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AARHUS SCHOOL OF BUSINESS AND SOCIAL SCIENCES,
UNIVERSITY OF AARHUS
THE EFFECTS OF CULTURE ON NEGOTIATIONS BETWEEN DANISH AND CHINESE COMPANIES
AUTHOR: VASIL RUSINOV
ID: 403038
CLASS: U35BSC
ADVISOR: PETER KESTING
AARHUS, DENMARK
MAY 1, 2012
AbstractThe purpose of the current thesis is to create a better understanding of the effects culture
has on negotiations between Danish and Chinese companies.
The author uses traditional bi-polar cultural theories to define culture and its effects on
both individual's behaviour and organizational structure. The ten factors developed by
Salacuse (1998), which conceptualize the way culture is manifested in and affects
different aspects of the negotiation process, are then used to develop a suggested
negotiation profiles of Chinese and Danish negotiators. These suggested styles are based
both on the theories discussed above, Chinese cultural specifics and on several sources of
"how to" type of literature on international negotiations.
The second part of the paper is consisted of an empirical research based on three
personal interviews with professionals with relevant experience. A qualitative research
was chosen, due to the exploratory nature of the research question. It is concerned with
how culture affected negotiations in the case of the three interviewees. The goal of the
research is not to develop new factors or to generalize the findings, but to provide a
deeper understanding of the negotiation as a social interaction across cultures. The
research design used Salacuse's framework (1998) as a theoretical foundation and
therefore the differences in culture and respectively in negotiation style are explained
with the ten factors: goal, attitude, personal style, communication, time sensitivity,
emotionalism, agreement form, agreement building, team organization and risk taking.
The results indicate that although some of those factors do not differ due to the increased
interaction between Western and Chinese companies, others represent major challenges
to successfully conducting negotiations with the Chinese.
Key words: negotiation, behaviour, culture, Denmark, China, effects, differences,
similarities;
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Table of contents
1. INTRODUCTION.................................................................................................................................... 7
1.1 PROBLEM STATEMENT..................................................................................................................................8
1.2 STRUCTURE OF THE REPORT...........................................................................................................................8
1.3 DELIMITATIONS...........................................................................................................................................9
2. DEFINING CULTURE AND ITS EFFECTS ON BUSINESS............................................................................10
2.1 GEERT HOFSTEDE’S FRAMEWORK.................................................................................................................11
2.1.1 Power distance (PDI).....................................................................................................................12
2.1.2 Individualism vs. Collectivism (IND)...............................................................................................12
2.1.3 Masculinity vs. Femininity (MAS)...................................................................................................13
2.1.4 Uncertainty avoidance (UAI).........................................................................................................13
2.1.5 Long-term vs. Short-term orientation (LTO)..................................................................................13
2.2 EDWARD T. HALL......................................................................................................................................14
2.2.1 High-context versus Low-context communication.........................................................................14
2.2.2 Temporal orientation....................................................................................................................15
2.3 FONS TROMPENAARS.................................................................................................................................15
2.3.1 Affective vs. Neutral relationships.................................................................................................16
2.3.2 Specific vs. Diffuse relationships....................................................................................................16
2.4 JESWALD SALACUSE'S TEN WAYS THAT CULTURE AFFECTS THE NEGOTIATION STYLE..............................................17
2.4.1 Goal (contract vs. relationship).....................................................................................................18
2.4.2 Attitudes (win/lose or win/wn)......................................................................................................18
2.4.3 Personal styles (formal vs. informal).............................................................................................19
2.4.4 Communication (direct vs. indirect)...............................................................................................19
2.4.5 Time sensitivity (high vs. low)........................................................................................................20
2.4.6 Emotionalism (high vs. low)...........................................................................................................20
2.4.7 Form of agreement (general or specific).......................................................................................20
2.4.8 Agreement building (bottom-up or top-down)..............................................................................21
2.4.9 Team organization (one leader or team consensus)......................................................................21
2.4.10 Risk taking (high or low)..............................................................................................................21
3. DANISH AND CHINESE CULTURES IN BUSINESS CONTEXT.....................................................................23
3.1. CULTURAL DIMENSIONS.............................................................................................................................23
3.2 CHINESE CULTURAL EMICS...........................................................................................................................26
3.2.1 Confucianism.................................................................................................................................26
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3.2.2 Chinese stratagems.......................................................................................................................29
3.2.3 Yin Yang.........................................................................................................................................29
3.2.3 DANISH AND CHINESE NEGOTIATION STYLES DEFINED BY SALACUSE'S TEN FACTORS.............................................30
Goal........................................................................................................................................................30
Attitude..................................................................................................................................................31
Personal styles........................................................................................................................................31
Communication......................................................................................................................................32
Time sensitivity.......................................................................................................................................32
Emotionalism.........................................................................................................................................32
Agreement form.....................................................................................................................................33
Agreement building................................................................................................................................33
Team organization.................................................................................................................................33
Risk taking..............................................................................................................................................34
4. METHODOLOGY.................................................................................................................................. 34
4.1 RESEARCH APPROACH.................................................................................................................................35
4.2 DATA COLLECTION AND STRUCTURE OF THE INTERVIEWS...................................................................................36
The interview guide................................................................................................................................36
4.3 THE INTERVIEWEES....................................................................................................................................42
Thomas Karst.........................................................................................................................................42
Heidi Jørgensen......................................................................................................................................43
Laurence Dawes.....................................................................................................................................43
4.4 DATA ANALYSIS.........................................................................................................................................44
4.5 RELIABILITY AND VALIDITY...........................................................................................................................45
5. RESULTS............................................................................................................................................. 46
5.1 SUMMARY OF THE INTERVIEWS....................................................................................................................46
5.2 DISCUSSION OF THE RESULTS.......................................................................................................................50
Pre-negotiation specifics........................................................................................................................50
5.2.1 Goal (Contract vs. Relationship)....................................................................................................51
5.2.2 Attitude (win-win vs. win-lose)......................................................................................................53
5.2.3 Personal style (formal vs. informal)...............................................................................................55
5.2.4 Communication (direct vs. indirect)...............................................................................................55
5.2.5 Time sensitivity (high vs. low)........................................................................................................56
5.2.6 Emotionalism (high vs. low)...........................................................................................................56
5.2.7 Agreement form (general vs. specific)...........................................................................................57
5.2.8 Agreement building (bottom-up vs. top-down).............................................................................57
5.2.9 Team organization (one leader vs. group consensus)....................................................................58
5.2.10 Risk taking...................................................................................................................................584
6. CONCLUSION...................................................................................................................................... 60
6.1 SUGGESTIONS FOR FURTHER RESEARCH..........................................................................................................61
BIBLIOGRAPHY....................................................................................................................................... 62
APPENDICES........................................................................................................................................... 64
APPENDIX 1 - THE 36 STRATAGEMS (GHAURI, FANG 2001)...................................................................................64
APPENDIX 2 - INTERVIEW GUIDE........................................................................................................................67
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1. IntroductionThe "open door" policy introduced in 1978 in the People's Republic of China (PRC) initiated a
stable growth throughout the 30 years that followed. It elevated the Chinese economy from
28th to 2nd place, smaller only than the United States' economy. (Fang 2006, Ghauri, Fang
2001) The interest Western-based companies show in the country has remained high and
continues to generate billions of dollars in foreign direct investment. China is not only an
attractive outsourcing option, but the size of its population and the growing middle-class has
created great opportunities for products that were considered unfit for the market some
time ago. It seems that the role of PRC plays in the Global marketplace is getting more and
more important and Western businesses will have to accept this fact, adapt to it and
leverage on it in order to stay competitive.
Meanwhile, the rapidly changing environment has affected not only the economy, but also
the Chinese people and their values. (Faure, Fang 2008) This creates the need for constant
update of the academic and empirical literature on the matter as traditional values might be
taken over by Western-influenced consumerism. Doing business with the Chinese turns out
to be challenging just as much as attractive. As a result, one can find numerous papers and
books on negotiations with the Chinese, some taking a more "how to" approach, based on
managerial experience, others taking a more traditional approach, based on conceptualizing
culture as a bi-polar.
As a result of the ever increasing interaction, the Western World and the Chinese seem to
get better and better in conducting business. There are many success stories of outsourcing
of production that created competitive advantage. However, there are also plenty examples
of failed negotiations, which prove to be costly for the companies trying to seize the Chinese
opportunities. Denmark, a country with traditions in innovations and export, is increasingly
working with Chinese manufacturers. Danish companies look at outsourcing to China as a
strategic option for improving their market performance. However, very often this move
turns out to be more complex and challenging than expected. (Andersen, Christensen &
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Damgaard 2009) This is the reason why the author has chosen to focus on the Sino-Danish
negotiations.
1.1 Problem Statement
There are many environmental and contextual factors that affect the international
negotiation. However, culture seems to be one that has the greatest impact on the overall
process. Not only does it affect the negotiators' behavior, but it also shapes both the way the
business interaction is perceived and the institutional setting it takes place in. Therefore, the
purpose of the current thesis is to answer the following question:
How does culture affect the negotiations between Danish and Chinese companies?
In order to achieve that, a framework that conceptualizes culture and its effects on specific
aspects of the negotiations had to be introduced. It was the author's decision to use the ten
factors developed by Jeswald Salacuse (1998) to define possible cultural differences with
respect to negotiation.
1.2 Structure of the report
The notion of culture does not have a universal definition and thus, the first chapter of the
report is devoted to defining culture in the business context. This is done through a
theoretical discussion including some of the bi-polar frameworks. Due to their etic approach,
which allows them to be used for simplified comparison of cultures, they have become very
popular The author uses the research by Hofstede (2001), Hall (1989) and Trompenaars
(1996) to explain culture's effects on business behavior and organizational construct. In the
last subsection, the effects of these cultural dimensions on negotiations are explained
through the ten factors formulated by Salacuse (1998). The second chapter is devoted to
comparing the Danish and Chinese culture with regard to the presented theory and
developing a negotiator's profile based on the countries' respective scores. In the
formulation of the negotiation style, the available "how to" literature that serve as a
practical guide to cross-border negotiations will also be used. The last two chapters discuss
the methodology and the findings of a qualitative research carried out by the author with
the purpose of introducing real-life insights on Danish-Chinese negotiation practices and
analyzing the way culture manifest itself in them. The conclusion summarizes the empirical
results and after putting them into perspective, provides an answer to the research question. 7
1.3 Delimitations
As already stated, international negotiations are affected by different factors on many levels,
however, the current thesis is focused solely on the effects of culture. Political, legal and
economic factors will not be part of the analysis. Moreover, when the author refers to
culture throughout the paper, he refers to national culture. As the research question strictly
specifies Danish and Chinese companies as the objects of the research, sub-cultures are only
briefly mentioned. The paper will not study the success and failure of the negotiations in
terms of quantitative and financial criteria, however, problems and opportunities will be
discussed. It is not the intention of this paper to develop new factors that represent cultural
effects on negotiation , but already existing frameworks will be used instead. Moreover, due
to the limits of the thesis, the goal of the research is not to generalize the findings, but to
provide a deeper understanding of the aspects of cross-cultural negotiations, with a focus on
Danish-Chinese national culture
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2. Defining culture and its effects on businessThere are various definitions of cultures. Due to its complexity and ambiguity, it is
hard to define it in a comprehensive way. (Varner, Beamer 2008) However, several studies of
the aspects of culture have managed to create a somewhat universally accepted formulation
of the phenomena. One of these cornerstone studies is the one carried out by Geert
Hofstede based on data from more than 70 countries. He describes culture as the software
of the mind, as group-specific and not innate, but learnt. It consists of systems of values that
affect all aspects of human behavior. (Mead, Andrews 2009) Around the same time Hofstede
was collecting his data, Edward T. Hall defined culture himself. According to him:
Culture [is] those deep, common, unstated experiences which members of a given
culture share, which they communicate without knowing, and which form the backdrop
against which all other events are judged. (Hall (1969))
It can be implied from this definition
that culture is something that might be
difficult to explain even to a member of the
group. Although it is very often a non-
cognitive part of our lives, it does affect our
values, which in turn affect our perception of
good and bad, right and wrong, normal and
abnormal.(Ghauri, Usunier 2003, p.138)
Figure 1 shows the interrelation between
culture and behavior. The values, regarding
the surrounding world, held by the group
members affect their attitudes towards what is considered accepted or unaccepted conduct.
(Adler 2007, p.19) Thus, understanding these values can facilitate interacting with people
with different cultural heritage than one’s own by providing logic and explanation to
observed behavior.
Negotiation, as a form of social interaction, is directly affected by culture. (Smith,
Peterson & Thomas 2008) The way negotiators think, act and perceive the situation is 9
Figure 1, (Adler 2007, p.19)
influenced by their cultural background. (Tan, Kiing 2004) Being aware of the “cultural
baggage” (Kent Glenzer 1997) one brings to the table and that of one’s counterpart is crucial
for the success of any cross-cultural negotiation. Such awareness helps the negotiator to
understand the meaning of the other side’s complex verbal and non-verbal message, as well
as to adjust her behavior to the situation. (Varner, Beamer 2008, p.8)
People belong to more than one cultural group and subgroup. The negotiators’
background is not only consisted of their national culture, but it also includes professional
and organizational culture. (Ghauri, Usunier 2003, p.138) According to Hofstede and
Usunier, “Negotiations are easier with people from other countries sharing the same
professional culture than with those who do not”. (Ghauri, Usunier 2003, p.138) They
continue their discussion with acknowledging that the last two sub-cultures mentioned
above are rather superficial and the associated conduct is therefore somewhat easier to
adopt. Due to the purpose of the current paper, national culture will be discussed almost
exclsively in the following chapters.
