Communication Key to China Business Success

COMMUNICATION ANTECEDENTS FOR
ESTABLISHING BUSINESS RELATIONSHIPS IN
CHINA
By
Geoffrey Gedge
This dissertation is submitted in part fulfillment for the
award of the degree of
Master of International Business
University of Auckland
November 2003

ABSTRACT
COMMUNICATION ANTECEDENTS FOR ESTABLISHING
BUSINESS RELATIONSHIPS IN CHINA
By Geoffrey Gedge
The purpose of this study is to explore whether the organizational management
of cross-cultural communication issues effects the establishment of business
relationships in China by Western, and more particularly, New Zealand
organizations. The study focuses on identifying the communication
antecedents that can be utilized by New Zealand organizations in the
establishment of business relationships in China. The data collected indicates
that many New Zealand organizations have trouble in establishing business
relationships in China. Identified are six communication related antecedents;
cultural difference, similarity and trust building, language barriers,
communication protocols, communication transmission and business network
development. The interviews and surveys conducted for this study identify that
New Zealand organizations are aware of these communication antecedents.
However, it was also identified that few of the organizations apply practical
consideration to, or application of these antecedents in establishing business
relationships in China.

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TABLE OF CONTENTS
PAGE
Abstract
Table of Contents i
List of Figures iv
List of Tables v
Acknowledgements vi
INTRODUCTION 1
1.0 Introduction 1
1.1 Background 1
1.2 Objectives 3
1.3 Research Focus 4
1.4 Scope of Research 5
1.5 Literature Review Outline 6
1.6 Methodology Outline 7
1.7 Study Rationale 8
1.8 Summary 9
LITERATURE REVIEW 10
2.0 Introduction 10
2.1 An Overview of the History of China 11
2.2 Chinese Business Relationships 12
2.2.1 Guanxi 13
2.3 The Impact of National Culture on Business Relationships 15
2.3.1 Power Distance 17
2.3.2 Uncertainty Avoidance 18
2.3.3 Individualism 18

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PAGE
2.3.4 Masculinity 19
2.3.5 Hofstede’sFifthDimension 20
2.4 Culture and Communication 21
2.5 The Communication Process 24
2.5.1 Understanding the Communication Process 27
2.5.2 Communication Style 30
2.5.3 Communication Interpretation 32
2.5.4 Communication Barriers 34
2.5.5 Language Barriers 34
2.5.6 Cultural Barriers 35
2.5.7 Perceptual Barriers 36
2.5.8 Non-Verbal Communication Barriers 36
2.5.9 Communication Process Summary 38
2.6 Communication Effectiveness 38
2.7 Requirements for Communication with the Chinese 39
2.7.1 Personal Address 39
2.7.2 Improved Listening Skills 40
2.7.3 Remembering and Comprehension 41
2.7.4 Adherence to the Rules of English Grammar 41
2.7.5 The Conceptof“Face” 41
2.7.6 Communication Exactness 42
2.8 Trust, Relationships, and Communication 43
2.9 Communication and Relationships 46
2.10 Summary 48
2.11 Conclusions 50

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PAGE
METHODOLOGY 54
3.0 Research Objective 54
3.1 Research Process Overview 56
3.2 Research Design 58
3.2.1 Initial Exploratory Interviews 60
3.2.2 Secondary Data Collection 61
3.2.3 The Observational Study 62
3.2.4 The Sample Survey 64
3.3 Summary 67
DATA ANALYSIS 68
4.0 Introduction 68
4.1 Cultural Difference 68
4.2 Similarity and Trust Building 69
4.3 Language Barriers 69
4.4 Communication Protocols 71
4.5 Communication Transmission 73
4.6 Business Network Development 74
4.7 Summary 77
CONCLUSIONS AND RECOMMENDATIONS 79
5.0 Conclusions 79
5.1 Limitations on Research 82
5.2 Recommendations 84
5.3 Implication for Further Research 85
APPENDICIES 87
Appendix 1Sample Survey Questionnaire
BIBLIOGRAPHY 88

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LIST OF FIGURES
PAGE
Figure 1 The Pervasiveness of Culture 22
Figure 2 The Communication Process 29
Figure 3 Chinese Business Model 45

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LIST OF TABLES
PAGE
Table 1 Western and Chinese Basic Cultural Values in Thought 21
Table 2 Hofstede’s Chinese and Western Cultures Dimensions 23
Table 3 Western and Chinese Approaches to Communication 26
Table 4 Chinese and Western Cultures Verbal Communication Styles 33
Table 5 Common Forms of Non-Verbal Communication 37

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ACKNOWLEDGMENTS
The author wishes to thanks the following people for their individual and
collective contribution to this thesis:
Maureen Benson-Rea, Director, Master of International Business Programme,
University of Auckland, for her time devoted to the co-supervision of this
thesis,
Steve Rawlinson, Lecturer, Department of International Business, University
of Auckland, for his time devoted to the co-supervision of this thesis,
Tim Munro-Keene, Group CEO, AFG Trust, for his comments and assistance
provided throughout the writing of this thesis and the conduct of the primary
data collection surveys,
S.P Chow, former Head of Finance and Economics, University of Hong Kong,
for his comments and assistance provided throughout the writing of this thesis,
Victor Percival, Chairman, New Zealand Chamber of Commerce, New
Zealand China Trade Association Inc, for his assistance with the exploratory
interviews and guidance of survey participants.

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C h a p t e r 1
INTRODUCTION
1.0 Introduction
Chapter 1 provides an overview of this study; communication antecedents for
establishing business relationships in China. An outline of the literature
reviewed is provided as background to the study objectives and research focus.
Finally, the scope of the study is outlined and the research methodology
adopted discussed.
1.1 Background
Research conducted by Geert Hofstede and others has made it clear that no
two cultures are the same, even if they appear to have similarities (Hofstede
1980, 1988, and 1990, Adler 1997, Chaney and Martin 1995, Gesteland 2002,
Rosch 1987, Warner 1997). In this regard, it would be an error to assume that
cultures across Asia are the same and that in terms of this study, that the
Chinese culture is synonymous with all other Asian cultures. The work of
Hofstede (1980) and others (Adler 1997, Chaney and Martin 1995, Gesteland
2002, Rosch 1987, Warner 1997) identifies that this incorrect assumption of
cultural homogeneity is a vital concept in terms of cultural understanding and

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communication. Data collected by the New Zealand Chamber of Commerce
evidence that many New Zealand organizations confuse the two. It is clear that
thereisno“onesizefitsall”approachtodoingbusinessinAsia,letalone
China.
Recent work undertaken by Stringer and Haworth (2003) in conjunction with
Asia 2000 and Trade New Zealand supports the proposition that while the
New Zealand market offers limited opportunities for growth and development
to New Zealand organizations, few organizations question the potential growth
value of our Asian neighbors, particularly that of China. According to Stringer
and Haworth (2003) New Zealand organizations, view China as a country
whose attractiveness for business has increased following its accession to the
World Trade Organization.
The New Zealand Chamber of Commerce has collected data over many years,
with respect to companies including Fletchers, Lion Nathan, Carters and
Fisher and Paykel. This data suggests that many New Zealand organizations
fail in their attempts to establish business relationships in China. For those that
are able to immerse themselves and understand the Chinese culture, business
practices, relationships and values, research by Cochran (2000) suggests that
success (however defined) is achievable.

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This data and research prompts questions. What are the key drivers for an
organization seeking to establish itself within China? What does an
organization need to understand about the Chinese business environment?
How and why does this environment differ from that of our own here in New
Zealand? Why is doing business in China difficult for not only New Zealand
organizations but also Western organizations in general? These questions
formed the basis for this study.
This study provides data on how New Zealand organizations attempt to
establish business relationships in China. It focuses on the antecedents for
communication in China, and the establishment of business networks. This
study examines what communication is and how to communicate within the
Chinese business environment. It also examines the role and effect of cultural
difference between the Chinese and Western cultures with respect to
communication and the establishment of business relationships in China.
1.2 Objectives
The objective of this study is to identify whether or not Western and in
particular, New Zealand organizations succeed or fail in their attempts to
establish business relationships in China. The study focuses on identifying
whether New Zealand organizations have an understanding of the key
antecedents of communication that arise in the establishment of a business

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relationship in China. This study also considers whether there is a co-
relationship between communication and the establishment of business
relationships in China. Cochran’s(2000) work on Chinese networks suggests
that there is.
The study focuses on understanding what the communication antecedents are
from a Chinese perspective, and whether the cultural differences between
Chinese and Western organizations affect the perception and interaction of
those antecedents. This study examines how cultural differences inter-relate
with the communication antecedents in the development of business
relationships in China. In this respect, recent work by Chadee and Zhang
(2000), and Luo (1997 and 2000) with respect to the role of the guanxi is
reviewed. This study concludes that key communication antecedents can be
identified, which can be extracted for New Zealand organizations in the
establishment of their business relationships in China.
1.3 Research Focus
The focus of this study is on data collected from the New Zealand Chamber of
Commerce and from work undertaken within a New Zealand based company
in Auckland, which had established operations in Shanghai, The Peoples
Republic of China (PRC) in 2002. The data collected evidences that there are
issues faced by organizations in establishing business relationships in China.

