a number of Chinese writers and political leaders identified the lingering hold of “feudal” attitudes, even within the Chinese Communist Party (CCP), as major obstacle to modernization. They identified such phenomena as authoritarianism, unthinking obedience to leaders, deprecation of expert knowledge, lack of appreciation for law, and the failure to apply laws to leaders as “feudal” legacies that were not addressed in the early years of China’s revolution3.

Person to Person Relationship
Chinese will go to extreme means not to embarrass another person, whether friend or foe4. The concept of face is very important in dealing with others in order to avoid loss of self- respect or prestige by either party. It also refers to one’s ability to deal smoothly with people face to face5. Chinese never say “no” to any request or outwardly disagree with anything. If someone responds to a request with “later” and later forgets, it probably means that he or she cannot do the favor. The Chinese have been brought up to mask their feelings, often by smiling or laughing. Chinese frequently respond with laughter or smiling when a person speaks of an embarrassing topic or in the wrong, which will persist if the talk doesn’t shift topics.
When two Chinese get to know each other, they have established guanxi, or relations. Guanxi contains implicit mutual obligation, assurances and intimacy, and is the perceived value of an ongoing relationship and its future possibilities that typically govern Chinese attitude toward long-term business; therefore, Guanxi is much more important than only “having contacts” as American believe6.
Chinese are also super hosts. Tables are often filled with food even after dinner is through. This seems like an incredible waste, but to the Chinese, empty plates mean their guests are still hungry and they have failed as hosts. Chinese modesty does not allow them to receive flattery, but to give it. Compliments are often brushed aside with an embarrassed laugh and a returned compliment.

Forms of Addressing One Another
The Chinese have a title for every member of the household. This came about because historically the Chinese family was an extended one with several generations living under one roof, and one had to be able to identify everyone’s position in the family7. Chinese never ask how many brothers and sisters one has, but how many are older or younger than one. Elder brothers are called “gege” while younger ones are “didi”. “Jeijie” refers to elder sisters while younger ones are called “meemei”. Different sets of names are given to each maternal and paternal grandfather and each aunt and uncle.
Outside the family, Chinese of all ages are known by their surname. Most of the time, “xiao”, meaning “little”, is used as a prefix for younger people and “lao”, meaning “old”, is put in front of the surname of a middle-aged person to show respect for his or her age and experience. These prefixes are used only for persons one is familiar with. In formal address, the surname is put before “xiansheng” (mister). Women kip their maiden names after marriage, replacing “missing” with “madam” behind their surnames.
Teachers are well respected and “laoshi”, meaning “teacher”, is always added behind their surnames. Often, people in the streets address strangers as “tongzhi”, or “comrade”, when asking for directions or buying things.

The Extended Family
In China, life revolves around the family. It is often common to find three generations living together under one roof in the city, while in the countryside it can be extended to include uncles, aunts, numerous cousins and in-laws8.The oldest relative in the family is always looked upon as a person of wisdom whose word is usually law. Elders are respected even if they are ill or bedridden. They are only sent to hospitals or institutions if the family cannot provide them with the proper care.
The greatest joy for the older generation is to see the whole family around them, the more males the better, as they are secure that the family name will be carried on. The family hierarchy is carefully preserved and each member of the family knows where he or she stands even if the difference in age is only a few days. The younger generation is not expected to talk back or disobey orders. Babies are well-loved in any Chinese family. With the one-child policy implemented across China, the precious child is doted on and given almost everything it asks for. In the extended family, babies is certainly king.
Adult Chinese live with their family until the time they get married. Upon marriage, the woman moves into husband’s parents’ home. The main reason why a Chinese man lives at his parents’ home is that it is a child’s duty to look after his parents until their death.

II. NEGOTIATING WITH CHINESE
A good negotiator in China must understand not only the Chinese negotiating tactics but also the impact of the human behavior over the negotiation’s evolution in order to conclude in a good deal. Therefore, due to the Chinese’s emphasis upon personal relationships this section has been divided mainly in two parts. The first part studies how to build a good relationship with the Chinese and the second discusses the process of negotiating.