2.1 Geert Hofstede’s framework
Hofstede’s contribution to the study of culture is tremendous. He created a
“paradigm” that transforms the complex notion of culture into a more comprehensible
framework(Fang 2010, p.157). His research, conducted in the 1970s, studied a 116 000 IBM
employees representing 53 different cultures and is considered one of the most
comprehensive in attempting to describe the differences between cultures. (Ghauri, Usunier
2003, p.139, Lewicki, Saunders & Barry 2011, p.237) The initial analysis of the data revealed
four universal dimensions on which culture can be compared: Power distance,
Individualism/collectivism, Masculinity/Femininity and Uncertainty avoidance. The first three
represent expected social behavior and the values that correspond to these dimensions are
bred in the family. The fourth dimension, Uncertainty avoidance reflects the degree to which
new ideas or unstructured situations cause discomfort in the group. It represents "man’s
search for truth”.(Ghauri, Usunier 2003, p.141) A research, carried in 1991 by Michael Bond
of the Chinese University of Hong-Kong, added a fifth dimension to Hofstede’s bi-polar
framework. It reflects certain values that are already apparent in the teaching of Confucius
and was called Confucian Dynamism (also known as Long-term vs. Short-term orientation).
10
Although there is a lot of criticism of Hofstede’s research, his framework is one of the most
widely used for conceptualizing culture. (Fang 2010)It offers a practical tool to compare
countries by assigning scores to the different dimensions. Each of these dimensions are
explained in the sections that follow.
2.1.1 Power distance (PDI)
Power distance is related to “the different solutions to the basic problem of human
inequality”. (Hofstede 2001, p29) In organizational settings, it measures the emotional
distance between subordinates and their superiors. In countries that score high on power
distance a more hierarchical system is observed in organizations and institutions compared
to countries that score low. Members accept the unequal distribution of power and respect
ranks and social status. This dimension is similar to the egalitarianism versus hierarchy
proposed by Schwartz. (Tan, Kiing 2004, p11) Brett (2000) discusses this concept of social
superiority, where inferiors have to comply with the decisions made by the higher authority.
(Brett 2000, p100) However, the superiors also have to look after and give directions to their
subordinates. In such cultures, conflicts do not occur often due to the dependence of its
members on the social structure. Meanwhile, nationals of countries that score low on power
distance will depend less on their superior and may take active part in the decision process.
(Tan, Kiing 2004, p12)
2.1.2 Individualism vs. Collectivism (IND)
This dimension refers to the degree to which the individual is integrated into the collective.
(Hofstede 2001, p.29) It represents the attitude towards personal achievement and success
versus as opposed to efforts towards group prosperity. In collectivist cultures, individuals are
raised to have a strong connection and loyalty to the group they belong to, status is based
on contribution to society. On the other hand, individualistic societies cherish autonomy and
personal achievements. (Lewicki, Saunders & Barry 2011, p.237) Brett (2000) explains that in
collectivist countries, in-group membership directly affects self-construal, whereas in
individualistic cultures, people identify themselves with diverse attributes that are
independent to the groups they belong to. Due to this in-group interrelation and the ease
with which members of collectivists societies work with each other, the in-group out-group
distinction is far more obvious than in individualistic cultures. (Brett 2000, p.99)
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2.1.3 Masculinity vs. Femininity (MAS)
This dimension represents the “division of emotional roles between men and women”.
(Hofstede 2001, p.29) Hofstede’s research found out that female values were rather
homogenous across cultures. Male values, on the other hand, differed significantly. (Ghauri,
Usunier 2003, p.140)That is why the dimension is based on the learnt attitude of male
members of the culture towards career success and quality of life. That is, the end of the
scale called masculine is associated with competitiveness and assertiveness, while the one
called feminine - with modesty and care. This dimension can also be described as the level to
which men share the same roles and values as women.
2.1.4 Uncertainty avoidance (UAI)
Uncertainty avoidance indicates the tolerance towards unstructured situations. It represents
the level of stress members of the culture experience when facing rapidly changing and new
situations. (Lewicki, Saunders & Barry 2011, p.239, Hofstede 2001, p.29) Uncertainty
avoiding cultures manage the risk of uncomfortable situations by removing any ambiguity
from their social and organizational structures. This is accomplished by strict rules and
protocols that increase predictability and as a result reduce work-related stress. Moreover,
members of uncertainty avoiding cultures show a lot more emotions than cultures on the
other end of the scale. What differentiates the two poles even more is the way they seek the
truth. (Ghauri, Usunier 2003, p.141, Tan, Kiing 2004, p.13) Countries that score low on
uncertainty avoidance question the current knowledge and search for new ways, that is, the
truth is somewhere out there and is open for discussion. On the other hand, high uncertainty
avoidance implies a fear of the unknown. The authority, guided by rules, always has the right
answer which is in harmony with the status quo.
2.1.5 Long-term vs. Short-term orientation (LTO)
Long-term versus Short-term orientation (Confucian dynamism) refers to “the choice of
focus of people’s efforts: the future or the present”. (Hofstede 2001, p.29) This dimension
divides certain values, which are also found in the Confucius teaching, into two groups,
depending on whether they are oriented towards the future or the past/present. Different
countries find some of these values more important than others, which results in an overall
distinction between “static” and “dynamic” cultures with respect to Confucian Dynamism.
(Ghauri, Usunier 2003, p.145, Tan, Kiing 2004, p.16) Persistence, perseverance, thrift and
12
concern for other-“face” affect positively the LTO score (dynamic). Meanwhile, concern of
self-“face”, little savings and investments, in combination with high spending in search of
quick results, represent Short-term orientation (static).
2.2 Edward T. Hall
Edward T. Hall (1990) introduced the idea of looking at cultures as universes on their own,
possessing unique characteristics. (Hall, Hall 1990, p.3) He calls these characteristics “the
silent language”, consisted of non-cognitive factors that are formed through collective
experience. Even the perception of time and space can differ across groups, affecting the
way members communicate. He describes several ways that culture manifests itself in
communication. The author of the current paper has found two of them to be very relevant
to the study of cross-cultural negotiations: context and temporal orientation.
2.2.1 High-context versus Low-context communication
Context is the information that shapes the meaning of the message. It is imbedded in both
the coding, that is the words and the verbal language, and in the psychological and physical
surroundings. (Tan, Kiing 2004, p.16, Hall, Hall 1990, p.6) Cultures differ in the amount of
information they use when they communicate. Some use explicit and direct exchange of
information with a focus on the details, others prefer more indirect approach by implying
most of the meaning into the context of the verbal conversation. Hall (1989) classifies them
on a scale from “low-context” to “high-context” depending on how much of the information
is already in the person it is transmitted to. (Hall 1989) The difference in communication
styles is not only due to different customs in verbal and non-verbal language, but is also a
result of different types of relationships between the members of the culture. High-context
societies, for example, do not need a lot of background information on a regular basis to be
able to send messages across, because members keep themselves informed about each
other. They have developed shared meanings and understandings that are absent in low-
context cultures. (Tan, Kiing 2004, Hall 1989, Rody 2002) Hall (1990) elaborates that the level
of context in communication differs across situations within the same culture. It can serve as
a tool to indicate warming (up the scale) or cooling (down the scale) of the relationship.
Nevertheless, one should always be aware of the general differences between one’s own
and one’s counterpart’s expectations about how much information is to be used at the
current and future interactions. (Hall, Hall 1990, p.7)13
2.2.2 Temporal orientation
Of the many different types of time that are defined in the academia, Edward T. Hall (1990)
found Monochromic and Polychromic to be the most important when conceptualizing
culture in a business setting. The main difference between the two is the way group
members perceive and organize time, in terms of scheduling and planning. (Tan, Kiing 2004,
Hall, Hall 1990, p.13)
According to Hall (1990), monochromic cultures use time cautiously, like to schedule and
concentrate on one thing at a time. Being developed during the industrial revolution in
England, monochromic time now feels natural to most Western cultures.
Monochromic time is perceived as being almost tangible: people talk about it as though it
was money, as something that can be “spent”, “saved”, “wasted” and “lost”. (Hall, Hall 1990,
p.13)
On the other hand, polychromic cultures are more concerned with the people involved in the
task and its completion, than with the pre-set agenda. (Tan, Kiing 2004, p.17) They value the
human interaction associated with the business transaction more than the time itself, and
therefore will work towards the completion of the task without consideration of the time
constraint. Hall (1990) gives an example:
Two polychromic Latins conversing on a street corner would likely opt to be late for their next
appointment rather than abruptly terminate the conversation before its natural conclusion.
(Hall, Hall 1990, p.14)
2.3 Fons Trompenaars
Fons Trompenaars (1996) also acknowledges that, although the way individuals interact with
each other and the environment differs across cultures, the fundamental dilemmas they face
are more or less universal.(Trompenaars 1996, p.52) According to him, understanding the
differences in the way people from different countries or organizations perceive and respond
to relationships with people, relationship to time and relation to the environment is crucial
for the success of any type of business interaction. Based on those three main cultural
factors, he developed seven dimensions: Universalism vs. Particularism, Collectivism vs.
Individualism, Affective vs. Neutral relationships, Specific vs. Diffuse relationships,
14
Achievement vs. Ascription, Orientation towards Time, Internal vs. External control. Similar
to some of these have already been discussed in the previous sections. For the purpose of
the current research, the author has found the dimensions Affective vs. Neutral and Specific
vs. Diffuse relationships to be relevant to the development of theoretical background of
Danish and Chinese negotiation styles.
2.3.1 Affective vs. Neutral relationships
This dimensions describes the level to which individuals show emotions. This aspect of non-
verbal communication is indeed different across cultures and even industries. This may lead
to serious misunderstandings and accusations of being "ice-cold" or "insincere", if not
showing enough emotions, or "out of control", if having an emotional response to a
situation. (Trompenaars 1996, p.58) Fons Trompenaars (1996) suggests that the source of
this miscommunication can be explained by the difference between affective (high
emotionalism) and neutral (low emotionalism) approach to relationship across cultures.
According to him, when an individual uses emotions or the lack thereof to communicate, he
seeks a reciprocal response in an attempt to find conformation of his feelings and thoughts
in the response of his counterpart.
2.3.2 Specific vs. Diffuse relationships
Trompenaars (1996) explains this concept as "the degree to which we engage others in
specific areas of life and single levels of personality, or diffusely in multiple areas of our lives
and at several levels of personality at the same time". (Trompenaars 1996, p.58) He uses the
relationships between employees as an example. Some cultures (specific) do not mix
professional life with personal life, that is, a manager interacting with a subordinate would
be strictly concerned with the work-related tasks at hand and would be unlikely to involve a
personal matter. On the other hand, diffuse cultures approach relationships in a more
holistic way. The organization is seen as part of the environment and establishing long-term
relationship with stakeholders, such as shareholders, suppliers and customers is of a great
importance. In business transactions, wining and dining is a frequent phenomenon
regardless of the nationality, however, whether the discussion circles around work or private
life can depend on culture. Thus, understanding those differences is crucial for better
conducting business by avoiding misunderstandings in the international environment.
15
2.4 Jeswald Salacuse's Ten Ways That Culture Affects the Negotiation Style
All the aspects of culture discussed above affect the negotiation style. There are many
articles that suggest factors which can be used to describe cross-cultural negotiations. They
vary significantly in the number of issues analyzed, some being thorough and specifically
touching on certain aspects, others taking a more general approach. Still, there is a
considerable overlap and it is up to the researchers to choose the most relevant and useful
framework for their specific topic. The author of the current paper has found the work of
Salacuse (1998) to be very well balanced between general differences across cultures and
negotiations specifics. Moreover, unlike many other research papers on the matter, the
framework is empirically tested with a survey carried with 310 respondents from 12
countries.(Salacuse 1998) Another strength of Salacuse's 10 factors is the fact that they
study not only the national, but the professional culture as well, which, as mentioned earlier
when culture was defined, also has an effect on negotiations.
Based on previous theory and empirical research, Salacuse (1998) defined 10 factors that
affect cross-cultural negotiations, which are described by bi-polar extremes (Figure 3).
Figure 2, (Salacuse 1998, p.223)
Salacuse's research, as he acknowledges, has three major setbacks: the answers of the
respondents are based on their own perception and might have been biased by their
aspirations; the style of any negotiation is influenced by other factors as well: occupation
and gender; the surveys were completed in English by people with international experience
and education and therefore might not have been a viable representation group of the
national culture. (Salacuse 1998) Therefore, any results must be interpreted with caution.
16
Despite all that, these ten factors can serve as a good basis for research in the field of
International Negotiations.
