Negotiation Behaviors of Chinese and Americans

Abstract

With the advent of globalization and integration of world markets, organizations increasingly have to negotiate across cultures in an attempt to expand their market. This paper provides a case for negotiation between Chinese and American enterprises. China is one of the emerging markets and Quasimoto Enterprises is considering a request by a Chinese firm to have exclusive right of production and distribution of its high-tech products. The paper thus explores Chinese and American negotiation approaches to propose a strategic negotiation plan to achieve the best deal for each side. To achieve this outcome this paper will examine existing research findings on cultural influence, bargaining intention, bargaining behaviors and negotiation rules. On review of literature on the subject, the findings indicated various differences in negotiation approaches between the Chinese and Americans. Such included the preference for a distributive approach by the Chinese and a distributive approach by the Americans. However, similarity in their bargaining behaviors such as mutual respect and cooperative attitude may help both entities to adopt a shared negotiation framework based on a win-win goal.

Negotiation Behaviors of Chinese and Americans

Due to the increasingly globalized economy, business organizations embrace international business to enhance their competitiveness within the emerging markets. Therefore, international negotiations and bargaining would play a significant role in extending distribution and growth in business operations. For instance, there have been continued negotiations between business entities from western countries with Chinese firms. However, these emerging markets provide complex framework on which western developed management and business theories would be tested in response to challenges presented by cultural and social diversities. Over the years, China has emerged as a dynamic world market that hitherto remains a growth avenue for western multinational corporations. Unfortunately, negotiation has remained a significant challenge facing Sino-western business relationships because of diverse cultures. Therefore, this essay will strive to review negotiation behaviors of Chinese businesses as well as western companies and propose necessary strategic considerations to achieve the best possible deal.

Chinese Bargaining Behaviors

According to Fang (2006), despite western interest in china, china has remained a dream to many western companies. Therefore, understanding the negotiation behaviors of Chinese business people would be valuable to western businesses intending to establish trade relationships with Chinese firms. The basic aspect that Quasimoto should understand before joining the negotiation process with Chinese firm is that culture plays a fundamental role in building business relationships with Chinese merchants. For instance, the Chinese will in general approach negotiations in a relationship context, rather than focus on contractual terms and legal requirements (Metcalf, Bird, Peterson, Shankarmahesh, & Lituchy, 2007; Ma, 2007). This may pose delays in timelines Quasimoto has set to have various stages of the contractual agreement completed. Inflexibility on the part of Quaimoto negotiators may thus result in the breakdown of negotiations.

Further Chinese portray complex behavior during negotiation, which may range from avoidance to assertiveness (Fang, 2006; Ma, 2007). This is because Chinese believe the strategies used by a commander in battlefield should guide business bargaining to achieve maximum value. Such a belief is exemplified by the Chinese proverb that a “Marketplace is a battlefield” (Wu, Chou & Wu, 2004, p. 396). In addition, Lee (2000) observes that Chinese negotiators will tend to favor retail bargaining and be more aggressive in haggling and more price conscious as compared to their western counterparts. Therefore, Quasimoto must engage business negotiators with skills and tactics to address this extreme competitiveness behavior. Equally important is the Chinese collectivistic cultural practices (Metcalfe et al., 2007; Ma, 2007), which, for instance, may place the role of agreement within the negotiation table beyond the negotiators present (Lee, 2000). This may lead to further consultation even after the Quasimoto negotiators believe that certain aspects of the contract have been finalized. Nevertheless, Chinese people pursue an integrative approach of negotiation because they attach high value to group harmony and interpersonal relationships during and after negotiations (Ma, 2006; Ma, 2007). Therefore, Quasimoto would need to be open to a win-win mindset (Zero-sum game) during negotiation process because Chinese use ‘Confucian gentleman’ approach that projects mutual trust, harmony and dependency (Fang, 2006).

American Negotiation Behaviors

Lee (2000) argues that Chinese people are more competitive in bargaining compared to Americans in low-priced and high-priced products. Therefore, based on this precept, Chinese negotiators can engage aggressive and price-oriented strategies to secure the best possible deal. Nevertheless, Chinese firm negotiators need to be aware of Americans’ cooperative bargaining behavior (Alserhan, 2009). However, they should not confuse cooperative bargaining behavior with weak negotiation ability because Americans emphasize competitiveness as a business culture. Since Chinese people are complex negotiators, they would need to develop a strategy to respond promptly to the Americans because, as Saee (2008) notes, American negotiators push for direct answers while Chinese avoid conceding until talks nears their desired culmination point. Additionally, Chinese firm executive team should be aware that American prefers distributive approach to negotiation by pushing their counterparts to accept the deal or settle near the envisioned outcome (Saee, 2008). Unlike the Chinese perspective likening business engagements to war, Americans view it as a game. Such is exemplified by phrases such as “we are still in the game”, or as highlighted in an article by Camp (2013), that engaging a particular strategy is “a losing game” (n.p). The goal in negotiations for Americans is thus to focus on their goals, i.e., “keeping their eyes on the ball”, an approach that may antagonize collectivistic-minded negotiators who focus on maintaining a relationship.