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Recent work undertaken by Graham and Lam (2003) examined this area in an
attempt to understand why American businesses in particular failed to
appreciate the broader context of Chinese culture and values in business
relationships. From this, the research problem for this study evolved.
1.4 Scope of Research
This study reviewed New Zealand based organizations, by way of exploratory
interviews, observational study, and sample survey. The organizations selected
had established business relationships within China. The review was not
limited to organizations that had continued to operate within the Chinese
market. It also extended to organizations, which had exited the Chinese
market. The New Zealand Chamber of Commerce, China Trade Association,
provided assistance in identifying organizations for participation in a sample
survey. This association maintains a New Zealand wide database of
organizations with business interests in China. The scope of the study also
focused on identifying whether there was a co-relationship between identified
communication antecedents and the establishment of business relationships in
China. Work undertaken by Cochran (2000) on Chinese business relationships
suggests that there is such a co-relationship.
The scope of the study included the collection of primary data by way of a
direct observational study conducted within the Auckland based organization

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within which the writer worked. The organizations head office is in New
Zealand. Through this data and secondary research data, a primary factor in
the establishment of business relationships in China was the management of
cross cultural communication issues.
Following discussions with several businesses that had established themselves
in China, and on the advice of Hong Kong based academics, a direct review of
New Zealand organizations that had attempted to establish business
relationships in China was undertaken. This review provided additional
primary data to support the data collected from the observational study and the
literature review. It also supported the data from the exploratory interviews
with the New Zealand Chamber of Commerce.
1.5 Literature Review Outline
The primary elements of this study involve concepts of culture,
communication, and business networks. The literature reviewed in this study
considers each concept individually and in conjunction with the other two
concepts.
Researchconductedinthe1960’sbyDutch Geert Hofstede is the base in this
study, for many of the perspectives regarding cultural difference. Nichols,
Stevens, Bartolome and Argys (1999), and Schein (1985), consider this

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perspective with respect to cultural barriers and the effect on the
communication process. Tam, Coote and Forrest (2000) identify the
importance of establishing trust and mutual respect in the communication
process, leading to the establishment of business relationships in China.
Additional support for this work is gathered from Luo (1997 and 2000), and
Ward and Smith (2003). Graham and Lam (2003) review the barriers to the
communication process, as do Coggin, Coggin and Li (2000).
Chen (2001) and Luo (2000) provide the base for the perspectives in this study
regarding Chinese business and Chinese business relationships, their
development, importance, and value. Monge and Contractor (1998) provide an
overview of the relationship between communication and the establishment of
business relationships in China.
1.6 Methodology Outline
Primary and secondary sources provide the research data for this study.
Exploratory research gathers primary data from the New Zealand Chamber of
Commerce, China Trade Association on the experiences of New Zealand
organizations establishing business relationships in China. As observational
study and informal interviews with the senior management of the organization
within which the writer works collects supporting primary data. Data
verification by way of a sample survey of New Zealand organizations known

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to have attempted to enter the Chinese business environment was undertaken.
The New Zealand Chamber of Commerce provided assistance in identifying
appropriate organizations to participate in the sample survey.
The data gathered from the exploratory interviews with the New Zealand
Chamber of Commerce, and from a review of literature provided the
foundation for the observational study and sample survey questions. The
literature published in relation to organizations that had entered the Chinese
business environment, and on the topics of communication, culture, and
Chinese business relationships provided the secondary research data for this
study. This included research studies of a number of organizations reviewed
by Chen (2001), Cochran (2000), and Whitely (2000).
Finally, the collation and analysis of these data evidences that there is a
relationship between the communication antecedents identified, and cultural
orientation, and the establishment of business relationships in China.
1.7 Study Rationale
The assertion that most New Zealand organizations are managed by, in
Hofstede (1980) terms, Western personnel, while Asian personnel manage
most Chinese businesses provides the rationale for this study. Research
conducted by Hofstede identifies that there are particular traits held by both

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Western and Asian managers that are different, and that would in the normal
course give rise to management conflict. The primary consideration for this
study is whether these cultural differences influence communication between
the cultures and the establishment of business relationships in China.
1.8 Summary
Chapter 1 has provided an overview of the research problem, the objectives
and focus of this study and a summary of the literature reviewed and the
methodology adopted in the gathering of the primary and secondary data
identified.
Chapter 2 will review the extensive literary works in the areas of cultural
orientation, communication, and business relationships, as those concepts
relate to the establishment of business relationships in China. Chapter 3
provides an explanation of the methodology adopted in the gathering of both
primary and secondary data for this study, while Chapter 4 provides analysis
of the data gathered from these sources. Finally, Chapter 5 reviews the
findings from the data analysis in Chapter 4 and provides considerations as to
research limitations and recommendations for further study.

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C h a p t e r 2
LITERATURE REVIEW
2.0 Introduction
This Chapter reviews cultural orientation, communication, and business
relationships, literary works with respect to the establishment of business
relationships in China. The aim of this study is to identify the communication
antecedents (if any) for establishing business relationships in China. Reference
to China throughout this study means Mainland China and the special
administrative regions of Hong Kong, Macau and Taiwan.
In identifying the communication antecedents (if any) for the establishment of
business relationships in China, an understanding of the history of China and
how that country’shistorical and cultural background influences business
relationships is necessary. Subsequent is an overview of what is a business
relationship in China. The differences that arise between Western business
relationships and Chinese business relationships are examined. This enables
comprehension of what and why the communication antecedents identified
throughout this literature review are considered necessary to the establishment
of business relationships in China.

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The research undertaken for this study does not investigate the concept of
success or failure in terms of establishing business relationships in China, as
this concept is beyond the scope of this study. The literature in this chapter
examines the theory behind cultural difference, the communication process
and associated communication networks, and the development of trust, for the
establishment of business relationships in China.
2.1 An Overview of the History of China
Graham and Lam (2003) in their recent work on Chinese negotiation and
cultural impact, provide an insightful overview of the roots of Chinese culture.
Throughout their review of the history of China, it is evident that there are
many modern sources on the history of China, as well as documented sources
in ancient writings; dating back more than 3,300 years. What makes the
Chinese civilization unique in global history is its continuity for over 4,000
years and its influence on not only business practices but also social and
business communication norms (Chen 2001).
The recurrent historical view of China has been the unceasing struggle of the
sedentary Chinese against the threat posed to their safety and way of life by
non-Chinese people (Cochran 2000). For centuries, virtually all the foreigners
that Chinese saw came from the less developed societies along their borders.
This conditioned the Chinese view of the outside world (Chen 2001), in which

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the Chinese saw their domain as the self-sufficient center of the universe or
Central Nation (Cochran 2000). Since that time, China has moved through a
series of political and social changes. It is the strength and length of this past
that dominates Chinese business and social practices (Cochran 2000). Without
understanding where a culture has evolved from, it is difficult to understand
how to communicate with it (Chen 2001). The Chinese national culture is not
only socially and politically strong, but dominates every facet of Chinese
business both within China and externally between Chinese businesses
overseas (Chen 2001). The role of national culture as will be examined in the
following sections builds considerably on the historical cultural embodiment
of a nation developed over time (Nichols, Stevens, Bartolome and Argys
1999). In the case of China, the role of national culture is synonymous with the
Chinese national ideology and identity (Chen 2001, Nichols, Stevens,
Bartolome and Argys 1999). The Chinese socially and culturally defines
themselves and their social and business practices and traits from their national
culture (Graham and Lam 2003).
2.2 Chinese Business Relationships
Since the focus of this study is to discover the communication antecedents for
the establishment of business relationships in China, it is essential to have an
understanding of the nature of the business relationships that prevail in China.

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These appear different from those in the West, and the question is how do
organizations develop and utilize Chinese business relationships to assist in the
establishment of their enterprises or undertakings? Equally, are Western
organizations able to develop and utilize such relationships for their own
success (Stringer and Haworth 2003)? Central to these questions is the
complex issue of guanxi (Luo 1997, 2000). The interpersonal relationships that
underpin the major dynamics of Chinese social and business structures define
guanxi (Luo 2000). Guanxi refers to the concept of drawing on connections in
order to secure favors in personal relations (Brunner, Chan and Zhou 1989). In
business, the Chinese first develop the relationship, which in turn leads to
guanxi (Li 1999). The guanxi relationship can put an organization into a
support position, or a position that offers power and an expectation that the
power held will be exerted to be helpful (Li 1999).
2.2.1 Guanxi
Guanxi has been pervasive throughout most of the Chinese business
environment for the past several centuries (Luo 2000), and literally binds
Chinese organizations within mainland China, and elsewhere globally into an
all encompassing social and business web. Guanxi has been widely recognized
as important in personal relations, and as a key determinant of business
performance in China (Liu, Dixon and Lee 2000).