2.4.1 Goal (contract vs. relationship).
Members of different cultures approach negotiations with different expectations about the
outcome. Salacuse (1998) found that the way the negotiation is defined varies across
respondents with different cultural background. (Salacuse 1998) Varner and Iris (2008) also
recognize this phenomenon. For example, high-context cultures would need to get to know
their counterparts in order to have a sense of the people they are dealing with. They would
be concerned with establishing a relationship, which can serve as the basis for further
transactions and information exchange .{{9 Varner,Iris 2008/f, p.343;}} On the other hand,
low-context cultures would be more interested in reaching a signed agreement, that sets the
rules of the interaction between the two parties. (Salacuse 1998) The level of collectivism
also might have an effect on this factor due to its positive correlation to the focus on the
relationships between individuals. (Varner, Beamer 2008, p.344) Moreover, as already
explained, diffuse cultures respect long-term relationships, which might affect both their
negotiation goal and attitude.
2.4.2 Attitudes (win/lose or win/wn).
Culture affects the type of negotiation itself. In distributive (win/lose) bargaining individuals
see the negotiation as a zero-sum game, in which every compromise means a lost peace of
the pie. On the other hand when seeking an integrative solutions (win/win) both parties
gain. (Salacuse 1998, p. 227) Some researchers argue that there is a certain correlation
between the level of collectivism and seeking win/win outcomes, based on the assumption
that such cultures put an emphasis on relationships. (Varner, Beamer 2008, p.344).
Salacuse's findings, however, do not support this theory. His results indeed show that 100%
of the collectivist Japanese see negotiations as a win/win process. However, a bigger
percentage of the highly individualistic USA and UK favor the integrative style than other
collectivist countries like Brazil and Mexico. On the other hand, this phenomenon might be
explained by the variations observed across industries as well. Salacuse's research proves
that this factor is more complex than previous research might have assumed.
17
The author of the current paper recognizes that there are still considerable variations across
cultures and thus is worth investigating. James Sebenius (2002) stresses the importance of
being aware of the counterpart's motivation, "Making assumptions about which view the
other side will take can be misleading and even dangerous." (Sebenius 2002, p.84)
2.4.3 Personal styles (formal vs. informal)
Difference in the level of formality across cultures can be observed as well. Salacuse
(1998) describes formality as the use of titles and last names when interacting with others.
(Salacuse 1998) Societies that score high on power distance and hierarchy seem to also be
inclined to communicate in a formal way as ranks symbolize status and superiority. Not only
do cultures differ in this aspect, but there are also culturally specific formalities that one
must follow. Those culturally specific customs are very important and explicit in high-context
cultures.(Varner, Beamer 2008, p.354) That is why, when interpreting Salacuse's results, one
must take into consideration the fact that different respondents might not have interpreted
the word "formality" in a consistent way. Moreover, according to them, occupation seems to
have a great effect on the way individuals communicate, which might have affected the
numbers even more.
2.4.4 Communication (direct vs. indirect)
Wording can be a source of serious misunderstandings. (Varner, Beamer 2008, p.354) The
communication styles in terms of directness and explicitness indeed vary across nations. The
way Salacuse (1998) describes the notion of direct vs. indirect communication somewhat
overlaps with the high-context and low-context division made by Hall (1990). It is based on
the extent to which individuals assume that their counterparts possess contextual
understanding. It affects the directness and the level to which details are explicitly stated.
(Hall, Hall 1990, Salacuse 1998) Since high-context communication is usually associated with
close relationships, collectivist societies are more inclined to use indirect communication.
Here again, Salacuse (1998) acknowledges the issues with generalizing the results due to the
effect of the respondent's international experience and the organizational culture they come
from.
18
2.4.5 Time sensitivity (high vs. low)
The way Hall (1990) and Salacuse (1998) describe the differences in punctuality and use of
time across cultures is very similar. In a previous chapter, Polychromic and Monochronic
times where thoroughly explained. One can relate to them respectively as low and high time
sensitivity. However, Salacuse (1998) acknowledges that the way cultures perceive and
utilize time is not strictly divided between the two poles, that is sometimes a mixed time
sensitivity can occur. According to him, Germans are known to exhibit both high and low
sensitivity of time as they are "punctual, but slow to negotiate and make decisions."
(Salacuse 1998, p.231)
2.4.6 Emotionalism (high vs. low)
Although emotionalism depends on personality, there are differences across cultures
recognized by Salacuse's research (1998). (Salacuse 2005)Members of different cultures use
emotions differently and when two such groups meet, misunderstandings can easily occur.
Not showing emotions can be accepted as normal in some high-context cultures and as
insincere in other low-context. (Varner, Beamer 2008, p.355) The level of emotions
expressed is also correlated to the level of uncertainty avoidance associated with the
culture. Societies that are intolerant to uncertainty are more likely to show emotions as
opposed to those with low-uncertainty avoidance.(Tan, Kiing 2004, p.14)
2.4.7 Form of agreement (general or specific)
The difference in expectations for the negotiation itself, described earlier in this chapter,
also has an effect on the level of details spelled down in the contractual agreement. Cultures
that prefer more general form of agreement would rely on the developed relationship
between the parties to resolve a conflict, whereas, others would go back to the specifics of
the written contract. (Salacuse 1998) Since those specifics reduce the ambiguity and the risk
in case of a dispute, societies that score high on Uncertainty avoidance might prefer specific
agreements. On the other hand, uncertainty accepting cultures would not be afraid to take
the risk. Low-context cultures are also likely to take a more specific approach when drafting
contracts as they stress the need for details. This, may be found offending by some high-
context cultures and be interpreted as a lack of trust. According to Salacuse's findings
(1998), however, this factor is more influenced by professional culture than national culture
and therefore when generalizing the results, one must take this into consideration.
19
2.4.8 Agreement building (bottom-up or top-down)
Negotiating parties can try to agree on specifics first and then move to the general
principles or the other way around. The approach they choose, inductive (bottom-up) or
deductive (top-down), is directly related the form of the agreement itself. (Salacuse 1998,
p.233) If the role of the contract is to serve simply as a formality of the relationship, then the
latter must first be established. Thus the general rules may first be laid down and from then
on, details can be discussed. On the other hand, when contracts are a written guidelines on
how the transaction is to unfold, the final agreement cannot be developed without first
discussing the details. Meanwhile, although perhaps not directly influencing the agreement
building in terms of bottom-up or top-down approach, time orientation affects the way the
key issues are discussed. Since monochromic time is sequential and compartmentalized,
details are discussed one at a time, whereas negotiators from polychromic cultures may take
a more holistic approach and jump from one thing to another. Salacuse's supports the
theory that while some cultures like both styles, other cultures prefer one way more than
the other.
2.4.9 Team organization (one leader or team consensus)
The power distance along with the extent to which society emphasizes success of the
individual, as opposed to success of the collective, affects almost every aspect of the
interaction between individuals. Negotiation is not an exception and not recognizing the
specifics of the counterpart's team and organizational structure might lead to confusion and
even failure to reach an agreement. Sometimes cultural predispositions can make it difficult
to understand each person's role and who actually has the final say. (Sebenius 2002, p.79)
Salacuse (1998) did find a difference in the way negotiating teams make decisions across
cultures and occupations as well.(Salacuse 1998, p.235)
2.4.10 Risk taking (high or low)
This factor seems to be somewhat connected to Hofstede's Uncertainty avoidance Index.
Information sharing and willingness to try new approaches are all affected by the risk
tolerance of the culture. (Salacuse 1998) Moreover, as explained in chapter 2.1.4, societies
that score high on UAI also tend to be very bureaucratic, and thus need a lot of information
before making a decision. On the other hand, more risk-taking countries are more willing to
close the deal early and take a chance. (Lewicki, Saunders & Barry 2011, p.243)
20
21
3. Danish and Chinese cultures in business context
3.1. Cultural dimensions
PDI
Figure 3 shows the big gap that exists
between Denmark and China on the Power
distance scale. Denmark scores only 18,
which is low, compared to other countries.
This implies rather flat organizations where
decentralization is common. Bosses are
democratic and often consult with their
employees.(Tan, Kiing 2004, p12) Danes do not fear to speak freely and to question
authority.(Rody 2002, p.82) Disputes between peers are resolved through face-to-face
negotiations and objective reasoning has more power than status.(Brett 2000,p.100)
On the other hand, hierarchy plays a big role in Chinese organizations. With a score of 80 on
the Power distance index, status symbols and the prerogatives associated with them are
welcome in the country. Moreover, subordinates expect an autocratic management style
form their managers. (Tan, Kiing 2004, p.11.12) Due to the emphasis the Chinese put on
social structure, conflicts between members of the same hierarchical level are settled by a
third party that has more social power. (Smith, Peterson & Thomas 2008, p.280) Meanwhile,
as “might makes right” (Tan, Kiing 2004, p12), disputes across social levels are very unlikely.
IND
Denmark ranks in top 10 of the most individualistic countries. (Tan, Kiing 2004, p.10) As such,
conflict in search of the truth is accepted. Honest and direct feedback is imbedded in the
low-context communication style. Organizations support equality, Individual freedom and
achievement. Skills take superiority to family and personal relationships.
Compared to Denmark, China scores very low on this index. Government has considerably
more control on every aspect of life, including business and economic planning. (Ghauri,
Fang 2001, p. 308) Group membership predetermines opinions and affects business
22
Figure 3, {{20 Hofstede,Geert,1928 2001}}
relationships. Hiring people that you can trust, such as members of the family or the
extended family reduces the business risk. (Tan, Kiing 2004, p.11)
MAS
Denmark is one of the most feminine cultures in the world. (Tan, Kiing 2004, p.15) As such, a
lot of the characteristics implied in the low score on the masculinity index apply for the
Danes. Disparities between genders in income are abolished. Modesty, imbedded in the
“Law of Jante”, that is “no one is better than anyone else”, is expected from everyone.
Conflicts are resolved through reason and managers strive for consensus. (Rody 2002, p.82)
China does not score very high on Masculinity.(Figure 2) Compared to Denmark, however, it
is more career and success-driven society, where leisure time is of second priority.
Nowadays economic power translates into a higher position in the social hierarchy,
especially in Hong Kong.(Rody 2002, p.61)
UAI
Both China and Denmark score low on Uncertainty avoidance. As a member of the bottom
top 10 cultures raking on this index, Danes are very open to innovation and learning.
Meanwhile, ambiguity is imbedded in the Chinese culture through the Yin and Yang, which is
discussed later in this chapter.
LTO
Long-term orientation is a significant part of the Chinese national identity as the index itself
was based on the Confucianism, which is strongly integrated in the Chinese values.
Meanwhile Danes score close to the middle and exhibits traits of both Long-term
orientation as they are known to be concerned with the environment for example, and
Short-term orientation as their negotiation style is sometimes aggressive, without
consideration of other-"face". (Rody 2002, p.82-85)
High and Low-context
Denmark is characterized with rather lower context communication. Danes are direct in
terms of what they say and what they mean. They are often described as individualistic and
more deal focused. (Brett 2000, Rody 2002, Gesteland 2005)
23
On the other hand, the Chinese employ a lot more High-context style of communication.
According to Gesteland (2005), they are very concerned with keeping the good shape of the
relationship through preserving other-"face". That is why they often use indirect language.
He explains this statement with an example:
Your Chinese counterparts may think it offensive to reply to a request with a blunt "no". They
may offer a polite evasion such as, "That will require further study" or "That will be difficult".
(Gesteland 2005, p.181)
Time Orientation
Denmark is a monochronic culture and as such punctuality and scheduling is important. If
Danes are kept waiting or meetings are frequently interrupted, they get offended as such
behavior is interpreted as not valuing their time. The task at hand is what is important and
they can easily get intimidated if things are going slow. (Rody 2002, Gesteland 2005)
Danes want to get to the bottom of the line as quickly as possible. (Rody 2002, p.85)
On the other hand, the Chinese business culture is multi-focused and polychromic. (Rody
2002, p.62) However, gaining more and more experience with international trade,
nowadays, punctuality and adherence to schedules are rather the standard than the
exception in China.(Gesteland 2005, p.181) Still, a considerable amount of time is spent on
building a relationship with the potential partners, without which, a business transaction is
more or less impossible.
Diffuse vs. Specific Relationships
Trompenaars (1996) measured this dimension by asking the respondents about their
willingness to paint their boss's house. According to his findings, Denmark is one of the
countries that score highest (89%) on specific attitude towards relationships. On the other
side of the scale is China (31%) and thus is characterized with a lot more diffuse
relationships. (Trompenaars 1996, p.60 fig. 8) According to Rody (2002), banquets are a big
and important part of the Chinese culture. They are an old tradition that nowadays serves as
a tool to close the gap between business partners and "soften them up for the negotiations".
(Rody 2002) Meanwhile, Danish business lunches are reserved strictly for discussing work-
24
related matters and, although dinners might be a more relaxed event, personal matters
should stay off the topic.
Affective vs. Neutral
Both Chinese and Danes are rather reserved in terms of expressing their emotions. (Rody
2002, Trompenaars 1996, Gesteland 2005) However, the literature available stresses the
importance of keeping one's cool in front of the Chinese as any outburst or overtly shown
emotional reaction is considered rude and inappropriate. Moreover, Rody (2002) suggest
that as any nonverbal communication is strategically interpreted when negotiating in China,
visitors should try to maintain a "Poker face" during the meetings. (Rody 2002, p.65)
3.2 Chinese cultural emics
Chinese negotiation style is affected by culture on many levels. The cultural theories
developed in the Western World do not necessary reflect and explain the cultural emics in
China. Therefore, in this section, some of the most important and influential aspects of
Chinese values and philosophical ideas are discussed and their role in forming the
negotiation style is explained. The author has found the following three elements as most
relevant: Yin Yang, Confucianism and the Chinese stratagems.