Negotiation Plan for Quasimoto Enterprises

To achieve the best possible deal with Chinese firm, Quasimoto top executive teams must embrace a win-win approach to negotiations. This is because although Chinese people are aggressive negotiators, they equally strive to achieve shared value and create mutual relationship in business negotiations (Lee, 2000). In addition, Quasimoto bargaining team must engage integrative approach because Chinese would consider a deal that will have social benefits as opposed to individualistic value. Further, negotiators should include symmetric relationship and mutual dependency in their strategy to establish trust and thus encourage stable negotiations with Chinese firm (Liu & Sharma, 2011). It will be imperative for Quasimoto negotiators to understand Chinese negotiators respond emotionally and powerfully to non-verbal communications that portray multiple messages. As Saee (2008) proposes, negotiators should be culturally aware and adopt negotiating strategies of the Chinese country if meeting will take place in china. Additionally, negotiation process should be guided by rules that for example restrain an outburst of emotions, always focusing on potential areas of agreement and expanding them as they strive to negotiate as a team. In case of any conflicts during negotiation, Liu & Sharma (2011) proposes relationship oriented negotiation as a channel to resolve conflict or divergence through discourse and dialogue. As Chen and Chen (2002) argue, even in unavoidable situations Chinese would uphold courtesy rather than use force. Essentially, negotiation members must consider the level of desired business alliance outcomes and substantive gain that may fail in case of unresolved conflict.

Negotiation Plan for Chinese firm

Significantly, conceptualization of negotiations across culture will play an integral role in determining success of negotiation process with Quasimoto enterprises particularly because Americans display cooperative-competitive bargaining behavior in negotiations (Ma et al., 2002), Therefore, the Chinese firm negotiators have to present clear and direct response to ensure negotiation process remain objective and engaging as possible. Equally, this approach will engender mutual trust leading to mutual concessionary behavior in both teams. This will ensure teams share accurate information by avoiding deleterious influence tactics that would enrage Quasimoto negotiators. Since face is considered an essential aspect of business negotiations in China, Chinese firm negotiators should discuss with Quasimoto negotiators on the potential for a win-win situation at the initial stages of negotiations. In fact, they must conceive that in a negotiation process each party is expected to achieve something of value (Saee, 2008).

Moreover, Americans are known to exhibit strong will to exchange information and use stringent problem solving approach (Lee, 2000). Therefore, the Chinese firm negotiators must exploit that attribute to establish mutual relationship and mutual dependency to attract and retain confidence of Quasimoto executives in entering a strategic alliance deal. In fact, negotiation is an act of give and take (Liu & Sharma, 2011); as such, the Chinese firm must desist from engaging real or perceived force to coerce Quasimoto team into total compliance. This is because American negotiators tend to focus strictly on agreement around the contractual terms, and may thus leave the negotiations when it becomes apparent that the Chinese are not keen on agreeing on the contractual terms. On the Chinese team, it would be unrealistic not to anticipate conflict during negotiation process. However, in such a situation, Destern (2006) proposes modification of held positions, greater flexibility and enhanced dialogue between the teams. Additionally, since Americans might insist on distributive approach, marked by aspects such as hard bargaining, the Chinese firm must continually highlight to Quasimoto negotiators the substantial benefit that would arise with completion of the negotiation deal, if they adopt an approach for mutual benefit.

Similarities in Bargaining Behaviors

Despite diverse cultures and preferred negotiation approaches, both teams depict bargaining behavior that espouses mutual respect, dependency and expectation to achieve the best possible deal. Both American and Chinese negotiators display cooperative behavior that is operationalized as combination of integrative and assertive behavior inherent in both teams (Ma et al., 2002). Furthermore, the distributive approach preferred by American is humbled by collectivist behavior of Chinese negotiators that seek to enhance interpersonal relationships during and beyond negotiation process, which leads to compromise. Therefore, Americans need to consider adjusting their initial stands to accommodate host country negotiation culture as proposed by Saee (2008) to eliminate conflict. Importantly, as Sheer and Chen (2003) observe, Chinese culture may influence the time for completion of the negotiation process thus necessitating Americans to accommodate their approach to Chinese culture by appreciating the cultural context of the negotiation. In both negotiation teams, a bargaining attitude emerges as a strong determinant of the negotiation intent, although the Chinese team subjective norm is stronger in influencing bargaining intention (Lee, 2000).

Can a Win-Win Deal Arise?

According to Sheer and Chen (2003), national culture exerts significant influence on international business negotiations. In fact, cultural incompatibility contributes immensely on failures of many business negotiations (Ma et al., 2002). However, due to globalization and associated cultural integration, firms such as Quasimoto and the Chinese firm may build their cultural competence of each other’s cultures to avoid cultural undertones that might have negative influence on negotiations process. Essentially, economic globalization has created international business environment where national influences are dwindling. Therefore, based on this precept, Quasimoto and the Chinese firm have a greater chance of arriving at a win-win deal. In addition, mutual respect for individual goal would provide a congruence between integrative approach advanced by Chinese and distributive American approach. Further, this is attributable to Chinese interest in ‘zero-sum game’ (Saee, 2008), where interpersonal relationships are built on mutual respect and dependency.

In addition, the underlying reason for negotiation is to solve a problem and success of this process becomes a fundamental achievement of any organization. Thus, both teams derive motivation from mutual economic benefit of this deal. According to Alserhan (2009), all parties in the negotiation consider the process as a bargain. Therefore, they integrate shared responsibility to ensure agreement and productive exchange during negotiations. The indication of ability to achieve win-win deal is greatly enhanced by the similarities in some of their bargaining behaviors. Ultimately, although Americans view negotiations as competition annexed by their preference to distributive approach, while Chinese view negotiation as relationship building exercise, integrated negotiation rules and universal professional culture can provide a harmonious framework where negotiations can proceed and produce envisioned outcomes.

In conclusion, there are irrefutable indications that negotiations between Quasimoto and Chinese firm would succeed based on the competitive advantage the deal would occasion. Further, similarities in negotiation behaviors may attenuate the differences posed by varying negotiation approaches. This facilitates harmonious negotiations and amicable solutions in case any conflicts arise during negotiation process. In addition, this deal presents both companies with opportunities to achieve global reach in international business thus boosting their competitiveness. Therefore, mutual benefits for both companies exist, which may provide a further incentive for a win-win approach to the negotiations.

References

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