Introduction

With rising interdependence among countries in a complex global economy, conducting international business in the twenty first century has brought many cultural difference issues to the forefront of today’s business strategies. Culture in international negotiations has frequently been compared to an iceberg, although there is an appearance of an obstacle above the surface, the depth of understanding required to conduct successful international negotiations goes far beyond what is immediately transparent. Since culture has a substantial influence on how people deliberate, converse and act, it has significant effect on many aspects of business negotiations, and therefore must be considered when conducting business internationally. All too often companies try to operate using the same business structure and strategies in multiple different countries and are unsuccessful or have extreme difficulty due to the differences in culture. This paper will discuss several cultural differences which consistently cause difficulties in international negotiations specifically during the conduct of business between America and China. These differences are broken up into several different categories including: purpose of negotiation, cultural compatibility, governmental compatibility, communication barriers, risk aversion, formalities and negotiating speed, emotional response, and successful negotiating tactics.

Purpose

Understanding why both business parties are negotiating as well as cultural negotiation processes are important in obtaining a favorable outcome during international business transactions. While Americans consider negotiating as a short term process to reach a formal agreement and sign a deal, Chinese cultures typically see negotiating as a process to establish a rapport and ultimately lead to a contract being signed. The relationship