VIET NAM NATIONAL UNIVERSITY HO CHI MINH CITY

UNIVERSITY ECONOMIC AND LAWS

CROSS – CULTURAL MANAGEMENT

Topic: Cross – cultural management in China

Teacher: Jennifer Dang
Prepared by: Group 1
Date: February 27th, 2019
GROUP 1: MEMBER LIST

1 Đỗ Thị Diệu Sang K164081084 (Leader)

2 Mai Văn Hiếu K164081043

3 Lê Phạm Thị Ngọc Ánh K174080861

4 Nguyễn Thị Thúy Diễm K17408068

5 Đỗ Thị Quỳnh Giang K174080874

6 Trần Thị Đinh Huệ K174080884

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TABLE OF CONTENT

INTRODUCTION……………………………………………………………………………….6

1. OVER VIEW OF CHINA COUNTRY……………………………………………………...7

1.1. Geographic position…………………………………………………………………………7

1.2. Natural conditions…………………………………………………………………………..7

1.2.1 Terrains……………………………………………………………………...……………...7

1.2.2 Climate……………………………………………………………………………………...8

1.2.3 Natural resources…………………………………………………………………………..9

1.3 Demographics………………………………………………………………………………10

1.3.1 Ethnicity and race…………………………………………………………………………10

1.3.2 Languages…………………………………………………………………………………10

1.3.3 Religion……………………………………………………………………………………11

1.3.4. Population………………………………………………………………………………...12

1.4. Social Structure of China………………………………………………………………….13

1.4.1. The Shi/Scholars/Officials……………………………………………………………….13

1.4.2 The Nong/Farmers/Peasants…………………………………………………………......14

1.4.3 The Gong/Artisans………………………………………………………………………...14

1.4.4 The Shang/Merchants…………………………………………………………………….14

1.5. Economic conditions of China…………………………………………………………….14

1.5.1 China’s Trade Patterns……………………………………………………………………14

1.5.2 Labor force………………………………………………………………………………...15

1.5.3 China’s Regional and Bilateral Free Trade Agreements…………………………………16

1.6 The politics of China……………………………………………………………………….16

1.7 Education…………………………………………………………………………………...19
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2. HOFSTEDE’S FIVE CUTURAL DIMENTIONS FOR CHINA…………………………21

2.1 Hofstede’s Cultural Dimensions for China………………………………………………..21

2.1.1 Power distance…………………………………………………………………………….21

2.1.2 Individualism……………………………………………………………………………...22

2.1.3 Masculinity………………………………………………………………………………..22

2.1.4 Uncertainty avoidance…………………………………………………………………….23

2.1.5 Long term orientation……………………………………………………………………..24

2.2. Trompenaars analysis of China…………………………………………………………...24

2.2.1. Particularism……………………………………………………………………………..24

2.2.2. Collectivism……………………………………………………………...........................25

2.2.3. Neutral ………….……………………………………………………………………….26

2.2.4. Diffuse…………...………………………………………………………………………26

2.2.5. Ascription………………………………………………………………………………..27

2.2.6. Synchronous time…………………………………………………….............................27

2.2.7. External direction……………………………………………………………………….28

3. THE NOTE ABOUT DIFFERECES IN BUSINESS CULTURE OF CHINA COUNTRY

3.1. The norm in business of China country…………………………………………………...28

3.1.1. Greetings…………………………………………………………………………………28

3.1.2. The Art of Conversation…………………………………………………………………28

3.1.3. Body Language…………………………………………………………………………..29

3.1.4. Business meetings and meals……………………………………………………………29

3.1.5. Numbers…………………………………………………………………………………30

3.2. The note in the business negotiations……………………………………………………30

3.2.1. Attitudes and styles………………………………………………………………………30

3.2.2. Sharing of information………………………………………………………………….30

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3.2.3. Pace of negotiation………………………………………………………………………31

3.2.4. Bargaining………………………………………………………………………………..32

3.2.5. Decision making………………………………………………………………………….34

3.3. How to motivate employees………………………………………………………………..34

3.4. Intercultural Management in China……………………………………………………...35

3.4.1. Being a manager in China……………………………………………………………….35

3.4.2. The role of a Manager……………………………………………………………………36

3.4.3. Approach to change………………………………………………………………………36

3.4.4. Approach to Time and Priorities…………………………………………………………36

3.5. Leadership issue……………………………………………………………………………36

3.5.1. Chinese leadership principles……………………………………………………………36

3.5.2. Tips of communication with subordinates………………………………………………37

CONCLUSION………………………………………………………………………………...41

REFERENCES…………………………………………………………………………………42

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INTRODUCTION

Culture exists in many areas of daily life from the past to the present. Culture is the characteristics
and knowledge of a particular group of people, encompassing language, religion, cuisine, social
habits, music and arts. The Center for Advance Research on Language Acquisition goes a step
further, defining culture as shared patterns of behaviors and interactions, cognitive constructs and
understanding that are learned by socialization. Thus, it can be seen as the growth of a group
identity fostered by social patterns unique to the group. "Culture encompasses religion, food, what
we wear, how we wear it, our language, marriage, music, what we believe is right or wrong, how
we sit at the table, how we greet visitors, how we behave with loved ones, and a million other
things," Cristina De Rossi, an anthropologist at Barnet and Southgate College in London, told
Live Science.

This report presents more specific Chinese culture. First of all, Chinese culture is one of the oldest
and most complex cultures in the world. Furthermore, regions that Chinese culture dominates
spread across a large geographic area in East Asia with customs and traditions many different
between towns, cities and provinces. Next, China is a country with a rich and interesting culture,
and there are also points that other countries need to consider to be able to learn and behave
accordingly. Moreover, Chinese culture has spread and strongly influenced neighboring nations
and countries such as Korea (now North Korea and South Korea), Japan and Vietnam (starting
from the Northern domination period and lasts until now). Last but not least, this report also
provides more complete Chinese business culture.

Hopefully, everyone can find this report helpful and please feel free to contribute ideas and
corrections for the better version of this report.

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1. OVER VIEW OF CHINA COUNTRY
1.1 Geographic position

Located in Southeast Asia along the coastline of the Pacific Ocean, China is the world's fourth
largest country, after Russia, Canada and the USA. With an area of 9.6 million square kilometers
and a coastline of 18,000 kilometers, its shape on the map is like a rooster. It reaches Mohe in
Heilongjiang Province as its northern end, Zengmu Ansha (or James Shoal) to the south, Pamirs
to the west, and expands to the eastern border at the conjunction of the Heilongjiang (Amur) River
and the Wusuli (Ussuri) River, spanning about 50 degrees of latitude and 62 degrees of longitude.

China has a border line of 22,800 kilometers long of land boundaries with 14 other nations, more
countries than any other country. These borders include: Afghanistan (76 kilometers), Bhutan
(470 kilometers), Burma (2,185 kilometers), India (3,380 kilometers), Kazakhstan (1,533
kilometers), North Korea (1,416 kilometers), Kyrgyzstan (858 kilometers), Laos (423 kilometers),
Mongolia (4,677 kilometers), Nepal (1,236 kilometers), Pakistan (523 kilometers), Russia (4,300
kilometers), Tajikistan (414 kilometers), and Vietnam (1,281 kilometers). [1]

Location of China

(Source: Grantantonio.wordpress, 2012)

1.2. Natural conditions

1.2.1. Terrains

China has a complicated topography, including towering mountains, basins of different sizes,
undulating plateaus and hills, and flat and fertile plains. For plateaus, the four largest plateaus are
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Qinghai-Tibet Plateau, Inner Mongolian Plateau, Loess Plateau, and Yunnan-Guizhou Plateau. It
has many mountain ranges, like the Himalaya mountain range in the southwest, Tianshan in the
north west, Changbaishan in the north east, and Wuyishan in the south. In terms of basin, China
has several basins, and the four biggest ones are Tarim Basin, Junggar Basin, Qaidam Basin and
Sichuan Basin. The first three are located in desert areas, and the last one is in a mountainous area.
Among those plains, the four largest plains are the Northeast China Plain, the North China Plain,
the Middle-lower Yangtze Plain and the Central Shaanxi Plain.