3.2.1 Confucianism
The Confucian teaching is central to Chinese culture. It affects the way people in China and
East Asia think and behave in all life situations, including doing business. It is more of a
philosophy than religion and serves as a pragmatic guide to relationships and social
organization. (Ghauri, Fang 2001, Tan, Kiing 2004) Ghauri and Fang (2001) describe the six
basic values of Confucianism.
1. Moral Cultivation - life-long self-development and improvement through learning. Trust
and honesty are of biggest importance to humans.
2. Importance of interpersonal relationships - society is based on the power relationships
between individuals (wulun - the Five Cardinal Relationships): ruler and subject, father and
son, older and younger brother, spouse and spouse, senior and junior friends.
3. Family and group orientation - the family is the smallest unit of the social organization.
Filial piety, that is respect to the elderly, is crucial for the functioning of the society. On the
25
other hand, the parents need to take care of their children, providing home, food and
guidance.
4. Respect for age and hierarchy - in China, age is respected as it also stands for wisdom.
Every person has a duty to contribute to the collective well being and harmony.
5. Avoidance of conflict and need for harmony - social harmony is achieved through moral
conduct. When a gentleman is forced to compete, he will compete like a gentleman . (Ghauri,
Fang 2001, p.309)
6. The concept of Chinese face ( mian zi, lian) - most cultures have a concept of face. (In some
Western countries it is simply defined as respect). It is a self-regulating moral mechanism
that governs people through the Confucianism sense of shame.
In order to further develop the Chinese approach to relationships that might affect the
negotiation style, four implications of these values will be discussed in details.
Trust/Distrust
Gesteland (2005) describes the Chinese as generally uncomfortable with doing business with
strangers. (Gesteland 2005) Potential business partners are viewed with suspicion and
approached with a high level of distrust. As a result, the literature is full of examples showing
how important it is for any foreigner to establish a close relationship with his Chinese
business partners. (Tan, Kiing 2004, Rody 2002, Sebenius 2002, Gesteland 2005) Tan Joo-
Seng (2004) discusses the obsession of the Chinese with trust. In general, honesty and
information sharing suffers when the parties do not trust each other. According to him the
best insurance for businesses in China against opportunistic behavior or collapse in a
stressful environment is the development of relationships.
Indeed, in common daily business transactions, partial truths or substandard goods are not
uncommon in China, whereby, for example, corners are cut and weights of goods are
tinkered for the purpose of cheating on prices. (Tan, Kiing 2004, p.25)
This feature of the Chinese business culture makes the necessity for developing guanxi
between foreigners and their Chinese counterparts a necessity for successful business
interactions. Guanxi is the special and unique foundation of all relationships. (Tan, Kiing
26
2004, p.25) Once established, the trust that comes with it can be the basis for forming a
network of businesses - guanxiwang - that goes beyond the dishonesty and opportunistic
behavior.
Face, Hierarchy and Power distance
The Chinese concept of Face can be divided into two types.
Lian stands for one's reputation in terms of moral and ethical conduct. If one loses lian as a
result of opportunistic behavior or failure to keep a promise within the guanxiwang, one will
eventually be detested by the group and will have to leave it.(Tan, Kiing 2004, p.26) The fear
of losing face serves as an incentive for keeping good business relationships within the
guanxiwang, therefore foreign companies can take the most out of doing business in China
by being aware of the importance of lian.
Mian zi represents the accumulated prestige through life-long achievements. As age and
hierarchy are positive characteristics according to Confucius, they are a source of mian zi.
Thus, an elderly high-ranked individual would be very respected by other members in the
guanxiwang and would be privileged to a certain degree. (Tan, Kiing 2004)
Long-term orientation
Establishing guanxi is a lengthy and hard process, thus once in place, the Chinese people
behave towards preserving the relationship. The aggressive negotiation style would be
inappropriate in China as it would disrupt the harmony and threaten the counterpart's face.
Direct conflicts are mainly avoided and, as already mentioned in a previous section, if they
do occur are resolved through a person standing higher in the hierarchy. (Tan, Kiing 2004)
Harmony
Interpersonal harmony is in the heart of the Confucian teaching. Maintaining it is the only
way relationships and guanxiwang can survive. (Tan, Kiing 2004)
3.2.2 Chinese stratagems
Human intelligance is superior to physical power
in the strategic mindset of the Chinese. The
Thirty-six Stratagems, or the 36 Ji, form a
practical guide for dealing with the enemy based
27Table 1, Grouping of the 36 stratagems
Situation StratagemBeing superior 1-6Confrontation 7-12Attack 13-18Confused situations 19-24Gaining ground 25-30Being put in an inferior situation 31-36
on a two-thousand-year old knowledge. (For a full list of the stratagems and their meaning
see Apendix 1.) Nowadays the Chinese negotiators do tend to follow these strategic advices,
current literature shows.(Ghauri, Fang 2001) In fact, they are integrated in the Chinese
society so well, that negotiators use them unintentionally just as much as intentionally. The
compendium is divided into six parts, grouping the strategies depending on the situation one
is found in. (See table 1.)
3.2.3 Yin Yang
The bi-polar cultural theories, that describe cultures by allocating them on dimensional
continuums and dividing them along two extremes, does not take into account the
ambiguity and the paradoxes found in the Chinese
culture. This is a result of the difference in the
fundamental way Westerners think compared to
Chinese. Faure and Fang (2008) explains this difference.
There is no doubt that Chinese people see the world
differently from Westerners for two obvious reasons:
the radically different nature of the Chinese script, and
the isolation in which Chinese civilization developed.
(Faure, Fang 2008, quoting Chen p.195)
According to them, in order to understand the way Chinese culture and values work, one
must understand the concept of Yin Yang. It is a philosophy that has a holistic and
paradoxical view of the world where opposites contain part of each other and there is no
complete distinction between them.(see Figure 3) Just like the black and white are illustrated
together, there are many paradoxes in China. Numerous examples can be found in the
Chinese language. There are many words that are consisted of two opposite sub-concepts
such as the word for "things" - "dongxi" (dong meaning east and xi meaning west). (Faure,
Fang 2008) Faure and Fang (2008) explain that Chinese people see all things as possessing
two opposite properties.
Other examples can be found in the Chinese behavior and social system. After the "open-
door" policy and the followed interaction with the West, more and more paradoxes can be
observed today, which are anything but intuitive to Western business people. The very
28
Figure 4, The symbol of Yin Yang (Faure, Fang 2008, fig.1 p.195)
organization of the Chinese national economic system - "socialist market economy" can be
found inconsistent with Western understanding of state-controlled, planned and free-
market economies. (Faure, Fang 2008)
Faure and Fang (2008) have depicted 8 contradicting values in Chinese society, based on
literature and the findings of empirical research they carried out. (see Table 2) Today, in fast
changing China where competition is putting pressure on relationships, income disparities
between regions and generations and international business conduct is getting more and
more demanded, some of the traditional Chinese values are challenged and have to co-exist
with the realities of the business environment.
Guanxi vs. ProfessionalismImportance of face vs. Self-expression and directnessThrift vs. Materialism and ostentatious consumptionFamily and group orientation vs. IndividuationAversion to law vs. Respect for legal practices
Respect for etiquette, age and hierarchy vs.Respect for simplicity, creativity and competence
Long-term orientation vs. Short-term orientationTraditional creeds vs. Modern approaches
3.2.3 Danish and Chinese negotiation styles defined by Salacuse's ten factors
Having discussed the aspects of Danish and Chinese cultures, now we can create the
respective negotiation profiles.
Goal
As Denmark is a low-context culture, associated with very specific relationships, one can
infer that Danish negotiators will be deal focused.
China on the other hand is a lot more relationship focused. Chinese culture is a high-context
one and relationships between individuals are diffuse. Moreover, as trust plays such a big
role in business, successful transaction is considered impossible without establishing a
serious relationship. All that indicates that the Chinese negotiator will look for a relationship.
29
Table 2, Paradoxical Chinese values
Attitude
There is little about the attitude of Danes towards the negotiations in the literature. Due to
their strong individualistic values, one can argue that they cherish personal achievement and
thus are inclined to take a more distributive approach. Moreover, according to Rody (2002),
"Danes are quite result-oriented and will explore every angle for the best solution". (Rody
2002, p. 84) However, whether they consider "best solution" one that gives them a bigger
piece of the "pie" or one that leaves both sides better off is not clear.
The way the Chinese negotiators approach the negotiation really depends on the level of
trust between the parties. They can have one of three negotiation styles: negotiating as
"gentlemen" (win-win), when the level of trust is high; as "strategists"(win-lose), when it is
low, or as "bureaucrats" when there is more than one government institution involved or
when the negotiations have political implications. (Ghauri, Fang 2001, p.312) The trust on
the other hand strongly depends on whether one is part of the guanxiwang or simply an
outsider.
While Faure and Fang (2008) explain the role of Yin and Yang in shaping the Chinese values
and behavior, they also argue that guaxi's importance for successfully conducting business is
decreasing. Professionalism is taking over, especially in the more developed regions of
China.(Faure, Fang 2008, p.197)
Personal styles
Danish business communication is known to be very informal as a result perhaps of its
egalitarian organizations. (Varner, Beamer 2008, p.354) Gesteland (2005) also explain this
lack of overt respect to high ranks by the low power distance. The "Law of Jante" also
manifestes itself in the way Danes communicate with respect to formality. (Gesteland 2005,
p.291)
While there are somewhat few etiquette rituals in Denmark, traditional Chinese greetings
are rich in symbolic gestures. (Rody 2002, Gesteland 2005) Moreover, rank, age and
experience are all sources of Mian Zi and thus respect needs to be shown. Titles and last
names are commonly used and according to Rody (2002), it is acceptable "to place the
(business) cards on the table in the same order of seating" in order to keep track of the right
ways to address people.(Rody 2002, p.62)
30
Communication
As already discussed, Danes communicate directly due to their low-context style and their
strongly expressed individualism.
On the other hand, the Chinese work towards preserving each other's lian through often
being indirect in stating their demands and making concessions.
According to Faure and Fang (2008), however, while Chinese business people do take face
into consideration, but also increasingly believe in self-expression.
To some extent, today’s Chinese managers are more assertive, and direct in communication
than they used to be.(Faure, Fang 2008, p.199)
Time sensitivity
Denmark belongs to the group of countries with monochromic cultures. Punctuality and
strict schedules are all signs of high time sensitivity.
Chinese fall into what Salacuse (1998) defines as a mixed time sensitivity. They are mainly
punctual for meetings, but do value the human interaction more than time itself.
Emotionalism
Both Denmark and China are expected to show low emotionalism during negotiations as
they both have neutral attitude towards relationships. However, due to the strive for
preserving harmony and face, the Chinese put a lot more importance on reserved
communication than the Danes.
Agreement form
Danes prefer written agreements where everything is spelled down.(Rody 2002, Gesteland
2005) The specifics of the contract turn into the law that governs the relationship and thus
all disputes are resolved with its help.
On the other hand, Chinese negotiators prefer a more general wording of the contract.
(Rody 2002, Gesteland 2005)They may view the agreement as simply the beginning of the
relationship. The strength of the relationship (guanxi) acts as an insurance against
opportunistic behavior while the looseness of the contract allows for flexibility of
interpretation if circumstances change.31
Agreement building
There is little information found in the literature about whether Danes prefer an inductive
or a deductive approach when building the agreement. According to Rody (2002),
"relationships are of little importance" when discussing issues.(Rody 2002, p.85) He states
that only the most relevant and business topics that are crucial to the agreement are
discussed. One might interpret this as a bottom-up approach, where the details such as price
and quality need to be agreed on first, which consequently lead to building the final
agreement.
The Chinese on the other hand discuss relationship-based issues as before they make any
concessions they need to know what kind of relationship is being formed. (Rody 2002, p.64)
From then on, the substantive aspects of the transaction can be worked on.
Team organization
Despite being very individualistic, Danes tend to work well together and are considered the
most effective and efficient national work force. The decision power is at the hands of the
senior executives, however, information and opinions from all employees are welcome and
used. Usually, the lower-level employees work on the details of the agreement, while the
higher-ranking ones take care of the overall strategy. (Rody 2002) The team members are
chosen on the basis of their experience, competence and relevance to the current task.
The Chinese have a long history of overt hierarchy where the superiors have all of the
decision power. However, nowadays there is a growing number of more dynamic
organizations in China, where while the decision is still made by the person in the highest
position, different layers of the organization also have a strong influence on it. Rody (2002)
calls it "Top-down Consensus".(Rody 2002, p.68) This type of structure can be viewed as
inefficient and bureaucratic by Westerners. The Chinese, however, believe that every group
that is affected by the decision has to have a say in it. According to Sebenius (2002), it is very
important that one recognizes all the stakeholders involved in a deal in order to better
understand the decision-making process of one's Chinese counterparts.(Sebenius 2002,
p.83)
32
Risk taking
As already discussed, both China and Denmark score low on the Uncertainty avoidance
Index. However, it turns out that the UAI does not necessary explain whether a negotiator
would be rather risk-taking or not. According to Rody (2002), both countries are rather
conservative when it comes to taking risk. He explains that the higher the risk, the higher the
potential for quick profit. However, neither the Danes, nor the Chinese are interested in it.
