Negotiating into China - Research Paper Example

? Negotiation in China Prepared For Dr. Robert B. Rogow, Dean College of Business and Technology Eastern Kentucky Prepared By: of theStudent Table of Contents Table of Contents 2 Introduction 4 Methods and Procedure Used 5 Analysis & Discussion 6 Research Question 1: Relationship Aspect of Negotiation 6 Conclusion 11 Recommendation 11 Reference 12 Appendices 13 List of Tables Table No Figure Name Page No. 1 Summary Statistics of Research Question 1 Response 5 Descriptive Statistics of Responses in Question 1 7 Statistics of Research Question 2 Response 8 List of Figures Figure No Figure Name Page No. 1 Emphasis on Relationship 7 2 Social Gathering 7 3 Translator 8 4 Fixed Term 9 5 Flexibility 9 6 Slow Deal Process 9 Introduction The role of negotiation in business world has significantly increased with the proliferation of globalization, cross border trade and economic liberalization of countries. As Ogilvie and Kidder (2008) have defined negotiation as the process by which individuals, business parties or countries exchange services, goods and decide an exchange rate for the exchanged goods. Both parties in negotiation try to articulate or influence each other in order to fulfillment of their own objective. Ma and Jaeger (2005) have done research work on negotiation process of China and found that business negotiation in China is affected by multitude of factors such as social beliefs, tenure of the deal making process, relationship, flexible nature of the negotiation and many others. Ma and Jaeger (2005) have argued that economy of China is booming and gross domestic output of the country is growing at an average of 9% which is greater than GDP growth of USA and other European countries. Hence, there is no surprise why American entrepreneurs are moving to China to open business units and American companies are looking establishing partnership with Chinese companies and government. Interesting fact is that, research work of Ma and Jaeger (2010) has revealed in more than 40% cases, American entrepreneurs fail to negotiate with Chinese companies due to reasons like lack of understanding of American entrepreneurs about the business and social culture of china, language barrier to understand Chinese language etc. However, very few researchers have tried to understand the inter-correlated nature of independent variable which ensure effectiveness of negotiation in China hence it can be assumed that there is large gap exist in the literature about negotiation in China. Hence the researcher working as media consultant for Academy of International Business (AIB) will conduct a quantitative study in order to analyze the relation between internal variables related to negotiation process in China. Purpose of the Study Key purpose of the study was to determine what special insights outsiders need in order prepare negotiation in China. The report will answer following questions; Research Question 1: What are the important factors while emphasizing on relationship aspect of negotiation in China? Using this research question helped the researcher to understand conjoint impact of three micro variables such as relationship, social gathering and presence of translator on overall effectiveness of negotiation in China. These three micro variables defined the overall on impact of relationship in negotiation in China. Research Question 2: What are the important factors while emphasizing on process aspect of negotiation in China? Using this research question helped the researcher to understand conjoint impact of three micro variables such as fixed term, flexibility in negotiating process and slow deal making process on overall effectiveness of negotiation in China. These three micro variables defined the overall on impact of process aspect in negotiation in China. Methods and Procedure Used Data for this research report was collected by sample survey process with the help of close ended questionnaire. Academic peer reviewed journals were used as secondary data sources in order to develop the theoretical argument and research questions for this paper while primary data sources in the form of responses of respondents were used for analysis section. Chinese manufacturing sectors were selected as sample universe for the study. The sample survey with close ended questionnaire was conducted during fall of 2012. The researcher has collected the database of Chinese manufacturing companies from the website of Chinese government. 225 business managers of Chinese manufacturing sectors was selected as sample size by using simple random selection as part of probabilistic sampling techniques. Although, 225 managers were surveyed by close ended questionnaire administration but responses of only 200 managers were qualified as usable. The close ended questionnaire was sent through e-mail to respondents and answer of business managers in responses to close ended questionnaire was treated as input data for analysis. A five point likert scale was used in order to assign numerical identity to responses in the form of, 1- Strongly Agree (value of 5), 2- Agree (value of 4), 3- Neutral (value of 3), 4- Disagree (value of 2) and 5- Strongly Disagree (value of 1). As the study used quantitative research methodology hence numerical value to responses was assigned in order to conduct further statistical analysis. Analysis & Discussion Analysis of the research objective, ‘what special insights outsiders need in order prepare negotiation in China” has been grouped into two categories such as; research question 1 and research question 2. Research Question 1: Relationship Aspect of Negotiation Table 1: Summary Statistics of Research Question 1 Response Emphasis on Relationship Strongly Agree Agree Neutral Disagree Strongly Disagree Relationship 120 40 10 30 - Social Gathering 20 100 40 40 - Translator - 50 50 100 - It is evident from the above table; majority of respondents (basically 80%) agreed with the fact that relationship between negotiating parties play vital role in China. Hence, it can be assumed that, having previous relationship