MGT 340 161-163 China+Guanxi

Doing Business in China

1, China is actively trading in world markets, is a member of the WTO, and is a major trading partner of the United States. Despite this global presence, many U.S. and European multinationals still find that doing business in the PRC can be a long, grueling process. 42 Luthans. International Management: Culture, Strategy, and Behavior (Page 161). McGraw-Hill Education. Kindle Edition.

Cultural highlights

1. The Chinese place values and principles above money and expediency. 2. Business meetings typically start with pleasantries such as tea and general conversation about the guest's trip to the country, local accommodations, and family. In most cases, the host already has been briefed on the background of the visitor. 3. When a meeting is ready to begin, the Chinese host will give the appropriate indication. Similarly, when the meeting is over, the host will indicate that it is time for the guest to leave. 4. Once the Chinese decide who and what are best, they tend to stick with these decisions. Therefore, they may be slow in formulating a plan of action, but once they get started, they make fairly good progress. 5. In negotiations, reciprocity is important. If the Chinese give concessions, they expect some in return. Additionally, it is common to find them slowing down negotiations to take advantage of Westerners' desire to conclude arrangements as quickly as possible. The objective of this tactic is to extract further concessions. Another common ploy used by the Chinese is to pressure the other party during final arrangements by suggesting that this counterpart has broken the spirit of friendship in which the business relationship originally was established. Again, through this ploy, the Chinese are trying to gain additional concessions. 6. Because negotiating can involve a loss of face, it is common to find Chinese carrying out the whole process through intermediaries. This allows them to convey their ideas without fear of embarrassment. 7. During negotiations, it is important not to show excessive emotion of any kind. Anger or frustration, for example, is viewed as antisocial and unseemly. 8. Negotiations should be viewed with a long-term perspective. Those who will do best are the ones who realize they are investing in a long-term relationship.

Confucianism

A philosophy that adheres to the teachings of the Chinese philosopher Confucius. It shows the way to ensure a stable government and an orderly society in the present world and stresses a moral code of conduct. orderly

Book of changes (Yijing) 2800 BC

How can one expect a state of abundance to be everlasting? when flowing water... meets with obstacles on its path, a blockage on its journey, it pauses. It increases in volume and strength, filling up in front of the obstacle and eventually spilling past it..." Do not turn and run, for it is nowhere worthwhile for you to go. Do not attempt to push ahead into the danger... emulate the example of the water: pause and build up your strength until the obstacles there is a time and a place, and an appropriate way to handle every circumstance. Often the solution does not present itself immediately, wait, there will be a time when a solution will present itself. holistic, in relation to nature

Very few outside firms have yet to make a profit in China.

One primary reason is that Western-based MNCs do not appreciate the important role and impact of Chinese culture.

Five Relationships of Confucius 551-479

Ruler- Subject Father-Son Older brother- Younger brother Husband-Wife Friend-Friend

the primary criterion for doing business in China

Technical competence

It is important to be

a good listener.

guanxi

chinese for good connections offered a number of potential benefits, including increased business, higher sales revenue, more sources of information, greater prospecting opportunities, and the facilitation of future transactions. 45 In practice, guanxi resembles nepotism, where individuals in authority make decisions on the basis of family ties or social connections rather than objective indices.

Major cultural differences from PRC and western countries

issue of time. Chinese are punctual, so need to arrive on time, ask many questions, nod their head often out of politeness and understanding (not out of liking what you say), need patience,

Must realize

they are acollective society, pride themselves as being a member of a group, do not single out someone and priase them, could embarass them, avoid self-centered conversation. be less boisterous and animated, greater physical differences