The cultural history is a crucial factor that may affect negotiations, particularly when such various countries as Chinese and United states ones are involved.

Having less confidence in Chinese partner became one of the main reasons behind the failure of negotiations. Having said that, United states negotiators were too direct that could be offensive for Chinese negotiators. Instead, the standard method of performing negotiations in Asia was sensed by the United states part as cheating or effort of it. The US part focused on certain business problems, including production facilities, costs, quality and other problems (Pudelko, 2005). On the contrary, Chinese put the business philosophy and culture prior to practical problems regarding their business.

Americans were disturbed they have not started negotiations from the moment of the arrival to China. Instead, they will have received hot welcome not just from part of the company and from the part of regional officials. Instead, Chinese dedicated to the establishment of close relations with officials to determine the bigger status of company and US lovers. Furthermore, Chinese couldn't constantly understand agenda and might not answer Us americans succinctly to their inquiries about the agenda and negotiations, which Chinese regarded as rudeness.

In fact, Americans didn't realize that negotiations have started through the first hand-shake because Chinese method of negotiations turned out to be positively not the same as United states one. At the meeting with the CEO, the US part had to concur general maxims, that have been long-term relationships, trust, providing Chinese business with American know-how alongside strategic problems. However, Americans lacked specific, practical, material side of business in Asia being discussed. Rather, the Chinese CEO, Mr. Chen, declined to negotiate details because it apparently wasn't his matter however the matter for the company’s executives of the lower level. Instead, Mr. Chen could focus on the strategic or general issues just. Throughout negotiations, People in america apparently waited the offer being created by Chinese but, instead, they finalized exactly what People in the us perceived as a non-binding statement of some intentions. Instead, Chinese perceived the signed document on basic principles of US-Chinese partnership because the binding offer and further negotiations ought to be carried out within its framework.

However, Us americans cannot accept the signed document simply because they failed to accept it as an offer. Instead, they needed particular offer, where passions of either celebration are defined plainly. At precisely the same time, the status of American negotiators would not match the CEO Chen degree because Chinese expected the CEO regarding the US business could have appeared to the negotiations to determine basic axioms (Ely & Thomas, 2001). The Chinese component took lots of time for consideration involving senior staff and officials within the crucial choice making procedure, whereas Chinese expected US negotiators to just take decisions immediately, while any delays had been perceived as harmful.

In reality, practical details of the contract were unimportant for Chinese because personal relations and mutual understanding were crucial for them. Quite simply, Chinese likely to establish strong social relations first and then come to contract on practical aspects of the business development for the duration of the utilization of the project. Rather, People in america needed settling practical aspects of company first, while interpersonal relations and incomprehensible basic principles remained secondary for them.

Additionally, Chinese insisted on clauses about arbitration to refer to 3rd parties, in case there is breach of agreement by either celebration, whereas Americans expected to adhere to the contract and certain legal procedures, that should be employed in case there is the breach of agreement. Once again, Chinese place personal relations before the agreement and so they prefer to negotiate controversial conditions that could breach the agreement with a responsible official or professional of this US business as opposed to undergo the legal procedure of breaching the contract.

Also, Chinese method of gathering relations means corruption for Us citizens. For this reason the American part was reluctant getting too included into gathering relations with officials out of sheer anxiety about being tangled up in corruptive activities, whereas Chinese interpreted such place as unpleasant and dangerous as the failure to establish positive relations with officials threatened to your project, which could simply take either a few weeks, if the company had good relations with officials, or almost a year, if relations were poor (Hopkins, et al., 2005).

Chinese place moral responsibilities before contract people and losing their face is the major risk to them, while going to trial is the instance of losing their face. This is the reason they insisted regarding establishment of social relations and concern of moral obligations, while agreement responsibilities were insignificant for them. On the contrary, Us citizens viewed agreement obligations as their priority while the only problem that did really matter, whereas individual relations cannot resolve any disputes or breach of contract if one could happen.

Hence, social differences have apparently played the key component within the failure of the agreement between Chinese and American part.

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