Generally speaking, China in topography descends from the west to the east, and forms a three-
step “staircase” according to altitude. The first step is Qinghai-Tibet Plateau, with an average
altitude over 4,500 meters, and it has the Qomolangma or Everest, praised as “roof of the world”.
The second step is lower, with an average altitude between 1,000 -2,000 meters, has large plateaus
and basins, and includes the Inner Mongolia, Loess and Yunnan-Guizhou plateaus, and the Tarim,
Junggar and Sichuan basins. It covers a large area in the mid-west, from Xinjiang, Gansu to,
Sichuan, Yunnan. The third step is much lower, with an altitude below 500 meters, and has hills,
low mountains and plains, and it includes provinces in the east and south of China.

With a various topography, China is abundant with tourism, from mountain-climbing like in the
Everest, desert exploration like in the Tarim Basin, and horse riding like in a plateau or a plain.
[2]

1.2.2. Climate
China climate is extremely diverse, stipulated by the vastness of its territory, complicated lay of
land and impact of the ocean. China is located in several climate zones. Mainly, it has equatorial,
tropical, subtropical and moderate climates.

A peculiar feature of the China’s climate is its monsoon nature. Winds from north in winter and
from south in summer are prevailing there, a sharp change of seasons are quite typical for the
country. A rainfall season usually comes in the hottest season.
China is the country of contrasts, which are manifested even in a climate pattern of the region. If
rainfalls are not uncommon in the east, then the west featuring a seasonal inland climate, suffers
from frequent drought seasons.
Every year the downfall in the country’s east affected by massive air flows, coming from the
Pacific and Indian oceans amounts to about 200-500mm. Such downfalls are common for summer
time period. The precipitation in winter is considerably lower, because this period is characterized
by a dry cold climate.
The climate pattern in the west of the country is considerably severe. In summer it features
intolerable heat, while in winter it suffers from hard frosts. The winter absolute temperature there
may fall as low as -50 degrees on Celsius, while in summer the air temperature in the Turpan

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basin, the hottest part of China reaches almost +50 degrees on Celsius with a rainfall amounting
only 3.9 mm. [3]
1.2.3 Natural resources
Mineral Resources and Raw Materials Found in China

China has extensive deposits of coal, oil and natural gas. Besides these fossil fuels, China is a top
producer of aluminum, magnesium, antimony, salt, talc, barite, cement, coal, fluorspar, gold,
graphite, iron, steel, lead, mercury, molybdenum, phosphate rock, rare earths, tin, tungsten,
bismuth and zinc. China exports antimony, barite, rare earths, fluorspar, graphite, indium and
tungsten, and it leads the world in domestic mining of gold, zinc, lead, molybdenum, iron ore and
coal.

Water Resources: Rivers and Rainfall

The high mountains and powerful rivers of China provide many opportunities for hydroelectric
power. The best potential for hydroelectric power lies in southwest China, providing power in an
area lacking in coal resources. The Three Gorges Project on the Yangtze River reached full
capacity in 2012, with 32 turbine generators and two additional generators providing 22,500
megawatts of electricity. Hydroelectric power, potentially, could generate 378 million kilowatts
for China.

Agriculture: Products from the Land

About 10 percent of China is farmland. Major crops are rice, wheat and corn as well as barley,
soybeans, tea, cotton and tobacco. The country has become a world leader in production of pigs,
chickens and eggs. China also has large herds of sheep and cattle. The country's population, about
25 percent of the world's population, severely strains the agricultural resources of China, however.
While mechanization is increasing, much of the agriculture still uses traditional labor-intensive
techniques.

Wildlife, Forests and Other Plants

Among other resources of China is the rich and diverse ecosystem. Many rare and unique
organisms live in China including the giant panda, golden monkey, white-flag dolphin, met
sequoia and the dove tree. China has created a number of parks and preserves to protect these
ecosystems. These conservation practices also serve to improve local economies by encouraging
tourism. [4]

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1.3. Demographics

1.3.1 Ethnicity and race

As a large united multi-national state, China is composed of 56 ethnic groups. Among them Han
Chinese account for 91.59% of the overall Chinese population and the other 55 make up the
remaining 8.41% according to the Fifth National Population Census of 2000. As the combined
population of these other minorities is far fewer than that of the Han, they form the 55 minorities
of China. These numerous ethnic groups share China's vast lands but at the same time many live
in their individual communities. The relationships between them have been formed over many
years.
Chinese Han People
With a population of 1159.4 million, the Han Chinese can be found in almost every part of China.
However, they mainly live in the middle and lower reaches of the Yellow River, Yangtze River
and the Pearl River, and also in the Northeast Plain Region (Songliao Plain). They form the largest
ethnic group within China and also the largest in the world. The Han people have their own
distinctive way of life.

55 Minorities in China

Although they make up only a small proportion of the overall Chinese population, the 55 minority
ethnic groups are distributed extensively throughout different regions of China. The regions where
they are most concentrated are Southwest China, Northwest China and Northeast China. No matter
whether it is Inner Mongolia, Xinjiang, Ningxia, Guangxi, Tibet, Yunnan, Guizhou, Qinghai or
Sichuan, Gansu, Hubei, Hunan or another province, one can find Chinese minorities. From the
areas listed above, the greatest number of minorities can be found in Yunnan Province (25 ethnic
groups). Zhuang has the largest population (more than 16 million) of minority ethnic groups. [5]

1.3.2 Languages

Rank Languages in China

1 Standard Chinese (Mandarin)

2 Yue (Cantonese)

3 Wu (Shanghainese)

4 Minbei (Fuzhou)

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 Rank Languages in China

5 Minnan (Hokkien-Taiwanese)

6 Xiang

7 Gan

8 Hakka

9 Zhuang

10 Mongolian

11 Uighur

12 Krygyz

Overview of Languages Spoken in China

(Source: www.worldatlas.com, 2018)

Standard Chinese is the official language in mainland China, as well as in Taiwan, and is also
known as Standard Mandarin or Modern Standard Mandarin. The language is a standardized
dialect of Mandarin language, but features aspects of other dialects in its usage, including written
vernacular Chinese in the language’s grammar, Mandarin dialects in its vocabulary, and the
Beijing dialect in the pronunciation of its words. In mainland China, Standard Chinese is also
known as Putonghua (loosely translating to “common speech”), while in Taiwan the language is
referred to as Guoyu, which loosely translates to “national language." [6]

1.3.3 Religion
China has been a multi-religion country since the ancient times. It is well known that
Confucianism is an indigenous religion and is the soul of Chinese culture, which enjoyed popular
support among people and even became the guiding ideology for feudalism society, but it did not
develop into a national belief. It makes the culture more tolerant to others, thus, many other
religions have been brought into the country in different dynasties, but none of them developed
powerful enough in the history and they only provide diverse people more spiritual support.

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According to a latest survey, 85% of Chinese people have religious beliefs or had some religious
practices and only 15% of them are real atheists. The real atheists here refer to those who lack
belief in the existence of deities and do not join in any religious activities. 185 million people
believe in Buddhism and 33 million have faith in Christianity and believes in the existence of God.
Only 12 million people are Taoists, although more than one hundred million have taken part in
Taoism activities before. Thus, it is obvious that the Buddhism has the widest influence. The other
major religions are Taoism, Confucianism, Islam and Christianity. [7]

Religion in China over time from 1950 to 2015

(Source: World Religion Database, 2018)
1.3.4 Population

The current population of China is 1,418,228,618 as of Monday, February 18, 2019, based on the
latest United Nations estimates.

China population is equivalent to 18.41% of the total world population.

China ranks number 1 in the list of countries (and dependencies) by population.

The population density in China is 151 per Km2 (392 people per mi2).

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The total land area is 9,388,211 Km2 (3,624,807 sq. miles)

60.4 % of the population is urban (857,055,542 people in 2019)

The median age in China is 37.3 years. [8]

Total population of China from 2001 to 2023 (in millions)

(Source: IMF; CEIC, 2018)
1.4. Social structure of China

1.4.1. The Shi/Scholars/Officials

The Shi held the highest status in the Chinese social hierarchy. They wore silk robes as an
identification of their status. They had the rights to ride in chariots, carry weapons and command
battles. They were well educated too. They served in various job roles such as advisors, clerks,
overseers and scribes. They also served in various administrative services. They performed
various civil functions. The people of this group gave examinations to get into various government
positions. They entered into governments of various levels such as district, provincial and federal
levels.
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1.4.2 The Nong/Farmers/Peasants

Agriculture played a vital role in the rise of the China’s civilization. The food produced by the
farmers or the Nong sustained the whole society. Therefore, they were considered as the valuable
members of the society. They held the second highest rank in the Chinese social hierarchy. They
also provided services to the nobles. The most important fact associated with the Nong was that
they provided revenue to the country.

