ASSIGNMENT

Supply Chain Management

TOPIC: Negotiation with Chinese Business Partners.

SUBMITTED TO:
Sir. Shujaat Mubarik

Waseem Sajjad (60756)

Zeeshan Abbas (60649)
Hamza Shoaib (7684)
Muhammad Anus (7696)
Negotiating and dealing with Chinese business partners.
THE PEOPLE'S REPUBLIC OF CHINA is a country with a long history and ancient civilization. As
early as 4,000 BC, there were settlements in the range of Yellow River. Chinese always tell their history
from the Xia Dynasty, which began in the 21st century BC and was followed by all the dynasties until
1911 when Sun Yat-sen was proclaimed the president of the Republic of China. In 1921, the Communist
Party of China was founded. After this, the communist cooperated with Sun Yat-sen's Nationalists, but
broke with the Nationalist after Sun died. Then the Communist Party began to establish its army, called
as Red Army. Shortly before the Anti-Japanese War (1936-1945) the Red Army formally established
through protracted and arduous struggle under the leadership of the party and her chairman, Mao Zedong,
the Chinese people founded the People's Republic of China in 1949. After 1949, The People's Republic
of China (also called as New China locally) experienced the Korea Wall with Americans, and about 10
years rapid growing period, and then suffered a 3-year long hard time because of natural disasters and
withdraw of Soviet Union's aid. From 1966-1976 China had its "Cultural Revolution", a nation-wide
movement against feudalism (also including religion) and capitalism. As a result, China's economy was
stopped. After 1978, when Mr. Deng Xiaoping came into the top leader, China began a reform and
opening program, and has enjoyed a 20 years of rapid development.

 Land area of 9.56 million square kilometers

• 3th Largest country in the world
• Largest Population – 1.387 Billion in 2013
• Population growing at 0.9% per year.
• Two thirds of people live in eastern lowlands of yellow river, Pearl River and Yangtze
River valleys – population density of > 200 per sq km!
• 10% of china’s land is arable.
• Vast sections of Northern, western & Tibet is sparsely inhabited
POWER DISTANCE
This dimension deals with the fact that all individuals in societies are not equal – it expresses the attitude
of the culture towards these inequalities amongst us. Power Distance is defined as the extent to which
the less powerful members of institutions and organizations within a country expect and accept
that power is distributed unequally.
At 80 China sits in the higher rankings of PDI – i.e. a society that believes that inequalities amongst
people are acceptable. The subordinate-superior relationship tends to be polarized and there is no defense
against power abuse by superiors. Individuals are influenced by formal authority and sanctions and are in
general optimistic about people’s capacity for leadership and initiative. People should not have
aspirations beyond their rank.

INDIVIDUALISM
The fundamental issue addressed by this dimension is the degree of interdependence a society maintains
among its members. It has to do with whether people´s self-image is defined in terms of “I” or “We”. In
Individualist societies people are supposed to look after themselves and their direct family only. In
Collectivist society’s people belong to ‘in groups’ that take care of them in exchange for loyalty.
At a score of 20 China is a highly collectivist culture where people act in the interests of the group and
not necessarily of themselves. In-group considerations affect hiring and promotions with closer in-groups
(such as family) are getting preferential treatment. Employee commitment to the organization (but not
necessarily to the people in the organization) is low. Whereas relationships with colleagues are
cooperative for in-groups they are cold or even hostile to out-groups. Personal relationships prevail over
task and company.

MASCULINITY
A high score (Masculine) on this dimension indicates that the society will be driven by competition,
achievement and success, with success being defined by the winner / best in field – a value system that
starts in school and continues throughout organizational life.
A low score (Feminine) on the dimension means that the dominant values in society are caring for others
and quality of life. A Feminine society is one where quality of life is the sign of success and standing out
from the crowd is not admirable. The fundamental issue here is what motivates people, wanting to be the
best (Masculine) or liking what you do (Feminine).
At 66 China is a Masculine society –success oriented and driven. The need to ensure success can be
exemplified by the fact that many Chinese will sacrifice family and leisure priorities to work. Service
people (such as hairdressers) will provide services until very late at night. Leisure time is not so
important. The migrated farmer workers will leave their families behind in faraway places in order to
obtain better work and pay in the cities. Another example is that Chinese students care very much about
their exam scores and ranking as this is the main criteria to achieve success or not.