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Trust is a key element of a guanxi (Liu, Dixon and Lee 2000). As will be
explored later the inability to develop trust limits the ability to develop a
business relationship in China (Ward and Smith 2003). A recurring concept in
the literature is that trust cannot be developed without communication (Tam,
Coote and Forrest 2000), and communication cannot be established without a
basis of similarity (Tam, Coote and Forrest 2000). The literature does not
define what amounts to a basis of similarity. It is unclear whether similarity in
the framework of communication and trust means cultural similarity or some
other basis of similarity such as common goals (Tam, Coote and Forrest 2000).
The relationship between these concepts is explored further in section 2.8. The
importance of guanxi in the literature develops from a widely accepted view
that guanxi is a key business element of organizational performance (Luo
2000). The relationship between the Chinese macro-economic environment
and the social micro-business environment gives rise to the guanxi network
(Luo 2000). Without access to the guanxi network, Chen (2001) states that, the
establishment of business relationships in China is limited. Other authors
(Chadee and Zhang 2000, Chen 2001, Luo 2000) support this view
As China continues to open to the global business environment the dynamics
of guanxi become gradually more entrenched, influencing both Chinese
business practice and social behavior (Chen 2001, Cochran 2000, Luo 2000)
throughout not only the greater Asian region but also the Western countries

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including New Zealand (Chadee and Zhang 2000). Guanxi within the Chinese
business environment in New Zealand is active (Chadee and Zhang 2000).
Despite the continued academic and business interest in guanxi, there is little
conclusive literature on the concept from an organizational business
perspective (Luo 1997 and 2000), and perhaps that is because guanxi is a
complex concept in practice. An understanding of guanxi is required within
the scope of this study because it is a cultural difference between Western and
Chinese cultures, which affects the communication process examined later.
If guanxi in its simplest form can be described as, trust (Luo 2000, Ward and
Smith 2003) then the literature demonstrates that trust cannot be built without
communication (Tam, Coote and Forrest 2000). Tam, Coote and Forrest
(2000) argue that while trust itself may be an antecedent to communication;
communication is an antecedent to the development of trust between parties of
cultural difference.
2.3 The Impact of National Culture on Business Relationships
A major challenge for any organization doing business internationally is its
ability to adapt to different cultural environments (Stringer and Haworth
2003). All adaptations require an understanding of cultural diversity,
perceptions, values and stereotypes (Graham and Lam 2003) and how these
interact within the context of communication and business relationships. To

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understand national culture, it is necessary to understand what “Culture”is.
Cultural characteristics between the Chinese and the West are so different that
they have an effect on the communication process (Graham and Lam 2003)
and on the establishment of business relationships in China (Alexander 2001,
Luo 2000).
Dutch researcher, Geert Hofstede (1980) found that there are four dimensions
to culture that help explain how and why individuals from different cultures
act in the way they do. His initial data was gathered from the results of two
surveys of over 116,000 IBM employee respondents from 70 different
countries, excluding China. From this data, Hofstede (1980) drew parallels and
distinctions between the work-based cultures of those 70 countries. It
continues to provide a concise overview of cultural similarity and distinction
based on the original four dimensions of power distance, masculinity,
uncertainty avoidance, and individualism. Through later work Hofstede and
Bond (1988), added a fifth dimension dealing with time orientation and
Confucian dynamism, and made assumptions regarding the Chinese, in terms
of the original four dimensions identified in the earlier work..
There are criticisms of Hofstede’s work including that it is now out of date
(Chen 2001). The main criticism is founded on the fact that it surveyed only
employees of IBM (Hodgetts and Luthans 2000). Chen (2001) considers that

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this taints Hofstede’swork with a US ethnocentric overture. In later work,
Hofstede and Bond (1988) addressed this criticism by clarifying that the IBM
study was not flawed as it dealt with the effect of the national environment and
culture on the IBM employee respondents before they joined IBM. Despite
criticism, Hofstede’s(1980) work continues to be one of the most definitive
pieces of research on culture to date (Chen 2001). For that reason, even though
Hofstede (1980) did not survey IBM employee respondents in China, it is
reviewed as foundation research dealing with cross-cultural issues in business.
Most recently, Hofstede’swork formed the basis for new research undertaken
by Graham and Lam (2003) in their review of American businesses in China
who indicate that Hofstede’swork is still valid. In order to gain an
understanding of each dimension and the effect on national culture and
communication, each dimension is summarized following.
2.3.1 Power Distance
Power Distance is defined as the extent to which less powerful members of
institutions and organizations accept that power is distributed unequally
(Hofstede and Bond 1988). Hofstede (1980) determined that in countries
where individuals blindly and without question obeyed orders given by
superiors are said to have a high power distance. The Asian cultures in
particular are typical of this (Hofstede 1980). By contrast, countries where

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subordinates legitimately question orders by superiors are said to have a low
power distance. Western cultures are typical of this trait (Hofstede 1980).
2.3.2 Uncertainty Avoidance
Uncertainty avoidance is the extent to which individuals feel threatened by
ambiguous situations, and create situations and beliefs in an attempt to try to
avoid such situations (Hofstede 1980). In countries where individuals do not
like high levels of uncertainty and require high levels of security, faith tends to
be put in the belief of experts and their knowledge. The Asian cultures are
typical of this (Hofstede 1980). By contrast, individuals who are more willing
to take risks associated with the unknown illustrate cultures, which have low
levels of uncertainty avoidance. The Western cultures are particularly
noticeable in this area (Hofstede 1980). Hofstede and Bond (1988) identified
that the Chinese demonstrated a tendency towards high uncertainty avoidance.
2.3.3 Individualism
Individualism is the tendency of individuals to look after themselves and their
immediate families only (Hofstede 1980). By contrast, collectivism is the
tendency of individuals to seek to belong to groups that look after each other
in exchange for loyalty (Hofstede 1980). Hofstede (1980) found that
individuals in Western cultures demonstrated high levels of individualistic

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behavior, while individuals in Asian cultures demonstrated high levels of
collectivist behavior. Hofstede’slater work (Hofstede and Bond 1988)
identified that the Chinese demonstrated highly collectivist behavior. The
individualism dimension has implications in relation to communication, for
establishing business relationships in China. Cochran (2000) in his review of a
number of organizations that have entered the China market has identified this
dimension as a potential source of conflict between Western and Chinese
organizations. The high individualistic behavior of Western cultures can often
bring conflict into the communication process when dealing with a highly
collectivist culture such as China.
2.3.4 Masculinity
Hofstede (1980) defined masculinity as a situation in which the dominant
values of a society are success, money, and “things”.Thisdimensiondoesnot
measure the stereotypical traits of masculine and feminine behavior. Hofstede
(1980) defined femininity as the situation in which the dominant values in a
society are the caring for others and the quality of life. Hofstede (1980) found
that a number of the Asian cultures demonstrated strong masculinity traits
while the Western cultures demonstrated traits that are more feminine.
Hofstede and Bond (1988) concluded China to be a culture demonstrating
traits that are more masculine in business.

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2.3.5 Hofstede’s Fifth Dimension
Hofstede undertook further research (Hofstede and Bond 1988) which added a
fifth dimension to the earlier research. This fifth dimension looked at the
concept of time orientation and Confucian dynamism and particularly looked
at the position of China within the scope of the previous work undertaken. The
Confucianism dimension looks at the extent to which the values of the ancient
Chinese philosopher Confucius are accepted or rejected within the daily values
of a society. These values include concepts of respect, order, and seniority.
China rated highly on this dimension whereas Western cultures varied but
generally did not rate as highly as China.
Graham andLam(2003)summarizeHofstede’s(1980)workinconjunction
with their own, as far as it relates to Chinese and Western organizations and
the effect on the communication process. Table 1 provides an insightful
summary of the main differences that exist culturally between Western and
Chinese organizations that affect the communication process between these
two groups. These differences were considered by Graham and Lam (2003) to
influence the establishment of business relationships. In section 2.4,
consideration is given to the impact of the cultural differences identified in this
section, from the works of Graham and Lam (2003) and Hofstede (1980 and
1988) on the communication process.

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Table 1 Western and Chinese Cultural Values in Thought
Western Organizations Chinese Organizations
Individualist Collectivist
Egalitarian Hierarchical
Information Orientated Relationship Orientated
Reductionist Holistic
Sequential Circular
Seeks the Truth Seeks the Way
Argument Culture Haggling Culture
Source: Adapted from Graham and Lam (2003)
2.4 Culture and Communication
Culture distinguishes one human group from another and in the context of
international business; it forms the basis that influences all behavior (Adler
1997). Figure 1 illustrates the influence that cultural differences have on an
organization (Schein 1985). This model illustrates the pervasive effects that
cultural orientation has across all aspects of human social and business
interaction.Schein’s(1985)modelillustratestheinteractionofcultural
orientation at different levels.

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Figure 1 The Pervasiveness of Culture
Source: AdaptedfromSchein’sModelofThePervasiveCulture
The model identifies the interrelationship between basic cultural assumptions,
national or societal cultural orientation, and organizational culture.Schein’s
(1985) model shows that culture consists of a series of complex and deep-
rooted phenomenon that are not easily changed. Organizations from different
cultural backgrounds will have basic assumptions and premises about dealings
with each other developed from deep-seated national ideology, values, and
cultural manifestations (Schein 1985). How to manage this is one of the issues
for Western organizations in the establishment of business relationships in
China (Stringer and Haworth 2003). Culture is one of the largest barriers to
communication (Rogers and Roethlisberger 1991). Coggin, Coggin and Li
(2000) indicate that use of the right communication antecedents assists in this
process and overcomes the barriers to communication.
Basic
Assumptions -
Premises
Ideology
Deep Seated
Values
Cultural
Manifestations
on an
Organizational
Micro-Level

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Hofstede’sand Bonds (1988) research illustrates the cultural orientation of
Western and Chinese cultures, which influence the communication process.
Table2illustratesthefivedimensionsofHofstede’s(1980)andHofstede’s
and Bonds (1988) research as it relates to Chinese and Western cultures. There
are traits that assist in understanding communication issues, which may arise
during this process between these cultural groups. Table 2, identifies areas of
potential conflict in the communication process that need overcoming in the
Table2Hofstede’sChineseandWesternCulturesDimensions
Chinese Culture Western Culture
High Power Distance Low Power Distance
High Uncertainty Avoidance Low Uncertainty Avoidance
Collectivist Culture Individualistic Culture
Masculine Culture Feminine Culture
High Confucianism Values Mixed Confucianism Values
Source: Adapted from Hofstede (1980) and Hofstede and Bond (1988)
Tables 1 and 2 identify that the Chinese tend to adopt a higher regard for
power distance, masculinity, and Confucianism principles, which can be
viewed as the Chinese positioning on respect, seniority, position and power.

