Dr. Hong Yu

Challenges in Western-Chinese business relationships: the Chinese perspective

Co-written by Hong Yu


As the world’s third largest country, home to one-fourth of the world’s population, and the fastest growing economy in the world, China offers enormous market opportunities for the world. In order to increase trade with China, global companies must be equipped with a more thorough understanding of China.

It is widely known that business practice differences between Western and China are the main challenge in doing businesses with China (e.g. Graham and Lam, 2003; Hirt and Orr, 2006; Movius et al., 2006). Understanding such differences, however, is complex because Chinese traditional values and new modern values concomitant of the economic growth paradoxically coexist.

An increasing number of studies reported the paradox (Faure and Fang, 2008; Leung, 2008; Luo, 2008; Styles and Ambler, 2003; Willis, 2009; Wright et al., 2008); however, previous studies are limited in understanding Chinese business practice because of three reasons. First, most studies mainly illustrate the changing or coexisting values regardless of specific context (e.g. Lin andWang, 2010;Willis and Quan, 2009).While such discussion is meaningful in understanding today’s China, it limits our precise understanding since Chinese may apply different values to business and social behavior (Leung, 2008). The second limitation comes from lack of empirical data. With an exception of Willis (2009) and Willis and Quan (2009) who interviewed young Chinese consumers, most studies are conceptual or literature review; empirical studies with business professionals are very limited. Third, previous studies largely delineate China’s mixed values from the Western perspective. To develop a more accurate understanding of Chinese business practice, it is equally important to know how Chinese business professionals perceive the differences.

To fill the gaps, the purpose of this study is to identify fundamental business practice differences between Western and China, and to examine if traditional Chinese values and modern values coexist in the business context. Changes in Chinese values can be effectively detected from the Chinese perspective. Thus, this study performed a series of one-on-one interviews and two focus group interviews with Chinese business people who are doing business with the USA.

Coexistence of traditional and Western values

China has gone through drastic transitions in social, economic, and political systems during the modern historical period. Significant milestones included: The Chinese monarchies sustained for more than 5,000 years were overturned in the late nineteenth century, followed by the Communist takeover in 1949, the Cultural Revolution in the 1960s and 1970s, and Deng Xiaoping’s open-door policy and economic reforms since 1978, which triggered China’s industrialization and modernization. Over the past decades, these drastic political and social changes have demolished some traditional Chinese values (Faure and Fang, 2008). Recent studies have revealed that only parts of traditional values remain prevalent in China today (e.g. Cheng and Schweitzer, 1996). In contemporary Chinese culture, Western ideas are shifting the existing social order and impinging on individuals’ ways of thinking (Ng, 2004).

Recent literature suggests the coexistence of traditional and transitional values. Based on Chinese Yin Yang cultural principle, Faure and Fang (2008) delineated eight pairs of paradoxical values that coexist in today’s China, which include: guanxi vs professionalism, importance of face vs self-expression and directness, thrift vs materialism and ostentatious consumption, family and group orientation vs individuation, aversion to law vs respect for legal practices, respect for etiquette, age, and hierarchy vs respect for simplicity, creativity, and competence, long-term orientation vs short-term orientation, and traditional creeds vs modern approaches. While seemingly contrasting with traditional Chinese values and modernWestern values, the values work together well in China. In marketing, transaction and relational approaches are commonly viewed as separate alternative forms.

However, Styles and Ambler (2003) pointed out that Western transactions and Chinese relational approaches (i.e. guanxi) coexist within the same firm or the same manager and concluded that both approaches not only coexist, but also reinforce each other in China. The above studies are valuable as it suggested the coexistence of traditional and modern values. However, they are limited in understanding in what extent and in what contexts one value is dominant over the other value. That is, Faure and Fang’s (2008) paradoxical eight pairs of values are suggested without referring to a specific context; thus, whether the paradoxical pairs are applicable to all contexts with equal weights or the pairs have differing relevance to business contexts are still unanswered. This is a research gap this study aims to fill in. Leung (2008) cautioned that applying traditional Chinese values to all situations should be avoided and suggested that in economic decisions, cost-benefit analyses, and economic rationality with a short-term perspective dominates, while social behaviors are more influenced by traditional norms and values. Based on this, this study posits that while the majority of Chinese traditional values are still dominant in business contexts, Western ways of doing business coexist.

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