He argues that Danes believe in producing high-quality products through hard work and
careful planning. Meanwhile, the Chinese, as members of a long-term oriented culture, do
not feel the need for quick profit and would rather keep the harmony in the relationship.
Moreover, their general distrust towards strangers and the fact that they need to build
guanxi can also be seen as a way to reduce the risk associated with the transaction.
However, as a result of the fast changing environment, shareholder and commercial
pressure, quick profit is now more and more turning into the main goal. In fact, according to
Faure and Fang (2008), one of the major problems that Westerners when dealing with China
is the short-term orientation of the businesses and their lack of planning capabilities.(Faure,
Fang 2008, p.204)
4. MethodologyThe purpose of the thesis is to explore the effects of culture on the negotiations between
Danish and Chinese companies.
Due to the exploratory nature of the research question, the goal is to create a deeper
understanding of the cross-cultural negotiation as a social interaction in a business setting.
After discussing the secondary data - the research and frameworks already available in the
existing literature, a primary set of data, generated from professionals with relevant
experience, will be analyzed.
4.1 Research approach
The concept of culture itself is very subjective. Authors take different approaches when
studying cultural phenomena, depending on the research question and the resources
available. International negotiators' behavior is directly influenced by their attitudes and
values, most of the times on a non-cognitive level. Thus, some researchers conduct 33
simulations where dyads of different cultures are introduced to an issue that needs to be
negotiated.(For examples see Adair (2005) and Lee (2006) ) If enough simulations are
observed, this method can generate results that can be generalized. However, due to the
large amount of resources required by this approach, one can find a larger number of
surveys instead , the respondents to which are simply asked to describe their negotiation
style based on pre-defined by the researcher factors. (For example, see Salacuse (1998) )
One of the advantages, of course, is the quantitative nature of the data, which allows for the
use of different statistical tools. Moreover, it is not as time consuming and reaching out to a
statistically significant sample is more feasible. On the other hand, the disadvantages of the
method is the simplification of the otherwise very complex notion of culture. The third
method than can be applied to explaining the aspects of cross-cultural negotiations is
conducting a qualitative research. It allows for that flexibility the quantitative research
design lacks. Through conducting personal interviews or focus groups, the subjective
perceptions of the negotiators are studied. Although, interpretation can be a challenge and
generalization often impossible, this approach can be a source of valid insights about the
actual experience of professionals.
Due to the exploratory nature of the current research and the limited resources available to
the author, a qualitative research was chosen. Culture affects both the behavior of
negotiators and the settings of the negotiation in general. Therefore, the perspective taken is
the one referred to as symbolic interactionism. Uwe Flick (2009) explains that its empirical
starting point as "the subjective meaning that individuals attribute to their activities and
their environments." (Flick 2009, p.57)
4.2 Data collection and structure of the interviews
The collection of the data was to be done through conducting personal interviews with
Danish professionals that have experience in negotiations with Chinese companies. Since the
interviewees had a complex stock of knowledge about the question at hand, extraction of
that information had to be done through an interview that was at least somewhat
structured. Having Salacuse's ten factors as a theoretical base, on which the interview guide
was based could provide such structure. However, some flexibility was needed in the
34
wording of the main questions and the follow-up ones, in order for the researcher to be able
to account for any aspect or pattern that was not included in the interview guide. (Flick
2009, p.156)
Therefore, three semi-structured interviews were carried out. As already mentioned, the
findings on the effects of culture on the Danish-Chinese negotiations were to be systemized
through the ten factors developed by Salacuse (1998). However, many of those factors could
not be addressed directly in a question, but rather hat to be looked at as a consequence the
national culture manifesting itself. For this purpose, fourteen different main topics were
developed, about which the researcher asked questions and probed on.(See Appendix 2) In
order to keep the natural flow of the interview as a conversation, the wording and the
sequence was not strictly pre-defined. This allowed for, whenever the interviewees talked
about or simply touched upon topics that were yet to be discussed, the interviewer to probe
directly on the new topic, instead of asking a question that had already been partly
answered.
The main disadvantage of this approach was that due to the author's lack of experience in
conducting qualitative interviews, there was a risk of not covering all the topics or confusing
the interviewees with unclear questions.
The interview guide
The fourteen topics are represented by main questions (highlighted in bold), which are
followed by probing questions. All of the topics and how they relate to the theoretical
background are now discussed.
1. Approach
How did your company initially approach China?
Directly or through a mediator?
Did it encounter any problems?
As already discussed in section 3.2.3, the level of trust has a huge impact on the way the
Chinese negotiate and perceive their counterparts. This topic aims to provide some
additional information regarding the background of the negotiations that the introductory
questions were not able to address. The researcher is to look for information about the
35
presence of already established guaxiwang or the lack thereof and its effects in terms of
problems with and choice of potential partners. This information can then be related to the
factors Goal and Attitude.
2. Goal
Before you start negotiating, what kind of results do you expect in terms of what is
considered a success?
Do you work towards finalizing the deal in the most profitable way or towards establishing a
long-term relationship.
Based on your experience, can you say the same for the Chinese?
This set of questions is directly related to the Goal of the Danish interviewees and how they
perceived their Chinese counterparts' goal.
3. Relationship building and customs
Have you observed any specific pre-negotiation customs and procedures, typical for
negotiations with the Chinese?
Did you and your colleagues working in China spend any time with your Chinese partners
away from the negotiations table?
Did you talk business?
The way the Danish negotiators perceived the Goal the Chinese had is inherently subjective
and might be based on their overall experience, not the first phase of the negotiation.
Therefore, the author has found the need to approach this factor also from an indirect angle.
The main question is open-ended and seeks to find information on any social activities
outside the physical professional domain. The follow-up question Did you talk business? was
to give some information about the type of relationship (specific or diffuse) which, as already
acknowledged in section 2.4.1, has an effect on the negotiation Goal.
This topic has the potential to touch on information about Formality and Hierarchy as well,
as some of these customs can serve more as showing respect, rather than relationship
building.
36
4. Time and space
Do you find anything different in the way the Chinese set up a time and place for the
negotiations?
Did you get to work immediately?
The first part of the question is to extract information about the perceived differences in the
scheduling and punctuality, which both reflect the Time sensitivity. The second part of the
question could add to the discussion of the type of relationship (Specific or diffuse) that the
previous topic touched on. Here, instead of addressing whether there were business-related
talks during the social activities, the researcher looks for information on whether the whole
process of negotiation was moved outside the office.
The purpose of the follow-up question is to find out whether there are differences in the
way Danes and Chinese perceive time. Time sensitive cultures would like to get to business
as soon as they can as "time is money". On the other hand, Time insensitive cultures would
devote the needed time for personal interactions.
5. Negotiation style (attitude)
In general, how would you describe the negotiation style of the Chinese?
Compared to the Danish one?
Collaborative or confrontational?
Did they use hardball tactics? (ex. time pressure)
This topic is related to the perceived Attitude of the Chinese negotiators, compared to what
the interviewees experienced in Denmark. The main question was asked directly only during
the first interview, as the researcher found out that information regarding this topic is better
obtained through probing on the way the Chinese negotiate in terms of tactics.
6. Trust
How willing are they to share information? Do you share the same amount of information?
What was the level of trust?
Did things change in the course of time?
37
It is safe to assume that the higher the level of trust, the more information is shared
between the parties. Information sharing, on the other hand, is related to the Attitude. The
first topic gathers information about the closeness of the relationship before the negotiation
had even started. In this one, however, the level of trust is studied after the kick-off of the
negotiation. Moreover, as some of the interviewees might have a long-lasting relationship
with a Chinese partner, it is important for the researcher to probe on the way things
changed in the course of time. Although the writer has come up with only one overt
expression of trust, this topic is open to discover more, which if indeed recognized, are to be
probed on.
7. Formality
Can you compare the Danish and the Chinese communication styles in terms of formality?
Ranks and titles?
This topic directly represents the difference in the way the Danish negotiators would address
their Chinese counterparts as opposed to when dealing with Danes. It reflects on Salacuse's
factor personal style.
8. Agreement building
Can you describe the way the Chinese discuss key issues when negotiating?
Did the negotiation start with discussing the specifics or the general rules?
Was there any strict plan on which issues are discussed first and second, or there was more
holistic approach to the negotiation in terms of jumping from one thing to another?
Is it any different than the Danish way?
The purpose of this set of questions is to study the perceived differences in the way the
Chinese and Danes discuss the key issues. It should generate information on whether the
Chinese prefer a more inductive or deductive approach for the Agreement building.
Meanwhile, whether they take a structured approach, discussing one thing at a time, or a
more general one, directly reflects the Time orientation, which is connected to the Time
sensitivity. Moreover, the time spent on each issue also might be an indicator for Time
sensitivity.
38
9. Communication style
Would you describe the Chinese as direct or indirect compared to the Danes?
Elaborate.
Examples of miscommunication?
The author has found acquiring information about this topic rather challenging in terms of
wording of the questions. Due to the risk of introducing bias or asking a guiding question, the
interviewer was looking for opportunities to probe on what seemed to be examples of
Direct/indirect style of communication. Moreover, as such difference in directness can be a
source of misunderstandings, if the researcher failed to probe on an examples of
miscommunication given by the interviewees, they were asked to specifically recall if any
occured. .
10. Emotionalism
Did they ever get emotional about anything during the negotiations?
Compared to Danes?
Example?
This topic is concerned with the level of Emotionalism exhibited by the Chinese, compared to
the Danes. Since it is part of the visible expression of culture, directly addressing the issue,
followed by a request for an example seems appropriate.
11. Concession making
Can you describe the way your company and your Chinese partners make concessions.
Are both parties active by taking turns or is it rather unbalanced process?
The negotiators' attitude, win-win or a win-lose, is probably best expressed in the way they
make concessions. Therefore, any information on the way the two parties made
compromises and whether it was balanced or not, can give insights on the type of
negotiation approach, distributive or integrative.
12. Risk taking
Did they take a lot of time to analyze and think through?
39
How willing were they to take new approaches?
These two questions are to measure the perceived level of Risk tolerance of the Chinese. As
discussed in section 2.4.10, there are difference in the willingness to take new approaches
and the pace with which negotiators make decisions across cultures, due to differences in
attitude towards Risk.
However, the researcher does acknowledge that one must be careful when analyzing the
generated data as Risk-taking itself is a very complex notion, and is dependable on too many
factors to make any decisive conclusions.
13. The Contract
Did you find anything different in the way the Chinese approached the contractual
agreement?
Is it specific or more general?
Do they obey it?
This topic can be directly connected to Salacuse's (1998) factor Agreement form and its
purpose is to identify the level of details spelled down in the contract. Moreover, due to the
difference in the way the Chinese and the Danes would regard to the contract (suggested by
the literature), the follow-up question on whether they obey it is also included in the
interview guide. Since the strength of the relationship is an insurance that what has been
agreed on will be delivered, the answer to that question might give additional insights about
the environment of the negotiations.
14. The Team
Can you describe the Chinese team of negotiators?
How does it differ compared to the Danish one?
Who speaks?
Who has the power to decide?
The main question is rather open, but is still intended to generate relevant information
about the group dynamics and the composition of the Chinese negotiating team. It was
important that the interviewee was asked to compare it with the Danish team in terms of 40
who speaks and who has the power to decide in order to acknowledge if there are any
differences in the Power distance and in the way decisions are made.
4.3 The interviewees
Uwe Flick (2009) explains that, unlike in the case of a quantitative research, the sample for a
qualitative research is not random, but purposive. (Flick 2009p.122) He also discusses the
different sampling suggestions available. For the purpose of the current research, critical
cases were selected, that is, employees of Danish companies with experience in negotiating
with companies in China. Of all the potential interviewees that were approached, only three
fulfilled all the criteria for a "good informant" defined by J.M. Morse. (Flick 2009, p.123)
They have the relevant knowledge about doing business with China and have participated in
personal negotiations in China. Moreover they had the time and the will to participate in the
research and were able to reflect well on the topics that were under consideration. The
interviews with Thomas Karst and Heidi Jørgensen took 30 minutes each, and the interview
with Laurence Dawes took 50 minutes.
Thomas Karst
Thomas Karst is a partner at MAKE Consulting A/S, a consulting agency that specializes in the
wind energy industry. He has been in this industry for thirteen years now. He has a vast
experience with doing business in Asia throughout the last 25 years. He has worked in a
Chinese environment for several years, including two years in a Chinese department in
Beijing. He used to work for companies that would try to sell innovative technology to
Chinese producers, who would use it to produce for the domestic market during the 1980s
and the 1990s and in the years to follow for the rest of the world. He explains that although
a lot of things have changed in China, the Chinese more or less stayed the same.
His insights would be very relevant to answering the research question as he has
participated in numerous negotiations, which gives him a more objective overview of the
Chinese negotiation style. When analyzing his interview, the researcher needs to take that
experience into account along with the fact that due to his position of a seller, one can
assume he worked harder to adjust his style to that of the Chinese.
41
Heidi Jørgensen
Heidi Jørgensen is the owner of the company Blended Minds, which works with different
developers to create new and innovative products, try to get patents on them and
afterwards sell them to bigger companies that might be interested. The company was in a
dialog with a Chinese producer of tools and she visited the factory to finalize the deal. Due to
several delays, missed deadlines and consequently loss of business, she eventually had to
terminate the relationship with the producer. Her case might contribute to the current
research with some examples of where a Danish-Chinese negotiation might go wrong and
eventually fail. The company was founded in 2010 and this was the only time it approached
a potential Chinese partner. However, Heidi used to work with Chinese in her previous
workplace. Although, not doing negotiations back then, this experience also contributed to
her better understanding of the aspects of communicating with Chinese businesses.
