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The following article is focused around key elements of negotiating and building a succesful business in China

Personal relationships and business relationships are not independent from each other in China

Best deals are made if both parties win, however without any trust and mutual respect there are no good deals or opportunities. These two types of relationships merge into each other and can not be regarded as separate. Unlike western people e.g. Germans that solely rely on the contracts because they are a guarantee in western societies, Chinese people rely on relationships.

The answer to why chinese businessmen until today rather rely on their relationships than on their legal system is rooted in china’s history. I recommend to read the article on Personalism&Paternalism to fully understand this matter. To keep it short : Chinese didn’t trust anybody outside their own family or have a legal system to rely on, because of the series of events occurred in the past.

Most starting foreign companies in China fail for a handful of reasons :
  1. Inability to deal with cultural difference
  2. Inability to maintain and build relationships
  3. Inability to manage conflicts the chinese way
  4. Inability to cope with government regulations
Cultural differences :

Technology is made by humanity, naturally technology can not be too different from how our nature is. Like every cell phone has a different software e.g. Android, iOS or Windows, people from different cultures operate from different softwares in their mind. This makes them see the world, judge people and solve their problem differently than in your country. If you want to have any chance to build a successful business abroad you need to understand these differences.

What makes it so special is that there is a visible and a hidden side of cultural differences. The priority of this article is to reveal the hidden side of chinese cultural mindset.

The obvious and the hidden side of things, left (obvious) and right (hidden) :

negotiation

Roots of Chinese Culture :

Chinese culture has it’s roots in agrarian society. People had to rely on each other to survive, this is why chinese tend to have a rather collectivist mindset, in which a group of people has more importance than a single person. The family is the most important unit and many put the family’s needs in front of their own.

The great philosopher Confucius not only has strengthen the collective mindset with his philosophy, but also put emphasis on hierarchy. He believed that in order for the society to function it needs a strict hierarchy. You can sometimes see these roots in simple things of everyday life-like positions of people at a table in a restaurant. Each person gets a seat according to its age and authority.

Another influence is Daoism with it’s Ying/Yang philosophy. According to this principle the world exists because of opposites like warm/cold, hard and soft. The key of life is the middle way, which sometimes means to compromise. Chinese people tend to compromise a lot for each other. Sometimes to get what you want means to close an eye on something else. For business it means that the best way to succeed in making deals with your partners is to compromise for each other to get what you want.

Holistic Mindset :

The written language with its pictographs has also strongly influenced the thinking of chinese people. While western people see written language as a sequence of letters, Chinese used pictographs 4000 years ago. This makes chinese people focus rather on the bigger picture than the details. For those with talent, the biggest challenge in learning Chinese sometimes is not the pronunciation or the grammar, but the fact that the most complicated things can sometimes be expressed with simplest phrases.

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