- 24 -
The consequence in terms of communication-based relationships is something
that can be described as dictatorial and ambiguous. Dictatorial in terms of the
need for a high degree of respect to be shown by persons considered
subordinate and ambiguous in terms of the flow of information, which can
appear less than accurate, from a Western perspective. In contrast, the
relatively low power distance and feminine based cultures of the West tend to
result in a less formal and more conciliatory approach being adopted in all
relationships. Western cultures tend to place fewer accents on the formality of
position and seniority. The Western tendency is for low uncertainty avoidance
and high individualism resulting in aninformalculturebasedonthe“me”
principle. The result is that Western organizations look for precision and
accuracy in terms of the communication process.
This section has reviewed the impact of culture on communication and
concluded that cultural differences in orientation can affect the communication
process. The next section will review the extent of this impact.
2.5 The Communication Process
Having examined culture and concluded that it influences the communication
process, attention is now given to consideration of the elements of
communication and their relationship in the communication process. To
identify the communication antecedents that affect the establishment of

- 25 -
business relationships in China, Stringer and Haworth (2003) find that it is
necessary to understand the communication process. The rationale for this is
that the basis of all relationships is communication (Tam, Coote and Forrest
2000). In the sphere of international business, communication takes on a role
of significance, because of the difficulties in conveying meanings and
messages between people of different cultures (Chen 2001, Nichols, Stevens,
Bartolome, and Argys (1999), Tam, Coote and Forrest (2000)).
The problems caused by misinterpretation, confusion and mistrust are
compounded for an organization operating in a cultural environment different
from its own (Nichols, Stevens, Bartolome and Argys 1999). Mistrust
resulting from miscommunication will halt the establishment of many
relationships, social, or business (Tam, Coote and Forrest 2000). The
significance of trust in the communication process and in the establishment of
business relationships in China will be reviewed in section 2.8. It is necessary
to ensure that communication, taking into account cultural differences, is
established because failure to do so will result in a failure to establish any form
of relationship (Tam, Coote and Forrest 2000).
Graham and Lam (2003) provide a basis for the comparison of the
communication process between Western and Chinese organizations. This is
summarized in Table 3 following.

- 26 -
Table 3 Western and Chinese Approaches to Communication
Western Organizations Chinese Organizations
Non-Task Sounding
Quick Meetings Long Courting Process
Informal Formal
Makes Cold Calls Draws on Intermediaries
Information Exchange
Full Authority Limited Authority
Direct Indirect
Means of Persuasion
Aggressive Questioning
Impatient Enduring
Terms of Agreement
Forginga“Good”Deal Forging a Long-Term Relationship
Source: Adapted from Graham and Lam (2003)
Table 3 indicates the Western tendency for quick meetings and informality as
opposed to the Chinese position in terms of a long courting process with
formality. This indicates that relationship building may not be a natural

- 27 -
inclination for Western organizations. This could give rise to conflict when
attempting to establish business relationships with Chinese organizations.
Graham and Lam’s(2003)summarized in Table 3, evidence that there may
also be misalignment in the information exchange process between Western
and Chinese organizations. Western organizations exchange information
directly with an expectation of full authority on the part of the parties involved
in the process. By comparison, Chinese organizations exchange information in
an indirect manner and the parties involved in the process may only have
limited authority. Information exchange also differs between the two cultures.
While Western organizations have a propensity towards persuasion in an
aggressive manner and become impatient, their Chinese counterparts have a
predisposition towards being more questioning in nature and as such more
enduring. These differences are consistent with the cultural differences
identified from Hofstede’s(1980) work, and identify areas of potential conflict
and misalignment in the communication process. Tam, Coote and Forrest
(2000) identified, that any such conflict or misalignment may ultimately
hamper the establishment of a business relationship in China.
2.5.1 Understanding the Communication Process
In terms of the communication process, attention is now focused on examining
what communication is. Many authors have defined communication as the

- 28 -
process of transferring a message from a sender to a receiver (Chen (2001),
Gesteland (2002), Hodgetts and Luthans (2000)). The practical execution of
which can be fraught with difficulties (Chen (2001), Rowley (1998) and
Warner (1998)). Analysis shows that there are many problems caused by the
international context in which many organizations operate (Hodgetts and
Luthans 2000), which effect the transfer of messages between sender and
receiver. The reason for this is principally due to cultural differences (Hofstede
(1980), Hofstede and Bond (1988)). Research by Daft (1999) indicates that
problems arise because potential communication errors develop when sending
and receiving messages, due to factors such as knowledge, attitudes, and
cultural background. These factors actasfiltersandcreate“noise”inthe
transmission, reception, and translation of the communication process (Daft
1999).
The most common of these problems is the inability of the sender and receiver
to establish a relationship with each other (Chaney and Martin 1995). In the
context of the Chinese business environment, this is seen as an inability to
establish a guanxi network. The question for an organization is how in the
international context to establish a relationship for communication purposes?
Secondly, why is the establishment of a relationship primary to the
communication process and relationship establishment process? (Tam, Coote
and Forrest (2000)). Research suggests that relationship building assists to

- 29 -
build a basis for similarity (Tam, Coote and Forrest (2000)), and similarity is
the foundation for building communication linkages necessary to establish
business relationships in China (Tam, Coote and Forrest 2000).
Figure 2 illustrates the communication process. Simplified, the sender of a
message determines what he or she wants to say and then encodes the message
to convey his or her meaning to the receiver.
Figure 2 The Communication Process
Source: Adapted from Hodgetts and Luthans (2000)
Figure 2, identifies that a message conveyed is encoded. The cultural
orientation of the sender affects this. Conveyance of the message is by the use
of some form of medium such as telephone, correspondence, facsimile, email,
Sender
Messaging
Recipient
Interpretation
Medium of
Exchange
Encoding
Decoding

- 30 -
or face-to-face communication. Finally, the message is decoded and
interpreted by the receiver. The cultural orientation of the receiver affects the
decoding and interpretation process. Figure 2 illustrates the importance that the
medium of communication and the cultural orientation of both the message
sender and receiver play in the communication process. There is potential for
conflict in this process resulting from misinterpretation on the parts of the
sender and receiver.
2.5.2 Communication Style
Section 2.5.1 identified that the process of delivery and interpretation of
communication is affected by the cultural orientation of the sender and
receiver. Graham and Lam (2003) identified differences between Western and
Chinese organizations in terms of the manner of information exchange as
summarized in Table 3. Gesteland (2002) states that the manner of
communication delivery and the means by which individuals covey and
receive messages is largely affected by their personal communication style.
Gesteland (2002) determined cultural orientation dictated this, a view
supported by Hofstede (1980) and Tam, Coote and Forrest (2000). The actual
context of the communication plays a role in determining the effectiveness of
the encoding and decoding processes (Rowley (2000)). In simplifying the
communication process, Nichols, Stevens, Bartolome, and Argys (1999) argue

- 31 -
from their review of various literature works that the defined context is the
actual information and the environment that surrounds a message being
communicated and that affects the manner in which that message is conveyed.
There are four contextual verbal styles examined in this area, which affect the
communication process. According to Hodgetts and Luthans (2000), and based
on prior research of Rosch (1987) these are Indirect vs. Direct verbal styles,
Succinct vs. Elaborate verbal styles, Contextual vs. Personal verbal styles, and
Affective vs. Instrumental verbal styles. In the context of Western and Chinese
communication antecedents, these four contextual verbal styles can help
explain the means by which some of the barriers to the communication
antecedent developed. Thesebarrierscreate“noise”as identified by Daft
(1999) in the communication process.
Rosch (1987) states that an indirect verbal communication style is one in
which implicit messages are sent and received. This is characteristic of
collective high context cultures such as the Chinese culture. By comparison,
direct verbal communication styles are characterized by the sending and
receiving of more less ambiguous explicit messages, and are found within the
more individualistic low context cultures such as Western cultures. Rosch
(1987) considered that a succinct verbal communication style involved little
“talk”. It is characteristic of cultures with high uncertainty avoidance and is

- 32 -
predominantly found in high context cultures such as the Chinese culture. By
comparison, an elaborate verbal communication involves a large amount of
“talk”andcan be found in high context cultures. Thirdly, Rosch (1987) found
that a contextual verbal style is one where the focus is on the speaker and on
the roles and relationships of the parties involved. This style is evident in high
context cultures predominated by high power distances and collective traits
such as the Chinese culture. By contrast, personal verbal styles are illustrated
by instances are the focus is also on the speaker the focus is on the personal
relationships of the parties involved. This is evident in low context cultures
with low power distances and more individualistic traits such as Western
cultures. Finally, Rosch (1987) considered affective and instrumental
communication styles. Rosch (1987) says that an affective verbal style appears
process orientated and receiver focused. This is evident in high context
cultures with a collective trait such as the Chinese culture. By contrast, an
instrumental verbal style tends to view language as goal orientated and sender
focused (Rosch 1987). A verbal communication style is indicative of the low
context more individualistic cultures such as the Western cultures.
2.5.3 Communication Interpretation
By understanding that Western and Chinese utilize different methods of
communication, it is understood why the process of communication and

- 33 -
interpretation becomes misaligned between the two cultures. The effectiveness
of communication depends on how closely aligned the sender and receiver
meanings of the communication are (Putnam and Cheney 1995). If the
meanings assigned to the communication by the sender and the receiver are
different, then the communication process will not be effective. Table 4
illustrates the communication process as applied to Chinese and Western
cultures. Table 4, summarizes the work of Rosch (1987) and identifies that the
Chinese culture tends to verbally communicate on a more indirect, succinct,
contextual and affective platform than Western culture. By contrast, Western
culture has a tendency to focus on verbal communication directly in an
exacting, personal, and instrumental manner. The result may result in
miscommunication between the cultures due to cultural orientation.
Table 4 Chinese and Western Cultures Verbal Communication Styles
Chinese Culture Western Culture
Indirect Direct
Succinct Exacting
Contextual Personal
Affective Instrumental
Source: Adapted from Hodgetts and Luthans (2000) and Rosch (1987)