Building a Inter-Cultural Relationship
The Chinese people are very sensitive to linguistic expression and courtesies. During your associations with Chinese people, you will quickly learn that what they say, and how they say it could imply many subtle meanings which differ from yours. Inappropriate language, expressions, or manners might bring failure to your business; on the contrary, a proper word or manner is likely to make a “cloudy day” become “like the sun”9.

The Effects of Polite Conversation
“Hi!” is usually the way Americans greet each other. If you greet a stranger in China this way, it would result in one of two possible outcomes. First, the person may be shocked. Second, the person might consider you to be warm and polite and that you will talk with everybody. Therefore, a way to solve this situation is just modestly smiling a little or nodding slightly to the other person.
Of course, if your are introducd, the result is completely different. Even in this situation, you still need to be aware of your actions. If a friend introduced you first, you would be the first to greet and stretch out your hand; if you were introduced later, you should follow the other’s behavior. After being introduced, if you meet this person again, greet him or her on your own initiative, then speak some polite words. [Polite Chinese greetings are usually, “Where are you going?”, “What are you doing?”, “Are you busy?”, “Have you eaten?”. Those common and normal phrases are not an invasion of privacy, they just emphasize the Chinese concern for others. Thus, you do not need to answer them in a serious manner.] Often, when you are extended an invitation it is difficult to identify whether it is a real one or just a courtesy. The best way to know this is to tactfully say, “Thank you, I do not want to bother you” . If your friend insists, you could respond by declining again. But if the your host insists again that means that he or she really want to invite you. Therefore, if you decline one or two times, and are not invite again, you know the invitation was just a courtesy.
When you help somebody in China, and he or she says “thanks” to you should reply, “Not at all. I am sorry I did not do a better job.” If you respond with the classical American phrase “Sure!” people will think that you are immodest, because your response may mean, “Yes, since I did something for you, you certainly should thank me”.There are some delicate topics for American that are more openly discussed in China. For instance, Chinese people like to talk openly about salaries, age, prices, and other people. So, do not feel uncomfortable when theses topics show up or when you are asking about your age.
Keep your Credibility , Do not Speak too Much
Credibility and reliability are the fundamental principles for conducting business with the Chinese people. In a sense, your credibility and reliability are judged by how you talk. For example, when a Chinese company expressed interest in buying machine tools from a Japanese company, the Japanese staff spoke too much, boasting about their products. The Chinese company began to suspect the quality of the machine tools and suspended contract negotiations. On the other hand, a German company understood this cultural tradition when they initiated their negotiations. The staff of the German company did not describe their machine tools as superior and number one in the world as the Japanese did, but rather analyzed the strengths and weaknesses of their products in comparison with the Japanese products. As a result, the Chinese company viewed the Germans as credible and reliable and signed a contract with them. The Chinese people dislike boasting and excessive descriptions because it makes them believe you may have something to hide.

The Magical Effect of Hinting
Very often, the Chinese people drop hints to others about what they really want to say. One of the reasons that the Chinese hint arises from their self-control and the mode of thinking rooted in the doctrine of the golden mean in traditional Chinese Culture. In fact, one consequence of this doctrine is that people dislike expressing themselves too obviously. Additionally, self-control tends to make people shy in openly revealing their needs and thoughts. For these reasons, hinting became a characteristic of the Chinese people.
Undoubtedly, Chinese people use hinting when conducting business. For example, two companies that had established a good relationship were negotiating the price of machine tools. The Chinese company thought the price was a little bit higher than they were willing to accept. They hoped the other side could reduce the price, but they did not wish to express this directly. During their conversation, the Chinese staff mentioned the possible development of a big machine tool plant in China. This remark was really a hint implying that a business deal may be possible when the machine tool plant is built if the price of machine tools was lowered now. If the prices are too high for a Chinese company to accept, they may openly discuss this fact with you; however, if there is a chance of conducting business, they will not risk hurting your feelings by discussing price with you. Instead they will drop hints.
Of course, in many cases, Chinese are likely to speak openly, frankly, and directly. Generally speaking, Chinese will not hint if an important principle or critical matter is at stake. The Chinese will speak openly, frankly, and directly if it will not hurt others and if they are dealing with intimate friends.

