Cross Cul tural Man age ment: An In ter na tional Jour nal

Transcription

1 Volume 12 Number Cross Cul tural Man age ment: An In ter na tional Jour nal (Incorporating Equal Opportunities International) Vol ume 12 Num ber 3 (of six is sues) 2005 SPE CIAL IS SUE ED I TORS: Yunxia Zhu, Associate Professor in Communication, Unitec New Zealand and Jan Ulijn, Jan Monnet Chair in In no va tion, En tre pre neur ship and Cul ture, Eindhoven University of Technology, the Netherlands Con tents 2 Ab stracts and Keywords 4 In tro duc tory Es say: New Ho ri zons in Cross Cul tural Man age ment Yunxia Zhu and Jan Ulijn 15 Cultural impact on Investment Destination Choice of US-Multinational Corporations in Australia Clare D Souza and Ro man Peretiatko 33 De ci sion-mak ing Styles by Cheryl Leo, Rebekah Bennett and Charmine E. J. Härtel 64 Communication Strategies for Building Business Relationships: A Comparative Study by Zhu Yunxia, Ravi Bhat and Pieter Nel 86 Chi nese Ne go ti a tion Prac tice: A Per spec tive from New Zea land Exporters by Kim-Shyan Fam, Da vid S. Waller, Zhilong Tian and Anna Stark 104 Pat terns of Feel ings in Face-to-Face Ne go ti a tion: A Sino-Dutch Pi lot Study by Jan Ulijn, Anne Françoise Rutkowski, Rajesh Kumar and Yunxia Zhu

2 2 Cross Cultural Management Ab stracts and Keywords Cultural impact on Investment Destination Choice of US-Multinational Corporations in Australia by Clare D Souza and Ro man Peretiatko Abstract The o ries fre quently used by re search ers only of - fer-lim ited in sight, they do not ex plain why some mul ti na tion als con tinue to in vest in some coun tries de spite be ing rated low on the rea sons ex plained by eco nomic and com par a tive ad van tage the o ries. The pa per ex am ines the at trac tive ness of Aus tra lia as an in vest ment des ti na tion for US based mul ti na tional cor po ra tions. By us ing Por ter s na tional ad van tage the ory and other vari ables of coun try at trac tive ness, it ex am ines what makes Aus tra lia an at trac tive des ti - na tion. Within the fast mov ing con sumer goods in - dus try, Aus tra lia was found to be at trac tive for three rea sons: in cen tives of fered by the gov ern ment, low risk and cul tural dis tance. There is ev i dence that cul - ture has an ef fect on the choice of for eign in vest ment ven ture struc ture well ahead of mar ket size, tar iffs, growth and lo ca tion to cul tural sim i lar ity. The aim was not only to gen er ate ideas for fu ture more rig or - ous re search but also to in ves ti gate the im pact crit i - cal to el e ments, such as cul ture, that make for eign in vest ments at trac tive. Key words: Aus tra lia, US mul ti na tion als, Cul ture, Fast mov ing con sumer goods (FMCG) Cross-Cultural Differences in Consumer Decision-Making Styles by Cheryl Leo, Rebekah Bennett and Charmine E. J. Härtel Abstract This ar ti cle com pares con sumer de ci sion-mak ing styles be tween Singaporeans and Aus tra lians. Uti lis - ing Hofstede s frame work, the pa per ar gues that cul - tural di men sions in flu ence con sumer de ci sion-mak ing styles. It is es sen tial that man ag ers un der stand cross-cul tural con sumer de ci sion-mak - ing styles to make stra te gic de ci sions or ef fec tively han dle mem bers of these na tion al i ties. Marked dif - fer ences were found be tween the two pop u la tions for: brand con scious ness, innovativeness and overchoice con fu sion. The re sults sug gest that some con sumer de ci sion-mak ing styles dif fer due to con - sum ers cul tural val ues. Man a ge rial im pli ca tions and fu ture re search di rec tions are dis cussed. Key Words: Sin ga pore, Aus tra lia, Con sumer De ci - sion-making Styles Com mu ni ca tion Strat e gies for Build ing Business Relationships: A Comparative Study by Zhu Yunxia, Ravi Bhat and Pieter Nel Abstract Re la tion ship build ing is be com ing in creas ingly im - por tant for cross-cul tural man age ment as more and more coun tries do busi ness across bor ders. Cur rent re search find ings in this re gard so far have mainly fo - cused on mar ket ing re la tion ships or on cross-cul - tural di men sions. This pre lim i nary study at tempts to break the bound ary and aims to ex plore re la tion ship build ing from a lin guis tic as well as cul ture-spe cific per spec tive while in cor po rat ing rel e vant intercultural di men sions. Spe cif i cally, it com pares re la tion ship build ing across four cul tures in clud ing New Zea land, Chi nese, In dian and South Af ri can cul tures. The re search method is based on a dis - course and nar ra tive anal y sis of in ter views with busi ness ex ec u tives from the four tar get cul tures. Key Words: Com mu ni ca tion strat e gies, busi ness re la tion ship build ing, New Zea land, China, In dia, South Af ri can Chinese Negotiation Practice: A Perspective from New Zea land Ex port ers by Kim-Shyan Fam, Da vid S. Waller, Zhilong Tian and Anna Stark Abstract Ne go ti a tion is cru cial to busi ness al li ances, but this pro cess can be come more com pli cated if there are lan guage bar ri ers and dif fer ences in cul tural val ues, cus toms, and life styles, such as West ern busi nesses ne go ti at ing in the Peo ple s Re pub lic of China (PRC). Pre vi ous stud ies have pre sented mod els of the Chi - nese ne go ti at ing pro cess but these are pri mar ily from the US. This study ex am ines the ne go ti at ing ex - pe ri ences of se lected New Zea land in ves tors who have had ex pe ri ences ne go ti at ing ei ther For eign Di - rect In vest ment (FDI) or short-term sales agree - ments in the PRC to cre ate two con cep tual mod els. The re sults pro vide some in ter est ing in sights for do - ing busi ness in China. Keywords: Ne go ti a tions, New Zea land, China, Cul tural Val ues, Re la tion ship