1.4.3 The Gong/Artisans

The Gong class consisted of Artisans and craftsman. They were higher in position than that of the
merchants. They also had a significant role for the country. They worked in either the government
sectors or the private sectors. Many artisans also worked on their independent businesses. They
were involved in various types of jobs. They produced textiles, potteries and worked in various
architectural works. They were valued because of their specific skills.

1.4.4 The Shang/Merchants

This class was the lowest in the Chinese social hierarchy because they didn’t produce anything
and gained profit from other organizations. This particular social class comprised of shopkeepers,
bankers, sellers and traders. They lived in towns and provided goods and services to the
landowners. They were not allowed to carry weapons. The superior members of the Chinese
hierarchy believed that the government officials must not be concerned with money. So, they
didn’t allow the merchant class to opt for the government jobs.

The above four classes were strongly prevalent during the dynastic periods of China. With time,
the classes also exhibited reformation in their structures. Over time, the merchant class earned
more due to the advancement in the trade industry. The attitudes of people about the social classes
also changed along the way. [9]

1.5. Economic conditions of China

1.5.1. China’s Trade Patterns

Economic reforms and trade and investment liberalization have helped transform China into a
major trading power. Chinese exports rose from $14 billion in 1979 to $1,429 billion in 2008,
while imports over this period grew from $16 billion to $1,132 billion.

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 China’s Merchandise World Trade: 1979-2008

(Source: Economist Intelligence Unit, 2010)

China’s trade growth has been particularly rapid over the past six or so years. From 2002 to 2008,
China’s exports grew by 339%, a compound annual growth rate of 23.5%; while imports increased
by 283%, a compound annual growth rate of 21.2%. In 2007, China surpassed the United States
as the world’s second largest merchandise exporter, after Germany. China was the world’s second
largest exporter in 2008 (and was close to overtaking Germany), and was the third largest importer,
after the United States and Germany (see Figure 5 and Figure 6). China’s trade surplus, which
totaled $32 billion in 2004, surged to $297 billion in 2008. Merchandise trade surpluses, large-
scale foreign investment, and large purchases of foreign currencies to maintain its exchange rate
with the dollar and other currencies have enabled China to accumulate the world’s largest foreign
exchange reserves at $2.3 trillion at the end of September 2009, making it the world’s largest
holder of such reserves. [10]

1.5.2. Labor force

China is the most populated country in the world and one of the largest producers and consumers.
That made China being the leading exporter and importer.

China’s abundance of cheap labor (the average hourly labor wage in China’s manufacturing sector
in 2008 was $1.64, compared to about $18 in the United States) has made it internationally
competitive in many low-cost, labor-intensive manufactures. As a result, manufactured products
constitute a significant share of China’s trade. A substantial amount of China’s imports is
comprised of parts and components that are assembled in Chinese factories (such as consumer
electronic products and computers), then exported. [10]

China’s top 10 in 2017 are represented by the below graph:

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 Top ten Exporters of Clothing (2017)

(Source: “WTO Reports World Textile and Apparel Trade in 2017”, 2018)

1.5.3 China’s Regional and Bilateral Free Trade Agreements:

The Chinese government has maintained an active policy of boosting trade and investment ties
around the world, especially countries in Asia. To that end, China has entered into a number of
regional and bilateral trade agreements, or is in the process of doing so. For instance, China
currently has FTAs that include the following trading partners: the 10 nations that make up
ASEAN, Bangladesh, India, South Korea, Sri Lanka, Chile, Hong Kong, Macau, New Zealand,
Singapore, Pakistan and Peru. [10]

1.6. The politics of China

The People's Republic of China is a socialist country that openly endorses communism. The
Chinese government is described as communist and socialist, but tyrannical and communist, with
strict restrictions in many areas. Most notably areas are Internet free accession, freedom of the
press, freedom of assembly, right to have children, freedom to form social organizations and
religious freedom.

China pretends to be a multi-party state by permitting a limited number of other political parties -
The eight registered minor parties that have existed since before 1950. In fact, since the end of the
civil war in 1949, eight parties all formally accept the leadership of the Communist Party of China
(CPC), CPC has ruled and operated the country. This power is recorded in China's constitution.
CPC is the biggest political party in the world, which has over 89-million memberships.
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The Politburo controls three other important bodies and ensures the party line is upheld through
these bodies. These are:

The National People's Congress or parliament:

The most powerful organ of state is meant to be the National People's Congress (NPC), China's
unicameral legislature. The formal position is that Congress "elects" the country's highest leaders,
including the State President and Vice-President, the Chairman of the government's own Military
Affairs Commission, and the President of the Supreme People's Court. In theory, the Congress
has the powers to change the constitution and make laws. But it is not, and is not meant to be, an
independent body in the Western sense of a parliament. In fact, the party drafts newest legislation
and passes it to the NPC for "consideration", better described as speedy approval. For instance, in
a notable incident in 1999, it delayed passing a law bringing in an unpopular fuel tax.

Chinese National People's Congress

(Source: “Chinese National People’s Congress has 83 billionaires”, 2013)

The State Council, the government's administrative arm:

The State Council is the cabinet which oversees China's vast government machine. The State
Council's most important roles are to draft and manage the national economic plan and the state
budget, giving it decision-making powers over almost every aspect of people's lives. It is also
responsible for law and order.

The Military Affairs Commission, which controls the armed forces:

17
China's People's Liberation Army (PLA) - currently 2.25 million strong - has always defended the
party as much as national borders. The relationship between Party leaders and senior military
leaders very close. Party leaders know they are lost without the army's support as well as senior
military leaders need the leadership's backing in paying for many far-reaching plans to modernize
the armed forces. The Military Affairs Commission also controls the paramilitary People's Armed
Police (1.5 million strong), which play a sensitive role of guarding key government buildings,
including the main leadership compound of Zhongnanhai in Beijing.

Chinese Military Affairs Commission

(Source: “China’s facts and figures”, 2007)

The President of China is the head of state, the Premier of China is the head of the government
and leads the State Council.

The President of China – Xi Jinping

(Source: Project Syndicate, 2018)

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The current President, Xi Jinping, is also the General Secretary of the Chinese Communist Party
and the President of the Chinese Military Commission, so he is the supreme leader of China. The
constitutional changes of 2018 play a great important role in consolidation of power of the current
President Xi Jinping. Xi Pinping ’s thought has been written into the Constitution, add to the
earlier Communist Party's Charter. Especially, the five-year term limit on the position of President
and Vice-President have been abolished, that allowed Xi to serve as long as he wishes.

Finally, it should be noted that because of the patron - portage nature of Chinese politics, senior
leaders wield such influence and sometimes they retain great influence over decisions and
appointments long after they officially step down from power. [11]

1.7. Education

The educational system in China is a major vehicle for both inculcating values in and teaching
needed skills to its people.

Traditional Chinese culture attached great importance to education as a means of enhancing a

person’s worth and career. Chinese ancient academy brought up the Confucians because most the
textbooks or school disciplines were from Confucianism. And they paid more attention to the
traditional ethical rules and worship ceremony to Confucius, who was the master of Confucianism.
[12]

Chinese great teacher – Confucius (Kongzi)

(Source: China Ancient Academy, 2019)

But, in 1990s, Chinese education began to lag behind compared to western countries. Chinese
Prime Minister Zhou Rongji acknowledged this and decided that Chinese education needed
reform. The revolution began from Tsinghua university, Henry Paulson, nicknamed "China's
MIT", was asked to evaluate this university and proposed a new MBA program. “There was never
19
a right or wrong answer. You must have your own thoughts, an essential skill for any administrator”
was put into curriculum as the goal of the new MBA program at Tsinghua. This switched
Education to case study, less focusing on theory and more advanced.

