Confucianism and the Chinese Business Culture

Table of Contents

List of figures and tables

1 Introduction
1.1 Problem Definition and Objectives
1.2 Course of the Investigation
1.3 Methodology

2 Confucianism in the Chinese Culture
2.1 Roots of Confucianism
2.2 Core Elements of Confucianism
2.2.1 Moral Person (junzi)
2.2.2 Human Morality (ren, yi, and li)
2.2.3 Relationships (guanxi)
2.2.4 Face (mianzi)

3 Confucianism and the Chinese Business Culture
3.1 Effects and Relevance of Confucianism
3.2 Positive and Negative Implications of Confucianism on Businesses
3.2.1 Hierarchy and Harmony
3.2.2 Group Orientation
3.2.3 Past Orientation
3.2.4 Guanxi Network
3.2.5 Mianzi (Giving Face)

4 Outlook and Conclusion
4.1 Outlook
4.2 Conclusion

Reference List

Appendix

List of figures and tables

Figure 1: Confucius (孔夫子)

Table 1: Managerial practices and their philosophical origins (Cheung & Chan, 2005)

Table 2: Financial Times Top 45 (2012)

Figure 2: Confucius (drawn by Wu Daozi in Tang Dynasty)

Figure 3: A Page from the Analects (Lunyu)

Table 3: Implication of Confucian ideas on businesses (Yeh & Xu, 2010)

Table 4: Techniques to establish the network of guanxi (Hwang et al., 2009)

Table 5: Techniques to maintain the already established guanxi (Hwang et al., 2009)

Table 6: Factors contributing to the establishment of guanxi (Hwang et al., 2009)

Figure 4: GDP in China (in Billion US Dollar). Source: IMF

Figure 5: Exports from China (in Billion US Dollar). Source: WTO

1 Introduction

1.1 Problem Definition and Objectives

In the last decades, globalization – the increased interconnectedness among countries all over the world – became more and more important in the fields of politics, economics and in cultural contexts. In current times, China exhibits a unique role, being the world's manufacturing powerhouse in economic terms while maintaining a strong, traditional culture. Foreign companies seeking to exploit the advantages the Chinese economy promises must adapt to the cultural characteristics of Chinese firms. The influence of Confucianism is the key difference between Western and Eastern companies – this has to be taken into respect when trying to enter the Chinese market and when planning to begin strong relationships with Chinese companies. This essay will highlight the core elements of Confucianism, their impact on Chinese business culture and managerial implications that can be drawn from these observations.

1.2 Course of the Investigation

After highlighting the methodology and explaining how the author gained the respective knowledge about the topic, the roots of Confucianism are shown. The core elements of Confucianism are drawn to give the reader a detailed understanding of the implications Confucianism has on the Chinese culture and on the businesses that operate in it. The influence and the relevance of Confucianism on Chinese companies are shown. After that, positive and negative implications of Confucianism on the Chinese business culture are highlighted. Here, quantitative and qualitative findings are consulted to give a thoughtful evaluation of Confucianism in Chinese business culture.

1.3 Methodology

This review is supposed to cover the speech 'Confucianism and Chinese Business Culture' held by Dr. Zhang Yan at Tongji University, Shanghai, on 11th September 2013. Additionally, it includes empirical and non-empirical journal articles about Confucianism and business making in China. To obtain a comprehensive and high quality sample the author focused on the top management journals provided by the Top 45 Financial Times list (see Table 2 in the appendix). A search algorithm was developed to investigate all relevant articles in these journals in the electronic library EBSCO. This search algorithm included the key words Confucianism and Confucius. The author focused on papers that strongly broached the issue of Confucianism in China and in Chinese businesses. After reviewing all results, particularly titles and abstracts, a total of 27 high-quality papers were found, from which 9 were seen as relevant for this essay.

2 Confucianism in the Chinese Culture

2.1 Roots of Confucianism

Confucianism (儒家) is a philosophical system that is rooted in the teachings of the Chinese teacher, politician and philosopher Confucius (孔夫子) He was born in 551 BC in Zou, Lou state. Confucius may be the greatest ancient Chinese philosopher of all time, having taught wise remarks on nature, the world and on human behaviour. He showed that education is not merely an accumulation of knowledge, but it is a means of self-perfection (Zhang, 2013). Confucius’ ideal person was the gentleman or “lord’s son” (junzi).

illustration not visible in this excerpt

Figure 1: Confucius (孔夫子)

The Analects (lunyu), which are also called The Analects of Confucius, is a collection of ideas and sayings by Confucius. It was written during the Warring States period (between around 475 and 221 BC). The Analects is one of the most read books in China and thus, takes an important role in today’s society. In Confucius’ view, the moral conception of the people was the most relevant factor when defining the overall wealth of a society. It is therefore of high notability to seek moral goodness.

2.2 Core Elements of Confucianism

2.2.1 Moral Person (junzi)

Junzi 君子 is a description of the ideal man (lord’s son). In Confucianism, Sage is the most perfect, ideal person. However, for individuals it is impossible to become as good. Therefore, junzi is a state of morally goodness that can be achieved by an individual. Ren is a relevant factor when becoming the junzi. Gaining inner peace through their virtues and having superior moral and ethical perceptions are the fundaments of junzi.

In contrast to junzi, xiaoren (小人) is an untrustworthy, unloyal and egoistic person. Those persons are only focusing on their own personal gain, on power or money. Leaders of nations should not be or be surrounded by xiaoren because it will have a negative effect on the whole country.

2.2.2 Human Morality (ren, yi, and li)

The core of Confucianism is built up by the three concepts ren 仁, yi 义/義 and li 禮. Those concepts have to be pursued by people to become junzi. Although Confucius underlines that it is nearly impossible to pursue all four concepts perfectly, the pursuit itself is the important belief everybody should imply in his or her behaviour.

Ren is expressed in human relationships. Basically, the Chinese word ren is made up of two words, 'human' and 'two'. When asked by one of his students, Yan Hui, what ren really means, Confucius answered “One should see nothing improper, hear nothing improper, say nothing improper, do nothing improper”. It is the virtue Confucius strongly connects with the happiness of being altruistic.

Ren is therefore the inner development of an altruistic personality while keeping in mind that someone is always part of something bigger – a family, a nation or a whole culture. Here, the weightiness of human relationships is highlighted.

Yi is often translated as righteousness. It underlines which actions are morally and ethically correct. Li is often expressed as a ritual. It shows what is right in the view of the society. As such, it is often the same as yi, however it is not necessarily always the same. Li and yi can be different.

2.2.3 Relationships (guanxi)

Guanxi 关系 highlights the concept of building up relationships. Especially in a family-oriented society such as China this concept is of high importance.

Relationships are built up through genuine interest and reciprocity. Genuine interest can be expressed by, for example, learning a few Chinese expressions, having an own Chinese name or inviting the business partners to dinner. Zhang, 2013, cites the relationship between Bill Gates, former CEO of Microsoft Inc., and the Chinese government as an example of guanxi. Bill Gates visited the Chinese president three times, in 1991, 1995 and in 2003 to establish a long-term cooperation between his company and China (Zhang, 2013).

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