How to Successfully Manage Cross-Cultural Negotiations between Australian and Chinese Organizations - Literature review Example

How to successfully conduct and manage cross-cultural negotiations between Australian and Chinese organizations? 06 September 2012 How to successfully conduct and manage cross-cultural negotiations between Australian and Chinese organizations? Cross cultural business is increasing day by day because of globalization, liberalization and privatization policies implemented by many countries. It should be noted that China was the number one criticizer of globalization earlier. However, they are the number one exploiter of globalization at present. Since China is the most heavily populated country in the world, Chinese markets are very much attractive to foreign business organizations. Moreover, manpower cost in in China is extremely low compared to that in Australia or other western countries. As a result of that majority of the foreign companies are looking for opportunities to outsource or offshore their business to China even though the track records of China in terms of human right protection, censoring of information etc are not so good. As part of outsourcing or offshoring of business to China, foreign firms or Australian firms need to conduct several business negotiations with their Chinese counterparts. “Business negotiation is the process by which typically two or more parties come together to try to create a mutually agreeable contractual decision” (What is Negotiation?). According to Lewicki et al.(2006), “Negotiation occurs for one of two reasons: 1) to create something new that neither party could do on his or her own or 2) to resolve a problem or dispute between the parties” (Lewicki et al., p.3). It is easy to conduct business negotiations if the parties involved in the negotiation processes are of the same culture. However, it is difficult to conduct cross cultural business negotiations because of the huge cultural differences between the parties. This paper analyses How to successfully conduct and manage cross-cultural negotiations between Australian and Chinese organizations. Australia is a country in which democratic administration prevails whereas China is a country with communist administration. Moreover, English is the official language of Australia whereas mandarin is the official language of China. Majority of the Australians are Christians whereas in China religion plays less significant roles in political, economic and social lives of the people. Human right values are more heavily respected in Australia whereas these things have less significant roles in China In short, cultural differences are plenty in number between Australia and China. The cultural dimensions of international business negotiations are well defined by former professor of Eastern Michigan University, David A. Victor in his famous LESCANT model of cultural variables. They are Language, Environment, Social organization, Contexting, Authority, Nonverbal behaviour, and Temporal conception (Kelm, p.2). Language plays an important role in any communication process and business negotiation is also not an exception. The views and opinions of each party can be communicated properly if both the parties don’t have a language barrier. “English has no legacy in the land of China. In fact, China had a long history of deliberately avoiding contact with the West for fear of cultural contamination (Shaobin). The fluency of Chinese people in English is extremely poor whereas the fluency of Australians in Chinese language can be negligible. Since English is the international language, a business negotiation between Australian companies and Chinese companies usually takes place in English language. So, Australians may get an upper hand while conducting business negotiations in English language with the Chinese people. Whenever two parties negotiate, the entire process occurs under two umbrella contexts, environmental and immediate. The environmental context refers to forces in the environment that are beyond the control of either party involved in the negotiations. The immediate context includes such aspects as the relative power of the negotiators and the nature of their interdependence factors over which the negotiators have influence and some measure of control (Phatak & Habib, p.30). Environmental characteristics of China are different from that of Australia. The natural resources, geography, weather, customs, beliefs, politics etc of China will be different from that of Australia. “RACIST attitudes in Australia threaten to scuttle much-needed foreign investment, a former senior Australian minister told a conference in New Zealand. Attitudes toward investment from China and the Middle East are particularly dire, he said”(Craymer). In short, environment plays an important role in successfully conducting a business negotiation. It should be noted that China’s policies towards human right protection and censoring of information are unacceptable to Australians. Australians always like to respect human rights and freedom of expression rights. The contrasting beliefs and political ideologies often cause problems in the business negotiations between China and Australia. Both China and Australia should forget their political differences and should give more focus to their business or economic interests while negotiating each other. Australians should realize that the potentials of Chinese markets are huge and it is suicidal for them to avoid it only because of the political differences between these two countries. “Social context influences information exchange through perception, cognitive interpretation, and communication behaviour. Social context barriers, such as status differences, will not constrain communication if senders and receivers are