3 Volume 12 Number Pat terns of Feel ings in Face-to-Face Ne go ti - a tion: A Sino-Dutch Pi lot Study by Jan Ulijn, Anne Françoise Rutkowski, Rajesh Kumar and Yunxia Zhu Abstract We con ducted a pi lot study to com pare the emo tions ex pe ri enced by Dutch and Chi nese stu dents dur ing a face-to-face ne go ti a tion role play. Emo tions play an im por tant role in ne go ti a tions be cause they in flu - ence the be hav iour and judg ments of ne go ti a tors. The Data Printer case de vel oped by Greenhalgh was used to ex am ine the pat terns of feel ings that emerge during negotiations. One hundred four participants (62 Chi nese and 42 Dutch post grad u ate stu dents) role-played two dif fer ent char ac ters who were con - fronted with a pay ment dis pute re gard ing the ser vic - ing of a de fec tive printer. The re sults of the MANOVA and of the Fac to rial Anal y sis dem on strates that cul ture as a car rier of so cial val ues and norms did in flu ence the emo tional re ac tions of the peo ple social ised in dif fer ent cul tural con texts. The pa per con cludes that in or der to fa cil i tate con flict res o lu - tion and in ter per sonal com mu ni ca tion amongst pro - tag o nists in mono as well as in inter-cul tural ne go ti a tion con text in di vid u als should learn to man - age their emo tions con struc tively. Key Words: Ne go ti a tion, pat terns of feel ings, Dutch, Chi nese Ref er ees for this Spe cial Is sue Bertha Du-Babcok, City Uni ver sity of Hong Kong Randolph T. Barker, Vir ginia Com mon wealth Uni ver sity, the United States Ralph Bathust, Massey Uni ver sity, New Zea land Pe ter Caswell, Unitec New Zea land Mar i lyn Easter, San Jose State Uni ver sity, the United States Tony Fang, Stock holm Uni ver sity, Swe den Her bert Hildebrandt, Uni ver sity of Mich i gan, the United States Then Jensen, Roskilde Uni ver sity, Den mark Rajesh Kumar, Aarhus School of Busi ness, Den mark. Clive Muir, Uni ver sity of Bal ti more, the United States Pieter Nel, Unitec New Zea land Carol Roever, Mis souri Westem State Col lege Janet Sayers, Massey Uni ver sity, New Zea land Hannah Slavik, Uni ver sity of Malta Ursula Stroh, Uni ver sity of Tech nol ogy Syd ney

4 86 Cross Cultural Management Chi nese Ne go ti a tion Prac tice: A Perspective from New Zealand Exporters Kim-Shyan Fam, Da vid S. Waller, Zhilong Tian and Anna Stark The Au thors Kim-Shyan Fam is an As so ci ate Pro fes sor in the De part ment of Mar ket ing and In - ter na tional Man age ment at the Uni ver sity of Waikato, New Zea land. Da vid S. Waller is a Se nior Lec turer in the De part ment of Mar ket ing Uni ver sity of Tech nol ogy, Syd ney, Aus tra lia. Zhilong Tian is Pro fes sor of Mar ket ing and Stra te gic Man age ment and head of Col lege of Man age ment, Huazhong Uni ver sity of Sci ence and Tech nol ogy, Wuhan, China. Anna Stark is a Con sul tant with TradeNZ. She is cur rently based in Auckland, New Zea land. Introduction Firms are in creas ingly form ing in ter na tional part ner ships as a re sponse to in dus - trial globalisation. Cru cial to ev ery busi ness al li ance are the face-to-face ne go ti a - tions that oc cur dur ing the for mu la tion of the com mer cial re la tion ship (Adler, Brahm & Gra ham, 1992). Tung (1999) de fines the ne go ti a tion pro cess as a dy - namic pro cess by which two par ties, each with its own ob jec tives, con fers to seek a mu tu ally ac cept able agree ment on a mat ter of com mon in ter est. The ne go ti a tion pro cess oc curs within a de fined time pe riod and in volves not only the use of data and in tu ition, but also the will ing ness of the par ties to un der stand each other s point of view. Ne go ti a tion has been de scribed as a dif fi cult and pain ful pro cess and can pres ent a ma jor hur dle for for eign par ties in the early stages of their busi - ness re la tion ship (Strange, 1998). Fur ther, this pro cess will be come more com pli - cated if there are lan guage bar ri ers and dif fer ences in cul tural val ues, cus toms, and life styles, such as West ern busi nesses ne go ti at ing in the Peo ple s Re pub lic of China (PRC) (Tung, 1999; Lee & Lo, 1988; Holton, 1989; Gra ham, Mintu & Rodgers, 1994). Lee & Lo (1988, p.217) found that there was a per sis tent per cep - tion that the Chi nese are ex tremely tough (smart and firm) ne go ti a tors. One ap - proach to over com ing this hur dle is to de velop im proved un der stand ing of the cur rent Sino-West ern ne go ti a tion pro cess. In fact, the rapid emer gence and growth of the PRC mar ket over the past twenty years has in sti gated a pro lif er a tion of both prac tice-ori ented re search and the ory in ves ti ga tions on the sub ject of PRC busi ness ne go ti a tions (Fran ken stein, 1986; Blackman 1997).