- 34 -
In terms of the communication process, these differences do not give rise to an
immediate trust sufficient to qualify as guanxi for the establishment of
business relationships in China (Luo 1997 and 2000). In order for Chinese and
Western organizations to establish trust, change is necessary in both the
delivery and interpretation of communication (Rogers and Roethlisberger
1991). In terms of the communication antecedents, these difficulties become
communication barriers. If these communication barriers cannot be overcome,
Tam, Coote and Forrest (2000) suggest that trust cannot be developed.
2.5.4 Communication Barriers
Ribbink (2002) considers there is benefit for organizations to understand the
barriers to communication. This assists to ensure that communication barriers
do not affect organizational performance. The more important communication
barriers according to Graham and Lam (2003) are those associated with
language, perceptions, culture, and non-verbal communication. These barriers
are considered in the following sections in terms of the potential effect on the
communication antecedents for establishing business relationships in China.
2.5.5 Language Barriers
A knowledge and understanding of a countries language is considered
important for organizations operating in foreign cultures (Gesteland 2002,

- 35 -
Graham and Lam 2003). While language education may be an advantage, the
ability to speak a foreign countries language does not guarantee success
(Graham and Lam 2003). Research indicates that written communication also
needs to be addressed (Gesteland 2002). Poor writing skills can prove a greater
barrier than poor language skills (Nichols, Stevens, Bartolome and Argys
1999). Similarly, translation problems need addressing as these also cause
language-understanding difficulties (Chaney and Martin 1995). An inability to
speak a foreign countries language is not necessarily a barrier (Luo 2000) as
with the assistance of interpreters this can be resolved.
2.5.6 Cultural Barriers
The concept of cultural barriers has been extensively considered in earlier
sections and is now considered given the effects of the different verbal
communication styles (Gesteland 2002, Hofstede 1980, 1991). Without an
understanding of the cultural orientation of both the sender and receiver of a
communication, misinterpretation of the communication and feedback will
occur (Gesteland 2002). Different emphasis and interpretation can be given to
different meanings and non-verbal components of a message communication
(Nichols, Stevens, Bartolome and Argys 1999). In terms of communication,
the cultural barriers that exist between a sender and receiver create “noise”that

- 36 -
distorts and distracts both the meaning of the communication and the
subsequent feedback (Daft 1999).
2.5.7 Perceptual Barriers
Gesteland (2002) defines perception asanindividual’sviewofreality.Howan
individual sees reality can vary due to a number of factors and ultimately
influences interpretation and decision-making (Chaney and Martin 1995).
Cultural barriers and orientation often influence perceptual barriers (Daft
1999). Perceptual barriers are evident in communications that involve or
requireindividualsto“see”others(Nichols, Stevens, Bartolome and Argys
1999). An organizations cultural orientation and perceptions determine the
manner, in which it evaluates, judges and approves or disapproves of another’s
actions (Rogers and Roethlisberger 1991). One solution suggested to this
barrier is listening and understanding (Coggin, Coggin and Li 2000, Rogers
and Roethlisberger 1991).
2.5.8 Non-Verbal Communication Barriers
In any relationship, there are specific culturally determined non-
communication barriers that can affect the establishment of a business
relationship (Alexander 2001). Non-Verbal communication is defined as the

- 37 -
transfer of meaning through means such as body language and physical space
(Gesteland 2002), and may include silence.
Table 5 Common Forms of Non-Verbal Communication
1 Hand gestures, intended and self directed (autistic)
2 Facial Expressions: smiles, frowns, yawns
3 Posture and stance
5 Interpersonal distance, special distance
6 Eye contact: direct gazing
7 Paralanguage: speech rate, pitch, volume,
8 Timing and pauses within verbal behavior
Source: Adapted from Hodgetts and Luthans (2000)
Table 5 lists some but not all, of the most important non-verbal barriers to
communication. The importance of each barrier differs from culture to culture
and situation to situation. An understanding of these non-verbal
communication facets can assist with the reduction of misinterpretation of
communications, and consequently assist in the development of trust that is
necessary for the establishment of business relationships in China (Alexander
2001, Chen 2001, Luo 1997 and 2000).

- 38 -
2.5.9 Communication Process Summary
Section 2.5 has reviewed the elements of the communication process that can
influence the transmission and receipt of communication. A number of barriers
to the communication process have been identifiedthatcause“noise”(Daft
1999) and hinder the communication process. Section 2.6 will now examine
communication effectiveness and its role within the communication
antecedents for the establishment of business relationships in China.
2.6 Communication Effectiveness
In considering how the communication antecedents might be hindered
attention focuses on communicating within the Chinese business context.
Organizations can take a number of steps to improve communication
effectiveness in the Chinese business context (Alexander 2001, Chaney and
Martin 1995, Rosenbaum 2003). These include face-to-face, meetings,
telephone calls, and personalized email, all considered more effective in
communicating in the Chinese business context (Alexander 2001, Rosenbaum
2003). Daft (1999) suggests that individuals also need to listen actively, find
areas of interest with their counterparts, resist distractions, be responsive, and
judge the content not the delivery. To find an area of interest with ones
counterparty assists in the development of similarity, which is the foundation
for communication (Tam, Coote and Forrest 2000).

- 39 -
2.7 Requirements for Communication with the Chinese
The literature suggests that there are communication process differences
between Western and Chinese organizations. By understanding, these
organizations can communicate more effectively within the Chinese business
context for the establishment of business relationships (Alexander 2001).
Organizations that have ventured into China have discovered that living and
working in China is a unique experience (Coggin, Coggin and Li 2000). The
literature in this area is specific to business negotiations and generally over
looks the more complex business communication requirements for a business
relationship (Alexander 2001, Coggin, Coggin and Li 2000, Fang 1999, Luo
2000). The communication antecedents for establishing business relationships
in China require more than cultural sensitivity (Alexander 2001). It requires a
focused cultural sensitivity within the communication context with the goal of
increasing the communication senders and receivers abilities to respond. There
are a number of communication antecedents suggested by the literature,
considered in the following sections.
2.7.1 Personal Address
Western-based cultures adopt a more informal approach to business
relationships than do the Chinese (Luo 1997). A frequent error made by

- 40 -
Western organizations is the addressing of people by first names (Coggin,
Coggin and Li 2000). Western individuals see this as a sign of friendliness;
however, heavily influenced by Confucian beliefs, Chinese people prefer to
give consideration to the social status and age of the person they are
addressing (Coggin, Coggin and Li 2000). To show politeness and
demonstrate respect for someone who is senior in age or social status, the
administrative title plus family name is often preferred (Coggin, Coggin and Li
2000). It is impolite to use the person’sfirst name in the address of a senior or
superior (Coggin, Coggin and Li 2000). It is safe to use first names when the
other party instructs you to use his or her first name (Coggin, Coggin and Li
2000).
2.7.2 Improved Listening Skills
The Western world has embraced the new technologies, particularly those
involving use of the internet, such as email, however most Chinese
organizations have not (Coggin, Coggin and Li 2000). The literature suggests
that the more senior in age and status the Chinese business associate, the less
likely he or she is to have access to or respond to email communications
(Coggin, Coggin and Li 2000). Many Chinese prefer to listen for hours on end.
The Chinese have developed attention spans, listen politely and comprehend
what is being said (Coggin, Coggin and Li 2000).

- 41 -
2.7.3 Remembering and Comprehension
As important as the ability to listen, is the ability to remember and the Chinese
are particularly good at remembering. Western organizations need to focus on
the ability to remember what is said, rather than what is thought said (Coggin,
Coggin and Li 2000). This ability to remember extends to the ability to
remember faces, names, places, dates and times, all considered part of respect
(Coggin, Coggin and Li 2000). Western organizations need to appreciate that
the Chinese not only remember what is said, but also understand what is said
in terms of their own cultural orientation (Coggin, Coggin and Li 2000).
2.7.4 Adherence to the Rules of English Grammar
The Chinese have learnt through listening, reading and remembering to follow
accepted authority (Coggin, Coggin and Li 2000). To the Chinese, the
accepted authorities of English usage are the authorities on grammar, books
and dictionaries (Coggin, Coggin and Li 2000). This may lead to challenges
for Western organizations, as there are variations of the English language from
country to country distorted through immigration and national usage.
2.7.5 The Conceptof“Face”
The Chinese are particular about when they will argue with people. This is not
done in public. In meetings the Chinese may be reluctant to express ideas or

- 42 -
raise concerns directly (Coggin, Coggin and Li 2000). The general rule is
never to contradict another persons ideas, particularly that of an official, senior
or superior. Contradiction is considered a threat to position which amounts to a
personal attack (Coggin, Coggin and Li 2000). This concept becomes difficult
when consideration is given to the idea that even commenting, questioning or
seeking explanation for understanding, can be seen as causing a person lose
“face”(Coggin, Coggin and Li 2000). This Chinese rule cause’sdifficulty for
Western organizations where people in power and position are often
accustomed to being questioned, challenged and commented upon (Coggin,
Coggin and Li 2000).
2.7.6 Communication Exactness
In China, use of general words, even in relation to instructions has developed
over centuries even though the Chinese appreciate receiving specific
instructions (Coggin, Coggin and Li 2000). It is the result of wanting to avoid
trouble or responsibility (a high uncertainty avoidance, in Hofstead terms), and
continues to be found even in situations requiring a high level of exactness
(Coggin, Coggin and Li 2000). Requesting clarification of exactness is not
appropriate as this might cause embarrassment if the receiver does not know
the true level of exactness (Coggin, Coggin and Li 2000).