UNCERTAINTY AVOIDANCE
The dimension Uncertainty Avoidance has to do with the way that a society deals with the fact that the
future can never be known: should we try to control the future or just let it happen? This ambiguity brings
with it anxiety and different cultures have learnt to deal with this anxiety in different ways. The extent to
which the members of a culture feel threatened by ambiguous or unknown situations and have created
beliefs and institutions that try to avoid these is reflected in the score on Uncertainty Avoidance.
At 30 China has a low score on Uncertainty Avoidance. Truth may be relative though in the immediate
social circles there is concern for Truth with a capital T and rules (but not necessarily laws) abound.
None the less, adherence to laws and rules may be flexible to suit the actual situation and pragmatism is a
fact of life. The Chinese are comfortable with ambiguity; the Chinese language is full of ambiguous
meanings that can be difficult for Western people to follow. Chinese are adaptable and entrepreneurial.
At the time of writing the majority (70% -80%) of Chinese businesses tend to be small to medium sized
and family owned.

LONG TERM ORIENTATION

This dimension describes how every society has to maintain some links with its own past while dealing
with the challenges of the present and future, and societies priorities these two existential goals
differently. Normative societies. Which score low on this dimension, for example, prefer to maintain
time-honored traditions and norms while viewing societal change with suspicion. Those with a culture
which scores high, on the other hand, take a more pragmatic approach: they encourage thrift and efforts
in modern education as a way to prepare for the future.
China scores 87 in this dimension, which means that it is a very pragmatic culture. In societies with a
pragmatic orientation, people believe that truth depends very much on situation, context and time. They
show an ability to adapt traditions easily to changed conditions, a strong propensity to save and invest,
thriftiness, and perseverance in achieving results.

INDULGENCE
One challenge that confronts humanity, now and in the past, is the degree to which small children are
socialized. Without socialization we do not become “human”. This dimension is defined as the extent to
which people try to control their desires and impulses, based on the way they were raised. Relatively
weak control is called “Indulgence” and relatively strong control is called “Restraint”. Cultures can,
therefore, be described as Indulgent or
Restrained.
China is a restrained society as can be seen in
its low score of 24 in this dimension. Societies
with a low score in this dimension have a
tendency to cynicism and pessimism. Also, in
contrast to Indulgent societies, restrained
societies do not put much emphasis on leisure
time and control the gratification of their
desires. People with this orientation have the
perception that their actions are restrained by
social norms and feel that indulging
themselves is somewhat wrong.
Techniques in Negotiating with the Chinese

1. Establish Mutual Trust

In order to work with the Chinese, “trust” is the most fundamental element. The Chinese people
believe that a long-term business relationship cannot be established without trust. On the contrary,
Westerners, especially Americans, are able to separate business relationships from personal
relationships, and they are also able to conduct business with those whom they do not yet trust.

2. Identify the Decision Makers

Generally speaking, when a Chinese negotiator consults with a Western negotiator, he would need
to report to his direct supervisor after gathering information before he can come back with new
questions and topics. The higher level officials seldom participate in the negotiating process.
Therefore, when negotiating with a Chinese negotiator, it is important to identify how much
authority he has.

3. Overcome the Language Barrier

Mandarin is the official language in China; however, each region has its own unique dialect, and
one should not rely entirely on translators. Being able to fully understand the opponent’s language
and local traditions is important in doing business or negotiating with the local people.

4. Send the right team to China

The Chinese negotiating style is flexible, situation-related, and paradoxical in nature. Meeting you
for the first time, even the Chinese themselves are not sure which of the three roles they should
play; all depends on how you act in your first moves. The frequently heard Chinese phrase
“Foreign guests first!” is not just a courtesy invitation but also a strategic consideration. Sending
the right team to negotiate in China is therefore vitally important. The status of your team
members will directly affect the attitude of the Chinese host organization toward your company.

5. Identify real Chinese negotiators

When embarking on a China venture, make sure you know the real Chinese negotiators. Despite
the large Chinese team with many participants, the real Chinese negotiators usually are absent
from the negotiation room. In large project negotiations those who are actually running and
influencing the negotiation tend to be high-ranking officials from the government ministries or
commissions or senior executives of the Chinese companies or both. Never miss the chance, if
any, to “talk” directly with the top leaders of the Chinese government at central and local levels to
gain their personal support and endorsements for your project. By identifying and negotiating
with the real Chinese negotiators, you can, as a Chinese proverb states, “get twice the result with
half the effort.”
CONCLUSION
Negotiation can be viewed as a process in which a party wishes to persuade and change the
thoughts and behaviors of another. When both parties wish to do so, they both need to seek
mutual benefits that address their needs and perspectives before they can reach a consensus.
Different people have different views, and it is even more difficult to reach an agreement in an
international negotiation that involves different cultural backgrounds. The three domains of
personal qualities, situational factors, and strategies/tactics are very different between different
cultures. To the Chinese people, however, the mutual relationship between the negotiators is the
key to a successful negotiation. Therefore, a successful multinational business negotiation begins
with understanding the opponent’s cultural and cognitive patterns.
Reference:

https://www.hofstede-insights.com/country-comparison/china/