5 Volume 12 Number China is fast be com ing the fa vour ite mar ket for West ern firms. China s rank in world trade rose from 32 nd in 1978 to 9 th po si tion in By the end of 2000, China was the re cip i ent of more than 20% of the to tal FDI in de vel op ing coun tries and more than 5% of the to tal FDI in the world (Ghauri & Fang, 2001). To date New Zea land in vest ment in the PRC has mostly been on a small scale, how ever, the PRC is re cog nised as a po ten tially lu cra tive mar ket for New Zea land com pa - nies and in ter est in it is in creas ing steadily. Ac cord ing to Chi nese gov ern ment in - for ma tion there are some 388 in vest ments worth NZ$278 mil lion in the PRC (Capie, 2000). New Zea land in vest ment in the PRC is seen as im por tant to both se cure a long term mar ket for New Zea land prod ucts, and also to cap i tal ise on the huge po ten tial of the con sumer mar ket de vel op ing there. How ever, many West ern firms found do ing busi ness with China is dif fi cult, mainly be cause ne go ti at ing with their Chi nese coun ter parts is quite com plex. This pa per dis cusses past mod els of the Chi nese ne go ti at ing pro cess and as sesses the ex pe ri ences of se lected New Zea land in ves tors who have ne go ti ated ei ther For eign Di rect In vest ment (FDI) or short-term sales agree ments in the PRC be tween 1970 and 2000s. The study in - tends to es tab lish a model of the NZ-PRC ne go ti a tion pro cess by ex am in ing what pro cesses do face-to-face ne go ti a tions be tween New Zea land busi ness peo ple and their PRC coun ter parts fol low and whether there have been any changes to the ne go ti a tion pro cesses in the past thirty years. To an swer these ques tions, this study will fo cus on in ter view ing a group of New Zea land busi ness peo ple who have had busi ness deal ings with their Chi nese coun ter parts since the early 1970s. Background The increasing economic interdependence among nations stresses the significance of co-op er a tive be hav iours in in ter na tional com merce (Gra ham, Mintu and Rodgers, 1994). In spite of the as so ci ated dif fi cul ties, firms are in creas ingly form - ing in ter na tional part ner ships as a re sponse to in dus trial globalisation (Adler, Brahm & Gra ham, 1992). Face-to-face ne go ti a tions are an in te gral part of the for - mation and implementation of all commercial relationships (Adler, Brahm, & Gra - ham, 1992). It is sim ply not enough to fully com pre hend mar kets and com pe ti tion. Nor is it enough to se lect the best busi ness part ners. Cor po rate al li - ances also re quire ef fi cient in ter per sonal com mu ni ca tions be tween ex ec u tives at all lev els in the in volved firms. Many stud ies re gard ing in ter na tional busi ness ne - gotiations suggest fundamental differences in approaches and behaviours across cul tures (see for ex am ple Lee & Lo, 1988; Holton, 1989; Gra ham, Mintu & Rodgers, 1994). These dif fer ences are par tic u larly sa lient in ne go ti a tions be tween the PRC and West ern cultures. As Holton (1989) as serts, an un der ly ing dif fi culty that has ac counted for prob lems in ne go ti at ing Sino-West ern busi ness stems from the enor mous dif fer - ences in the back grounds of the two par ties. Con se quently, the two sides have quite dif fer ent views of the world. Per haps equally im por tant, each side knows lit - tle about the other side s view of the world. But if the two views are dif fer ent and

6 88 Cross Cultural Management each side is ig no rant of the prin ci pal fea tures of the other s view of the world, the prob lem is com pounded. Ne go ti at ing in the PRC- His tor i cal De vel op ment The pro cess of ne go ti a tion has de vel oped over many years in China, and ac cord - ing to Pye (1986, p. 74), for cen tu ries, the Chi nese have known few peers in the sub tle art of ne go ti at ing. Pye (1982) sum ma rises the de vel op ment of Sino-West - ern ne go ti a tions into four dis tinct phases. The first phase in ne go ti at ing re la tions be gan with the Kissinger- Nixon over tures to China shortly af ter the end of the Cul tural Rev o lu tion. Dur ing this pe riod, most trade was re stricted to semi-an nual meet ings at the Can ton Trade Fair and ne go ti a tions tended to be sharply fo cused on spe cific com mod i ties and ex port items to China. There was a lot of po lit i cal in - ter play and the pol i tics seemed as im por tant as what was be ing bought or sold. The sec ond phase ex tended from the death of Mao to the an nounce ment of the Sino-American normalisation and other such agreements. Western expectations were grow ing and were be ing fed by the Four Mod erni sa tions rhet o ric. How ever, West ern spir its were often dampened by repeated disappointments over the signing of actual contracts. Be gin ning Jan u ary 1979, a third phase found the for eign trad ers and the Chi nese com pletely out of step. The orig i nal ten-year plan was quickly re placed by a three-year plan of re-ad just ment. Most ex ist ing con tracts were frozen and later re vived or cancelled. Many for eign firms de cided to re view their in vest ments of time and money in open ing the doors of China trade and con cluded that if the Chi nese were to make re ad just ments they should do the same. Through out the 1980 s there was a steady with er ing of en thu si asm as it be came clearer that com - mer cial ne go ti a tions with China could not be in su lated from Chi nese do mes tic po - lit i cal de vel op ments. All of this was a pre lude to Tiananmen Square in ci dent in 1989 that brought a near end to in vest ments in China, and led to the de bate over whether China should re tain the Most Fa voured Na tion Sta tus. The 1990 s opened a new, fourth phase of China trade in which it was gen er ally real ised that greater care and analysis would be necessary for serious business negotiations. Chi nese Ne go ti at ing Pro cess: Pre and Post 1990s Ne go ti a tion can be de fined as a unique form of con flict man age ment whereby par tic i pants de velop mu tu ally shared rules and then co op er ate within those rules to gain a com pet i tive ad van tage over their op po nents (Ganesan, 1993). Tung (1999) de fines the ne go ti a tion pro cess as a dy namic pro cess by which two par ties, each with its own ob jec tives, con fers to seek a mu tu ally ac cept able agree ment on a mat ter of com mon in ter est. The ne go ti a tion pro cess oc curs within a de fined time pe riod, and in volves not only the use of data and in tu ition, but also the will - ing ness of the par ties to un der stand each other s point of view. Such an ar du ous pro cess is fur ther com pli cated by lan guage bar ri ers and dif fer ences in cul tural val -

7 Volume 12 Number ues, cus toms and life styles in cross-na tional set tings. For the pur pose of this study, we adopt the ne go ti a tion pro cess as de fined by Tung (1999). The in ter est in Chi - nese ne go ti at ing style has led to the es tab lish ment of a spe cial area of in quiry in the literature that deals with international business negotiations between Western firms and the PRC busi ness or gani sa tions (see for ex am ple Pye, 1986; Tung 1982, Blackman, 1997; Warrington, 1983; Hendryx, 1986; Fran ken stein, 1986; Zhao, 2000; Sheer & Chen, 2003). The cen tral theme of these works is to ar rive at an in-depth socio-cultural understanding of Chinese business negotiating style. Never the less, these works can be clas si fied into pre- and post- 1990s pro cess and will be dis cussed as fol lows: Pre-1990s Pro cess Adler, Brahm and Gra ham (1992) as sert that while there is no lack of an ec dotal and descriptive evidence confirming East/West differences and the difficulties Westerners have in negotiating with the Chinese, little research exists document - ing the actual processes of Chinese business negotiations. Frankenstein (1986) sum ma rised the lit er a ture on ne go ti a tion prior to 1986 into a model of Chi nese ne go ti a tion pro cess (see for ex am ple, Pye, 1982; Davies, 1984; Tung, 1982). It sug gests a rather round about pro cess, con tin u ous and cy cli cal in na ture, that pro - ceeds at a lei surely pace through four phases each char ac ter ised by dif fer ent ne go - tiating behaviour (see Figure 1). Figure 1: A Model of Pre-1990 PRC Negotiation Process Opening Moves Establishment of General Principles; Relationship Building Range of Commitment Implementation Continuing Process Of Adjustment and Discussion Assessment Bulk of Negotiations; Negotiation of Soft Issues End-Game Sudden; Negotiation of Hard Items Scope of Agreement