Modesty and Bragging
In the latter part of the 1970s, when the Chinese began to associate with American visitors, both groups often had a dilemma in understanding modesty and bragging. For example, when a Chinese praised an American by saying, “How beautiful your clothing is!” the American said, “Thank you”. However, when an American praised a Chinese person in the same way, the Chinese would say, “No, no, no, yours is more beautiful than mine”. The Chinese reply to another’s praise by first stating “NO,” and then praising that person or acknowledging a weakness in themselves. Typically, they will not accept another’s praise directly.
On one hand, traditional Chinese civilization advocates modesty, and on the other hand, the traditional dialectical mode of thought of Yin and Yang influences Chinese behavior. For example, Confucius advised people to prevent four faults: “Do not fabricate without foundation; do not make a arbitrary decision, do not stick stubbornly to one’s own opinion; do not be too self-important.” The fourth was to advise people to be modest. All in all, modesty is a virtue in China; therefore, when you hear somebody praise you, you must respond to him or her with a negation.

The Role of Banquets
The Chinese are looking for a long relationship involving mutual friendship and mutual trust. They need to develop confidence in their prospective partners before committing themselves. For this one needs a strong head and strong stomach, because banquets and other social occasions are vital part of doing business in China - bonding through glasses of lethal Mao Tai liquor10. Any foreign businessman who tries to circumvent this process is unlikely to get very far. To the “time-is-money” Western businessman, this process may seem frustrating and old-fashioned, but that is the way the Chinese do things. It is congenial, and to their way of thinking, likely to create a more-lasting relationship.
In China, there are many complicated eating rituals. For example, if the Chinese have an important guest visiting from far away, they hold a welcoming banquet. The guest might then give a reciprocal banquet. When the guest leaves, the Chinese host provides a send-off banquet, and he or she may hold a banquet for the success of your visit. During the banquet, eating is very complicated11. As a guest, you should wait until your Chinese hosts invite you to sit at a seat according to their arrangement. After everyone takes their seats, the cook starts to make the first course, and only when the first course is almost finished will the cook start the second course, and so on, until at least eight courses and two kinds of soup are consumed. People use chopsticks for their meal in China, but a foreigner does not have to feel guilty for not knowing how to use them. Before the banquet you can tell your host that you want to use a fork and spoon.
Although many Chinese people do not drink alcohol as often as some Europeans, wine is absolutely necessary at a banquet. In terms of Chinese tradition, a banquet is not complete without wine. People usually evaluate the quality (or level) of a banquet by the kind of whiskey served. When the banquet starts, each man is given a cup of whiskey. Women may have whiskey too, if they want, but generally they drink wine. Everyone stands up and lifts his or her cup to drink. The host proposes a toast, and the people respond by saying, “Ganbei!”. You should only take a sip of your whiskey or wine, then sit down and slowly enjoy your drink with your meal. You must engage in lively conversation with your friends and click glasses with each other. Having a silent drink, as some American do, is impolite. If people propose a toast to you, you must accept each other’s toasts, but you may not appear drunk, so just sip a little bit. If you are able to hold a lot of whiskey, people will respect you as a hero.

Cross-Cultural Differences in Negotiations
In negotiations, Chinese and Westerners often find the other’s approach maddening. Westerners generally want to charge into town, hammer out a quick deal, sign the contract, then head home to proclaim victory at headquarters. The Chinese approach is to arrive in town when convenient, slowly build consensus for a project, get to know and trust the partner fully, acquire as much technical information as possible, hopefully get somebody else to sign the contract, then head home worry about they might have lost12.
For the Western firm, therefore, understanding Chinese negotiating techniques and motivation may save a lot of frustration and money. Moreover, a solid appreciation for Chinese behavior can help a foreign company use the Chinese approach to negotiate to its own advantage.