Laurence Dawes
Laurence Dawes is a Design Manager at LEGO and as such, he oversees several play-theme
product lines and the teams of designers associated with them. From his office in Billund, he
works with the company's Chinese suppliers on a daily basis and has to travel to China once
in a while to deal with the manufacturers in person. He is originally from the UK. However,
he has been a LEGO employee ever since he graduated from university almost six years ago
and since it is his first job in the industry, he considers himself very much integrated into the
Danish working culture. He explains that outsourcing some of the production to China in
2006 was one of the strategic moves LEGO did that stabilized the company. He also explains
that nowadays most of the negotiation is done through the company's office in Hong Kong
where both native Chinese and Danes work together. As they know the language and the
way the suppliers work, most of Laurence's job goes through them, however, he has
witnessed some negotiations first-hand.
4.4 Data analysis
There are many approaches that one can take to analyze the collected data from personal
interviews, however, the choice strongly depends on the purpose of the research. Since the
current paper does not look to develop new theories, but rather to explore the effects of
culture on negotiations with the specific delimitation of Danish and Chinese companies, the
more classical approach to analyzing textual material qualitative content analysis was taken. 42
According to Flick (2009), this technique is especially suitable when categories are derived
from already existing theoretical frameworks and not derived from the research itself. (Flick
2009, p.323) After transcribing the interviews, the researcher can then apply procedure and
techniques suggested by Mayring (2000).
The first step is to define the material that would contribute to answering the research
question at hand. This was done through taking sections of the interviews that the
researcher found relevant the topics prescribed in the interview guide. The next two steps
are concerned with evaluating the situation the data was collected in and acknowledging any
factors that might have interfered with the quality of it. The three interviews were personal,
without third parties present, recorded and consequently transcribed. Since no field notes
were used, the information obtained comes directly from the recordings and thus is free of
any collecting errors. However, two of the interviews were conducted over the phone, which
reduced the quality of the sound and resulted in some unclear sentences.
The next step is to define the direction of the analysis. In the current case, what the
researcher wants to interpret out of the interview is "How did the Chinese and Danish
national cultures affect the negotiations the interviewees were part of". As already
discussed, Salacuse's framework (1998) of the effects of culture on the negotiations is used
and thus every factor can be treated as a research sub-question. The last several steps deal
with defining the techniques, interpretation of the results and assessing the quality of the
analysis.
The analytical technique used in the current paper is summarizing content analysis.(Flick
2009, p.325)
Firstly, whole sections (the analytical units) are paraphrased into sentences that summarize
the meanings and any repeating or ornamenting is deleted. Afterwards the issues discussed
in the paraphrases are generalized to the level of abstraction. Any irrelevant passages or
ones that are overlapping are deleted. Take for example Laurence Dawes' answer to the
question if he felt like one side was making more concessions than the other.
Am.. I would say it's pretty even, just from looking at how high they start and how we sort of
really negotiate them down and yeah... we are in the lucky position that we can really
43
investigate a lot of the stuff in Billund. So unfortunately for them we've been doing this for a
long-long time ourselves and we have found the cheapest ways of doing it. So we have a
really good bargaining tool and to say "right, this is how much it costs, so you do it for that".
So that's why they sort of start high and we sort of challenge them down to a price that we
think is more reasonable back home, and then that's the little bit when we sort of, we either
can just afford it or we can't just... sort of have to get rid of a bit and so forth so... I do find
it's the same old negotiation no matter what you're doing, you know... it's just their way of
working, you know... it's a negotiating culture, they would start here and we would bar them
down.
After the first reduction the researcher has identified four passages:
I would say it's pretty even. They start high, but we negotiate them down. We are in a
position to make them make concessions to a point where we need to make the last
compromise. It's a negotiating culture - they would start high.
After the second reduction, the first and the third passage are bundled into "It's even
concession making" and the second and the third into "They start with a high opening
stance"
These can then be reassessed against Salacuse's factors and other existing theories and
interpretation can be made.
4.5 Reliability and Validity
There are different criteria used to assess the quality of a qualitative research. Since the
purpose of the current paper is to explore the effects of culture on the negotiations between
Danish and Chinese companies, the research design does not allow for high level of
generalizing of the results.
There is a lot of discussion in the literature whether reliability assessment can be applied to
qualitative research as it originates from quantitative methodology. (Md. Ali, Yusof 2011)
Many authors do recognize it as an important part of the methodology of any research,
including in the qualitative dimension. Flick (2009) provides several definitions of reliability,
most of which he criticize. However, he stresses the importance of procedural reliability, that
is the reliability of the collection of data. In the current research, only one interviewer was
44
employed, the fourteen topics chosen for conducting the interviews are based on previous
research and theory and were covered in all of the three interviews. Therefore, at least some
level of standardization is present. Moreover, the conversations were recorded and
transcribed, which reduces the risk of misinterpreting and faulty collection of the data. All of
this affects positively the procedural reliability. The flexibility in wording of the questions,
however, might result in different interpretation of the questions by the interviewees and
thus it is up to the researcher to control the collection of the information.
Azham (2011) recognizes inconsistencies in defining validity in qualitative research as well.
Flick (2009) summarizes the question of validity as " a question of whether the researchers
see what they think they see". (Flick 2009, p.387) That is, whether the data and the
instruments used for its collection are suitable for answering the research question. The
current research used an already established framework for studying the effects of culture
on negotiations. The ten factors Salacuse (1998) defined are empirically tested and indeed
differences across cultures were found. However, the formulation of some of them into
interview topics is a challenge and thus, for some, the researcher provides only a suggestion
as to how those factors might manifest themselves in a negotiation situation. Since the
current paper focuses on Danish-Chinese negotiations, the interviewees are employees from
Danish-based companies. One might question the validity of the information provided by
Laurence as he is originally from the United Kingdom. However, in the previous section, the
author argues about his relevance to the research question.
5. Results
5.1 Summary of the interviews
The statements of the three interviewees are summarized and grouped into the 14
categories prescribed by the interview guide. (see Table 3)
Topic: Thomas Karst Heidi Jørgensen Laurence Dawes1. Approach If you don't have
someone thatknows the language, market, people and demand, it's hard to find the
Through a Danish company, recommended Steve (Chinese) as an agent.
LEGO has established a Hong-Kong office to set up a relationship with many suppliers.
45
Table 3
right partners.
2. Goal Danish team: Building a relationship, seeking acceptance in order to be able to do business.Chinese team: Relationship, the only way do business.
Danish team: Long-term business relationship.Chinese agent: Both long-term business relationship and contract.Chinese factory: very much deal-focused. "They didn't seem very interested in having us as customers."
Danish team: Deal focused, however protecting the business relationship.Chinese team: Maximizing profit, long-term consideration for the relationship.
3. Relationship building and customs
Wining and dining is important. Non-business conversations.
Some time spent outside the office."The Chinese seem to talk about everything else but business when out eating, they have a lot of humor."
Lunch in a flashy restaurant (only once), where business was talked.
4. Time and space In Denmark everybody is ready to go get to work immediately.In China it takes time from the arrival to actually getting to business.
An agenda that any Dane would think is the right way was too strict for the Chinese.Took one thing at a time and took a lot longer than expected."Should have been there more time."
Formal meetings with agenda and strict timeline.Two or three hours on issues and then factory tours.
5. Negotiation style " If you are not part of the network, you don't have an easy life, to put it this way."They use tactics that are abandoned in Europe, such as deliberately procrastinating to give you hard time and get you soft. You learn to plan more time.
Felt disrespect.The agent pretended he had never heard things that had already been agreed on and it would take additional time to sort it out. They don't mention themselves if there is something missing and if you find out they add to the price. "I felt like they were very greedy"
The Chinese would always go for the most expensive option.LEGO keeps in touch with several suppliers to keep them competitive. They go early to be able to negotiate them down."Initially they bend to please us, but as time goes on, prices go up so we need to constantly negotiate."
6. Trust You show them more trust before they show you. Once you have established the relationship a lot
The Danes were a lot more open about prices and charging than the Chinese. No trust on their side and
"They do trust us." It's a very close relationship and exchange of information.
46
more information starts to flow. It might be in the corridor or before you get in a taxi like "It would be a good idea if".
increased already agreed prices.
For new suppliers it takes about a year to see how things are going.
7. Formality "You are formal in their terms." There are number of formal things that need to be done right. Showing respect to the senior by a designated seat etc.
First names even with the people high in the hierarchy.
Rather informal due to the close work relationship.
8. Agreement building Starts holistic and jokes around, which might end up in a mess.No structured meetings like at home.Important not to close any "doors".
Had details before even going there, but they had to be renegotiated.
Long negotiations on details.Very specific approach, directly on the details since it's always the same.
9. Communication styles
"They will come around you in a thousand indirect ways", unlike Dane."You cannot make them lose face by saying no." There has been occasions when people failed adhering to the conduct and things basically stopped, in some cases irrevocably.
It's part of their culture not to say no. "The Chinese said yes without understanding what we were saying."To them it's very much of a let-down if they don't understand what you agreed on.It's a big problem to disappoint someone.
They are very direct and thrall.There are almost no misunderstanding because of the skilled personnel in the Hong Kong office.
10 Emotionalism No emotions, only politeness and smiles. Danes can get angry and annoyed. "If it's a negative emotion, they (the Chinese) don't really say anything and things seem to come to a stop."
Only the agent got upset at a point because he was disappointing so much and offered the Danish company to pull out of the deal if they wished.All that not in front of the Chinese owner.
The Chinese are emotionless, business oriented. Danes are more emotional. Although things come different than expected, there are no signs on the negotiation table.
11. Concession making It's part of winning their trust that you give a bit more than they do. It's important to reciprocate in order
"I think we gave a lot, but didn't get that much back""In Europe, it would be the customer that
It's even concession making. They start with a high opening stance.If it's tiny bit of cost,
47
to preserve their face. But you need to know what you are doing, some things are of no value to us, but a great token of trust and relationship to them.
you listen to more than the factory. It was opposite in China, it was up to the factory owner what she wanted."
we would compromise to preserve the relationship. Thus we are usually the ones making the last concession.
12. Risk taking It takes less time for the Danes to reach an agreement as "it's a waste of time to keep somebody waiting while we think". However, it is important for the Chinese to think it through and meanwhile "let the counterpart cook a little bit".
It took them a lot of time to think, to go over the prices.
It takes time for them to analyze every little detail. Sometimes we need to be chasing them."It's always the same people, with same roles and responsibilities, done the same way." Their managers are forcing them to do their job in a cost effective way and don't have time for innovation. "They are conservative. If they put time and effort in innovation, that would possibly unlock doors that can't be closed."
13. The contract Not that different than in Denmark. They won't necessary keep their part if you don't put pressure on them.
General agreement as the agent was trusted. The contract was breached as the deadline was missed.
Strict contracts on quality and delivery.Often un-kept. As time goes on, they "cut corners"
14. The team "Always a lot of people, assistants, co-directors. They put someone in front of you, who has high enough title so you don't lose face by being presented with people on too lower level." They go to a supervisor for a go ahead. Higher position people would not get involved unless there is a big probability to make a deal. We try to
The factory owner was on a lot higher level than us, it felt like we couldn't deal on the same level. The agent did not say the same things and was not as open about the mistakes when the factory owner was there and when she was gone.
The Chinese team would negotiate but ultimately would have to go back to their manager, who makes the decision."I think having me there counts as a bit more weight, they are more likely to think quickly and do something."In Denmark, the organization is a bit more flat, compared to China where there
48
match people by title and competence asyou won't go anywhere if you don't show them respect.
is evident hierarchy. They respect age and experience.
5.2 Discussion of the results
After being summarized and systemized, the information generated from the interviews can
now be reassessed against existing theories in the field of intercultural negotiations. This
would provide an understanding of the way culture affects the negotiations between Danish
and Chinese companies that is based both on the experience of professionals and academic
papers. The author has already argued about the choice of the ten factors suggested by
Salacuse (1998) to be one used as the basis of the analysis in the current research.
An important note is to be made that while LEGO and Blended Minds act as buyers, while
the companies Thomas Karst worked for acted as sellers. Moreover, before proceeding with
the discussion, the specifics around each interviewee's experience will be analyzed.
Pre-negotiation specifics.
Thomas gave his interview from the perspective of an experienced expert in the field and
thus his answers are less likely to be biased by a single negative experience. His point of view
is more general and is not focused on a few cases of negotiation and his approach probably
have varied from one case to another. However, he clearly states that he sought to find
insiders within the market in order to facilitate the entry and even then he still had to work
hard to build a relationship that would be the base for further business activity.
When proceeding with the information Heidi provided, it is important to acknowledge the
circumstances surrounding her initial contact with China. She worked through an agent, who
one can assume from her interview, has a certain relationship with the manufacturer. From
the presented theory, one can argue that there was a potential for Blended Minds to
become part of a guanxiwang, which would have affected strongly the way the negotiation
would unfold. However, in the remaining of this section and in the ones to follow, this
possibility is questioned.