8 90 Cross Cultural Management Fran ken stein (1986) cites that in the first phase, open ing moves, the two sides reach a gen eral agree ment on in ten tions, mu tual goals, and re la tion ship build ing. Lee & Lo (1988, p.220) re fer to this pro cess as non- task sound ing. Of - ten much of what tran spires at this stage is mis tak enly re garded by the non- Chi - nese side as mere rhet o ric and un im por tant. But for the Chi nese side, these dec la ra tions are an im por tant step. They es tab lish a frame work for the ne go ti a - tions and provide ammunition should the foreign negotiators go beyond the bound aries. The fo cus of this stage is on the im por tance of a friend ship as an es - sen tial ne go ti at ing el e ment. Based on rec i proc ity, the better off party (in most cases the west ern party) is ex pected to be gen er ous and forth com ing in re veal ing it s in ter ests first while the Chi nese mask their in ter ests and pri or i ties (Pye, 1986). The sec ond phase, as sess ment, in volves the bulk of the ne go ti a tions. Here the Chinese demonstrate their mastery of negotiating technique and begin to show how they can ma nip u late the ne go ti at ing en vi ron ment. Once again, the pace is lei surely and the ap proach usu ally in di rect. There may be an em pha sis on what some West ern ers call the soft or pe riph eral is sues. Pye (1982) emphasises the Chi nese pro pen sity to fo cus on items rather than pro grams and on tac tics over strat egy, mean ing ne go ti a tions tend to pro ceed with a great many ground rules un-stated and con sid er able un cer tainty as to ex actly how the Chi nese are likely to read prog ress or lack of prog ress in the ne go ti at ing pro cess. He emphasises the Chi nese in cli na tion to make un ac cept able de mands in the hope that the West ern ne go ti a tors will ac cede a mod est con ces sion, and also their shrewd use of time in the same vein. The third phase, end game, accentuates the suddenness and often unex - pect ed ness of this stage of the ne go ti a tions. Hav ing reached bu reau cratic con sen - sus the Chi nese now fo cus on the hard items, es pe cially price. In ad di tion, the pace may ac cel er ate. Pye (1982, p. 85) high lights the Chi nese skill in pac ing the ne go ti a tions so as to build up pres sures on the other side, stat ing. in the early stages the Chi nese can be ex cru ci at ingly de lib er ate, con sum ing time as though the pro cess could con tinue in def i nitely. As ne go ti a tions move to ward a cli max, they will not only speed up the pro cess but load down the ses sions with a heavy bur den of items. Finally, the negotiations concluded, the business arrangement moves to the fourth phase implementation (Fran ken stein, 1986). But rather than a straight for - ward reali sa tion of the con tract, there is a con tin u ing pro cess of ad just ment and dis cus sion, where the Chi nese may try to ex pand the scope of the agree ment to their ad van tage (Lee and Lo, 1988). Pye (1986) con curs, add ing that al though the Chi nese are scru pu lous in ad her ing to agree ments, they have no in hi bi tions in pro pos ing changes. They have less feel ing for the drama of the agree ment and lit - tle ex pec ta tion that any for ma lised con tract will end the pro cess of ne go ti a tions.

9 Volume 12 Number Post-1990s Pro cess A de cade later, ac cord ing to the ex ist ing lit er a ture, the Chi nese ne go ti at ing pro - cess ap pears to have changed very lit tle. One might have ex pected that Wes ter ni - sa tion and its con se quen tial im pact on Chi nese cul ture and tra di tion (see Yau & Steele, 2000) would have had a more sig nif i cant im pact on the ne go ti a tion pro - cess. How ever, Blackman s (1997) con tract ne go ti a tion pro cess de lin ea tion, al - though more de tailed with five stages, can be dis tinctly cor re lated with Fran ken stein s ear lier model (see Fig ure 2). Blackman s (1997) tech ni cal dis cus - sion phase, and terms of con tract dis cus sion phase fall un der Fran ken stein s (1986) as sess ment phase. Sim i larly Blackman s (1997) con tract sign ing and post-con tract ne go ti a tion phases cor re spond with Fran ken stein s (1986) im ple - mentation phase. Both authors cite similar examples of Chinese negotiating be - hav iour at each stage. Figure 2: A model of the Post 1990 Contract Negotiating Process Post- Contract Negotiation Ongoing Contract Signing Immediately preceded by demands for new concessions Opening Phase Pleasant and General Terms of Contract Discussion Challenges on Technicalities Technical Discussion Penetrating and Drawn-out Blackman (1997) cites the es tab lish ment of gen eral prin ci ples as a prom i - nent fea ture of the first stage of ne go ti a tions, the open ing stage, which is con sis - tent with pre vi ous stud ies (Fran ken stein 1986; Pye 1982, 1986). Blackman (1997) also dis cusses the com mit tee ap proach to ne go ti a tions, emphasising the large and hi er ar chi cal na ture of the Chi nese ne go ti a tion team. With ref er ence to this, Tung (1999) adds the Chi nese are ex perts in find ing rel e vant in for ma tion about their West ern coun ter parts through their ex ten sive busi ness net works.