Until Death Do Us Part
A business relationship in China is often likened to a marriage, and the Chinese partner wants to know if the Western partner will make a good spouse. In the West, a business relationship is often regarded as little more than a marriage of convenience, and the marriage contract is more important than the personal feelings of bride and groom. For the Chinese, the personal relationship is of paramount importance and defines the parameters within which business can be conducted. The role of negotiations is not merely to come to an agreement on specific terms, but to learn more about the other side and decide if there is a basis for trust and true collaboration. If a contract is subsequently signed, it is largely considered just one more event in the course of building the relationship.
Western executives, however, generally consider the contractual relationship to be the most important element in formal business dealing. The goal of negotiations is the signed contract, and the contract defines the parameters of the business relationship. Since the contract is considered the prize, Western business executives are naturally impatient to reach that goal. But the Chinese are extremely distrustful of foreign firms seeking to make a fast deal. This is slowly changing; the trend among younger Chinese is to conclude business deals much more quickly than their elders. But trust building is still essential.
This difference in approach also affects how parties attempt to solve problems. Western executives generally try to resolve all issues through legal stipulations in the contract, while the Chinese will try to rely on “friendly negotiations”. In fact, the Chinese generally insist that a “friendly negotiations clause” be put into the contract, which obligates the parties to make a good faith effort to resolve any differences before they enter formal arbitration. Given the embryonic state of business law in China, foreigners may do well to rely as much as possible on such “friendly negotiations”.

Group vs Individual
Chief negotiators for most Western companies are often empowered to make many critical decision on the spot during negotiations. They have little need for extensive consultations outside the negotiating room to conclude a deal. Among Chinese negotiators, however, the situation could not be more different. In large part, this is because the structure of the Chinese system makes consensus building a necessity. The negotiations with the prospective Western partner is just one piece of all the negotiations the Chinese firm must conduct to get the whole deal approved and implemented. Typically, the Chinese firm must also negotiate for political and financial support among a wide group, which includes all possible customers, prospective vendors, available suppliers and local government officials, all of whom must be convinced they will not lose out if they join the project.
Another factor is that individual Chinese negotiators (typically being bureaucrats) generally have little incentive to put themselves on the line for a deal, they will certainly be penalized for making the wrong decision, and not necessarily rewarded for making the right one. Also, Chinese negotiators rarely receive any sort of bonus or raise for concluding a deal quickly.
Such consensus building takes time, specially in the state-run sector, and can be a very contentious process. Many Westerners get terribly frustrated when they are sent off to see the sights yet again. But often, the Chinese side is using this time to hold very delicate internal negotiations, and it may be best to relax and don a good pair of walking shoes.
Attempts to discuss an item not listed on the agenda also can be frustrated by the need for consensus. The response to unexpected subjects will likely be stone silence, if it is not downright negative. Obviously, one reason is because a Chinese negotiator cannot receive approval to discuss an issue not included on the planned agenda. But after the initially cold reception, Westerners often find that such issues reemerge as a popular topic of discussion a few days later.
Another frustration for many Westerners is that their Chinese counterparts often ask for a great deal of technical information, and very often they ask for the information to be repeated. In the West, as noted Ernest DeBellis, a former general manager of the Shanghai joint venture of Massachusetts’ Foxboro Company, “if you repeat yourself, everybody falls asleep. In China repetition means that you are really serious, repetition is good in that culture. It is incredible how much you repeat yourself to be effective.”
In large part, the Chinese negotiator’s main task is actually to build consensus within the Chinese side. This means they must fully understand the technology or product in order to convince others of its value. One way to keep the process moving is for the Western negotiators to fully explain all the risks and benefits of the deal for the Chinese side. They also should explain exactly what the Western company hopes to get. This gives the Chinese negotiators the tools to educate and convince superiors of the merit of the project.
Potential investors should be aware, however, that some Western companies have found their potential “partners” were actually using the negotiations simply as a classroom. Some Chinese firms will have no intention of buying your product, but they want to gather as much information as possible on the latest technology.To protect any company’s proprietary know-how against this type of behavior, it is important to be very selective in sharing detailed information or technical specifications. Even in the face of competitive pressures, foreign firm should have a signed contract or licensing agreement in hand before letting out any truly proprietary information.