Tsinghua university

(Source: www.uniconexed.org)

The Chinese educational structure provides for six years of primary school, three years each of
lower secondary school and upper secondary school, and four years in the standard university
curriculum. All urban schools are financed by the state, while rural schools depend more heavily
on their own financial resources. Official policy stresses scholastic achievement, with particular
emphasis on the natural sciences.

Six universities, all administered directly by the Ministry of Education in Beijing, are the flagships
of the Chinese higher educational system:

 Peking University (Beijing Daxue) - the leading nontechnical institution;

 Tsinghua (Qinghua) University, which is oriented primarily toward science and
engineering;
 People’s University of China, the only one of the six founded after 1949;
 Nankai University in Tianjin, which is especially strong in the social sciences;
 Fudan University - a comprehensive institution in Shanghai;
 Sun Yat-sen (Zhongshan) University in Guangzhou (Canton), the principal university of
South China. [13]

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In addition, every province has a key provincial university, and there are hundreds of other
technical and comprehensive higher educational institutions in locations around the country.

2. HOFSTEDE’S FIVE CUTURAL DIMENTIONS FOR CHINA

2.1 Hofstede cultural dimensions for China

Geert Hofstede is a famous Dutch anthropologist. One of his famous studies is the national
dimension theory. Accordingly, the national culture will show in the following aspects:

 Power distance
 Individualism
 Masculinity
 Uncertainty avoidance
 Long term orientation

Hofstede’s five Cultural Dimensions for China

(Source: Hofstede-insights)

2.1.1 Power distance

Power distance, the extent to which a society accepts that power is distributed unequally, is
established through subordinates and superiors. In societies with high power distance, such as
China, individuals with power enjoy greater status and privilege than those without power, and
subordinates are less likely to challenge or express disagreement with superiors. In other words,
the rank structure is clearly delineated between management and subordinates, and disagreement
with management is frowned upon.
21
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. [14]

2.1.2 Individualism

Individualism describes the relationship between the individual and the immediate community
[15]. In organizations, individualism has been linked to a preference for individual decision-
making; in contrast, in societies with collective values, such as China, interpersonal relationships
and group affiliation are the focus [16]. In individualistic cultures, members view themselves as
autonomous from the organization, whereas in collective cultures, the organization comprises part
of the member’s identity [17]. Studies have found that collective organizational cultures possess
stronger reward systems than similar individualistic organizational cultures, and in collective
cultures, managers typically give higher performance evaluations and rewards.

Leadership has been linked to individualism and collectivism and varies across cultures; for
example, autonomy is linked positively to leadership in some cultures and negatively in others. In
China, a collectivistic culture, individuals are willing to sacrifice personal goals for the good of
the group. This loyalty is promoted across all aspects of Chinese culture, including the workplace.
For example, a Chinese worker that has developed strong ties to the team will often not abandon
the team in the midst of a project to pursue individual goals. In fact, a Chinese worker may forgo
a promotion to continue work on a project, a concept that is foreign to many Western expatriates
working in China. The motto of the Chinese worker is often that the needs of the many outweigh
personal desires. American expatriates operating in China need to be cognizant of this principle
and understand the ramifications of pursing personal agendas over those of the team [18].

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 [19].

2.1.3 Masculinity

Masculinity is the extent to which the dominant values in a society are assertiveness, money, and
material possessions; caring for others and quality of life tend to be subordinate in such societies.
In masculine cultures, such as China, the “heroic” manager is decisive, assertive, and aggressive.

22
The manager makes decisions with confidence and directness and does not allow employees to
question authority.

Although certain feminine characteristics, such as being indirect and evasive and using intuitive
reasoning, are often valued in leadership, they are rejected in masculine cultures like China’s.
However, it is important to note that honor and saving face are extremely important concepts to
Chinese business people, and a direct style may be viewed as insulting and can harm
employee/manager relationships [20].

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 [21].

2.1.4 Uncertainty avoidance

Uncertainty avoidance is the degree to which members in a society feel uncomfortable with
ambiguous situations and take steps to avoid them [22]. Uncertainty avoidance occurs at various
levels of an organization. For example, senior management may refuse to pursue a project with
uncertain outcomes. Uncertainty avoidance has many implications for leadership characteristics
and leadership traits such as habitual, formal, cautious, and orderly is perceived as an outstanding
form of leadership in some countries while a negative form in others [23].

In China, a country with high uncertainty avoidance, managers are more controlling, less
approachable, and less likely to delegate to subordinates than their low-avoidance counterparts
[24]. In other words, managers in China do not place as much trust in their employees as managers
in other countries, such as the United States, France, or Sweden.

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 [25].

23
2.1.5 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 [26].

2.2. Trompenaars analysis of China

2.2.1. Particularistic

Particularistic cultures make it dependent from the situation and their relationship to the involved
parties whether or not to apply rules or morals. The main goal is to keep the relationship in tact
rather than upholding a universal principle. In case the government has good relationship with a
business, special agreements can be made which move outside the regulatory parameters [27]. In
particularistic cultures legal contracts don’t only keep their promises something is written down
on paper. More than that they trust, rely and believe in the business relationship which was build
up in the time before the contract was discussed.

As already mentioned in a previous chapter Chinese business people trust very much on
relationships between the partners. Strict regulations/formulations would probably offend/insult
the partner because they would get the idea that they aren’t trustful and are cheater. The
importance of relationships again solidity be carefully considered and taken into account
especially from universalistic cultures when dealing with particularistic cultures. Chinese try to
keep the contracts vague and not too tied. It might happen that Chinese business people will still
try to negotiate afterwards even the contract was already signed/closed and agreed from all sites.
In negotiations Chinese will spend a lot of time in building up a relationship with their business
partners so the actual negotiation will be at the end of the meeting time. While Americans dealing
with Chinese, Americans often try to close deals as fast as possible. But as a result of the Chinese
way to make deals the Americans might commit more advantages than first thought just to rush
forward and close a deal. This can be an advantage for particularistic cultures [28].

China tends to be particularistic while Western countries tend to be more universalistic. In the
Chinese culture, the concept of people inside and outside the group determine for example whether
morals should be applied or not at all. Due to the Confucian and communist background of the
24
country, a judiciary state was not necessary before 1979 when the country began its transition
towards a market economy. However, with the emergence of private business and foreign
investment, it became necessary to set up a functioning legal system. China's government is
putting much effort in building such a framework and enforcing it. However, most conflicts are
still solved through negotiation supported by third parties with who the conflict parties share
relationships. In 1997, only "2% of state owned enterprises (SOE), which still form the economic
backbone of China, employed legal advisers". That is most important to consider for foreign
companies when it comes to conflict resolution with Chinese firms. Confucius evaluates the
effectiveness of laws from a governance perspective: If the people be led by laws, and uniformity
among them be sought by punishments, they will try to escape punishment and have no sense of
shame. If they are led by virtue, and uniformity sought among them through the practice of ritual
propriety, they will possess a sense of shame and come to you of their own accord.

A strong universalistic approach in business might not always be advantageous either. When a
company has a conflict with one of its customers, insisting on its rights might uphold the principles
of the company-buyer agreement but destroy their relationship resulting in the client switching to
another company [29].

2.2.2. Collectivism

Collectivism is a cultural value that is characterized by emphasis on cohesiveness among

individuals and prioritization of the group over self. Individuals or groups that subscribe to a
collectivist worldview tend to find common values and goals as particularly salient and
demonstrate greater orientation toward in-group than toward out-group. The term “in-group” is
thought to be more diffusely defined for collectivistic individuals to include societal units ranging
from the nuclear family to a religious or racial/ethnic group. Meta-analytic findings support that
collectivism shows a consistent association with discrete values, interpersonal patterns of
interaction, cognition, perception and self-construal [30].

A few common traits of collectivistic cultures include:

 Social rules focus on promoting selflessness and putting the community needs ahead of
individual needs
 Working as a group and supporting others is essential
 People are encouraged to do what's best for society
 Families and communities have a central role [31]

The Chinese have a cultural history which dates back for more than four thousand years. The
cultural values still have certain impacts to the behavior of today’s Chinese. The four elements
are respect for age and hierarchical position, group orientation, concept of face and importance of
relationships. Tan (1990) had also identified some significant values in Chinese culture, including
25
the importance of the family or kinship groups, respects for elders, obligations toward friends and
relatives, the avoidance of conflict, the need for harmony and the concept of face. Some of these
values can be used to explain the “collectivism” of traditional Chinese. For instance, in a Chinese
society, relationships begin with the immediate family as an in-group and are then radiated to the
extended family and village. In such a collectivist society, an honor bestowed upon a family
member is shared by the family and beyond. Due to the obligations towards relatives, it is common
for relatives brought in to help in various positions in a family owned business [32].