- 43 -
2.8 Trust, Relationships and Communication
Having considered the principle communication antecedents, attention now
focuses on the concept of trust and the establishment of business relationships
in China. The literature indicates that in order to develop a business
relationship in China, it is necessary for the parties to develop a level of trust
sufficient to establish and maintain such relationship (Tam, Coote and Forrest
2000). The key antecedent in establishing trust is communication (Ward and
Smith 2003). Developing the correct communication style and protocol is of
importance to the overall establishment of a business relationship in China
(Cochran 2000). So is the development of mutual trust (Ward and Smith
2003). The lack of trust remains the utmost inhibitor to the establishment of
relationships in China (GUV 1997, Liu, Dixon and Lee 2000).
In the Chinese business context as a belief about an exchange partner’s
trustworthiness that results in that exchange partner’sexpertise, reliability or
internationality defines trust (Liu, Dixon and Lee 2000). Trust is the
foundation of good business behavior and is directly related to the cooperative
behavior that is seen as conductive to the success of a relationship (Wong
1998). The building trust in the Chinese business context involves frequent
face-to-face contact (Liu, Dixon and Lee 2000). Research by Jarvenpaa (1998)
concluded that individuals from collectivist-based cultures are more likely to

- 44 -
rely on face-to-face contacts when seeking to eliminate uncertainty. According
to the general principals of Confucianism, the evaluation of a partner’s past
and present behavior is a pre-requisite to building trust (Liu, Dixon and Lee
2000). This evaluation is based on frequent face-to-face contact (Liu, Dixon
and Lee 2000). According to Leung, Wong and Wong (1993), trust can only
be engendered when partners have the ability to observe each other’s
behaviors across a wide variety of situations and over a period.
Tam, Coote and Forrest (2000) identified potential communication antecedents
for the establishment of business relationships in China. Their study focused
on 152 Chinese business relationships and examined the effect of conflict,
communication, trust and similarity in the establishment and maintenance of
such relationships. It is clear that Chinese organizations focus on longer-term
goals and benefits, rather than on short run profitability (Seagrave 1995). It is
also clear that a longer-term orientation can only exist when the parties to the
relationship focus on the long run goals and mutually recognize the
interdependence of the long-term outcomes (Ganesan 1994). In contrast to
their Chinese counterparts, most Western organizations focus on the short-
term maximization of returns from an individual transaction (Tam, Coote and
Forrest 2000). With such polarized orientations, it is possible that Chinese and
Western organizations will never be able to develop interlinked relationships
that match true Chinese business relationships.

- 45 -
Figure 3 illustrates the nature and inter-relationship of the factors contributing
to the establishment of Chinese business relationships.
Figure 3 Chinese Business Model
Source: Adapted from Tam, Coote and Forrest (2000)
The key factor that emerging from the literature is the need to develop trust.
Figure 3 illustrates the importance in the establishment of longer-term
relationships of mutual trust and sound communication lines. These assist to
minimize conflict as a relationship destroyer. Tam, Coote and Forrest (2000)
suggest that in order to establish a longer-term business relationship in China,
Conflict
Communication
Similarity Trust
Long Term
Orientation

- 46 -
you need trust, communication and an absence of conflict. Figure 3 illustrates
that conflict is avoided through the development of trust and communication.
Also illustrated is that the concept of trust itself is developed through
communication, and that communication is developed through similarity
between the parties. Trust, which is a basis of all Chinese business
relationships (Luo 2000), appears to be developed and influenced by both
communication and similarity, which supports the suggestion that
communication is assisted by similarity. If similarity in this context means
cultural similarity, then Hofstede (1980, 1991) and Hofstede and Bond (1988)
indicate that such similarity will never exist as between Chinese and Western
organizations. Tam, Coote and Forrest (2000) and other authors (Chen 2000,
Luo 2000, Rosch 1987) do not qualify whether the similarity for establishing
communication can be developed on a basis other than cultural similarity, such
as business goal similarity. In this respect, Rosenbaum (2003) suggests that
organizationsneed to understand theircounterparty’sexpectations,and
establish common ground, in order to develop business relationships.
2.9 Communication and Relationships
The relationship between communication and establishing business
relationships in China is considered. In all organizational communication
networks, the flow of information between groups for the establishment of

- 47 -
business relationships is constant and necessary (Monge and Contractor 1998).
The mechanisms that help explain the creation, maintenance and dissolution of
these complex organizational networks largely difficult to understand (Monge
and Contractor 1998), but necessary if an overall understanding of business
relationships in China is to be achieved (Cochran 2000).
In terms of communication networks within Chinese business relationships,
each individual and each organization plays a role within the communication
relationship. The type of network and communication linkage(s) that exist
between organizations and the type of communication and network
relationship(s) that exists largely determine the success of the network
relationship (Monge and Contractor 1998). In Chinese business relationships,
there does not appear any evidence that such relationships ever dissolve. They
appear to enter a dormant phase and later revive when needed. This differs
considerably from the Western business perspective where business
relationships are generally short term, one off profitability exercises, dissolved
at conclusionandrebornfora“new”businessrelationshiplaterrequired.
By understanding communication networks, a further understanding of the
Chinese business relationship is gained. Such relationships are viewed in terms
of indirect links, frequent communication, stability, multiplicity, strength,
direction, and symmetry (Cochran 2000, Monge and Contractor 1998). While

- 48 -
the actual networks can be viewed in terms of size, inclusiveness, components,
connectivity, density, centralization, symmetry and transitivity (Monge and
Contractor 1998), it is evident are that these factors that demonstrate
communication and business relationships are highly complex and continually
changing. (Cochran 2000, Luo 2000).
2.10 Summary
The literature suggests that the establishment of business relationships in
China is both complex and involved. Even more so is the development and
maintenance of communication networks. The establishment of business
relationships in China is based on communication. Without communication,
trust cannot be built and without trust, business relationships or guanxi cannot
develop.
Business relationships in China link entrepreneurs across the Asia Pacific
region in an interlinked business and social network (Luo 1997). It is clear that
business relationships in China possess a wealth of political, social, and
business influence within the Asia pacific region (Seagrave 1995). It is argued
that no business within the Asia Pacific region is able to maximize its potential
without involvement within a Chinese business relationship (Tam, Coote and
Forrest 2000). Guanxi and networksaffectmanagers’strategicchoices,and
influence the overall performance of an organization (Luo 2000). The

- 49 -
literature on guanxi finds that these network relationships are a strategic
mechanism to assist an organization to overcome organizational competitive
and resource failings, by encouraging cooperation and exchange of favors with
other competitors and government authorities (Luo 2000).
Organizational communication is affected by the uniqueness of the
organizations communication channels and the organizational communication
climate (Putnam and Cheney 1995). The superior subordinate relationship
within a Chinese organization as distinct to the same relationship within a
Western organization canaddtocommunication“noise”whenthetwo
cultures meet.
Chinese organizations place less emphasis on short-term outcomes than
Western organizations (Buttery and Leung 1998, Xin and Pearce 1996). The
longer-term orientation and nature of a Chinese business relationship is able to
capture the extent to which Chinese organizations desire to maintain a
relationship despite short-term sacrifices (Tam, Coote and Forrest 2000). In
contrast Western organizations focus on short-term profitability. This does not
mean that Chinese organizations do not focus on profitability; however, the
focus of Chinese organizations is on the longer-term benefits as well as
profitability.

- 50 -
Western organizations can gain an advantage over competitors by developing
and maintaining their own guanxi network in China (Luo 2000). Knowing
how to develop, maintain and reinforce guanxi relations is vital for any
organization in China (Luo 2000). This process involves integration of
individual guanxi into an organizational guanxi web (Luo 2000). The literature
suggests that many Western organizations fail to understand that guanxi
involves constant monitoring both within the organization itself as well as the
external guanxi in a constant drive to improve an organizations social and
business credibility (Luo 2000).
2.11 Conclusions
The literature reviewed has identified a number of communication antecedents
that appear to contribute in a complex matrix to the establishment of business
relationships in China. A discussion of these follows.
Work undertaken by Geert Hofstede (1980) suggests that there are cultural
differences underpinning the both Chinese and Western cultures which in turn
impacts the nature of business relationships between these two groups. This
work viewed in association with that of Gesteland (2002), Hodgetts and
Luthans (2000), and Scheins (1985) establishes a base for understanding some
of the communication barriers that may exist between Chinese and Western
organizations. Nichols, Stevens, Bartolome, and Argys (1999) identified

- 51 -
cultural orientation is a communication barrier. As such, the literature suggests
that the first communication antecedent critical to the establishment of
business relationships in China is a base understanding that cultural
differences exist.
Secondly, Tam, Coote and Forrest (2000) indicate that the basis of Chinese
business relationships is mutual trust and respect. Tam, Coote and Forrest
(2000) also suggest that the basis for building trust and respect is good
communication. A precondition to building good communication appears from
their research to be a basis of similarity. A second communication antecedent
is one of trust and similarity.
Thirdly, language is identified as a potential communication barrier through
research of Graham and Lam (2003). In terms of language, it is important to
examine the spoken as well as the non-spoken aspects of language and how
the differences from Graham and Lam (2003) work are managed by Western
organizations. Language as a communication antecedent to the establishment
of business relationships in China is important to examine because it forms the
basis of the communication process.
Fourthly, an understanding of basic Chinese communication requirements, as
identified by Coggin, Coggin and Li (2000) and Chen (2001) is beneficial. It is
important to have an appreciation for the use of personal titles in address. The

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fourth communication antecedent examined is the use of personal titles in
addressing Chinese business counterparts.
Fifthly, Coggin,CogginandLi’s(2000)work,examinedtherolethatlistening
plays in the communication process and the use of words and the context in
which those words are used, particularly as far as that context relates to use of
the English language. Words, terms, phrases all can have different meanings in
different situational contexts. The fifth communication antecedent looks at the
peripheral aspects of communication in terms of listening and language use as
they relates to the delivery and receipt of communication.
The sixth antecedent examines the actual communication network. This
examines how communication is effected to establish business relationships in
China. This seeks to examine the importance of understanding the
communication network linkage and the effect on the communication process
in the establishment of business relationships in China. The sixth
communication antecedent looks at the “how”aspect of establishing business
relationships and how trust and mutual respect and similarity are built.
In the forthcoming chapters, these antecedents will be verified as they relate to
the experiences of New Zealand organizations in the Chinese business
environment. Chapter 3 outlines the methodology adopted for identifying and
verifying the communication antecedents, while Chapter 4 provide analysis of

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the data collected through the verification process. In concluding, Chapter 5
reviews the findings, provides recommendations for further research, and
outlines the limitations of the research undertaken.