Fairness
The issue of fairness tends to come up often during negotiations with the Chinese. On one hand, the Chinese want to know that you are treating them as fairly as you have treated other partners elsewhere. On the other hand, the Chinese mistrust of Western imperialism often leads them to demand a level playing field, where they are treated as equal to their technologically sophisticated partner. If the Chinese believe that the foreign partner is gaining a greater advantage than they are, it will be very difficult to close a deal.
This mistrust in Westerners comes from both Marxist-Leninist and Maoist ideologies which have especially affected China’s interpretations of world events and Chinese foreign policy. The ideological components of China’s foreign policy, whose influence has varied over time, have included a belief that conflict and struggle are inevitable; a focus on opposing imperialism; the determination to advance communism throughout the world, especially through the Chinese model; and Maoist concept of responding with flexibility while adhering to fundamental principles13. However, the state ideology in the hand of Deng Xiaoping has been more practical and less doctrinaire than before and aimed at fulfilling the goal of modernization14.
One of the ways the issue of fairness manifests itself is that the Chinese will often vastly overstate the value of their contribution to the deal. During the initial opening of China in the early 1980s, the Chinese would even insist that their workers and managers be paid at the same rate as workers and managers in the West. They were willing to forsake what was at the time their major competitive advantage of cheap labor to ensure they were being treated “fairly” by the outside world.
A very effective way to deal with this concern with fairness is to take time to educate a potential Chinese partner. When a problem arises, it is best to assume first that it is due to misunderstanding. Then take a tutorial rather than an adversarial approach to solving the problem. Foxboro’s DeBellis says that when his company was negotiating its join venture in China, the Chinese side put a overly high value on its land and buildings. The Western negotiators then took the time to explain that the company had never paid so much money for land and buildings anywhere else in the world. The company even opened its books to show actual costs at operations in other countries. The Chinese lowered their valuations to more realistic levels.
Often, Chinese perceptions that they are not receiving fair treatment may be due to cultural misunderstandings. One such problem arose when Xerox negotiators were discussing the duties of the highest ranking Chinese manager at a joint venture site in China. The negotiations became seriously bogged down until the negotiators realized the problem was that Xerox had been referring to the position as “assistant general manager” rather than “deputy general manager”. To Xerox, the difference in title was of little importance. But the Chinese simply could not accept that their top manager be referred to as “assistant”. Once identified, the problem was solved in minutes15.
Initial Meeting
Since the Chinese like to view business relationship as a marriage, the initial meeting should be viewed as a first date. Like most first date, it will be an exploration of mutual interests and goals, a time for friendship and trust building.
If the schedule and budget allow, it is a good a idea to host a banquet or dinner the night before the first meeting. This will give you an opportunity to begin building trust and to learn more about your counterparts. If you cannot host a banquet, you should start your initial meetings by asking questions about your counterparts, their families and their backgrounds. Unless your hosts ask you to do so, do not jump straight into business specifics. You may want to discuss your general impressions of the Chinese economy and culture, and of course, your family and background. Do not, however, criticize the Chinese government or bring up sensitive political issues such as prison labor or independence for Tibet. Also, Chinese are often uncomfortable when foreign criticize their own governments.