2.2.3. Neutral

In a neutral emotion are controlled, whereas in an emotional culture emotions are expressed
openly and spontaneously. Well-known examples of neutral cultures are Japan and Great Britain
and China, where they frown upon being angry in public, laughing loudly or displaying any other
emotional outbursts. [33]

Affective or neutral context describes how cultures express their emotions. In affective cultures
like in China people express their emotions more naturally. Reactions are shown immediately
verbally and/or non-verbally by using mimic and gesture in form of body signals. They don’t
avoid physical contact, which is well known especially from Italians and Spanish when meeting
each other very enthusiastic and with raised voices. Neutral cultures like China tend to hide their
emotions and don’t show them in public. Neutral cultures don’t express precisely and directly
what they are really thinking which can lead to misunderstandings and certain emotions are
considered to be improper to exhibit in certain situations. It is also considered as important not to
let emotion influence objectivity and reason in decision making. In general, they feel discomfort
with physical contact in public and communicate in a subtler way which makes it difficult for
members of other cultures to read between the lines and get the message. The Chinese may also
us more intuition or feeling in making a business decision. [34]

2.2.4. Diffuse

In diffused cultures, people see an overlap between their work and personal life. They see personal
relationships outside of work to be necessary in meeting business objectives. In these cultures,
people spend a great deal of time with outside of work with colleagues and clients [35].

Diffuse cultures (Germany, France, China) are concerned with keeping people’s face. Therefore,
why in diffuse cultures so much more time is take to get to the point. It is about to avoid private
confrontations so the interlocutor or groups won’t feel offended and won’t take disagreements
personally. China have a high degree of privacy and share just a low percentage with public.

Chinese belong to the diffuse societies. If a European manager gets invited by his Chinese partner
at home, he would share nearly everything they have to be a good host. The guest becomes a close
person because of the established close relationship. This is very important in diffuse cultures to
26
build up close relationships in business life. This requires a lot of information which has to be
exchanged in advance of a business deal. Some may look irrelevant but they are important.
Chinese become via this procedure capable to get a more detailed picture about their business
partner and their characters.

The conclusion which can be drawn out of that is "Don’t do business with strangers, you can just
trust friends “. It is sometimes as important if not more important to build up a close relationship
than the deal itself. People from diffusive cultures circle around the strange business partner to
get to know him more deeply and they will discuss the specific facts only after a relationship of
trust has been created [36].

2.2.5. Ascription

In achievement cultures people are judged on what they have accomplished and on their record.
Ascription means that status is attributed to you by things like birth, kinship, gender, age,
interpersonal connections, or educational record [37].

In comparison to astrictive cultures like China, measure other’s behavior on the groups into which
they were born or attributed by birth right, gender, caste or age but also to your interpersonal
relationships and your ranking in society. They relate status to highly qualified, older more
experienced persons. Senior employees of a company are highly respected because of who they
are and their length of service but the trend towards shows slightly towards an achievement
development. The individual is something special and hardly to compare with others, independent
from a specific position or task. The main differences in this dimension has affection to who is
expected to speak in a particular situation and how much weight might be put on their words [38].

2.2.6. Synchronous time

In synchronic cultures, people will have a much broader and more flexible perception of time. As
such time is adaptable and allows much more freedom for tasks to be achieved. People from
synchronic cultures don’t tend to be slaves to time, but rather they use time as guidance for how
they structure their day and life. In synchronic cultures, people will approach tasks in a much more
open way and not be as beholden to deadlines and timeframes.

When you make an appointment with a person from a synchronic culture, this should be viewed
as an intention to meet at that time. The actual appointment can be rescheduled, start earlier or
later than planned, and will take as long as needed to complete the goals for that meeting.

For Chinese, they are not slaves of a time line; they adjust time according to their needs.
Unexpected gaps of time (for example when your appointment arrives late) are not a problem for
synchronic people as they are always juggling various activities at a time anyway.

Expressions of synchronic time perception:

27
  People do multiple things at a time
 Times are guidelines/ intentions
 Time is a tool, a subjective, moldable concept
 Relationships and effectiveness are the focus of business
 Time is secondary to tasks
 Completing the task is more important than meeting deadlines
 Future is interconnected with the past and present [39].

2.2.7. External direction

In China, people tend to think that the environment that they are in controls them by making them
achieve their goals. Also people try to avoid conflicts as much as possible because they want to
reassurance that they are doing a good job. The strategy includes giving people the right
information so that they do a good job and letting people know that they are doing a good job [40].

3. THE NOTE ABOUT DIFFERENCES IN BUSINESS CUTURE OF CHINA COUNTRY

3.1. The norm in business of China country

3.1.1. Greetings

Handshakes are common but wait for your Chinese counterpart to initiate the gesture.

Regarding titles of courtesy, most people should be addressed with a title followed by their last
name. Careful not to use "comrade" - unless you are a committed communist of course. [41]

3.1.2. The Art of Conversation

Chinese people will appreciate it if you use a couple of words in Chinese, but make sure you are
aware of the meaning and the appropriate occasions.

In Chinese culture, the questions "Have you eaten?" or "Where have you been?" are pleasantries
equivalent to the traditional "How are you?" in the English-speaking culture. Therefore, do not
take it literally and start getting into details in your answer! Simply answer "yes" if you have eaten
- even if you haven't – or simply smile and say "thank you!".

Popular welcome topics are themes about China: art, scenery, landmarks, climate, and geography.
You can mention you’re travelling experiences to other countries and include your positive
impressions as a tourist in China!

Try to avoid political-related discussions, such as the Cultural Revolution or Chairman Mao, the
"Tibet" and "Taiwan" questions, human rights, animal treatment.

28
Chinese people are very careful about strong negative statements. For instance, negative answers
are considered impolite, so find alternatives ("I'll think about it"/"maybe"/"we'll see") instead of
a blunt "no".

Similarly, if your Chinese counterparts say "Not a big issue" or "The problem is not serious", they
usually mean that there still are problems or that the problems are serious [41].

3.1.3. Body Language

Body language and movements are things you have to be constantly conscious of when doing
business in China. As mentioned above, you have to stay calm, collected and controlled.

Body posture should always be formal and attentive as it demonstrates self-control and
respectfulness.

Be careful about what you do with your hands as well - putting your hands in your mouth, biting
your nails, removing food from your teeth and similar practices are considered rude [41].

3.1.4. Business meetings and meals

Dress code: conservative suits. Bright colors of any kind are considered inadequate.

Punctuality is vital. Being late is a serious offence in the Chinese business culture.

When the meeting is finished, you are expected to leave before your Chinese counterparts.

Exchanging business cards is common practice, so make sure to bring plenty!

It is advisable to have one side in English and the other in either Simplified Chinese or Traditional
Chinese - depending on the region.

Include your professional title, especially if it is important to your case. Also, if your business is
the oldest, largest or has some other prestigious distinction, do include that on the card.

Gold is the color of prestige and prosperity, so if you print your business cards in gold ink, it will
have that connotation.

Give your card using two hands and ensure the Chinese side is facing the recipient; receive your
card attentively and examine it for a few moments.

Do not bring presents! The official policy in Chinese business etiquette forbids gifts. The gesture
is considered bribery, which is illegal in the country.

If you are invited to a business meal, wait to be seated, as there is a seating protocol based on
hierarchy. Do not discuss business during the meal.

29
During a meal, 20 to 30 courses can be served, so try not to eat too much at once! The trick is to
try a sample of each dish.

Scorpions, locusts, snake skin, dog meat and blood may come your way - they are considered
premium delicacies.

It is also important to know how much to eat. Leaving an empty dish signifies that you were not
given enough food and not touching your food is offensive as well.

Do not be startled if everyone starts slurping and belching - these are signs of enjoyment while
eating.

