Cultural attitudes

Hospitality

In China, gift exchange is an indispensable part of relationship building. This practice extends even to the family of the recipient. The context of gift exchange is believed to generate an expansion of human sympathy. Foreigners are cautioned to avoid admiring the possessions of a Chinese friend during a house visit as they will very likely be offered as gifts. Traditionally, it is impolite to unwrap the gifts in front of the giver.

Wining and dining is an important part of business dealings. Obstruction at a negotiation table may well be solved after a couple of toasts at dinner table. 'Going Dutch' is generally not acceptable. In paying the bill, initiative or even a friendly fight is expected. Splitting the bill may initially seem fair but Chinese people look at the long- term relationship. Friends or business counterparts do not only meet once in a lifetime so everyone has the opportunity to reciprocate. If only one party has to pay, the wealthier one, or one who will be reimbursed by his or her organization is expected to take the initiative.

Face-saving

Actually, the real purpose of humility , modesty or self-depreciation is to save or gain face. 'I am not well prepared due to the short notice or personal incompetence . . .' is often heard at the beginning of a speech. 'Due to limited knowledge, the author begs for criticism of the mistakes in the book' is often found at the end of the preface to a book. A positive result is more likely if parties have been paying attention to face- saving. On the contrary, an outright 'no', pointing to the face or banging on the table will definitely lead to hostility . Chinese people have suffered a long history of foreign oppression and the imposition of ' unequal treaties ', which render them more sensitive to perceived power games by foreigners. An American friend doing business with China won immediate applause when he said 'my grandfather was a member of the "Eight Foreign Troops" who looted Beijing, and now I am here to find a way to compensate within my limited capacity.'

Most business contracts start with the words 'through friendly negotiation, both parties unanimously agree to the following terms and conditions in the spirit of equality and mutual benefit'. Executives would do well to keep the stated objectives in mind so that they can structure proposals in a manner acceptable to their Chinese counterparts. Price negotiation is usually regarded as the highlight of a business deal. Scope must be allowed in the price quotation for strenuous bargaining. A ' take-it-or-leave-it ' position even when the price was structured at the bottom line is not perceived as sincere, because price reduction through bargaining is a necessary component of face-saving.

With regard to contract disputes, most contracts maintain a standard clause stipulating that amicable settlement through friendly negotiation or mutual consultation is a prerequisite before any other legal action, such as arbitration, takes place. One of the unique characteristics of Chinese arbitration is that before formal arbitration proceeds, disputants are in the first place referred to the Conciliation Centre for mediation. The goal of 'amicable settlement ' “ so different from the Western norm of compromise through adversarial negotiations “ reflects the Chinese insistence on peaceful coexistence and harmony in all human endeavour, including business. In conflict resolution, a losing party is far more likely to agree to end a struggle if a way out of the situation is suggested that is not too embarrassing. Excessively driving the other side to admit a loss is an unwise approach. The recent announcement by Philips to withdraw the lawsuit against the accused unauthorized use of DVD technology by Chinese companies ended with more gains to Philips. If there is a creative way to frame the outcome of the dispute to the effect that all sides can claim at least some success, at least on the surface, it will make it much easier for the losing side to back down.

Forms of address and expressions

In addressing the elderly or senior, it is impolite to use the first name . It is advisable to include the job position of the senior person, for example 'Manager Wang', 'Teacher Liu' or 'Section Chief Zhao'. To the elderly with no senior position, one is advised to use lao (old), or shifu (master) (if he or she is a blue- collar worker) before the family name. To the younger , xiao (young) is often used before the family name to show cordiality. Tongzhi (Comrade) is a legacy of the communist revolutionary usage whose frequency of use has declined sharply except for some official occasions. There is a growing tendency to address white-collar workers with teacher before the family name. In the meantime, xianshen (Mr) and xiaojie (Miss) are increasingly popular in the cities. But while taitai (Mrs) is used behind the husband's family name, its popularity is limited since most Chinese women are socially and economically independent and their maiden names are retained after marriage . Women hold half the sky! They appear in equal positions with men both in the business and entertainment scenes.

Chinese people are good and careful listeners. Ample time is given to their counterparts to spell out their intention , proposal and solution. Most Chinese are not adept at body languages, but when they speak they demonstrate a clear line of logic. Exasperation or irritation is considered bad manners, however heated the discussion. A Minnesota magazine journalist , John Marshall, describes a businessman from a European company who had been pushed to his personal breaking point on the matter of price. The hot weather and the days of discussion over a fairly small price differential led him finally to rise from the table saying 'Obviously, we are not going to get an agreement. You've had everything I can offer you except the shirt off my back, and you can have that now'. With that, he got up, unbuttoned his sweaty shirt, tossed it on the table, and walked out of the room. After the embarrassed silence that followed, the Chinese told the leader of the company's negotiation team that they would prefer the group not to return as its representative had shown such bad manners. (Source: Business strategy for the PRC , Business International Asian Research Report, 1980, p 296)