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C h a p t e r 3
METHODOLOGY
3.0 Research Objective
In Chapter 2, key communication antecedents are identified for the
establishment of business relationships in China. This chapter will outline the
methodology adopted to verify the communication antecedents identified from
the literature, as those antecedents relate to the experiences of New Zealand
organizations in establishing business relationships in China.
By looking at how New Zealand organizations approach the establishment of
business relationships in China, it is considered that the key communication
antecedents identified will be verified. An implicit assumption is the
proposition that management of the key communication antecedents is
necessary for the establishment of business relationships in China. The
purpose of the further research is to verify the following:
1. Whether organizations have a general understanding and appreciation of
the cultural differences between the Chinese and their own cultural
orientation,

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2. How organizations look to create some form of similarity in order to assist
the communication process and the development of trust for establishing
business relationships in China,
3. How organizations overcome the language barriers and ensure that the
communication process is not hindered by other barriers,
4. Whether organizations have an appreciation for the particular aspects of
Chinese communication such as use of title in address,
5. How organizations ensure that the meaning of a communication
transmission is effected and that both parties to a communication
transmission attach the same meaning and interpretation to the
communication, and
6. Whether organizations understand the aspects of Chinese communication
networks in the establishment of business relationships in China.
The objective of this study is only to ascertain what the communication
antecedents are that influenced the establishment of business relationships in
China, and to verify whether those communication antecedents are recognized,
acknowledged and utilized by New Zealand organizations, in the
establishment of their own business relationships in China. Section 3.1

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provides and overview of the research process adopted, while Section 3.2
explains the research design.
3.1 Research Process Overview
The scope of this study focused on a review of New Zealand based
organizations, by way of exploratory interviews, literature review,
observational study, and sample survey. The review was not limited to
organizations that had continued to operate within the Chinese market. It
extended to organizations, which had exited the Chinese market. The research
process included the collection of primary data by way of exploratory
interviews, a direct observational study conducted within the Auckland based
organization within which the writer is employed, and a sample survey of New
Zealand organizations identified as having entered or intended to enter and
establish business relationships within China. Secondary research data was
collected from literature sources.
Exploratory research was conducted to gather primary data from the New
Zealand Chamber of Commerce, China Trade Association on the experiences
of New Zealand organizations establishing business relationships in China.
Additional primary research was undertaken by way of observational study
and informal interviews with the senior management of the organization
within which the writer is employed. Verifying primary research was

- 57 -
undertaken by way of a sample survey of New Zealand organizations known
to have entered the Chinese business environment. These organizations were
identified with the assistance of the New Zealand Chamber of Commerce.
This review provided additional primary data to support the primary data
collected from the exploratory interviews and the secondary data from the
literature review.
The observational study and sample survey questions were developed based
on the data gathered from the exploratory interviews with the New Zealand
Chamber of Commerce, and from secondary source data from a review of
literature sources. The secondary research data was gathered from a variety of
literature works published in relation to organizations that had entered the
Chinese business environment, and on the topics of communication, culture,
and Chinese business relationships, including extensive studies of a number of
organizations reviewed by Chen (2001), Cochran (2000), and Whitely (2000).
Finally, data was collated and analyzed. This evidenced that there was a
relationship between the communication antecedents identified, and the
Through the literature review and exploratory research interviews that took
place, the research problem, the subject of this study, was identified and the
unit(s) of analysis and related variables identified. This was considered an

- 58 -
appropriate procedure for identifying the problem, due to the limited literature
in this area, and the limited reported experiences of Western organizations in
entering the Chinese business environment (Zikmund 2000).
3.2 Research Design
A review of literature on research methodology and design (Tam, Coote and
Forrest (2000), Whitely (2000), Zikmund 2000) provided the approach
adopted for this study. Once the research problem was identified, attention
focused on the basic research design. Consideration was given to the types of
questions to be answered, what was required, in terms of descriptive or casual
finings, and the sources of data. A review was conducted to determine whether
the research objective should be answered by asking people, and to ascertain
the period for gathering the required information. Finally, research was
conducted to ascertain the wording of surveys and interviews, and application
was made for University of Auckland Ethics Committee approval. Approval
was granted under reference number 2003/332.
Identification of the research process assisted in the determination that primary
data would be best gathered by initially undertaking exploratory interviews
with professional organizations such as the New Zealand Chamber of
Commerce, in order to gain a broad overview of industry known problems
with communication and the establishment of business relationships in China

- 59 -
by New Zealand organizations. Following this, the collection of secondary
data from literature sources identified the research problem and possible
solutions. In order to verify the primary and secondary data collected through
these processes, further primary data collection was undertaken by way of
direct observation of company employees and clients within a New Zealand
based company operating in Shanghai, China. Company consent was first
obtained, as was approval from the University of Auckland Ethics Committee.
Finally, consideration was given to identification of additional primary data by
an appropriate method such as a sample survey of other New Zealand
organizations that had entered China within the previous twelve (12) month
period, or who intended to operate within China during the next twelve (12)
month period. The purpose was to verify whether the data collected from the
observational study and the literature sources was reflective of New Zealand
organizations is general.
For the purposes of the sample survey of New Zealand organizations,
identification of an appropriate respondent database was undertaken. A
decision was made following an invitation from the President of the New
Zealand Chamber of Commerce –China Trade Association, to utilize the New
Zealand Chamber of Commerce’sdatabase, which is a free public access
database that categorizes its members into geographic business regions for
statistical and networking purposes. This data base was selected and utilized

- 60 -
due to the ability to be able to rely on the accuracy of information maintained
by the database owner, in this case the New Zealand Chamber of Commerce.
The sample survey questions were designed, reviewed and pre tested, prior to
submission to the University of Auckland Ethics Committee for approval. An
initial pilot test was then conducted within the same New Zealand based
company that the observational research took place, in order to ascertain any
potential errors. The sample survey was distributed by email and post to 74
identified New Zealand Chamber of Commerce members that had indicated in
their member profiles an interest in business in China.
Following collection of the primary data, analysis and evaluation was
undertaken. Editing and coding of variables was based primarily on the
identified communication antecedents, size of organizations, and length of
time business had been conducted in China, use of networks, and use of
introduction parties. A brief overview of each of the principal methods of data
collection will now be outlined.
3.2.1 Initial Exploratory Interviews
Two initial exploratory interviews took place. The organizations interviewed
were the New Zealand Chamber of Commerce and the University of Hong
Kong, Department of Finance and Economics, both of which had collected
their own data over a number of years with respect to Western organizations

- 61 -
attempting to establish business relationships within Mainland China. Data
collected from these interviews was recorded in handwritten notes for analysis
later and crosschecked with the interviewees.
3.2.2 Secondary Data Collection
Following the exploratory interviews, secondary data was collected throughout
the literature review process. Secondary data was collected from authorative
textbook authors on the topics of cross cultural issues, communication, and
Chinese business networks. Additional sources of secondary data included
research articles and journals on topics of communication, Chinese business
relationships, cultural orientation. Other Masters and PHD research projects
from Australian, New Zealand, American and Hong Kong Universities on the
topics of Chinese communication techniques, Chinese business relationships
were also reviewed.
The purpose of the secondary data collection was primarily fact-finding
(Zikmund 2000), for assisting with the identification of the research problem
and the research design of both the observational study, and the New Zealand
organizational sample survey. The secondary data collection process was
evolutionary in nature in that question and problem continually evolved
throughout the secondary data collection process until the point that the
research problem and possible solutions were identified.

- 62 -
3.2.3 The Observational Study
An observational study was undertaken within the New Zealand Company in
which the writer is employed, following approval from the University of
Auckland Ethics Committee as to the objectives of the observation undertaken.
This part of the study was undertaken as formulated research with the purpose
to verify elements of the exploratory interviews and the literature review
(Morrel-Samuels 2002, Zikmund 2000). The literature reviewed on
observational studies (Zikmund 2000) indicated that for the purposes of this
study an observational study was an appropriate source of primary data
collection due to the writer’spersonal knowledge of and relationship with the
participants and the environment in which the observational study was
undertaken. The observational study was conducted within a corporate office
setting and as such a controlled working environment. Additionally, the nature
of the observational study was one in which social behavior; frequency and
duration of activities were being observed and recorded.
University of Auckland Ethics Committee approval for the observational
study, and company employee participant consent was obtained. In the case of
the company employee participant consent, this was obtained at a corporate
level from the company Group CEO, and at a personal level from the
employee participants being observed. There were 6 company employees

- 63 -
being observed for this part of the study. No electronic recording of
participants or activities took place, due to privacy issues raised to the study at
the corporate level. The observational study was systematically planned to
cover the six key communication antecedents outlined in section 3.0 and
observations were systematically recorded and entered into an Excel
spreadsheet for analysis. The results of the observations were crosschecked
and verified with the company personnel being observed for accuracy as
matter of prudence (Morrel-Samuels 2002).
The observational study sought to gather primary data in relation to use by
company employees of telephone, facsimile, email, written correspondence,
and teleconference facilities in their dealing with counterparties in China, and
the primary language used by company employees (i.e. English or Chinese) in
their dealings with counterparties in China. The study also sought to identify
whether company employees used titles in address to counterparties in China
and what methods (if any) of reinforcement of communications took place to
ensure that counterparties in China understood what was required. The
observational study focused on identifying the cultural mix of employees and
their roles in terms of the creation of similarity with Chinese counterparts, and
the overall approach of the company to the building of relationships with
Chinese counterparties.