If you are invited for drinks - you have to go, as building a personal relationship ("guanxi") during
your business is very important. Sadly, or not, part of this implies participating in the drinking
culture existing in the country.

It might happen that your Chinese counterpart will test your ability to handle alcohol, especially
"bai jiu" (common brand names are "Mao Tai" and "Er Guo Tou") - a powerful drink that might
be compared to airline fuel! If you go for it, make sure to eat something beforehand; otherwise
find a good excuse - a medical one will be accepted.

Giving tips is generally considered an insult in China, implying the recipient needs money [41].

3.1.5. Numbers

Always pay attention to numbers and their significance or avoid as appropriate:

8 is the luckiest number in Chinese culture. If you receive eight of something, consider it a gesture
of good will.

6 is considered a blessing for smoothness and progress.

4 is a taboo number because it sounds like the word "death" and is considered unlucky.

73 means "the funeral"

84 means "having accidents" [41].

3.2. The note in the business negotiations

3.2.1. Attitudes and styles

Attitudes and Styles – In China, the primary approach to negotiating is to employ distributive and
contingency bargaining. While the buyer is in a superior position, both sides in a business deal
own the responsibility to reach agreement. They expect long-term commitments from their
business partners and will focus mostly on long-term benefits. Although the primary negotiation
30
style is competitive the Chinese nevertheless value long-term relationships. Chinese negotiators
may at times appear highly competitive or outright adversarial, fiercely bargaining for seemingly
small gains. However, even when negotiating in a fairly direct and aggressive fashion, they
ultimately maintain a long-term perspective and remain willing to compromise for the sake of the
relationship. Do not confuse the sometimes-aggressive style with bad intentions. Keeping
relationships intact throughout your negotiation is vital. It is best to remain calm, friendly, patient,
and persistent, never taking anything personally. It will also be very important to maintain
continuity in the objectives you pursue, the messages you deliver, and the people you include in
the negotiation. Should a dispute arise at any stage of a negotiation, you might be able to reach
resolution through emphasizing the benefits to both sides, remaining flexible and showing
willingness to compromise. Show your commitment to the relationship and refrain from using
logical reasoning or becoming argumentative since this will only make matters worse. Patience
and creativity will pay strong dividends. In extreme situations, leverage your local relationships
(Guanxi) to influence your negotiation counterpart’s decisions, or use a mediator, ideally the party
who initially introduced you. [42]

3.2.2. Sharing of information

Chinese negotiators are willing to spend considerable time, sometimes many weeks or even
months, gathering information and discussing various details before the bargaining stage of a
negotiation can begin. Information is rarely shared freely, since the Chinese believe that privileged
information creates bargaining advantages. Be careful with what you are willing to share yourself
and protect your intellectual property. In China, people may consider all information available to
them a property they are entitled to use to their best interest. Keep in mind that humility is a virtue
in Chinese business culture. If you make exaggerated claims in an effort to impress the other side
or to obtain concessions, they will likely investigate your claims before responding. This could
prove very embarrassing. [42]

3.2.3. Pace of negotiation

Expect negotiations to be slow and protracted. Relationship building, information gathering,

bargaining, and decision making may all take considerable time. Furthermore, negotiators often
attempt to wear you down in an effort to obtain concessions. Be prepared to make several trips if
necessary to achieve your objectives. Throughout the negotiation, be patient, show little emotion,
and accept that delays occur.

The Chinese generally employ a polychromic work style. They are used to pursuing multiple
actions and goals in parallel. When negotiating, they often take a holistic approach and may jump
back and forth between topics rather than addressing them in sequential order. In multi-item
negotiations, people may bargain and haggle over several aspects in parallel. It is not unusual for
them to re-open a discussion over items that had already been agreed upon. In addition, they may
31
take phone calls or interrupt meetings at critical points in a negotiation. While they may be doing
some of this on purpose in order to confuse the other side, there are usually no bad intentions.
Negotiators from strongly monochromic cultures, such as Germany, the United Kingdom, or the
United States, may nonetheless find this style highly confusing and irritating. In any case, do not
show irritation or anger when encountering this behavior. Instead, keep track of the bargaining
progress at all times, often emphasizing areas where agreement already exists.

If your counterparts appear to be stalling the negotiation, assess carefully whether their slowing
down the process indicates that they are evaluating alternatives or that they are not interested in
doing business with you. While such behavior could represent attempts to create time pressure in
order to obtain concessions, the slow decision process in the country is far more likely causing
the lack of progress. People from fast-paced cultures often underestimate how much time this
takes and make the mistake of trying to ‘speed things up’, which is usually counterproductive.
Again, patience and persistence are vitally important. [42]

3.2.4. Bargaining

Most Chinese businesspeople are shrewd negotiators who should not be underestimated.
Bargaining and haggling are aspects of everyday life, and people may use a wide array of
negotiation techniques competently. The bargaining stage of a negotiation can be extensive. Prices
may move by 40 percent or more between initial offers and final agreement. Leave yourself
sufficient room for concessions at many different levels and prepare several alternative options.
This gives the Chinese negotiators room to refuse aspects of your proposal while preserving face.
Ask the other side to reciprocate if you make concessions. It is not advisable to make significant
early concessions since your counterparts will expect further compromises as the bargaining
continues. You can use the fact that aspects can be revisited to your advantage, for instance by off
erring further concessions under the condition that the Chinese side reciprocate in areas that had
already been agreed upon. Deceptive techniques are frequently employed, and Chinese negotiators
may expect you to use some of them as well. This includes tactics such as telling lies and sending
fake non-verbal messages, pretending to be disinterested in the whole deal or in single concessions,
misrepresenting an item’s value, or making false demands and concessions. Lies will be difficult
to detect. It is advisable to verify all information received from the local side through other
channels. Similarly, they treat ‘outside’ information with caution. Do not take such tactics
personally and realize that overt attempts to lie at or bluff your counterparts could backfire and
might damage business relationships. Since negotiation teams must be well aligned and always
have to preserve face, people rarely use ‘good cop, bad cop.’ It can sometimes be beneficial to use
these tactics in your own negotiation approach. Carefully orchestrated, they may allow you to
obtain valuable concessions without damaging the overall relationship. However, it could be
devastating if the other side recognized this as a tactic, and any ‘bad cop’ member of your team
also needs to be excluded from future negotiation rounds. The Chinese are not likely to use the
32
‘limited authority’ technique because groups rather than individuals normally make decisions. Be
cautious when using the techniques of making false demands or false concessions. Since you must
avoid causing loss of face, any overt attempts to bluff your counterparts could also backfire.
Negotiators may use pressure techniques that include keeping silent, making final or expiring
offers, applying time pressure, or nibbling. Silence can sometimes be effective as a way to convey
displeasure. Skilled Chinese negotiators may remain silent for a long time without showing any
signs of impatience. Don’t let this fool you into thinking that they are not interested. Final offers
may be made more than once and are almost never final. Do not announce any of your offers as
‘final’– your counterparts will likely not believe that you are serious and may turn the tactic
against you. Time pressure can be difficult to counter. If Chinese negotiators learn that you are
working against a deadline, they may exploit this knowledge to increase the pressure on you to
make concessions. Near the end of a negotiation, they may suddenly request large discounts,
calling their request a ‘compromise.’ In extreme cases, they may try to renegotiate the whole deal
on the final day of your visit. It is important never to take such techniques personally and to avoid
open conflict. On the other hand, time pressure techniques rarely work against them since the
Chinese are patient and persistent enough to overcome such challenges. However, you might be
able to use these techniques should the negotiation take place on your home turf rather than in
China. Nibbling may prove useful in the final phases of negotiations. None of this will take your
counterparts by surprise, though. Avoid other common pressure tactics such as opening with your
best offer or showing intransigence, since they cannot be applied effectively without running the
risk of causing loss of face. Chinese negotiators avoid most aggressive or adversarial techniques
since they affect face. The risk of using any of them yourself is rarely worth the potential gain.
Exceptions are extreme openings, which people use frequently, as well as threats and warnings.
As long as extreme opening offers are not openly aggressive, this approach can be effective.
Should your counterparts appear aggressive as the bargaining gets more heated, remind yourself
that they may not perceive it that way. It might be wise to deflect the pressure, for example by
explaining other arrangements you have accepted for similar deals in the past. As in most strongly
relationship-oriented cultures, negotiators may sometimes use emotional techniques such as
attitudinal bargaining, attempting to make you feel guilty, grimacing, or appealing to personal
relationships. Be cautious when doing this yourself. You might cause the other side to lose face,
which could damage your negotiating position. At times, defensive negotiation tactics may be
used. An exception is directness, which is rare in China. People may be shocked if you are overly
direct yourself, which can be counterproductive. Note that opening with written offers and
attempting to introduce written terms and conditions as a negotiation tactic is rarely successful. In
most cases, businesspeople will ignore or tactfully reject them and request that each aspect be
negotiated individually. Corruption and bribery are quite common in China’s public and private
sectors. However, people may draw the line differently, viewing minor payments as rewards for
getting a job done rather than as bribes. Also, keep in mind that there is a fine line between giving
gifts and bribing. What you may consider a bribe, a Chinese may view as only a nice gift. It may
33
help if you introduce and explain your company’s policies early on, but be careful not to moralize
or appear to imply that local customs are unethical. [42]