Setting the Agenda
When business discussions begin in earnest, the Chinese typically like to begin with an agreement on general principles, to broadly define the nature of the relationship the parties hope to build. The end result of this process will be a letter of intent, a legally non-binding document filed with the local government. The letter of intent represents a “right of passage” that allows the Chinese entity to move ahead with serious and detailed discussions. At first glance, this process may seem innocuous. But the Chinese will usually soon thereafter present the foreign party with a pro-forma contract that becomes the basis of further negotiations. During these negotiations, a standard Chinese tactic is to assert the foreign side is not living up to the spirit of general principles. It is therefore extremely important to carefully consider what principles you are willing to accept.
A good idea is to draw up your own letter of intent or memorandum of understanding (MOU) and fax it to your potential Chinese partner before detailed negotiations begin. While not legally binding, the MOU should include the same protective language you should use anywhere else in the world. If you do not then get a general agreement on the MOU you have drafted, it may be best to put off your departure. Such steps will help put you in the driver’s seat during negotiations and may considerably reduce negotiations time.
Interpreters
The PRC’s official language is Mandarin Chinese, but there are more than 900 dialects. One mistake foreign firms often make is to rely solely on the interpreter hired by the Chinese side. Regardless of this person’s capabilities, it is virtually impossible for someone to translate for several hours a day, several days in a row, and not make mistakes. For long discussions, it is always best to have at least two fully bilingual people in the negotiating room at all time. In this way they can switch duties when one is fatigued, and they can help each other maintain a high standard of accuracy.
An important distinction is made between translators and interpreters in the Chinese context. Serious misunderstanding can erupt if you rely on someone who is “interpreting” rather than simply translating verbatim what is being said. Many local Chinese translators, in their effort to add value and to cut across cultural barriers, frequently shift roles (without notifying the foreign firm) from translating information to putting a certain spin on it - perhaps in both directions. At some point, this may lead to a great deal of confusion as the interpreter seems to become a negotiator. Accordingly, it is essential to explicitly communicate your instructions and expectations beforehand to the interpreter.
Experienced China hands often point out that a good interpreter can provide the Westerner with an excellent opportunity to learn about the needs of (and pressures on) the Chinese. Only a good interpreter can make sure you really hear all that is being said and meant. A good interpreter can also serve as an informal means of communicating outside the negotiating room. The use of selected intermediaries is a time-honored way of resolving differences and speeding the pace of negotiations in China. The Chinese will often seek out your interpreter to clarify issues, raise new possibilities for resolving problems, explain the problems they may be facing (which they could never discuss in a more formal setting), and to learn more about you and your company. Western firms should learn to make good use of this informal negotiating mechanism as well.

Control the Process
To avoid a bad deal, there several basic steps you can take16:
- Let the Chinese know you consider business failure preferable to a bad deal.
The Chinese can typically walk away from any business negotiation without penalty, and they will definitely take advantage if they think you do not have such freedom.
- Keep your schedule ambiguous
It is a common ploy by the Chinese to try to pressure Westerners into an agreement by delaying negotiations on critical issues until a day or two before scheduled departure.
- If necessary let the Chinese know you are holding discussions with several other Chinese companies.
They will certainly try to impress upon you that there are many other foreign firms interested in their business, and they may even invite your competitors to hold negotiations while you are in town.
- Do not make concessions too readily.
Chinese negotiators tend to adopt a rigid posture at the beginning of negotiations and only grudgingly make concessions. Westerners tend to begin with many alternatives in hand but to the Chinese this negotiating flexibility can signal insincerity.
- Be extremely careful about what you say and to whom you say it.
The Chinese take copious notes during negotiations and often try to leverage any perceived inconsistencies by quoting your words back to you.
- Do not led the Chinese be the only record keeper.
You should make sure your side also takes detailed notes and that you review them regularly.
- Remember that from the moment you step off the plane in China, you are on stage.
Your behavior is being monitored and evaluated, as are your words.

2.4 Examples of Chinese Negotiating Practices
These three brief anecdotes illustrate Chinese negotiating practices of time pressures and intransigence17:
- Asked about China’s stance on the contested Spratley Islands in the South China Sea, Beijing responded: “China is prepared to discuss islands which are under dispute. But for those islands where ownership is indisputable, China will not negotiate.” What is left unspoken is that China, presumably, determines what is and what is not under dispute.

