When East meets West – Negotiation Strategies across Cultures
In the current business climate, cross-cultural negotiations are increasingly commonplace and frequently involve managers who have studied and worked in countries far from home. As a result, the perceived East-West divide in ways of trying to broker agreements has become more blurred. A recent in situ, behind-the-scenes study of Chinese-Australian fair trade talks provides valuable insight into the changing face of international negotiations and to what extent cultural background shapes tactics and strategy.
Whether in a business, political or personal context, negotiations can ultimately head in one of two directions – agreement or stalemate, potentially leading to frustration, tension and maybe even a complete breakdown of talks. Within a corporate context, this can culminate in a collapse of business relations altogether. To avoid this worst case scenario, a game of give-and-take is sometimes required in order to broker a final deal, involving a degree of comprising along the way. Knowing the cultural background of one’s fellow negotiators can help anticipate how they will seek to achieve their part of a deal. However, the waters have been somewhat muddied in recent times by the increasingly global, multicultural and cross-cultural nature of business negotiations. It is high time the old East-versus-West stereotypes were reviewed, if not thrown out completely.
What makes negotiators tick – the Chinese example
For a long time it has been assumed that the cultural background of a company and the negotiators representing a company will directly impact their strategy when trying to reach a deal with another company from elsewhere in the world. The Chinese are a good example of this. Certain traits and characteristics have emerged over a prolonged period. However, knowing how these manifest themselves in a business context is easier said than done, with most high-level talks being conducted behind closed doors.
The Chinese make-up comprises four main characteristics: “guanxi” (the ability to leverage unequally distributed but valuable resources), “mianzi” (a response to a situation where one might lose out, resulting in “face-saving”), “renquin” (whereby a favour or gift is offered but a reciprocal gesture is more or less expected), and “ying and yang” (where seemingly conflicting forces can be combined). Establishing the dynamics of Chinese organisations and how they interact not only internally but also when confronted with partners from organisations from the West enables us to see just how strong is the link between culture with strategy.
The common good or self-gain?
Chinese businesses are invariably multi-layered structures where perceived rank can sharply influence the negotiation strategies adopted by managers. Generally speaking there is a far more pronounced tendency to work for the collective good of the company than for individual gain, in contrast with the western model. This is often achieved by conflict avoidance (as opposed to resolution), which may turn out to the advantage of a business as a whole but can also create frustration for counterparts with a more western approach characterised by self-interest, the management of conflict by competition and compromise, and a distinguishable win-lose mentality.
To test this dynamic and see to what extent the Chinese still adhere to the perceived eastern model, an observational study was recently carried out during behind-closed-doors Fair Trade Agreement talks between China and Australia. The approach taken and the insight gathered was outstanding for two main reasons. Firstly, only around 5% of studies into the area of cross-cultural managerial negotiations have thus far been carried out with real managers and only 1% have been focussed on real-life, real-time negotiations. The aim? To ascertain to what extent managers on the Chinese side stuck to or veered away from four main negotiation tactics: Avoidance, Accommodation, Competition, and Compromise, the latter two being more commonly associated with the West and the first two with the East.
Re-drawing the boundaries
According to the findings of the study, two classic Chinese traits were confirmed – the desire to avoid conflict (by postponing contentious issues or the convenient absence of certain negotiators) and the adoption of a seemingly accommodating attitude (for example, on scheduling issues and the choice of negotiation language of English). However, these various tactics were adopted with a view to pushing some of the thornier issues to one side and creating a semblance of progress, despite the obvious frustration of some Australian participants.
Where the Chinese representatives veered away from the more traditional Eastern model was in regards to identifiable competition and compromise tactics. Although the trait of agreeing in principle to certain issues without actually taking concrete action was more classic in nature, there were also clear signs of Chinese managers looking to override the chief negotiator, introduce third parties into talks to try to achieve their ends, and break down and re-present conflicts as opportunities for concession. In short, certain strategies were adopted which, on face value, came across as an attempt to reach an agreement in the interests of all whilst, under the surface, being driven by a more western-style pursuit of personal gain.
Based upon the insight provided by the study, the respect for hierarchical order and the desire to save face will take longer to recede in the ways the Chinese conduct such business negotiations. However, western counterparts should start to think twice about approaching any such cross-cultural talks on the assumption that their eastern colleagues are not just as skilled in the art of compromise and the desire to compete…and win! In a world where an increasing number of managers originating from the East go to study, live and work in the West, the previously established business boundaries need to be drawn up again afresh.
This article draws inspiration from the paper How the Chinese really negotiate: observations from an Australian-Chinese trade negotiation, written by Rod McColl, Irena Descubes and Mohammed Elahee and published in The Journal of Business Strategy, vol. 38 no. 6 (2017).
Mohammed Elahee is a professor of International Business at Quinnipiac School of Business, USA. His research interests include International Business and Cross-cultural Negotiations.