3.2.5. Decision making

Organizations are usually very hierarchical. However, while you may sometimes encounter a
western-style entrepreneur as the sole decision maker within their company, decision making is
normally a consensus-oriented group process in China. This can be confusing for Westerners
looking to identify the ‘key decision maker’ in an organization, while in reality such a role may
not exist at all. Decisions are often made through a process involving many stakeholders who
establish consensus through a series of deliberations and internal politics that outsiders have very
limited insight into. This process can take a long time and requires patience. Influencing the
decision making requires understanding the Chinese side’s intentions and building strong
relationships with as many influential stakeholders as you possibly can. The role of the senior
leaders is to orchestrate the process, not to make decisions themselves. Nevertheless, their input
carries a lot of weight and they may have the final say, so do everything you can to win their
consent and support. While the People’s Republic has made significant strides to open its economy
to global trade, do not underestimate the extent to which government bureaucrats still influence
company decisions. It is wise to contact national, provincial, and local government representatives
to fill them in upfront about your plans to negotiate with a local company. That way, you are more
likely to receive preferential treatment from your desired partner as they do not want to displease
their government. If your business interactions include a party or local government representative,
it is essential to include the person in the negotiation and treat him or her as a senior decision
maker, even if the person is or appears unfamiliar with the subject. When making decisions,
Chinese businesspeople may not rely much on rules or laws. They usually consider the specific
situation rather than applying universal principles. Personal feelings and experiences weigh more
strongly than empirical evidence and other objective facts do. Exceptions exist where party rules
or government objectives force them to be more dogmatic. The Chinese are often reluctant to take
risks. If you expect them to support a risky decision, you may need to find ways for them to
become comfortable with it first. You are much more likely to succeed if the relationship with
your counterparts is strong and you managed to win their trust. [42]

3.3. How to motivate employees

Usually in China, the Chinese company would typically do the following thing. I will start with
the most common ones.

 Housing compensation: Other than paying for the state housing plan dictated by Chinese
government. The company would either offer to pitch in considerable more money to help
them buy house or offer company sponsored house in much lower than market price in the
city.
34
  Social Reimbursement: offer a position in company for their spouse; help their kids get in
a top local school or college; Medical plan for whole family; Travel stipend for family, etc.
 Guarantee Hukou or long term residency permit: Solve their residency status for them. Let
that be a Beijing, Shanghai Hukou permit, or foreign permanent residency.
 Entitlements: In China, entitlement comes with a very fat check or privilege.
A typical example would be an employee of the year comes with extra months of pay.
Another would be rise your personal value; you get to charge more for every tech
assignment. Other typical privileges Chinese companies give like be assigned personal
driver and car. Others are large travel budget or ability to take family on business trips.
Others like able to write off portions of personal costs on company budget, for example
one can be compensated for grocery and/or house supplies.
 Pay rise or promotion: rise their pay by a sizable margin are often practiced by private
company, and/or offer a rise in position if the company has hierarchy like state or corporate
company.
 Stock options and share hold: Usually for starter company or for high position or valuable
employee.
 Provide context: Young, passionate people are focused on making their mark on the world.
Even simple tasks have an effect on the health of a start-up. Express how each task impacts
the team, product, clients and planet.
 Check for understanding: Language misunderstandings are frustrating for everyone
involved. Your Chinese teammates will become demotivated after doing an hour of work
incorrectly, because of a simple language misunderstanding.
 Provide positive feedback in context: Positive feedback is rarely doled out in Chinese
companies. Providing context for positive feedback reinforces the context you offered in
the task assignment phase. Express, “You did a wonderful job on X, it really allowed me
to do Y more easily. The client told me they appreciated the effort you put into that task.”
 Provide opportunities for growth: The hierarchy in most Chinese companies is strict, and
relationships are often managed from the highest levels on down. Involve your Chinese
employees in different aspects of your company. Allow them to try new things. These are
unique opportunities not available at other companies, and will engender team loyalty. [43]

3.4. Intercultural Management in China

3.4.1. Being a manager in China
The first thing you will notice when doing business in China is that all issues are looked at from
the same vantage point - how will this benefit China or Chinese business. The Chinese always
want to know what your company can do that they cannot already do for themselves.

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Communication is both formal and indirect. Since China is an extremely homogeneous country,
there is much that can be said without using words. Cross cultural communication can often be
difficult as westerners find it difficult to appreciate the subtleties of certain situations. [44]

3.4.2. The role of a Manager

Successful cross cultural management in China is more likely if you bear in mind that each person
has a very distinct role within the organization, and maintaining that role helps to keep order.

In general, the manager may function autocratically and dictate to his subordinates. At the same
time, managers will not compliment or chastise an employee publicly. In fact, should they want
to communicate bad news to their employees, they might use an intermediary. [44]

3.4.3. Approach to change

Whereas China has traditionally had a medium tolerance for change and risk its intercultural
adaptability is rapidly improving due to the increasing demands of the global marketplace.

In the more traditional companies cross cultural sensitivity is essential as the fear of exposure, and
the potential of embarrassment that may accompany failure, still brings about aversion to risk.
Any ideas raised by an individual need to be raised gently to avoid exposing that person. [44]

3.4.4. Approach to Time and Priorities

China is a moderate time culture and typically there may be some flexibility to strict adherence to
schedules and deadlines. Nevertheless, the expectations of global and intercultural expansion have
caused the Chinese to adopt relatively strict standards of adhering to schedule. [44]

3.5. Leadership issue

3.5.1. Chinese leadership principles

Chinese business practices continue to follow traditional, long-established Chinese approaches as

moral leadership—rooted in ancient Chinese philosophy. Such approaches can be conceptually
linked with political, social, and commercial paradigms. Within this philosophical framework,
leadership has focused on being humanistic and improving followers through personal
development.

Leaders are differentiated by the designations "ling xiu" for leaders who have achieved a vision
and "ling dao" for leaders who act in a stewardship role where managers focus on getting the job
done.

Chinese leaders are expected to rank ethical considerations above the achievement of profit.

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A leader can be a model and a source of inspiration for subordinates by using persuasion rather
than coercion; promoting harmony with nature and with others; and setting a personal example
by promoting equality, simple living, and a rejection of the trappings of status.

Finally, a leader should exert minimal influence on subordinates.

Although described as discrete elements, these principles are interlinked and interdependent. [45]

3.5.2. Tips of communication with subordinates

Aside from competency in the Chinese language, one of the more difficult (and important) aspects
of communications with the Chinese stems from their tendency to speak in a vague and
roundabout manner.

Maintaining a Harmonious Environment

As a rule, both in business and on social occasions most Chinese prefer to maintain a polite and
harmonious environment to avoid offending both hosts and guests. At formal business meetings
this desire to preserve harmony will often prevent dissension among meeting attendees, especially
with regard to more junior employees (e.g. age or rank). Senior managers or executives lead this
meeting with junior employees normally toeing the line laid down by their superiors. In addition
to the concept of harmony, these practices also relate to the Chinese interpretation of proper
leadership methods. Many Chinese leaders use a “do as I say” model of leadership and in contrast
to many Western corporations, rely much less on colleagues and subordinates for ideas and
support. Thus in many cases meetings are used by managers and leaders to to discuss agendas,
hear reports and presentations, and issue instructions. When meeting with other companies,
organizations, and government agencies, the Chinese prefer to set specific agendas and prefer not
to deviate in order to avoid surprises and potential embarrassment. Maintaining harmony is
usually more important when there are more people present, or when there are people present of
many different ranks or statuses.

