How to make a deal in China:

- A guide for German negotiators

by

Jan Schnack

Managing Cultural Diversity

Table of content:

1 Introduction p. 1

2 Negotiation
2 a Introduction phase p. 2, 3
2 b Starting the negotiation p. 4, 5
2 c Signing the contract p. 5

3 Conclusion p. 6

4 Bibliography p. 7

1 Introduction

Since the opening of the People′s Republic of China in 1978¹, China has become a more and more important business partner for Germany. Today China is the second biggest Asian trade partner of Germany. In the year 2000 the trade between China and Germany increased by 34 %.² That is why more and more managers from Germany go to China for business negotiations. "Global managers spend more than 50 percent of their time negotiating."³

In this paper I am going to explain the differences how negotiations are conducted in China and Germany and what German managers involved in cross-cultural negotiations with the Chinese should bear in mind in order to avoid conflicts and misunderstandings. I assume that both, the Chinese and the Germans have not been trained in intercultural management before joining the negotiation.
Fons Trompenaars describes the German culture as universalistic, collectivistic, diffuse and achievement-oriented, whereas he characterizes the Chinese culture as particularistic, collectivistic, very diffuse and ascriptive.

In this paper I will divide the negotiation process into three stages and explain the cultural dimensions involved.

2 Negotiation

2 a Introduction phase

For Chinese punctuality is very important. Being punctual is a way to show respect, sincerity and concern.⁴,⁵ When being early don′t hesitate to let your host know. Being early is also showing respect.⁶ When shaking hands, using both hands, is a way to warmly welcome the guests.⁷ Shake hands first with the most important person, as China according to Fons Trompenaars is a quite ascriptive culture.⁸ That means that in China status is ascribed to people on the basis of age, class, gender, education and position not on their achievement.⁹,¹⁰ As result of this when entering the conference room the Chinese top executives will enter the room first, followed by the rest of the group.¹¹ During the introduction phase it is very important to exchange business cards. This will help you to know who is the most important partner in the negotiation. Usually Chinese use both hands to hand over their business cards.

When you entered the room where the negotiation will be held you will find name cards with titles on the table. In China it is very important who is sitting where. Usually the host will sit in the middle of the table. At the host′s right side, the second important person will be seated.¹² This behavior is also showing the ascriptive way in which the Chinese normally act.

In Germany being punctual is also a way to show respect.¹³ Arriving a little late without a good excuse is viewed as being unfriendly.¹⁴ It is considered good manners to shake hands with all people present.¹⁵ It is not so important to follow a certain order when shaking hands but it is considered nice to shake hands with women first.¹⁶ According to Fons Trompenaars the Germans are rather achievement oriented. That means that status and power are determined by what a person has achieved and how effectively the person performs his or her job.¹⁷ Therefore seating arrangements and name cards including the position of a person are not so important. Achievement-oriented cultures, use titles "only when relevant to the competence."¹⁸

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1 Chinanah, www.chinanah.com/forument001.htm

2 Bundeswirtschaftsministerium, www.wirtschaftsministerium.de

3 Adler, Nancy, p. 191

4 Wenzhong, Hu and Grove, Cornelius L., p.41

5 Lafayette De Mente, Boye, p.147

6 Käser- Friedrich, Sabine, Nicola Garratt-Gnann, p.69

7 Käser- Friedrich, Sabine, Nicola Garratt-Gnann, pp.25, 26

8 Hale, Nikola, p.23

9 Trompenaars, Fons and Hampden-Turner, Charles, p.230

10 Wenzhong, Hu and Grove, Cornelius L., p.6

11 Lafayette De Mente, Boye, p.115

12 Professor Yuan Li Bin, lecturer at Yangzhou University in Yangzhou, China. International week 2002 FH Furtwangen "Doing business in China".

13 Nees, Gregory, p.131

14 Nees, Gregory, p.133

15 Nees, Gregory, p.94

16 Käser- Friedrich, Sabine, Nicola Garratt-Gnann p.26

17 Hale, Nikola, p.23

18 Trompenaars, Fons and Hampden-Turner, Charles, p.118