10 92 Cross Cultural Management In stage two, the tech ni cal dis cus sion phase, Blackman (1997, p60) stresses the slow pro cess of ne go ti at ing in China, stat ing. the time it takes does not seem to mat ter to the Chi nese. This is con sis tent with prior re search (See for ex - am ple, Pye 1982, 1986; Fran ken stein, 1986; Lee & Lo, 1988). In ad di tion she sup - ports ear lier ob ser va tions that stall ing is used by the Chi nese to ex ploit for eign im pa tience, add ing that the at ti tude of the bu reau cracy is an im por tant fac tor in delays, causing meticulous and slow internal discussions. Consistent with Fran - ken stein s (1986) as sess ment phase, Blackman (1997) be lieves a strik ing fea ture of ne go ti a tions at this stage is the re pet i tive ques tion ing and the de mand for ex - pla na tions, con cern ing is sues not di rectly rel e vant to the fi nal agree ment. Blackman s (1997) third and fourth phases, Terms of Con tract Dis cus sion and Con tract Sign ing, are cor re lated with Fran ken stein s (1986) ear lier end game phase. The con tract dis cus sion is dom i nated by tech ni cal i ties and the West ern de - vel op ment of clauses, and the Chi nese de vel op ment of coun ter-clauses can be - come a tit-for-tat spi ral (Blackman, 1997, p68). In ad di tion, Blackman be lieves that when the fi nal ver sion of the con tract is pre sented for sign ing, the Chi nese may well have changed some terms al ready agreed to with out prior con sul ta tion. Blackman (1997) makes no ref er ence to di men sions of time in her dis cus sion of stages three and four. How ever, Chen (1993) high lights the Chi nese may switch from one stage to an other with out the Amer i cans know ing when the ne go ti a tions have passed from the res o lu tion stage to the fi nal agree ment. Blackman (1997) in the fi nal stage, Post-Con tract Ne go ti a tion, emphasises the mere fact that an agree ment has been reached and a con tract signed amid a flour ish of flags and pro to col does not mean the con tract is now fixed and un al ter - able and will be im ple mented in line with the printed doc u ment. Rather, the Chi - nese will re quest clar i fi ca tion meet ings at which they will de mand more than is stated in the con tract and of ten ask for some thing they had to sac ri fice in the con - tract. This was con firmed by Tung (1999). The Ping-Pong Model Ghauri (1996) structures the international business negotiation process into pre-negotiation, negotiation, and post-negotiation stages and the author claims that the three stages are in flu enced by fac tors such as cul ture, strat egy, back - ground, and at mo sphere. Fang (1999) on the other hand uses the Chi nese busi - ness cul ture frame work to ana lyse Chi nese ne go ti at ing style in the Sino-West ern business negotiation process. Fang s business framework consists of three interrelated com po nents namely Con fu cian ism, PRC con di tion and Chi nese strat a gems. A few years later, Ghauri & Fang (2001) de vel oped the ping-pong model to struc - ture their anal y sis of the Sino-West ern busi ness ne go ti a tion pro cess. The model com prises the stages of the Sino-West ern busi ness ne go ti a tion pro cess and di men - sions of the Chi nese busi ness cul ture. The ping-pong met a phor was in tended to

11 Volume 12 Number emphasise the con tin u ous back and forth bar gain ing feature in the Chinese negotiating style and the Sino-Western business negotiation process. The work of Ghauri and Fang (2001) was based on the ne go ti a tions of the Swedish multinational corporation Ericsson with Chinese customers in the early and mid 1990s. Fur ther more, this study and other stud ies in the lit er a ture have mod eled the ne go ti a tion pro cess ob serv ing pri mary US and Eu ro pean mul ti na - tional cor po ra tions. In terms of in dus try, only Gulbro and Herbig (1995) have ex - am ined the cross-cul tural ne go ti a tion be hav iour be tween in dus trial prod uct and con sumer prod uct firms. This leaves a gap in the lit er a ture for the study of agri-business or primary industry business negotiation process. Thus, the primary pur pose of our study is to ex am ine the ne go ti at ing pro cesses be tween New Zea - land busi ness peo ple and their Chi nese coun ter parts. More spe cif i cally, we are in - ter ested in what pro cesses do face-to-face ne go ti a tions be tween New Zea land busi ness peo ple and their PRC coun ter parts fol low and whether there are any changes to the ne go ti at ing pro cesses that might have oc curred in the past thirty years. To an swer these ques tions, we car ried out a face-to-face in ter view with a num ber of New Zea land busi ness peo ple who have had busi ness ne go ti at ing ex pe - ri ence with their Chi nese coun ter parts since the 1970s. Al though there are all kinds of business negotiations, our discussion is on formal contract negotiations such as joint ven tures and short-term con trac tual ar range ments be tween New Zea land and PRC par ties. Our study will pri mar ily fo cus on the agri-busi ness which again dif fers from the ex ist ing stud ies which fo cused more on multina tional cor po ra tions. Meth od ol ogy The business people involved predominantly represent agri-business (primary in - dus try) and have been in volved in ne go ti a tions in ei ther the North ern (Beijing, Tianjin, Shandong) or South ern (Guangdong, Fujian, Hainan) re gions of the PRC. These forms of agree ment were cho sen be cause of their prom i nence in NZ-PRC business. New Zealand is an agricultural society with exports primarily in live-stocks, fruits, and tim bers to China (Sta tis tics NZ, 1999). This study ex am ines the ne go ti at ing ex pe ri ences of se lected New Zea land in ves tors who have had ex - pe ri ences ne go ti at ing ei ther For eign Di rect In vest ment (FDI) or short-term sales agree ments in the PRC. These ne go ti a tion ex pe ri ences com bined, span three de - cades from 1970 to the 2000s. A va ri ety of re search meth ods were used in clud ing non-directive pilot interviews and semi-structured in-depth interviews. This ap - proach was consistent with observations in the literature highlighting a preference for us ing a va ri ety of re search meth ods in a con sid er ation of intercultural ne go ti a - tions (Adler & Gra ham, 1989). Ghauri and Fang (2001) used the case study meth - od ol ogy in their study of Ericsson s ne go ti a tion with Chi nese cus tom ers on joint-venture establishment and operations in China. In addition, Harwood (2002) claims that the qual i ta tive re search ap proach is a better method to gain a more de tailed un der stand ing of the ne go ti a tion phenomena.