Respecting Hierarchy

Hierarchy also factors into how the Chinese communicate. To the Chinese (as well as Asians in
general), a person’s place in a given business or social hierarchy not only determines how others
will and can speak to that person, but also the ways in which a person is allowed to speak to others.
For example, workers in China must generally phrase their words carefully when speaking to
superiors, especially to those which are more traditionally minded. Speaking out of turn to a
superior in China can lead to both poor treatment (e.g. being discriminated against or humiliated)
as well as reprisals (e.g. being fired or passed over for a promotion). Leaders and managers in
Chinese companies by contrast, are much freer to speak their minds to subordinates. And while
the concept hierarchy may seem similar to and have similar implications as the idea of a

37
“harmonious environment” as explained above, there is a subtle difference. Harmony comes into
play when a group is gathered together, or members of a company are meeting with
representatives of another company. Hierarchy in turn determines what can and can’t be said, and
to whom.

Avoiding Refusals & Paying Compliments

The concept of Face also plays a strong role in how the Chinese communicate. The Chinese prefer
to avoid the negative and emphasize the positive. When faced with a situation in which they have
bad news, disagree with someone, or there is the need to refuse a request, the Chinese often will
worry about causing a loss of Face. Most Chinese will go to great lengths to avoid this, especially
when it pertains to someone the Chinese person in question cares about personally, professionally
or someone who may have influence over their future. The Chinese avoid potential losses of Face
simply because it is judged to be the way a civilized person behaves. Depending on the specific
situation, there are different ways that this can influence a conversation or dialogue. First, the truth
may be withheld completely, with the goal of either fixing the problem first, or waiting until a
later date to reveal the news (why get in trouble today, when you can put it off until
tomorrow). Second, the truth may be marginalized, by inferring that the situation is not as dire as
it actually is. Third, with the intent to tell the truth, a Chinese person may often lead into an
embarrassing topic with compliments, with intent of easing the blow to a person’s Face, or
allowing the other person to perceive that everything possible was done to prevent a loss of face.
The Chinese also do their utmost to give Face to people important to them in the form of
giving compliments (and sometimes giving gifts).

Building & Maintaining Relationships

Building and maintaining relationships also influences how the Chinese communicate.
Relationships are the web which hold Chinese society and social circles together, and in order to
function properly it is essential that the Chinese maintain relationships within companies, the
family, and between friends. Within a company, not only are employees bound by the rules of
hierarchy, but they also must build relationships (especially in larger companies) to support their
efforts to succeed on projects or receive promotions. For example, a manager in a Chinese
company must simultaneously manage relationships with subordinates, fellow managers, and
superiors. This necessary management of these types of intra-company relationships all require
the use of differing language and communication styles in order to be effective.

The Non-Specific Nature of the Chinese Language

Aside from the cultural aspects of communication in China, there are also linguistic elements
which must be considered. In the experience of the author, many words and phrases are structured
in Chinese, traditional and modern, are not as specific as their counterparts in Western languages

38
(e.g. English). Many words in Chinese have multiple definitions, and the same character can
mean separate things in different contexts, as well as be pronounced in different ways. It is
common in speeches, announcements and communications in China for more generalized speech
to be used. However, in China it is important to have a clear understanding of context, and allow
for the tendency of language to be vague.

Refusals are Best Given in Private

To succeed in China, it is vital to retain your key managers and employees, as well as to maintain
good relations with partners and clients. This is made difficult by the fact that Chinese can be
extremely sensitive to how they are perceived and treated by others. Unlike in Western countries
a badly timed refusal or reprimand can burn bridges or cause employees to quit their job. Thus No
Chinese employee wants to have an idea rejected in front of friends of colleagues by their
supervisor as it can be interpreted as a slight (and lead to embarrassment or humiliation). Chinese
leaders feel as they are due a great deal more respect and prestige than other employees, and some
are used to never being wrong where their subordinates are concerned. The best strategy for when
a refusal must be given is to attempt to offer as much cushioning to the person’s Face as possible.
One way of accomplishing this is to talk in a private setting with no one else around your Chinese
colleague might be more willing to listen. You can also try to be indirect in your refusal or make
sure your refusal doesn’t state your boss as part of the reason (even if he or she is). It is all too
easy to burn bridges colleagues, supervisors, clients and partners through losses of faces, even
when it is unintentional.

Hierarchy & Harmony Can Create Complications

The emphasis on hierarchy and harmony in the Chinese business environment creates more
distance between different levels in an organization as well as reducing the ability of Western
managers and leaders to easily receive feedback from employees, and effectively communicate
throughout all levels of an organization. When a Western business person wants to find out what
managers and subordinates think, especially regarding an uncomfortable issue, it’s best not to do
it in a formal setting with other employees present. One option is to pull them aside for an
individual meeting, or assign that task to their direct supervisor. And while this isn’t a catch-all
solution, it reduces the pressure the employee will feel and increase the chances of getting more
honest feedback. And while training can indeed allow some Chinese employees to be more at
home in a Western style work environment, it’s not a given. Many Chinese employees do, and
will continue to prefer to be in an environment that contains traditional Chinese values. In light of
this, Western managers can benefit from developing a strong team of managers and support staff,
some of which should be familiar with both Chinese and Western methods, and thus able to act
as a go-between.

When in Doubt, Follow Up with Specific Questions

39
In the event that vague answers are received from employees, colleagues, or service providers,
answers can sometimes be obtained by gently asking follow-up questions, or asking related
questions to try to uncover the information that you need; getting straight answers is seldom easy
but is less difficult if a Chinese person doesn’t feel embarrassed. When receiving vague answers
about potential partnerships and meetings it is harder to judge, even to the Chinese, what is really
going on. The easiest way to deal with this situation is to check back on a regular basis. If you
keep getting the run around for more than a few months then the answer is most likely a no.
Getting a direct response out of the Chinese is also something of an art form (which the author
cannot claim to have completely mastered), but as with any art form the more practice, the better
you will become.

Don’t Expect a Discussion in Formal Meetings

Business in China revolves around protocol and etiquette, especially on formal occasions. And
while different organizations might indeed possess different cultures and personalities, larger
Chinese organizations by and large focus on formality, and observing the proper etiquette
and protocol. When a Chinese company or organization meets with another (e.g. a Western
company), the key issues likely on the table are discussing pre-agreed upon topics, building or
managing the relationship between the two organizations, or taking direction (e.g. from client to
consultant). In this context, Chinese organizations and managers do not like to discuss
controversial topics which hold the potential to cause loses of face or create an uncomfortable
atmosphere. To have a conversation about details and specifics, wait until the after the meeting to
discuss things in a more informal setting. Another option is to hold individual talks with your
equal in a Chinese organization. [46]

CONCLUSION

It is clear that China has been shaped by its history and that in turn modern Chinese management
has been sprung from deep cultural roots, whatever the economic and institutional changes of the
last half-century. However, Chinese people are quick to maintain that these changes have been
given ‘Chinese characteristics’, implying that whatever the immediate institutional and
organizational details, the underlying norms and values may reflect continuity as much as change.

In a rapidly changing and varied context such as contemporary China, it is very difficult to assess
the degree to which traditional culture continues to exert an influence on management values and
behavior. Rather than attempt any definitive conclusions, it is more helpful to repeat the issues
and questions that we need to bear in mind when addressing this subject.

In short, China offers a challenging and fascinating arena for further exploration of the theoretical
and practical issues associated with culture and management. Whether the future will lead to a
degree of convergence is not the question; it is what will be the pace and ultimate limit of such

40
change… In any case, whether you’re working with an international corporation, it’s common to
run into scenarios where you’re dealing with people from other cultures on a professional level.
In a management position, it’s especially important to be aware of the differences so you can
mitigate any cultural barriers and lead your organization to success.

In this report, our group have researched and analyzed the cultural issues in China. We hope you
enjoy our report.

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THE END./.
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