- 64 -
3.2.4 The Sample Survey
The sample survey was conducted to verify the data collected from the initial
exploratory interviews, the secondary literature based data and the
observational survey data. The sample survey was conducted by way of
questionnaire designed to reflect that a cross sectional study was being
undertaken nationwide, at a set point in time (Zikmund 2000). The purpose of
this was to obtain a broad overview of the general approach of New Zealand
organizations to establishing business relationships in China.
Some elements of the sample survey questionnaire could be classified as
longitudinal, in that respondents were asked questions with time ranges from
the present to the past and future twelve-month periods. The sample survey
questions were designed on a simple attitude-scaling basis, or a yes or no
answer basis, as well as a category-scaling basis consisting of several response
categories providing the respondents with alternative rankings. Assistance in
the design of the sample survey questionnaire was gained from a review of
prior work and surveys undertaken by a number of authors (Morrel-Samuels
2002, Tang, Lai, Zhu and Quan 1996, Whitely 2000). A number of behavioral
intention or expectation questions were included to summarize respondent
overall positions.

- 65 -
The sample survey questionnaires were distributed by email and direct mail to
74 identified New Zealand organizations who were all members of the New
Zealand Chamber of Commerce, and who in their profiles had indicated that
they had, or were intending to undertake business in China. 11 invited
participants responded to the sample survey, representing a 14.86% response
rate. Non-response rates are always a problem and this will be examined
furtherinChapter5under“ResearchLimitations”.
In developing the sample survey questionnaire (Appendix 1), it was
determined that in order to receive the greatest number of direct and accurate
responses (Morrel-Samuels 2002) that a structured question format would be
adopted, limiting the number of variable answers respondents could give. The
majority of the sample survey questions were designed to be undisguised and
straightforward. A number of disguised questions were included for cross
checking respondent’sprior answers and to ensure that respondents could not
tryto“guess”theanswerrequired.Questions were designed for relevance and
pre-tested for accuracy (Morrel-Samuels 2002). No open-ended questions
were included. The language of the sample survey questions was kept simple
and did not carry any double-barreled question items (Zikmund 2000). All
questions related to only a single issue. Filter questions were initially asked to
identify the type of category a respondent company came from, followed by

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specific questions on communication preferences, business networks, practices
and satisfaction.
The sample survey questionnaire is divided into 4 specific data collection
sections. Section 1 gathers generic data about respondent companies such as
size, industry, turnover, employee numbers, and ownership. The ownership
question is aimed at identifying whether cultural similarity exists.
Section 2 reviews organizational intention for the establishment of business
relationships in China. The questions in this section are aimed at identifying
survey respondent’sentry into the China market. These questions assist in
identifying the level of organizational knowledge that an organization has
about the establishment of business relationships in China.
Section 3 is the main data collection section of the questionnaire. This section
aimed to collect specific data concerting organizational interaction in the
China market. Survey respondents were questioned regarding amount and type
of contact within the China market, the frequency of these interactions and the
type of interactions be it social or business. The organizational level at which
these interactions took place and the ethnic origin of the primary contact
person within the organization were questioned. This section focuses on the
use of titles by organizations and the methods of ensuring communication
effectiveness are achieved.

- 67 -
Section 4 attempted to collect data concerning an organizations purely
subjective view of its activities in China, and the organizations intention for
the forthcoming 12 months. The purpose was to identify the organizations
commitment to establishing business relationships in China and whether the
organization acknowledged that the establishment of such relationships is
longer term and not solely profit focused. The nature of this section required
subjective analysis on the part of the survey respondent.
3.3 Summary
This chapter has outlined the process and rational for the methodology adopted
in the collection of data for this study. This process involved exploration,
verification, further exploration and final verification of data identified as
relevant to the research problem.
Through this process of exploration and verification, the research problem was
defined and solutions identified. Data collected from the research process was
systematically recorded for further use and analyzed though the use of Excel
spreadsheets. The results of the exploratory interviews, the observational study
and the sample survey are discussed in the following Chapter.

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C h a p t e r 4
DATA ANALYSIS
4.0 Introduction
Chapter 2 identified 6 key communication antecedents for the establishment of
business relationships in China. These deal with areas of cultural difference,
similarity and trust, language barriers, communication requirements,
communication transmission and business network development. The data
collected from the exploratory interviews, the observational study and the
sample survey will be analyzed with respect to each of these antecedents. The
data collected from these primary sources generally supports the literature
perspectives as related to the 6 identified communication antecedents for the
4.1 Cultural Difference
The data gathered from the New Zealand Chamber of Commerce and the
University of Hong Kong, Department of Finance and Economics from the
exploratory interviews is essentially similar in terms of content. Both
organizations viewed that the key problems with Western organizations
establishing business relationships in China is a general lack of cultural

- 69 -
awareness of the cultural and communication differences that existed between
Western and Chinese cultures.
4.2 Similarity and Trust Building
It was evident from the observational study and the sample survey that New
Zealand organizations did not generally consider the issue of similarity. The
respondent organizations of the sample survey considered that the contractual
relationship was of primary importance. It was because of the contractual
relationship that they felt trust could be based.
This evidences data provided by the New Zealand Chamber of Commerce in
the exploratory interviews. The Chamber expressed concern that New Zealand
organizations did not generally appreciate the nature or need for trust in
establishing business relationships in China.
4.3 Language Barriers
While difficulties associated with language is an issue, it is generally
considered that this is not a paramount communication problem, albeit, one
that could greatly aid in reducing communication barriers. The New Zealand
Chamber of Commerce considered that from a New Zealand perspective, New
Zealand organizationshada“businessarrogance”thatdictatedthatbusiness
must be conducted their way and in their language.

- 70 -
By contrast, from the observational study, the language most commonly
spoken within the Auckland office of the company observed, when dealing
with its Shanghai office and company clients was Mandarin. Mandarin was
spoken on average 85% of the time during the observational periods and
English spoken the rest of the time. The language always spoken within the
companies Shanghai office was Mandarin. Other than the Group CEO, who
was Western by cultural decent, the other employees observed of a Chinese
cultural decent spoke Chinese in their business and social related
conversations in some 85% of the time during the day. English was generally
only spoken when dealing with a native English speaker. Native English
speaking employees who did not also speak Mandarin, never dealt with either
the Shanghai office employees or clients. The perception was that non-
Mandarin speaking employees in the Auckland office were disadvantaged and
limited at times in the extent to which they could participate in company work
projectsduetolanguagebarriers.Thiswasmostevidentwithinthecompany’s
Corporate Banking division, which was dominated by work from Shanghai.
In the sample survey, conversations directly in English were not considered
essential with only 18.18% of respondents stating that discussions in English
or written communications in English are important to them. Of a higher
importance is speaking to their Chinese business partners directly (36.36%)
irrespective of whether an interpreter was used, which was in 90.91% of cases.

- 71 -
4.4 Communication Protocols
In the exploratory interviews, the New Zealand Chamber of Commerce and
the University of Hong Kong, Department of Finance and Economics
expressed views that they considered Western organizations had a general lack
of understanding of Chinese business protocols. Both organizations also
considered that the general lack of appreciation for Chinese business
relationships and Chinese communication networks were interlinked.
The company the subject of the observational study had strict policies in terms
of addressing clients and associates. In addressing clients and senior
employees within the Shanghai office, titles such as Mr., Mrs., and Dr. were
always used. Interestingly, titles were rarely if at all used within the Auckland
office between employees. Of note was that the Group CEO was always
referred to by his first name, by all employees in both Auckland and Shanghai,
however, senior Shanghai employees were always referred to by title, even by
the Group CEO. The use of titles with clients was dispensed with upon the
client requesting the use of their first name.
In terms of China business experiences the sample survey indicated that
36.36% of respondents felt that an understanding of the Chinese business
practices is the single largest barrier to business relationships, while 27.27%
feltthatitisalwaysdifficulttoconcludea“deal”inChina.Surprisinglyonly

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9.09% found language a business barrier. 18.18% found that they were
generally unable to reach a contractual agreement with their Chinese business
partner, and 9.09% considered that the Chinese always changed their minds
too much during the negotiation process. New Zealand businesses
predominately conducted business in China through some form of strategic
alliance or joint venture (63.64% and 9.09% respectively), with establishing a
wholly owned subsidiary as the least favored method (36.36%).
Further, of the responding participants, 63.64% recognized the importance of
Chairman or Owner to Chairman or Owner interaction. The same percentage
also recognized the importance of Director interaction. Nearly 1/3 of those
responding did not recognize the importance of these interactions, rating the
interactions at a senior level as average to low in terms of importance. This
may be because the ethnic origins of those personnel within the New Zealand
respondent organizations interacting with Chinese business partners were
predominantly New Zealand European (81.82%). Only 36.36% of respondents
had Chinese personnel who interacted with their Chinese business partners.
The high percentage of New Zealand European personal interacting with
Chinese business partners may account for the equally high response rate that
senior level interaction was not particularly important. This may be due to the
cultural orientation of New Zealand European personal as discussed in Chapter
2. When dealing with their Chinese business partners, 100% of respondents

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