12 94 Cross Cultural Management Re spon dents were re cruited via a snow ball ing pro cess (Arcury and Quandt, 1999). The pro tected na ture of doc u men ta tion de tail ing New Zea land busi nesses in volve ment in the PRC, and the lim ited num ber of New Zea land busi ness peo ple who have been in volved in the PRC, deemed this pro cess the most ef fec tive means of se lect ing re spon dents. Ini tially, ex plor atory pi lot stud ies were un der taken with the pur pose of as sess ing the mag ni tude of the re search prob lem, iden ti fy ing key is sues, and guid ing the for mu la tion of the in ter view pro to col for the sec ond re - search stage. These stud ies con sisted of three non-di rec tive, in depth in ter views. The in ter views were con ducted in Dunedin and Christchurch and each lasted approximately 60 minutes. In a sec ond stage again a snow ball sam pling pro cess was uti lised based on prior jus ti fi ca tions stated ear lier and to en sure that whilst most re spon dents rep re - sented a pri mary in dus try, a va ri ety of dif fer ent busi ness ne go ti a tions were de - picted. Five semi-struc tured in-depth in ter views were con ducted, of 60 min utes to 90 min utes du ra tion in Wellington, Christchurch, and South land, us ing a loosely struc tured in ter view pro to col. The ob jec tive of this stage was to build on the prior pilot interviews, narrowing the focus from general PRC business to negotiation pro cess and be hav iour. Hence these dis cus sions were more guided by the re - searcher than the pre vi ous pi lot in ter views. This re search ap proach per mit ted the flex i bil ity needed for re spon dents to an swer ques tions to their full po ten tial and to be able to probe more deeply where re quired. Ac cord ing to Aaker, Kumar and Day (1998, p. 189) this mode of in ter view ing is es pe cially ef fec tive with busy ex ec u tives. The open struc ture en sures that un ex pected facts or at ti tudes can be pur sued eas ily. In ad di tion, this re search tech nique was most suited to the com plex na ture of the sub ject of ne go ti a tion in the PRC (Ru bin & Sander, 1991). Each re spon dent had ex ten sive ex pe ri ence ne go ti at ing in the PRC, and been in volved in ne go ti a tions in the South ern Prov inces of the PRC, which fa cil i tated ease of com par i son. In ad di tion two re spon dents had also been in volved in ear lier ne go ti a tions in the Cen tral PRC be fore the other re gions were opened to for eign busi ness. A va ri ety of forms of agree ment were rep re sented in clud ing short-term sales con tracts, joint ven tures, and wholly-owned sub sid iar ies which en abled the gen er ali sa tion of re sults. Fi nally the re spon dents ne go ti at ing ex pe ri ences com - bined spanned three de cades en abling the re searcher to draw com par i sons between negotiations at different stages of the PRC s modernisation. Re sults In the in ter views with the New Zea land in ves tors they gave their own ac count of ne go ti a tion in China, some from their ex pe ri ence in the 1970s. Two con cep tual mod els were cre ated from this, one on short-term sales agree ments and the other on For eign Di rect In vest ment (FDI). Note that the two mod els were drawn by the au thors based on the in ter views and dis cus sions with the re spon dents. These mod - els were then shown and ex plained to the re spon dents who agreed with the mod -

13 Volume 12 Number els. The first model pres ents the pro cess re lat ing to short-term sales agree ments (see Fig ure 3). This model par tic u larly re lates to ne go ti a tion in South ern China. It is claimed that ne go ti a tion in the 1970s was more of a lin ear pro cess that be gan with relationship building which aimed at establishing a long-term relationship. One re spon dent claimed that the re la tion ship build ing and the busi ness side of things oc curred si mul ta neously which in volved ban quet ing ev ery night. Next was a ne go ti a tion stage that went straight into dis cuss ing the hard is sues, with price be ing a ma jor fo cus. There was usu ally one key de ci sion maker and the cen tral laws were a high pri or ity. This was the stage where only Cen tral China was open to for eign busi ness. The next stage was pay ment, which was done cash up front. The New Zea land re spon dents/in ves tors claimed they knew the re la tion ship will be hon oured and they were no too con cerned about upfront pay ment. Finally the deal was completed and was strictly enforced with a high degree of loyalty and reliability. By the 1990s, ac cord ing to those in ter viewed, there de vel oped a semi-cy cli - cal ne go ti at ing pro cess. This be gan with a re la tion ship build ing stage which aimed at short-term re la tion ships. Ac cord ing to the re spon dents, the shift to short-term relationship was attributed to the negotiations were becoming more business like. The im por tance of friend ship went out of the win dow and dis si pated in the late 1980s and early 1990s. Next stage is ne go ti a tion and again goes to the hard is sues with price be ing the ma jor fo cus. These ne go ti a tions are di rect but with many de - ci sion mak ers and the pro vin cial laws be ing a pri or ity. These ne go ti a tions can take three days to three weeks to com plete with the strong pos si bil ity of an nul ments and re ne go ti a tions oc cur ring. Dur ing this pe riod, our re spon dents claimed that they jumped into the ne go ti a tion straight away and tack led the hard is sues first. Ne go ti a tion of soft is sues and em pha sis on re la tion ship build ing did not come un - til af ter the con tract had been signed. In the signed con tract, it would in clude is - sues like re turns and credit. The pay ment would then oc cur and goods could not be ex changed un til the pay ment is re ceived. Over all, our re spon dents claimed that the ne go ti a tion pro cess is a con tin u ous one, and emphasises that they are still ne - go ti at ing the is sues. They be lieved the PRC Chi nese don t regard a contract as the end of the process, but rather place more emphasis on relationships than on a signed piece of paper. The sec ond model (see Fig ure 4) pres ents ne go ti a tions for for eign di rect in - vest ment (Joint Ven ture) agree ments span ning 3 de cades. In the early 1970s there was still lin ear ne go ti a tion sim i lar to Fig ure 3. The pro cess was per ceived as smooth and ef fi cient, and usu ally com pleted within a year. Dur ing the late 1970s s, the pro cess be came more cy cli cal, with re la tion ship build ing, through such things as ban quets, lead to ne go ti a tions that lead to more re la tion ship build ing. The ban quet is treated as an op por tu nity for the ne go ti at ing par ties to get to know each other and build a re la tion ship. Our re spon dents claimed that dur ing this first ban quet ing stage the es tab lish ment of trust and friend ship are im por tant as it is