49
Laurence's experience in negotiating with Chinese is generated solely through LEGO's
interactions with the producer it outsources its production to. He mentions that the
company has stopped doing business with some of the suppliers it originally approached,
however, it has maintained a long-term relationship with most of its partners. The Hong
Kong office acts as the middlemen between Billund and the mainland Chinese producers.
This most likely would affect the way they do negotiations today.
5.2.1 Goal (Contract vs. Relationship)
It is evident from the interviews that the main goal of the Danish businesses when dealing
with China is to develop a long-term business relationship, which can then be leveraged on.
In fact, LEGO opened its office in Hong Kong with the sole purpose of finding and
approaching potential suppliers. It is safe to assume that the reason why all three
interviewees acknowledged relationship as the goal is the costs involved in looking for a new
supplier in a country such as China. This assumption is supported by Thomas Karst's
statement related to the Approach topic: " If you don't have someone that knows the
language, market, people and demand, it's hard to find the right partners". Moreover, since
outsourcing manufacturing involves a lengthy information exchange process, companies
have almost no incentive to go through that process more than once.
The information related to the factor Goal indicates that all three respondents would
consider the establishment of a long-term business relationship as a success. However, one
must make a distinction between a long-term business relationship and a personal
relationship. When talking about the goal of the negotiations, only Thomas mentions
"cultural bonding" and seeking acceptance as an activity on a more personal level. Heidi
explains that most of the preliminary discussion about the details were via e-mail and that
when she went there she approached the final stages of the negotiations with a very strict
agenda, which she found out was not a successful strategy. Moreover, Laurence
acknowledges that the right price and qualities are of the greatest importance when
approaching the suppliers. According to him, the way LEGO conducts meetings with its
Chinese partners is guided by a strict schedule and in his experience with little social activity
where mostly business was discussed. All this is more typical for the Danish specific
approach to relationships.
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Meanwhile, the interviewees are not completely unanimous about the goal of the Chinese.
According to Thomas Karst, the only way to do business with the Chinese is to create a stable
relationship. However, one must be aware that this statement might have been affected by
his position of a seller. According to Laurence, LEGO's Chinese partners are very focused on
maximizing the profit from the transactions and do "cut corners" to save money. However,
he emphasized on several occasions, throughout the interview, the closeness of the
relationship his company has with its suppliers. "They've even gone as far as to expand their
whole factories and build whole new buildings just to house our new project." When looking
for information about the goal of the Chinese in the interview with Heidi, a clarification
needed to be made about whether she was talking about the agent or the factory. According
to her, the agent did try to establish a long-term business relationship, but was also
concerned with getting a good deal for the factory. The manufacturer's employees she dealt
with, however, "didn't seem very interested in having us as customers". In the next section,
some tactics that clearly indicate some opportunistic behavior by her Chinese partners are
discussed, which has affected her perception of them being more deal-focused.
On the other hand, both Thomas and Heidi mention off-work activities where they did not
talk business. Their experience supports the diffuse type of relationship the Chinese are used
to and is a sign of an attempt to build a relationship further than the professional domain.
To conclude, all of the interviewees described their goal as establishing a long-term business
relationship. Their specific and professional approach to it, however, indicates that they are
still more focused on the contractual agreement. They did not talk about developing a
relationship on a personal level, which can be the real source of trust and guanxi. An
exception here is the statement made by Thomas about engaging in cultural bonding.
However, he also acknowledged that this is typical for the Chinese, not the Danes. The
cultural bonding seems to be more a strategic move of an experienced seller than his real
goal. All that indicates that the Danish employees were, as predicted, more concerned with
reaching an agreement and signing a contract.
When asked directly about the goal of the Chinese, the subjective points of view of the
interviewees differed. Laurence described them as being extremely deal focused. However,
he did acknowledge that it is the employees in the Hong Kong office that approach new
51
suppliers and thus his information regarding the initial building of a relationship might be
insufficient to draw any conclusions. Meanwhile, Heidi also described them as more business
oriented. However, both she and Thomas spent time outside the office, which might be
interpreted as an attempt on their Chinese hosts' side to build a more personal relationship.
5.2.2 Attitude (win-win vs. win-lose)
As already discussed, the way the Chinese would approach the negotiation depends on the
level of trust between the parties.
Thomas, being aware of the importance of building a relationship, explained that the only
way a Danish company can conduct successful negotiations is to embrace that importance
and adjust its tactics according to it. Not only by adhering to formalities, but also by being
the first to make larger concessions and to share information. He describes such moves as
"part of winning their trust". Heidi seems to have applied the same strategy. She did try to
be as open as possible when exchanging information. However, she, unlike Thomas, did not
observe a change in her Chinese partner's attitude and they never became open. Laurence
made a statement that might explain why this has happened. According to him, developing a
stable working relationship with the Chinese is a lengthy process. He says that in LEGO's
case, It takes about a year to be able to evaluate how the partnership is working out. After
that initial period is over, he describes the negotiations between the company and its
partners as rather integrative. Although bargaining heavily on price, he explains that LEGO
shares experience and technology with its suppliers in order to optimize their processes.
Even though the company uses various tactics to lower the price in the initial quote, the two
parties seem to find a win-win solution through more or less balanced concession making.
Moreover, despite always having several potential producers to outsource to in order to
keep the competitive, once a decision has been made to proceed with a certain supplier, a
more mutually beneficial outcome is looked for where the relationship is also taken into
account.
All three interviewees described the Chinese negotiation style as rather overtly strategic.
Even Laurence explains that they always choose the most expensive processes and it is up to
the LEGO employees to work with their engineers to lower the cost. According to Thomas,
they use tactics that are abandoned in Europe, such as deliberately procrastinating to give
52
you hard time and get you soft. This particular tactic can in fact be found in the second group
of the Thirty-six Stratagems, the group containing strategies for confrontation. Stratagem 9,
Watch the fire burning from accross the river (Ge An Guan Huo) is interpreted as Master the
art of delay. Wait for favorable conditions to emerge. (Fang 2006) Heidi also talked about
prolonged discussions within the Chinese team, which made the negotiations last longer
than she expected. She also mentions several times that things that were agreed on was not
delivered. Moreover, during the negotiations, the agent claimed he had never heard about
the agreements made beforehand and that it would not be possible. According to her, the
Chinese producer did not explicitly mention that a lot of key parts are missing, which
eventually translated into a higher price than the one initially agreed on. This situation can
be traced back to stratagem 10, Hide a knife in a smile (Xiao Li Cang Dao), which stands for
Hide a strong will under a compliant appearance, win the opponent’s trust and act only after
his guard is down.
The three interviewees all mention is that the Chinese do not necessary obey the contract or
fulfill their obligations. Deadlines, quality and price arrangements were all subject to a
change in all three cases. According to Tan Joo-Seng (2004), the weaker the relationship, the
bigger the probability of cutting corners and opportunistic behavior.(Tan, Kiing 2004, p.25)
Therefore, It seems that the type of relationship described in the literature as an insurance
to opportunistic behavior and collapse is not present in the current cases.
To conclude, the researcher has found that all three interviewees seem to have a rather
integrative (win-win) approach to the negotiations. This rejects the suggested correlation
between individualism and attitude by the author. On the other hand, it seems that the
Chinese manufacturers employ some classic distributive (win-lose) tactics, such as using the
time pressure against the visitors and starting with a high initial stance.
There is, however, a possibility that the Chinese negotiators use the stratagems
unintentionally and might change to a more integrative approach if a more personal
relationship was in place. Meanwhile, in LEGO's case, the high opening offer might not be an
attempt to employ a highball tactic, but it might simply be the way the Chinese are used to
approaching negotiations. In fact, Laurence explains this behavior with the statement: "It's a
negotiating culture".
53
5.2.3 Personal style (formal vs. informal)
In terms of formality, only Thomas discussed specific customs and etiquettes that needed to
be followed "You are formal on their terms". His statement fits with the Chinese negotiation
profile found in most of the literature. Meanwhile, Laurence explains that due to the very
close working relationship between the two companies' employees, the communication is
mainly informal. Moreover, while Heidi explains that there is a very visible hierarchy, her
experience also indicates informal communication. This inconsistency can perhaps be
explained by Slacuse's (1998) empirical findings on the effects of professional culture on the
negotiators' personal style. According to him, the engineering sector has the most informal
style of communication, which can explain Heidi's and Laurence's experience.(Salacuse 1998)
Although all three negotiated with Chinese manufacturers, those two were in the role of
customers and dealt with their counterparts directly on the details regarding the design.
Thomas, on the other hand, was representing sellers. This fact, combined with his vast
experience in doing business in China and his background (Law and Accounting/Finance),
account for his formal personal style.
5.2.4 Communication (direct vs. indirect)
According to Thomas, unlike the Danes, "They (the Chinese) will come around you in a
thousand indirect ways". Moreover, he stresses the importance of preserving the other's
face (lian) as otherwise it might be disastrous for the negotiation. He mentions that part of
this consideration is not directly saying "no", but leaving "the doors open". Heidi also
observed this phenomenon. She says "it's part of their culture not to say no". She elaborates
further saying that the Chinese sometimes would even say yes when clearly not
understanding what they were asked to do. She explains this behavior by saying that it is a
big problem to disappoint someone and very much a let-down if they do not understand
what they have agreed on. These two statements completely support what was discussed
when the Chinese culture was defined as high-context. There is evidence in the existing
literature about the avoidance of saying "no" in order to preserve both self and other-lian.
Laurence, however, had a different experience to share. He describes the Chinese as very
thrall and direct. However, his point of view might have been affected more by his day-to-
day engineering work communication, which one can assume requires a lot of details and
explanation.54
5.2.5 Time sensitivity (high vs. low)
Due perhaps to the established long-term relationship and the experience of working
together, Laurence describes the negotiations between LEGO and its Chinese partners as
very structured, on time and with a strict agenda.
On the other hand, both Thomas and Heidi recognize a sharp difference in the way Chinese
and Danes use time. They describe the latter as very time sensitive, who value time as a
tangible good. No time is wasted and strict agenda is followed. This supports what is found
in the existing literature, which describes the Danish culture as monochromic. Meanwhile,
they talk about the Chinese as rather unorganized when it comes to discussion of issues.
According to Thomas, it takes a considerable time to actually get to business and even then
the conversation is not organized around a list of topics. Heidi also explains that the strict
agenda she had prepared was too structured for the Chinese to follow. All that qualifies the
Chinese negotiators as less time sensitive than their Danish counterparts. Therefore, the
expectations about this factor were confirmed.
5.2.6 Emotionalism (high vs. low)
Both Laurence and Thomas describe the Chinese as more emotionless than the Danes. They
also explain that even if a problem occurs, the Chinese would not show emotions during the
negotiations. Thomas explains that the only cue Westerners have about a potential problem
is a sudden stop and lack of development. Meanwhile, the only time Heidi observed
expressing of emotions was by the agent when things were not going too well. However,
even then, no emotions were observed on the negotiation table. Therefore, the findings for
this factor fully support the results of previous research and literature on the matter.
5.2.7 Agreement form (general vs. specific)
According to Thomas, the Chinese do understand and respect international contractual
formats and therefore the written agreements do not look that different. Laurence also
describes the contracts LEGO has with its suppliers as very specific, especially with regard to
quality and delivery time. Meanwhile, Heidi never signed a final contractual agreement.
However, she did have some written arrangements with the agent, and since she trusted
him, they were rather general.
55
5.2.8 Agreement building (bottom-up vs. top-down)
From the three interviews, it seems like the agreement building process depends very much
on the situation. Thomas describes it as rather deductive, starting holistic and from then
jumping to other issues. Heidi, on the other hand, exchanged a lot of details with the agent
and the factory via e-mail before she even went there, which implies a more inductive
process. However, once she got there, some of the things that were agreed on had to be
renegotiated. This misunderstanding might be due to the different perception of the written
agreement by the Danes and the Chinese. What the Danish company might have considered
a discussion and conformation of specific details, the Chinese counterparts might have
considered merely a guideline of what needs to be done. This means that although Blended
Minds might have thought the agreement building was bottom-up, it might actually have
been top-down. Meanwhile, in the case of LEGO, since the company has worked with its
long-term partners before, the agreement starts directly with details as the general
guidelines of how the order needs to be carried out had already been agreed on.
56
5.2.9 Team organization (one leader vs. group consensus)
The three interviewees all described hierarchy and status as being an important part of the
Chinese business culture. In all of the cases, the decision power is centered in the people
that actually do not conduct the negotiations. Heidi mentions several times that the factory
owner was obviously on the highest position in the hierarchy, higher even than her, although
she was a customer. A change in the agent's behavior could be observed as he did not say
the same things and did not act the same way when the factory owner was there and when
he was dealing with Heidi in private. Laurence also explains that the team of engineers and
representatives from the suppliers, even the one in charge of the project, had to go back to
their managers who would ultimately make the decision. He describes the Danish
organization as "more flat" mainly in terms of information sharing. However, he explains
that the decision, although with input from all employees, is still made by the person in
charge. This supports the literature discussed in section 3.2.3. Meanwhile, Thomas talks
about a different role and aspect of the team composition of the Chinese. According to him,
the rank and position of the people one is presented with, serves as an expression of
respect and it also reflects the stage of the negotiations. They would always send somebody
that matches their counterparts rank in order to preserve face (lian), but would not send a
person with a very high mian zi (status face) if there is any risk that the negotiations would
fail. Therefore, he explains, if a person very high in the hierarchy is simply present at the
table, that is a sign that the negotiations are probably going to reach closure soon.