with the negotiator ease the process of negotiation. The result can be depicted graphically in the following manner. Figure 1: Emphasis on Relationship 60% of respondents have agreed with the fact that social gathering plays vital role for negotiating in China. Hence, it can be advised to American entrepreneurs to organize social gathering for their Chinese partners in order to engage them in discussion. Gelfand and Dyer (2000) and Macintosh and Stevens (2008) have also pointed out that social gathering is a good way to engage negotiators which creates opportunity for meeting their personality traits. Figure 2: Social Gathering Almost 75% of respondents were more or less disgree with misconception that lack of understanding of Chinese language creates barrier in negotiation. This is probably due to the fact majority of negotion is done by using english as common language hence there is very little scope for confusion regarding the use of language in business deal. Figure 3: Translator Table 2: Descriptive Statistics of Responses in Question 1 Emphasis on Relationship Relationship Social Gathering Translator Mean 4.25 3.5 2.75 Standard Deviation 1.092459 0.924268 0.831237 Sample Variance 1.193467 0.854271 0.690955 Kurtosis -0.02279 -0.82808 -1.37622 Skewness -1.21173 -0.38572 0.497118 High mean value is showing that majority of respondents given positive respons regarding relationship and social gathering benefits in negotiation while low mean value for presence of transalor is showing that respondents given very little importance on role of transalator in negotiation process. High value of standard deviation for all three question is showing that there is significant amount of variance exist among responses of respondents and high value of skewness is also showing the chances for the distribution to be leptokurtic in nature. Research Question 2: Negotiation Process Aspect Negotiation Process Strongly Agree Agree Neutral Disagree Strongly Disagree Fixed Term 40 10 110 40 Flexibility to Contract 100 20 40 40 Slow deal making process 110 50 20 20 Majority of respondents (60% and 75%) of agreed with the fact that flexibility and slow deal making process are key success criteria for any negotiation to be successful in China. The research finding is in line with theoretical argument presented by Ma (2006 & 2007) that Chinese people take time to negotiate with others. Hence, slow deal making process is and asking for flexibility in negotiation is caused by cultural and social orientation of China. As a result of Chinese cultural orientation, they show reluctance for stressing on rigid terms and conditions in negotiation. Figure 4: Fixed Term Figure 5: Flexibility Figure 6: Slow Deal Process Conclusion The following conclusions are based upon the analysis of question 1: negotiators need to establish and maintain good relationship with their Chinese partner and organize social gathering for Chinese partners. Social gathering and establishing good relationship are the most important factor in order to negotiate successfully in context to China. Question 2: creating a flexible contract and taking time to negotiate the deal are the key success criteria for any negation in Chinese context. Recommendation Based on the above mentioned conclusion, following recommendation are made for 1. American entrepreneurs should establish both formal and non-formal relationship with Chinese partners in order to engage them with the negotiation process. 2- American entrepreneurs should take time to frame the deal and do not emphasize more on rigid terms and condition in the negotiation in order make it flexible enough to adapt with any sudden changes. Reference Gelfand, M., & Dyer, N. (2000). A cultural perspective on negotiation: Progress, pitfalls, and prospects. Annual Psychology: An International Review, 49(1), 62-99. Ma, Z. (2006). Negotiating into China: the impact of individual perception on Chinese negotiations styles. International Journal of Emerging Markets, 1(1), 64-83. Ma, Z. (2007). Conflict management styles as indicators of behavioural pattern in business negotiation: The impact of contextualism in two countries. International Journal of Conflict Management, 18(3), 260-79. Ma, Z., & Jaeger, A. (2005). Getting into yes in China: Exploring personality effects in Chinese negotiation styles. Group Decision and Negotiation, 14(5), 425-37. Ma, Z., & Jaeger, A. (2010). A comparative study of the influence of assertiveness on negotiation outcomes in Canada and China. Cross Cultural Management: An International Journal, 17(4), 333-346. Macintosh, G., & Stevens, C. (2008). Personality, motives, and conflict strategies in everyday service encounters. International Journal of Conflict Management, 19(2), 112-31. Ogilvie, J. R., & Kidder, D. L. (2008). What about negotiation styles? International Journal of Conflict Management, 19(2), 132-47. Appendices Appendix A: Cover Letter Dear participant, My name is “…..”, and I’m media consultant at “Academy of International Business (AIB)”. As a part of the research project of the company, I am investigating factors related to negotiation process in context to Chinese business environment. Many of the American entrepreneurs are planning to enter China in order to establish new projects and co-ordinate with Chinese companies in order to penetrate in Chinese business environment. But, these entrepreneurs are facing problems regarding negotiating with Chinese partners and these researcher will try to underpin the reasons behind this problem. Hence, result of this research will create new opening for American Entrepreneurs regarding the negotiation in context to Chinese business environment which also strengthen the USA-China business relationship in upcoming future. This is a confidential project, so I can assure you that identity of the respondents will not be revealed in any future circumstances. If you kindly answer the following questions for my research study then I will be highly obliged. Appendix B: Survey Instrument- Close Ended Questionnaire Demographic data Appendix C: Answer of Respondents Read More