Collectivism

It is not traditional for Chinese people to embrace collectivism. For the greater part of its, 2000-year history, China was ruled by an absolute monarchy. Unlike ancient Europe, where the basic unit of social production was the manor, the family was the basic unit of social production in traditional Chinese society. On this basis a series of ethical principles were developed that bound the Chinese tightly to their homes . In time, a mentality was formed among the Chinese, marked by heavy dependence on the collectives of family, clan and nation. This dependence inevitably produced inertia and a conservative attitude. People simply wanted to feel secure; they were afraid of change and lacked an enterprising spirit. Ironically, all such psychological needs were supposed to be met under the centralized system, in which everything from clothing to food, from housing to transportation, from cradle to grave was to be taken care of. People tended to look to the organisation or the government for a secure life.

Managers of an organization are expected in some ways to assume the role of parents. Today, particularly in state-owned organizations, employees can be found pestering their managers for better housing or even for settlements of family disputes. Individualism is not a welcome quality where collective decisions and responsibility are the accepted way of the world. Excessive numbers of meetings are an important part of the work routine, either for ascertaining public opinion or broadcasting directives from senior staff. In spite of all its merits, collectivism is also, for the executives, a shield against uncertainty. They do not have to delegate their power, but neither do they have to shoulder individual responsibility if things go wrong. When security prevails over efficiency, mediocrity finds a rich soil. In virtually all Chinese organizations, clear job descriptions and professionalism are still in a lax condition. This lack of clear job descriptions and professional responsibility necessitates collective discussions and layers of approval. Paradoxically, under this type of collectivism, it is usually on the top person who makes the final decision; collectivism is perfectly compatible with a hierarchical chain of command. It is not surprising that dozens of rubber stamps may be needed before a business licence can be obtained: it may take months to get contract approval and it would be foolish to expect decisions to be made on the spot.

Corruption

It may seem odd to relate contemporary corruption and abuse of power by government and corporate officials to the virtues advocated by Confucius. However, it not too far fetched to hold Confucius partly responsible for the prevailing corruption in China for the following reasons:

1. his condemnation of legislation;

2. his class distinction between the gentry and the petty;

3. his proposition that it is righteous for the son to help conceal the wrongdoings of the father.

Believing in the essential and original goodness of man, Confucius held that strict laws were unnecessary and that virtue was the root of civilization. 'If the ruler is virtuous,' he said, 'the people will also be virtuous '. Therefore, power should not need to be checked. Confucius took such a partial stance in favour of the gentry class that he contrived defences for their misconduct : 'Mistakes of the gentry are like eclipses of the sun and moon: they will not keep them from shining' he proclaimed. Officials are part of the learned and the learned constitute the gentry's class. The Confucian li applied, in reality, only within this class stratum. He focused on the importance of moral teaching and establishing exemplary models, but to many, the temptation of economic interest was irresistible without the threat of penalty. Active concealment by family members , relatives and other barriers built up by corrupt officials add further complication to legal enforcement.

Guanxi

Guanxi (connection) may be seen as a web of strong personal connections where the connection's official position may be utilized to extend personal favours and commitments. For example, if a friend helped my daughter to find a better job, I would be more inclined to grant him an import licence within my authority. The culture of Guanxi is based on binding social units: family, school, office or social networks. Though a controversial and subtle subject, Guanxi is so widespread and pervasive in Chinese culture that it is a subject of study “ Guanxiology . It does not aim at direct exchange or immediate gratification. Chinese culture holds it of paramount important to reciprocate favours received. Even today, many families keep a record of the gifts for a wedding or funeral so that one day they will find a way to reciprocate. Guanxi is a strategic reserve, which takes time to accumulate but can be cashed in in case of need and convenience. Some conclude that 'to get things done in China, it is not important to know what, but to know who'. It is particularly useful in tapping benefits from bureaucrats who possess freewheeling authority.

Excessive gift giving and extensive use of guanxi can be a subject of anti-corruption scrutiny both along the Communist Party line and on the strength of public law. However, the importance of guanxi and the pervasiveness of corruption tend to be generally exaggerated to many westerners to the point that it becomes misleading. Reform over the state-owned enterprises (SOEs) took the corporate management position out of the hands of former government officials and into those of business executives. The correlation between personal motivation and performance is being legitimized. While the burgeoning private enterprises are in no position to be bribed, they have the motivation to act as a source of corruption in dealing with government officials and corporate executives of SOEs, partly due to their flexibility when it comes to decision-making and distribution of cash.

Overall, the corruption situation in China is changing for the better. Incessant anti-corruption campaigning and legal changes have helped to restore bureaucratic reverence for, if not responsibility to, their duties . The ultimate driver lies in streamlined government functions, increased law enforcement, free market competition and free access to information. As China becomes an active member of the world community, especially by its entry into the WTO, wholesale changes have been taking place toward these objectives.

Today, the deep-rooted culture of guanxi still exists in China, but its importance is more restricted at the stage of 'knocking on the door'.