1. The current relationship between Canada and China
Luo Zhaouhui, the Chinese Ambassador to Canada, interesting explains on The Globe and Mail (2015) that, “Developing China-Canada relations is like sailing against currents. You either advance or recede.” Diplomatic ties between China and Canada have been established for 45 years and counting. Strategic partnerships between the two countries have held strong for over 10 years (Zhaouhui, 2015). The strong ties between the two countries are reflected through current statistics. As of 2014, about 100,000 Chinese students attend educational institutions in Canada. Chinese is considered the third most spoken language in Canada with over 1.3 million Chinese-Canadian residents (“Bilateral Relations”, 2015).
2. The standard practices and business etiquette in China Labelling and stereotyping can be very detrimental in cross-cultural situations; special care must be taken to ensure the team avoids that habit. The strongest armour against generalizations would be to educate our VCC negotiating team about standard Chinese practices in business and the negotiation process. The Chinese business culture places significant value on building relationships and getting to know the team individually. Personal connections would lead to friendships and friendships would lead to open trust and harmony – values emphasized in Chinese businesses. As a team, we need to recognize that in order to be successful in negotiating we must first build an honorary friendship with the Chinese (Yin, 2008). In China, business negotiations are viewed as moral obligations based on favours and mutual trust instead of concrete contract terms and agreements. Tony Fang (2006) explains, “When trust is high, the negotiation process will be relatively smooth, creative win-win solutions will be worked out and the business will be done relatively quickly.”
Gift giving during introductory meetings is an option, however I would caution our negotiation team from following that custom because of the hierarchical nature of a Chinese company. We need to be wary of who receives what; the gift must be given in accordance to the position a person holds in the company. The negotiation process is often stretched over long periods of time because of this hierarchy of power and we must be prepared to be flexible with time-restraints. The first step of the process will primarily be getting to know each other and meeting different people of different ranks. Bonding will instigate trust and responsiveness for mutual gains in the negotiations. As any meeting, punctuality is expected and every person on the team must look presentable according to the conservative culture of China. We can expect that we will be attending scheduled meetings and dinners several times before discussing business. We must be patient and wait for the Chinese company to first open up the discussion of business and we cannot continuously probe them. Talks of politics, Chinese internal affairs, and negative impressions of China are all considered impolite and disrespectful.
VCC’s CEO, Mr. King, should make an appearance once negotiations officially start and general principles are discussed with the Chinese company’s CEO. Once negotiations start, it is important to actively listen more than speak. The Chinese take a holistic view of the negotiations, we need to be ready to connect the dots from every aspect of the joint venture and emphasis that joint venture has a rewarding potential in the long run. The word “Yes” has many shades of meaning for the Chinese (Doucet, 2008). VCC negotiation team must pay attention to all ambiguous responses that may have negative implications even though they may be said with a positive tone. Similarly, the word “No” is considered rude in Chinese culture; we will be hearing and using strategic phrases to communicate disagreement, such as “This may be difficult” and “We might be able to consider it” (Doucet, 2008). Chinese negotiations are illustrated as a circular and interrelated process. Rather than become frustrated by this non-linearity, we will take this into our advantage by continuously reopening and renegotiating terms that we would like to change.
3. The concepts of guanxi and “face”
During the initial meeting, personal connections will be established, or guanxi. Guanxi instigates good intentions and opens up more opportunities for success in the joint venture. It is especially important to build up guanxi with the Chinese local government because it can help VCC obtain licenses or permissions that we may need in the future (Yang, 2011). It is important that we do not underestimate the power of guanxi when in China. We need to identify the leaders and decision-makers of the Chinese company and build genuine rapport; this would help us minimize future disagreements or conflicts. Respect is also involved in guanxi (Yin, 2008). One approach VCC can take to gain the respect of the Chinese is abiding by company’s ethics, demonstrating composure and passiveness during negotiations, and conducting business in a professional and composed manner. Aggressive and competitive tactics are not effective while negotiating to the Chinese; rather it is viewed as disrespectful and impolite (Pudelko, 2015). Persistence and logical rationale bring about the best results. We need to stay grounded about what we offer and support our position in the joint venture.
In one study, Fei Yin (2008) explains the concept of face as “a symbol of personal self-respect and forms on the basis of the individual’s social status and reputation.” This is particularly important for our team to keep in mind when discussing negotiations as it can either make or break the business deal. A simple way of describing the concept of “losing face” is saying something that would embarrass the other party. We need to be careful of what we say and how we say it. Negotiations in China take great deal of time and effort in order to analyze character rather than contracts. Character shows them the kind of person one is thus has more of an appeal than what one says or does at any given time (Mujtaba, 2013, p. 194). When VCC pursues the joint venture with China, the team will be faced with a negotiating style that is heavily related to Chinese culture. With the help of cultural intelligence and cultural sensitivity as outlined in this report, I am confident that we will be able to achieve success in the proposed joint venture.