5.2.10 Risk taking
The author has suggested that time spent on making the decision and the willingness to take
new approaches might be aspects of the otherwise very complex attitude towards Risk
taking. According to the three interviewees, the Chinese need to go through all details and
thinking tends to take them a lot more time than it takes to the Danes. As already discussed
earlier, Thomas explains this as a tactic to soften their opponents. However, this waiting for
more favorable conditions also can be interpreted as unwillingness to make the decision
before all options are explored. On the other hand, he continues, it takes a lot less time for
the Danes to say "yes" or "no" as "it's a waste of time to keep somebody waiting while we
think". Heidi also supports the former statement as even though she had to wait some time
to receive answers about prices in the preliminary stage, even when she got there, the 57
Chinese team had to re-discuss things that seemed to already be agreed on. Laurence also
acknowledges their obsession with details. He also describes them as conservative and
reluctant to take on new approaches. According to him, the reason why they would not look
for new and innovative ways and processes is the inherent risk to the established system and
operations. "If they put time and effort in innovation, that would possibly unlock doors that
can't be closed."
To conclude, based on the findings, it seems that the Chinese are less willing to take risks
compared to the Danes.
58
6. ConclusionThe current thesis was created with the purpose to explore the different ways culture
affects the negotiations between Danish and Chinese companies. Defining culture,
however, is still a matter of debate and different opinions in the academia. Therefore, the
author discussed some of the more popular cultural theories that he found relevant to
the topic of cross-cultural negotiations. The bi-polar frameworks provided by Hofstede
(2001), Hall (1990) and Trompenaars (1996) serve as a good starting point of any research
that focuses on cultural phenomena. The simplified conceptualization of the differences
in values across countries is useful when comparing national cultures, especially in
business setting. Those values affect both the behavior of individuals and the social
construct they are part of. However, these dimensions, developed in the Western World,
cannot fully explain the all the aspects of Chinese culture and its effects on negotiations.
For this reason, the author has included some of the Chinese cultural emics in the
theoretical discussion. Confucianism, the 36 Chinese Stratagems and Yin-Yang all have an
effect on the way negotiations are conducted.
For answering the research question, the author used Salacuse's (1998) ten factors that
define the effects of culture on negotiations. Based on his framework, an empirical study
was carried out, which included three personal interviews with professionals from Danish
companies, who have conducted personal negotiations with Chinese organizations. The
findings were reassessed against the theories mentioned above. The findings indicate that
the negotiators from the Danish companies seek to establish a contractual agreement. On
the other hand, although there was not sufficient information on the goal of the Chinese
negotiators, there was some indications of concern for relationship building. All of the
Danish employees had a more integrative (win-win) attitude towards the negotiations. On
the other hand, Chinese took a more distributive approach to the negotiations. This might
have been due to the lack of a personal relationship (guanxi). The findings of the research
suggest that personal styles in terms of formality differ from case to case, depending on
the professional culture, working and personal relationships. Two of the three
interviewees described the Chinese as indirect, but they all defined Danish
communication style as rather direct. When it comes to time sensitivity, again two of the 59
three professionals described a big difference between Danish and Chinese cultures. The
Chinese negotiators were described as possessing mixed time sensitivity, they were
assumed to be punctual, but value more the human interaction than the time itself. On
the other hand, Danes are very time sensitive and prefer to follow a strict agenda. The
research confirmed what was hypothesized based on the literature regarding the level of
emotions expressed by the negotiators. The Chinese showed less emotions than the
Danes. The research was not able to conclude on the effect of national culture on the
agreement form as according to the interviewees the Chinese follow more or less the
international standards where more specific approach is taken. With regard to the
agreement building, the research recognized that there is a difference in the focus. One of
the interviewees acknowledged that the Chinese prefer to take a more holistic approach
when discussing issues and from then on to go to details. In terms of decision making,
both Danish and Chinese managers have the final say. However, hierarchy seem to play a
bigger role in the Chinese organizations compared to the more "flat" Danish ones. As a
result, the members of the Danish negotiating team need to match the Chinese ones with
regard to rank and status if an agreement is to be made. The research was not able to
draw a decisive conclusion regarding risk taking as well, due to the challenges in defining
risk. However, based on the criteria defined by the researcher, the Chinese negotiators
were described as less willing to take risks than their Danish counterparts.
6.1 Suggestions for further research
Due to the limitations of the current paper, only representatives of Danish companies
were interviewed. If more employees, both Danish and Chinese are interviewed some of
the gaps that the current research left unaddressed might be filled. A research on a larger
scale will generate findings that can be generalized. Moreover, a topic for a more detailed
study might be the ways Danish negotiators can establish a closer personal relationship
that would decrease the risk of opportunistic behavior.
60
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Appendices
Appendix 1 - The 36 Stratagems (Ghauri, Fang 2001)
Group 1 - Being superiorStratagem 1 Cross the sea without Heaven's Knowledge - Man Tian Guo Hai
Deceive the Emperor (“Heaven”) into sailing across the sea by inviting him into a seaside city which is in reality a huge camouflaged ship. Hide the deepest secrets in the most obvious situations.
Stratagem 2 Besiege Wei to rescue Zhao - Wei Wei Jiu ZhaoSave the state of Zhao by besieging the state of Wei, whose troops are out attacking Zhao. Avoid the strong to attack the weak.
Stratagem 3 Kill with a borrowed knife - Jie Dao Sha RenMake use of external resources for one’s own gain.
Stratagem 4 Await Leisurely the exhausted Enemy - Yi Yi Dai LaoRelax and preserve your strength while watching the enemy exhaust himself.
Stratagem 5 Loot a burning house - Chen Huo Da JieTake advantage of the opponent’s trouble or crisis.
Stratagem 6 Clamour in the east but attack in the west - Sheng Dong Ji XiDevise a feint eastward but launch an attack westward.
Group 2 - ConfrontationStratagem 7 Create something out of nothing - Wu Zhong Sheng You
Make the unreal seem real. Gain advantage by conjuring illusion.Stratagem 8 Openly repair the walkway but secretly march to Chen Cang - An Du Chen Cang
Play overt, predictable, and public maneuvers (the walkway) against covert, surprising, and secretive ones (Chen Cang).
Stratagem 9 Watch the fire burning from accross the river - Ge An Guan HuoMaster the art of delay. Wait for favorable conditions to emerge.
Stratagem 10 Hide a knife in a smile - Xiao Li Cang Dao
Hide a strong will under a compliant appearance, win the opponent’s trust and act only after his guard is down.
Stratagem 11 Let the plum tree wither in place of the peach tree - Li Dai Tao Jiang
Make a small sacrifice in order to gain a major profit.Stratagem
12 Lead away a goat in passing - Shun Shou Qian YangTake advantage of opportunities when they appear.
Group 3 - AttackStratagem 13 Beat the grass to startle the snake - Da Cao Jing She
63
Use direct or indirect warning and agitation.Stratagem 14 Borrow a corpse to return the soul - Jie shi Huan Hun
According to popular Chinese myth, the spirit of a deceased may find reincarnation. Revive something “dead” by decorating or expressing it in a new face.
Stratagem 15 Lure the tiger to leave the mountains - Diao Hu Li ShanDraw the opponent out of his natural environment from which his source of power comes to make him more vulnerable to attack.
Stratagem 16 In order to capture, first let go - Yu Qin Gu ZongThe enemy should be given room to retreat so that he is not forced to act out of desperation.
Stratagem 17 Toss out a brick to attract a piece of jade - Pao Zhuan Yin YuTrade something of minor value for something of major value in exchange.
Stratagem 18 To capture bandits, first capture the ringleader - Quin Zei Quin WangDeal with the most important issues first.
Group 4 - Confused situationsStratagem 19 Remove the firewood from under the cooking pot - Fu Di Chou Xin
Avoid confronting your opponent’s strong points and remove the source of his strength.
Stratagem 20 Muddle the water to catch a fish - Hun Shui Mo YuTake advantage of the opponent’s inability to resist when they are put in a difficult and complicated situation.
Stratagem 21 The colden cicada sheds its shell - Jin Chan Tuo QiaoCreate an illusion by appearing to present the original “shape” to the opponent while secretly withdrawing the real “body” from danger.
Stratagem 22 Shut the door to catch the thief - Guan Men Zhuo ZeiCreate a favorable enveloping environment to encircle the opponent and close off all his escape routes.
Stratagem 23 Befriend the distant states while attacking the nearby ones - Yuan Jiao Jin GongDeal with the “enemies” one by one. After the neighboring state is conquered, one can then attack the distant state
Stratagem 24 Borrow the road to conquer Guo - Jia Dao Fa GuoDeal with the enemies one by one. Use the nearby state as a springboard to reach the distant state. Then remove the nearby state.
Group 5 - Gaining groundStratagem 25 Steal the beams and change the pillars - Tou Liang Huan Zhu
In a broader sense the stratagem refers to the use of various replacement tactics to achieve one’s masked purposes.
Stratagem 26 Point at the mulberry tree but curse the locust tree - Zhi Sang Ma HuaiConvey one’s intention, opinions in an indirect way.
Stratagem 27 Play a sober-minded fool - Jia Chi Bu DianHide one’s ambition in order to win by total surprise.
Stratagem 28 Lure the enemy onto the roof, then take away the ladder - Shang Wu Chou TiLure the enemy into a trap and then cut off his escape route.
64
Stratagem 29 Flowers bloom in the tree - Shu Shang Kai HuaOne can decorate a flowerless tree with lifelike yet artificial flowers attached to it, so that it looks like a tree capable of bearing flowers. One who lacks internal strength may resort to external forces to achieve his goal.
Stratagem 30 The guest becomes the host - Fan Ke Wei ZhuTurn one’s defensive and passive position to an offensive and active one.
Group 6 - Being put in an inferior positionStratagem 31 The beautiful woman stratagem - Mei Ren Ji
Use women, temptation and espionage to overpower the enemy; Attach importance to espionage, intelligence and information collecting.
Stratagem 32 The empty city stratagem - Kong Cheng JiIf you have absolutely no means of defense for your city and you openly display this vulnerable situation to your suspicious enemy by just opening the city gate, he is likely to assume the opposite. A deliberate display of weakness can conceal the true vulnerability and thus confuse the enemy. The stratagem can also be used to mean something with a grand exterior but a void interior.
Stratagem 33 The counter-espionage stratagem - Fan Jian JiWhen the enemy’s spy is detected, do not “beat the grass to startle the snake, but furnish him with false information to sow discord in his camp. Maintain high intelligence and alertness.
Stratagem 34 The self-torture stratagem - Ku Rou JiDisplay one’s own suffering in order to win sympathy from others.
Stratagem 35 The stratagem of interrelated stratagems - Lian Huan JiA stratagem combining various stratagems into one interconnected arrangement. Deliberately planning a series of stratagems.
Stratagem 36 Running away is the best stratagem - Zou Wei Shang JiRun away, when all else fails. Put up with temporary disgrace and losses to win ultimate victory. Running away to gain more bargaining power.
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Appendix 2 - Interview Guide
Interviewee:
1. Approach
How did your company initially approached China?
Directly or through mediator?
Did it encounter any problems?
2. Goal
Before you start negotiating, what kind of results do you expect in terms of what is
considered a success?
Do you work towards finalizing the deal in the most profitable way or towards establishing a
long-term relationship.
Based on your experience, can you say the same for the Chinese?
3. Relationship building and customs
Have you observed any specific pre-negotiation customs and procedures, typical for
negotiations with the Chinese?
Did you and your colleagues working in China spend any time with your Chinese partners
away from the negotiations table?
Did you talk business?
4. Time and space
Do you find anything different in the way the Chinese set up a time and place for
negotiations?
Did you get to work immediately?
5. Negotiation style (attitude)
In general, how would you describe the negotiation style of the Chinese?
Compared to the Danish one?
Collaborative or confrontational?
66
Did they use hardball tactics? (ex. time pressure)
6. Trust
How willing are they to share information? Do you share the same amount of information?
What was the level of trust?
Did things change in the course of time?
7. Formality
Can you compare the Danish and the Chinese communication styles in terms of formality?
Ranks and titles?
8. Agreement building
Can you describe the way the Chinese discuss key issues when negotiating?
Did the negotiation start with discussing the specifics or the general rules?
Was there any strict plan on which issues are discussed first and second, or there was more
holistic approach to the negotiation in terms of jumping from one thing to another?
Is it any different than the Danish way?
9. Communication style
Would you describe the Chinese as direct or indirect compared to the Danes?
Elaborate.
Examples of miscommunication?
10. Emotionalism
Did they ever get emotional about anything during the negotiations?
Compared to Danes?
Example?
11. Concession making
Can you describe the way your company and your Chinese partners make concessions.
Are both parties active by taking turns or is it rather unbalanced process?
12. Risk taking
Did they take a lot of time to analyze and think through?
67
How willing were they to take new approaches?
13. The Contract
Did you find anything different in the way the Chinese approached the contractual
agreement?
Is it specific or more general?
Do they obey it?
14. The team
Can you describe the Chinese team of negotiators?
How does it differ compared to the Danish one?
Who speaks?
Who has the power to decide?
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