14 96 Cross Cultural Management Figure 3: A Model of PRC Negotiations for Short-Term Sales Agreements Spanning Three Decades SHORT-TERM SALES AGREEMENTS SOUTHERN PRC 1970 s: A Lin ear Pro cess 1990 s: A Semi-Cy cli cal Pro cess RELATIONSHIP BUILDING Longer-term Orientation RELATIONSHIP BUILDING Shorter-term Orientation NEGOTIATIONS Straight down to hard issues; price major focus; direct; one key decision maker; central laws NEGOTIATIONS Straight down to hard issues; price major focus; direct; many decision makers; provincial laws Annulments and Renegotiations 3 days- 3 weeks PAYMENT Cash up Front CONTRACT Returns and Credit COMPLETED DEAL Strictly enforced high degree of loyalty and reliability PAYMENT Goods not exchanged until payment received NB. Negotiations in Northern PRC reflect more of the 1970s linear process. im po lite to ask di rect ques tions. Gen er ally dur ing this ban quet ing stage, both par - ties will negotiate on establishing a general guideline. The actual negotiations fol - low in later ban quets. Later ne go ti a tions are usu ally fixed around price and once ne go ti a tions get mov ing they can be pro tracted and based on col lec tive de ci sion mak ing, but they would lead to long-term agree ments. By the mid-1990s to 2000 those in ter viewed felt that the ne go ti a tion pro cess be came semi-cy cli cal, with less of an em pha sis on re la tion ships and more fo cus on do ing busi ness. The ne go ti a tions were be ing more one-on-one deal ing that could still be pro tracted with some re-ne go ti a tions, but to a lesser ex tent in re cent years.

15 Volume 12 Number Figure 4: A Model of PRC Negotiations for Foreign Direct Investment (Joint Venture) Agreements Spanning Three Decades Early 1970 s: Linear Late 1970 s-1980 s: Cyclical : Semi-Cyclical Note: negotiation of WOS still follows this process today RELATIONSHIP BUILDING Banquet Less emphasis on Relationships More focus on business Smooth and Efficient Completed within a year NEGOTIATION Protracted; Collective Decision Making More one on one dealing; more expedient process Can still be protracted with re-negotiations but to a lesser extent LONG-TERM AGREEMENT The New Zea land re spon dents ad vised that the Chi nese could still stall the con - tract for months with the aim of im pel ling the for eign party to make fur ther con - ces sions in or der to get the ne go ti a tions go ing again. Rel e vant to the is sue of stall ing is the Chi nese con cept of time. Our re spon dents claimed that there are wide dis crep an cies be tween the PRC Chi nese and New Zea land ex port ers un der - stand ing of time. Ac cord ingly, the Chi nese are pre pared to wait for years to achieve things that the New Zea land ers would ex pect to be done within a spec i - fied pe riod of time. In terms of the signed fi nal con tract, our re spon dents claimed that even though the con tract is signed and en dorsed by the proper au thor i ties, it will not be en force able. Dis cus sion The ne go ti a tion pro cess and busi ness be hav iour in China has un der gone a se ries of changes since the 1970 s. In spite of the sit u a tion-spe cific na ture of ne go ti a - tions, the research findings highlight definite commonalities within and between ne go ti a tions of sim i lar forms of agree ment. The cur rent re search study fo cused on the ne go ti a tion of short-term sales con tracts, and for eign di rect in vest ment. Ne go - ti a tions of for eign di rect in vest ment in cluded joint ven tures, and a wholly-owned sub sid iary. At this stage of the dis cus sion ref er ence is made only to joint ven tures in the con text of for eign di rect in vest ment. Be tween 1970, and 2000, ne go ti a tions of both joint ven tures and short-term sales con tracts re flected sim i lar changes. In 1970, both pro cesses were lin ear in na ture (see Fig ures 3 and 4). Ne go ti a tions

16 98 Cross Cultural Management were con ducted smoothly and ef fi ciently and re sul tant con tracts were strictly en - forced. This can be at trib uted to the cen tral ised gov ern ment de ci sion mak ing of the time whereby one per son made the fi nal de ci sion. In ad di tion the tra di tional Con fu cian val ues of har mony and hi er ar chy were more prom i nent as the PRC was just com ing out of the Com mu nist era, a time when these val ues had been heavily pro moted (Laaksonen, 1988; Zhao, 2000; Sheer & Chen, 2003). The em pha sis on re la tion ship build ing cor re lates with China s closed econ - omy in the early 1970s. Their mis trust of for eign ers do ing busi ness with them is well doc u mented in the per ti nent lit er a ture. Ac cord ing to Ghauri & Fang (2001), the Chi nese at tached great im por tance to trust build ing es pe cially at the ini tial stage. Our in ter view with one of the re spon dents ex plained: The Chi nese will not do any thing, but nod ding. What the Chi nese are in ter ested in are to let you tell them more about your self. They want to know you more. The im por tance of re la tion ship build ing could be due to cul tural dif fer ences. Ac cord ing to Zhao (2000) the way peo ple ne go ti ate is in flu enced by cul ture and val ues. Thus the pro cess of get ting to know each other or es tab lish ing rap port be - tween members of negotiating teams is particularly important to the Chinese and other Asian ne go ti a tors (Adler, 1986; Gra ham, 1983; But tery & Leung, 1998). Our find ings also sup port the works of Fang (1999), Gra ham & Lin (1987) where the authors discussed the possible influence of cultural factors in a negotiation. Tung (1999) observes that international business negotiations which involve par - ties from two widely dis sim i lar cul tures can be prob lem atic. There fore at tempts to resolve disagreements through negotiation increasingly requires sensitivity to the pos si ble con trib ut ing role of cul tural dif fer ences. Clark (1990) and oth ers as sert that the cul ture within which an in di vid ual is social ised and ed u cated ex erts a sig - nif i cant in flu ence on ne go ti a tion be hav iour. Gra ham, Mintu & Rodgers (1994) as - sert that vari a tions in ne go ti a tion be hav iours can be ex pected due to the un der ly ing dif fer ences in her ent in each cul ture s value sys tem and ori en ta tion. Tung (1999, p. 65) re in forces this stat ing as cul ture plays an im por tant role in fram ing the pri or i ties of the ne go ti a tors, ne go ti at ing skills are not value-free and ex - pec ta tions for out come dif fer at the ne go ti at ing ta ble. The in flu ence of cul ture on negotiation might explain the continual emphasis on relationship building well into the 1990s al beit on a short-term ori en ta tion. An other as pect of re la tion ship build ing is guanxi. Pye (1986) claims that guanxi is not about get ting through one ne go ti a tion. In stead, it is about build ing up a life-long re la tion ship and not about immediately returning one favour with another. How ever, by the 1980 s and 1990 s the ne go ti at ing pro cesses were be com ing more pro tracted, com pli cated and less ex pe di ent. The re sult ing con tract could not al ways be re lied upon, and of ten the Chi nese would pro ceed to re ne go ti ate the con tract af ter sign ing it. At this point both forms of ne go ti a tion were be gin ning to

