Managing Conflict in Chinese Business for Westerners - Sources of Conflict

Now available on Kindle, iTunes, and other eBook formats: In The Fragile Bridge Andrew Hupert, publisher of ChinaSolved, shows you how to avoid disputes in China when you can, minimize damage when you cant, and manage conflict when you must. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

When crossing a cultural divideas wide as the Western-Chinese gap, conflict arises from unexpected places … and canspin out of control much faster than you could imagine. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Introduction to Conflict: Western Perspective Western managers sees conflict as double edged sword Factors Leading  Good for emerging leaders, trial to Conflict by combat.  Bad when destructive, warping corporate culture.It’s necessary, and generally non-fatal Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Westerners and Chinese values differ We all have different notions about what constitutes good business.  Don’t assume that intelligent, reasonable people all agree on business fundamentals.  Your ideas might be news to him.  His assumptions and standard operating procedure may be surprisingly different from yours. Remember the old expat joke: “Common sense” is neither Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Race to the bottom vs. reach for the top.Chinese have made their money providing low cost manufacturing services cheaper than anyone else does.Westerners usually make their money adding value to unique or high value services (finance, advertising, design). These different orientations are source of conflict when you are localizing products or services. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

There is always another counterparty coming down the road. The current generation of Chinese negotiators had never seen a shortage of customers or clients until recently.  Finding new partners just a matter of dropping price.  Eliminates the incentive for them to resolve conflict. They have had a Plan B since the beginning. Consider it a source of power they can exploit at a moment’s notice if the situation calls for it. The Chinese side feels that they have nothing to lose except a new opportunity. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Good enough vs. PerfectChinese managers are often willing to settle for nearly good enough. They don’t worry about brand reputation and rarely concern themselves with return or refund policyWestern obsession with "insanely great design" appeals to Chinese consumers. Managers aren’t quite as enthusiastic. Potential for conflict if your partnership depends on high levels of quality control. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Manufacturing vs. IPChinese get paid for producing goods and selling . The Chinese think that making use of other people’s IP is a commonsense shortcut to successWesterners like selling services and being paid for new ideas. Lock in competitive advantages with proprietary technology, patents and copyrights. This is a major source of dispute and hostility. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Introduction to Conflict: Western Perspective Western managers sees conflict as double edged sword Post-Negotiation trial  Good for emerging leaders, Conflict by combat.  Bad when destructive, warping corporate culture.It’s necessary, and generally non-fatal Copyright 2012 Best Practices China. ltd. All Rights Reserved.

When does the negotiation end? In North America or Europe a signed contract seals the deal and ends the negotiation phase of the deal. To Americans and Europeans, negotiations have a beginning and an ending. In China, every transaction requires one or more relationships As long as the relationship is intact then the negotiation continues. The negotiating process simply does not end, and it is not supposed to. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Introduction to Conflict: Western Perspective Western managers sees conflict as double edged sword Fighting Words  Good for emerging leaders, trial by combat.  Bad when destructive, warping corporate culture.It’s necessary, and generally non-fatal Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Culture gap  Language gapEnglish is a “low context” language. The same words mean the same thing whenever they are said. No means No. English can have loaded meanings and connotationsChinese is “high context”. The dictionary definition of a word or phrase may have little to do with the meaning in a negotiation. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Common high-context meanings If Chinese counterparties ask the same question or raise the same point several times, it may mean that they disagree and want to reopen the discussion. If they say something is a little difficult it usually means expensive, slow, or the wrong approach. If they smile or laugh and break eye contact, they are embarrassed because you have just said something stupid or proposed something ludicrous. If they say, “It’s hard to be sure,” they are sure you are wrong. If they say “your Chinese pronunciation is so good” it isn’t. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Western words of conflict: Contract Contract – In the West, a signed contract ends the negotiation. In China, it represents a written record of a meeting of minds between two individuals at a certain time under specific circumstances. Contracts are important in China, but don’t compel performance or inhibit further negotiation. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Western words of conflict: RiskRisk as used by Westerners, refers to two related concepts: possibility of loss, and uncertainty. To Americans and Europeans, these are two sides of the same coin.To the Chinese, these are completely different things with widely diverging ramifications. Possibility of loss does not frighten Chinese dealmakers, but uncertainty does. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Western words of conflict: Truth Truth: Westerners view Truth as an external, universal constant. Truth is intimately tied up with rationality and knowledge. It is immutable, constant, and virtuous. Chinese have a more fluid view. Everything changes. Price levels, supply chain factors, weather conditions – the world is always in flux. To Westerners, truth is absolute and objective. To the Chinese, it just isn’t. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Introduction to Conflict: Western Perspective Western managers sees conflict as To order The Fragile Bridge: Conflict Management double edged sword in Chinese Business for Westerners: click here  Good for emerging leaders, trial To visit the Fragile Bridge site: click here by combat. To Bad when destructive, warping  see the previous slideshow: 3 Approaches to Conflict Management in Chinese Business: click here corporate culture.It’s necessary, and generally non-fatal Copyright 2012 Best Practices China. ltd. All Rights Reserved.

Order here: The Fragile BridgeThe Fragile Bridge:Managing Conflict in Chinese Business Developing relationshipswith Chinese partners,suppliers and clients is hardwork — but profiting fromthem can be even moredifficult. The bridges youpainstakingly built to crossthe cultural divide are morefragile than you thought. Copyright 2012 Best Practices China. ltd. All Rights Reserved.

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Managing Conflict in Chinese Business for Westerners - Sources of Conflict

by ChinaSolved on Aug 07, 2012

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