- China’s 5.000-year history also produces a different interpretation of historical events. During Nixon’s first trip to Beijing in 1972, Henry Kissinger asked Zhou Enlai, the highly respected Chinese foreign minister, his views on the French revolution and Europe’s age of enlightenment. “We Chinese feel it is too soon to tell,” was Zhou’s straight faced-reply.

- Beijing Jeep, the joint venture between Chrysler and Beijing Auto Industry Corp., took more than five years to negotiate. But, after two months into operation, both sides agreed to throw out the clause which had been the main sticking point for the final 30 months of talks.

CONCLUSION
Prior to business initiatives, there must be an understanding of the Chinese style of negotiating. There are significant differences in approaches. In China, personal relationships are a quintessential basis for all business transactions. The Chinese do not do business with people they do not know or trust. Being impatient, demeaning, or critical is counterproductive. Developing an effective business relationship based on mutual trust and admiration takes time. Yet, while slow to develop, business relationships in China can grow into friendships that last a lifetime. In addition, Western executives generally try to resolve all issues through legal stipulations in the contract, while the Chinese will try to rely on friendly negotiations. China is a collective society; therefore, consensus building is a necessity for Chinese negotiators, and this consensus takes time, so Western negotiators must be patient and understand that there is no incentive for individual decisions in the Chinese side.
When introductions take place, politeness and formality are critical. Never insult or criticize a potential business partner. Losing face is a terrible embarrassment for a Chinese person. The Chinese take their responsibilities very seriously and consider meeting your expectations very important.
Businesspersons must be aware of and respect the vast differences that exist between the American and Chinese cultures. For instance, family always has been, and will continue to be, an important and highly institution in China. Also, individuality has not been rewarded. The Chinese are taught to be humble and undemanding as modesty is a virtue in China.
Finally, Chinese are the masters of negotiations for two reasons. First, they understand the importance -and pressures- of time, and they exploit them. Secondly, they hold tightly to their negotiating stance to the point of intransigence. Therefore, being patient and knowing the Chinese approach in negotiations and their business behavior, will facilitate good agreements and business relationships in China.

RECOMMENDATIONS
The recommendations for negotiating with Chinese people are the following:
- Get a good background about cultural differences may affect a business relationship, which means learning the influences of Confucianism and Communist in the Chinese society.
- Be aware of developing “Guanxi”
- Enjoy the social events in China which are considered very important by the Chinese.
- Be carefull with your manners; politeness and formality are critical.
- Be modest, since modesty is a virtue in China.
- Never insult or critize your business partner, since losing face is a terrible embarrassment.
- Adapt your approach to Chinese approach in negotiating which is focused on the personal relationship rather that the contractual relationship.
- Be willing to talk about your family and background before jumping on business itself.
- Remember that the signed contract is only a means to get a deal. Mutual trust and respect are the paramount of the business relationship.
- Verbal agreement are more important than written agreement.
- Be patient, Chinese negotiators need time to build consensus
- Keep your schedule ambiguous, Chinese put pression by delaying critical issues.
- Let the Chinese know you consider business failure preferable to a bad deal.
- Do not make concessions too readily.
- Try to have two fully-bilingual interpreters for long discussions.

BIBLIOGRAPHY

- Geoffrey Murray, Doing Business in China: The last great market.
Ch.9, Negotiating skills required for succeeding in China, pa 222-242

- Quanyu, Andrulis, Tong; A Guide to Successful: Business relations with the Chinese Ch 7, The skill of talking with the Chinese people, pa 163-179
Ch 9, The role of banquets, pa. 195-213

- Philips R. Harris, Robert T. Moran; Managing Cultural Differences
People’s Republic of China, pa. 399-407.

- Kamal Fatehi, International Management: A cross-cultural and functional perspective Ch 6, International communication, appendix 1, pa 224-226.

- American Management Association , Aug. 95.
Scaling the wall of China, pa. 13-19.