17 Volume 12 Number re flect a cy cli cal pro cess sim i lar to that ad vo cated by Fran ken stein (1986) and Blackman (1997). It is dif fi cult to iden tify a di rect cause of these changes. Some re spon dents ad vo cated in creas ing Wes ter ni sa tion ac com pa nied by an in crease in the application of traditional Confucian values as the cause. Confucianism is a 2500 year old Chi nese philo soph i cal tra di tion that has ex erted a fun da men tal in - flu ence on the Chi nese modes of think ing and ways of be hav ing (Ghauri & Fang 2001). Con fu cian ism stresses the need for avoid ance of con flict and the need for harmony in society. The principle of harmony implies aspirations toward con - flict-free group based on sys tems of so cial re la tions (Shenkar and Ronen, 1987). Hence, the pro cess of re-ne go ti at ing the con tract af ter sign ing can be at trib uted to the Chi nese not want ing to cre ate con flict. What they were try ing to do was to en - sure that the con tract is agree able to both par ties. An other cause of the cy cli cal pro cess was that bu reau cracy has shifted from Cen tral Gov ern ment to the Prov - inces and hence in creas ing the num ber of de ci sion mak ers in volved in any one de - ci sion. How ever, con flict ing with the ear lier mod els in the lit er a ture, our re sults con tend that in spite of these changes the PRC Chi nese have al ways been di rect ne go ti a tors, pre fer ring to get straight down to the hard is sues, in par tic u lar price. One re spon dent said: Pa tience, states a re al is tic price, re cog nise when the Chi nese aren t in ter ested in ne go ti at ing with you, and don t waste time pur su ing the ne go ti a tions. The cause of this dis crep ancy can be at trib uted to un cer tainty avoid ance. Al - though China is not mea sured in Hofstede s (1980) orig i nal study, the Chi nese ne - go ti a tors were cer tainty more prac ti cally ori ented. By ne go ti at ing right down to an ac cept able price would cer tainly avoid un cer tainty and hence dis har mony. From the year 2000 on wards the Chi nese ne go ti a tion pro cess of both joint ven ture and short-term sales con tract agree ments is still cy cli cal in na ture though is be com ing slightly less so with more one-on-one deal ing. Re spon dents at trib ute more one-on-one deal ing to in creas ing Wes ter ni sa tion which is sup ported by the lit er a ture (Chan, Ko & Yu, 2000). One re spon dent be lieves the in creas ing Wes ter - ni sa tion cou pled with will ing ness to learn and un der stand have caused the Chi - nese party to be come more trust ing and hence re sult ing in a more ef fi cient negotiations. Similarly most Westerners have learned the art of negotiating with the Chi nese. One of our re spon dents said: Ne go ti at ing in China is not that dif fer - ent from ne go ti at ing in New York, while an other claims: Do ing busi ness in China takes time. With more learn ing, trust ing and un der stand ing of the par ties in - volved in the ne go ti a tion, per haps there will be a day where the ne go ti at ing pro - cess gap be tween the West and the East is sim ply sign ing on the dot ted line. In view of the dif fer ence be tween joint ven ture ne go ti a tions and short-term sales con tracts, the for mer is more pro tracted and com pli cated in na ture than the later and this can be at trib uted to the more com plex man a ge rial and con trol is -

18 100 Cross Cultural Management sues in volved. The pro cess of ne go ti at ing a wholly-owned sub sid iary ap pears to be sub stan tially less com plex than other forms of ne go ti a tion and more lin ear in na - ture. This is at trib uted to the fact that the West ern party has 100% own er ship and the PRC di rectly ben e fit from the FDI (Child & Yan, 1999). The com par i son of the joint ven ture ne go ti a tion pro cesses in the North ern and South ern PRC high lighted some im por tant dif fer ences. Ac cord ing to re spon dents who have ne go ti ated joint ven tures in the South ern PRC, cur rent ne go ti a tions, though still cy cli cal in na ture are be com ing less so. In con trast, the cur rent ne go ti a tion pro cess in the North ern PRC di rectly cor re sponds al most to the point of mir ror ing the pro cess in the South years prior. This could sug gest that the South ern Prov inces of the PRC have been more af fected by Wes ter ni sa tion than the North. This is sup ported by cur rent sta tis tics which re cog nise the higher rates of for eign trade growth in the South ern re gions. Over all our study re vealed that there is no stand ard ised pro cess of PRC ne go ti a tions. Since the be gin ning of 1970, the PRC ne go ti a tion pro cess and be hav iour have un der gone a se ries of changes start ing with a lin ear pro cess to cy cli cal and now semi-cy cli cal pro cess. In ad di tion, the PRC ne go ti a tion pro - cess and be hav iour will vary de pend ing on the type of ar range ment be ing ne go ti - ated and the geo graphic lo ca tion of the ne go ti a tions. Conclusion and Further Research The unique PRC business environment manifests challenges for every international mar keter no mat ter whether it is for a mul ti na tional cor po ra tion or from a small ag ri cul tural based com pany. The im pli ca tions for these mar ket ers are to better un der stand the Chi nese cul tural val ues. Many re spon dents saw pa tience and in creased cul tural un der stand ing as be ing the best way of over com ing dif fi - culties during negotiations. In addition, the international marketers should also be ware of the geo graph ical dif fer ences as our study showed that the North ern re - gions are more tra di tional com pared to the South ern re gions. The model we pro - posed should pro vide a clearer pic ture to the in ter na tional mar ket ing com mu nity about the PRC ne go ti a tion pro cess and be hav iour as ex pe ri enced by New Zea land busi ness peo ple from the 1970s, be fore China s doors had been of fi cially opened to West ern busi ness, through to the year In ad di tion, our anal y sis of the re - sults has drawn a very strong con nec tion be tween the stages of this con tin uum and Chi nese cul ture. How ever, fur ther re search should be un der taken to strengthen the find ing of this qual i ta tive study. Due to the low num ber of those in ter viewed and the in abil ity to gen er al ise from the qual i ta tive re sults, it is rec om - mended that the re search be ex panded with a sub stan tially larger sam ple of re - spondents; the respondents representing negotiations in a wider cross-section of PRC re gions; the re spon dents representing a wider cross- section of industry, and a dual perspective using a combination of both PRC and other western business respondents.