unaware of them” Sproull and Kiesler , p.1495).Social organizations are another entity which plays an important role in the business negotiation processes. For example, religion is an important entity in Australia whereas in China it is not so. So business organizations in Australia may not do anything to harm the interests of religions in Australia. At the same time in China, country’s interests are more important than the religious interests. It should be noted that in Australia, society is divided into upper class, middle class and lower class whereas in China only the working class is existing. Moreover, family structure in China is entirely different from that in Australia. Recreational activities and aesthetic values are more respected in Australia whereas in China such things have less importance. Thus, the peculiarities of the social setups in China and Australia can affect the business negotiations immensely. Negotiators should realize the social structure in China and Australia properly to conduct the negotiation process smoothly. Contexting refers to the amount of information possessed by the negotiators in a negotiation process. Those who possess more information may get upper hand in the negotiation process. So, the negotiators should do their homework properly before the beginning of the actual negotiation process to get an upper hand. Power and authority are the two sides of the same coin. These things are essential in a business negotiation process. Australians are more authoritative compared to the Chinese and hence they may try to take upper hand in a negotiation process. Chinese negotiators should formulate ways to tackle the power and authority of their Australian counterparts before the beginning of the negotiation process. “Negotiations may involve several stages, such as greeting, background information exchange, agenda setting, issue discussion, and final agreement formulation, and different media may be used by negotiators to perform different tasks”(Yuan et al., p.107). All these stages are characterised by different verbal and nonverbal communication processes. In a business negotiation, more ideas are communicated nonverbally than verbally. Body languages, gestures, facial expressions, eye contacts etc of a negotiator can communicate many things to the opponent in a negotiation process. It is often said that more than 60% of the message is communicated through nonverbal means in a negotiation process. Since Australians and Chinese are coming from different cultural backgrounds, their nonverbal communication means could be different. For example, Australians shake hands to greet others whereas Chinese people bow their head to mark their respect towards others. Moreover, body languages and gestures of Chinese people and Australian people are different. Negotiators should learn the nonverbal means of communication of the opposite party very well before the beginning of the negotiation process. The concept of time is different in Chinese and Australian contexts. Chinese are known to be polychromic in their dealings while monochronic in their approaches whereas Australians are believed to be monochronic in their dealings and polychromic in their approaches. Monochronic or M-time is characterized by doing one thing at a time whereas polychromic or P-time means doing several things at the same time. Moreover, P-time put more emphasize on human relationship and long term relationship whereas M time gives more emphasize to short term relationships. The awareness about these temporal conceptions of the opposite party may help a negotiator very much in the negotiation process. “Negotiations are often categorized as distributive (win-lose) and integrative (win-win)” (Stuhlmacher.& Citera, p.24) OR one that end up in the victory of one party and the failure of the other party (distributive or win-lose) and another that end up in the victory to both the parties (integrative or win-win). Australians and Chinese business negotiators should try to make the negotiation process an Integrative or win-win one. To conclude, to successfully conduct and manage cross-cultural negotiations between Australian and Chinese organizations, the negotiators should account for the cultural differences between these two countries. Language, environment, social organizations, contexting, authority, nonverbal communication and temporal conceptions of Australians and Chinese people are entirely different. The negotiators should account for these cultural differences to conduct the negotiations on a positive note. They should not bother much about the political differences and should give more focus to the economic interests of their home countries. The negotiators should make sure that the negotiation process end up in a win-win result rather than a win-lose result. Bibliography 1. Craymer Lucy. Aussie racism threat to investment. The Wall Street Journal September 06, 2012. [Online] http://www.theaustralian.com.au/business/wall-street-journal/aussie-racism-threat-to-investment/story-fnay3vxj-1226466325927[accessed 06 September 2012] 2. Kelm Orlando R. Overview of David Victor’s LESCANT Model: International Business Communication.[Online] http://www.laits.utexas.edu/orkelm/culture/lescantkelm.pdf [accessed 06 September 2012] 3. Lewicki, Roy. J., Barry, Roy J. Lewicki (Author) › Visit Amazon’s Roy J. Lewicki Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central Bruce & Saunders Bruce Barry (Author) › Visit Amazon’s Bruce Barry Page Find all the books, read about the author, and more. See search results for this author Are you an author? Learn about Author Central David. M . 2006. Essentials of Negotiation, Publisher: McGraw Hill Higher Education; 4th edition (September 1, 2006) 4. Phatak Arvind V. 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