Cultural traditions and business communication style of China. (2 hrs)

Questions

1. What should a business traveler to China know about the country background?

2. How can you describe Chinese national character?

3. What are the principles of Chinese business behavior?

4. What do you know about scheduling of appointment and negotiation strategies in China? (The role of hierarchy in Chinese business culture; key points of decision-making).

5. What is the attitude to contracts in China?

6. What is it important to know about business entertaining and protocol in China?

 

Case study

1. Read the information about attitudes to contracts in some countries over the world and try to guess the name of the country which suits each extract.

1._______________The executives from this culture tend to establish contractual relationships based on trust and honor without any reliance on the enforcement powers of law. “A contract is considered unnecessary, sometimes offensive, when rules of loyalty and mutual obligation structure the business environment.” They will frequently ignore the written contract and treat it as a mere formality. Even if a contract is ultimately signed, a signed contract means the beginning of a relationship, not the “be all and end all” document which controls the parties’ economic relationship, as in the eyes of U.S. contract law.

2.___________________The Civil Code declares contracts even non-written contracts legal, for example, in situations such as purchase, rent, booking a journey etc. Written contracts are serious matters in this country and tend to be lengthy. Legal aspects may be reviewed repeatedly. In most companies, only high-ranking managers have signature authority. Oral agreements and statements of intent may already be legally binding and are usually dependable, though they do not substitute for written contracts. Actions that have been agreed upon are usually implemented immediately, even if a final contract is still pending. The law of this country makes offers binding unless otherwise noted. It is best to mark your offers with ‘good until …’ or to add a ‘subject to change’ clause.

3.___________ Capturing and exchanging written understandings after meetings and at key negotiation stages is useful since oral statements are not always dependable. Although interim agreements are usually kept, do not consider them final. Only a final contract signed by both parties constitutes a binding agreement. While your counterparts will expect you to keep all your commitments and respond harshly if you fail to do so, they may not always fulfill their own obligations to the letter.

4.___________ Many people of this nationality pride themselves with being consistent, so they will likely keep their commitments, at least if they are sufficiently documented. While you should not consider interim agreements final, avoid the impression that you are not willing to hold up your commitments. Nevertheless, only a contract signed by both parties constitutes a binding agreement. Negotiators sometimes request to document the progress of a negotiation by both parties signing a Letter of Intent (LOI) or Memorandum of Understanding (MOU). While much weaker than signed contracts, these documents may have legal implications. Contracts are almost always dependable, and strict adherence to the agreed terms and conditions is expected. The companies from this country may prefer to resolve disputes in court, which can become very costly. It is highly advisable to fulfill your contractual obligations to the letter.

5.____________ Capturing and exchanging written understandings after meetings and at key negotiation stages is useful since oral statements are not always dependable. The representatives from this country may insist on having a protocol (meeting minutes) signed by both parties at the end of a meeting. It serves to record what was discussed, is not a contract, and should not be mistaken for a final agreement. Any part of an agreement may still change significantly before both parties sign the final contract. Written contracts should be clear and concise, without too many detailed terms and conditions. Your counterparts may request that details of the contract be kept secret. Your legal rights may not be enforceable, while local companies often have a better chance in court (or find ways to circumvent laws). You should definitely consult a local legal expert, ideally throughout the negotiation or at the very least before signing a contract. For the time being, it is wise to recognize that the country’s legal system is in a transitional mode, so be prepared for laws to change on short notice. Even local businessmen may not be very familiar with applicable laws and regulations.

6.____________ Handshakes and verbal agreements are often considered binding. They are normally kept, even though they are not legally binding. Nevertheless, it is best to confirm agreements in writing. The representatives from this country generally prefer to resolve disputes out of court, but they will not shy away from taking legal action if deemed necessary. However, do not bring the person to the negotiation table until you have reached the final stages of the contract discussions. Contracts are almost always dependable, and strict adherence to the agreed terms and conditions is expected. Requests to change contract details after signature may be considered as bad faith and will meet with strong resistance.

 

Topics for essays

1. The ways to increase the chances for accurate understanding international partners within business communication.

2. Basic differences in Contract Law in common and civil law systems.

3. Religious beliefs that influence Chinese public and business behavior.

 

Recommended sources

1. Copeland, Lennie, and Lewis Griggs. Going International. New York: Penguin Books, 1985.

2. Harris, Philip R., and Robert T. Moran. Managing Cultural Differences. Houston: Gulf Publishing, 1991.

3. Kennedy, Gavin. Doing Business Abroad. New York: Simon and Schuster, 1985.

4. Moran, Robert T., Philip R. Harris, and Sarah V. Moran. Managing Cultural Differences. 7th ed. Elsevier, 2007.

5. Moran, Philip R„ and William Stripp. Dynamics of Successful Business Negotiations. Houston: Gulf Publishing, 1991.

6. Morrison, Terri, and Wayne A. Conaway. Kiss, Bow, or Shake Hands: The Bestselling Guide to Doing Business in More Than 60 Countries. Adams Media, 2006.

7. Ricks, David A. Blunders in International Business. 4th ed. Blackwell Business, 2006.

8. Victor, David A. International Business Communication. New York: HarperCollins, 1992.

Internet sources

1. http://www.china-embassy.org.

2.http://www.kwintessential.co.uk/resources/global-etiquette/china-country- profile.html

3. http://www.cyborlink.com/besite/china.htm

4. http://www.kwintessential.co.uk/etiquette/doing-business-china.html

5.http://www.worldbusinessculture.com/Business-in-China.html

 

Theme 6.