Managing Conflict in Chinese Business for Westerners - Sources of Conflict

Managing Conflict
in Chinese Business
For Westerners:
The Fragile Bridge
Part 2: Sources of Conflict
Copyright 2012 Best Practices China. ltd.
All Rights Reserved.

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 can't, and
manage conflict when
you must.

Sources of Conflict
in
Western- Chinese
Business

Table of Contents

1. Factors Leading to Conflict
2. Post Negotiation Conflict
3. Fighting Words


When crossing a cultural divide
as wide as the Western-Chinese
gap, conflict arises from
unexpected places … and can
spin out of control much faster
than you could imagine.

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

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

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.

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.

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.

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.


Western Perspective
double edged sword
Post-Negotiation trial
 Good for emerging leaders,
Conflict
by combat.
corporate culture.

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.


Western Perspective
double edged sword
Fighting Words
by combat.
corporate culture.

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.


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.

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.


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.

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.

Western Perspective
To order The Fragile Bridge: Conflict Management
double edged sword
in Chinese Business for Westerners: click here
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.

Order here: The Fragile Bridge
The Fragile Bridge:
Managing Conflict in
Chinese Business
Developing relationships
with Chinese partners,
suppliers and clients is hard
work — but profiting from
them can be even more
difficult. The bridges you
painstakingly built to cross
the cultural divide are more
fragile than you thought.

www.ChinaSolved.com
www.ChineseNegotiation.com


Managing Conflict in Chinese Business for Westerners - Sources of Conflict

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