Chinese business culture is a combination of its socio-political system;its philosophical ideologies, specifically Confucianism and Guanxi; and the strategies and tactics the Chinese employ in business negotiations (Fang, 2006). It is important to note here that unlike the U.S.—or the Western world in general-China has no formal culture or system of business ethics for private enterprise. According to Lu , “Although there were social ethics and ethics in business, business ethics arose from domestic economic reforms”.
Sociopolitical System
China’s sociopolitical construct is unique in that it has a Communist ruling government that emphasizes a socialist, free-market economy.Transition and reform notwithstanding,centralized decision-making, internal bargaining, and bureaucratic red tape are still the norm. On the other hand, economic reforms have also led to decentralization in many industries, the growth of consumerism, and a shift in fundamental economic interests.
Additionally, since its induction into the World Trade Organization (WTO) in 2001
China has significantly modified its legal system to ensure businesses operate within WTO regulations . This could be attributed in part to the series of scandals it has experienced in recent years related to product safety including tainted pet food,toxic toys,and contaminated toothpaste , as well as environmental pollution and worker exploitation related to coal mining and consumption (Ip, 2009b). These have generated local public outrage, and damaged China’s image as the factory to the world.
This crisis of credibility has led the Chinese government to reformulate its ideology and initiate policies that stress supervision, regulate trade and industry, and establish high
standards of production. Finally, there appears to be a return to confucian ethics with the emergence of the notion of a Confucian Firm that incorporates the concepts of the moral person,core human morality and relitionships.
Business Strategies
Chinese business negotiators view the marketplace as a battlefield and the ultimate goal is to “capture the market without destroying it” .The intent is to gain psychological and material advantage over one’s adversary, creating a favorable situation to manipulate a counterpart into doing business your own way (Ghauri and Fang, 2001).To this end, the Chinese—and East Asians in general-draw from ancient literature that includes Sun Tzu’s The Art of War, 36 Stratagems, The Three Kingdoms, and The Book of FiveRings.
Twelve distinct themes emerged from Tung’s (1994) analysis of these texts as follows:
The importance of strategies.