How is negotiation viewed differently in the East??

Having lived and done business in the US, UK and Hong Kong, I have witnessed first-hand how people from the East and West view the subject of negotiation differently, and this has something to do strongly with how the judicial system works historically and at present amongst various cultures.

Separation of Powers vs Negotiation

Sometimes in the west, we take the “Separation of Powers” concept for granted, and by this I mean that we assume everybody in this world understands what this really means. In China for example, there has never been “Separation of Powers” and in fact, General Secretary Xi Jinping has even mentioned about his love for the “Cooperation of Powers” – something that to be honest, is quite scary for a lot of westerners to comprehend. To understand why China and indeed its people, do not understand what “Separation of Powers” is, we must trace back to the historical roots of China.

Spanning over 5000 years and umpteen dynasties, the so-called “executive branch” in China has always governed everything related to law, from how the law is written, to how it is interpreted and how it is executed and implemented. In other words, the emperor makes the law and judges human deeds according to the law he has written himself. It is unfathomable for the emperor to distance itself from law-making and implementation, since this would mean ceding governance power to somebody else, something which emperors never agree to, let alone Chinese emperors, where “power” is viewed to be the most important thing in society, even ahead of money and fame (hence the highly hierarchical structure in Chinese Society).

When Western society has come to achieve the “Separation of Powers” in the 17th and 18th Century, normal citizens and peasants came to view the “law” as something holy – something that is inflexible and must be followed to the word. In my opinion, since the Chinese people have never experienced democracy, they have never understood what the word “law” meant in Western countries. They have always thought of the “law” as something that is flexible and could be changed according to different circumstances. This has significant implications on how the Chinese conduct negotiations, and more importantly, how they view their legal responsibilities after formal contracts have been signed.

Perception of “Law” in China & Negotiation

Returning back to the subject of law in Chinese history, Chinese laws are written very differently from that of Western laws. Consistent with the experience I had from business dealings with westerners, westerners place a lot of emphasis on the details of any given contract or written law. For example, small details are given in terms of the consequences of breaching a contract or law. Negotiations are often carried out by going through terms and conditions one-by-one, whilst negotiators make conscious attempts at ironing out the tiniest of details to make sure that every possible scenario can be accounted for. If one negotiates the same way in China, one doesn’t even have to bother wasting time at the negotiation table since the Chinese do not negotiate this way.

Chinese laws are written very differently. Little emphasis is placed on accounting for every possible scenario that may arise – Chinese laws are never written pin-pointedly, but instead, laws are often written vaguely. For example, when the US and China negotiated for China’s entry to the World Trade Organization, US trade representatives have expressed frustration over the Chinese’s proposed terms and conditions, since the Chinese didn’t seem capable of spelling out clearly in wording, what would happen if such or such a scenario occurs. Instead, Chinese trade representatives seemed to only give out generalized requirements and did not find the need to mark everything down in writing. If one studies how ancient Chinese law is written, one can find out that laws are written funnily enough, in detail about the different death punishments that can be executed, but very little about what constitutes as crimes, felonies and so on.

Profiting from Vagueness

For instance, a typically vaguely written Chinese law would be “A person shall be jailed for 10 years or more if he/she is found to be colluding with foreign forces”. A westerner upon reading this “law”, would immediately enquire about what the definition of collusion and foreign forces would mean. The Chinese however, would find this unnecessary, since laws are written intentionally vaguely. By writing this hypothetical law in such a way, this gives the Chinese authorities to iron out the details for punishment and whom to prosecute depending on the situation it faced in due course. Applying this example to a business context, the intention behind Chinese negotiators for not wanting to iron out details in an initial negotiation is to allow them enough room to manoeuvre after agreements have been signed. To put it more bluntly, this allows them more ways to benefit themselves in the future. There is therefore a hysterical recent saying in the US that when China stresses “a win-win scenario” for both parties, she doesn’t mean a win-win situation for both parties but instead, China wins twice. The Chinese however, would predictably disagree with this, claiming that they have their own set of rules and laws (and again, their definitions of “rules and laws” differ from Westerners)

In essence, the Chinese do not view negotiations as a one-off process like Westerners, in which negotiations stop once agreements have been signed. In fact, they view negotiations as a continual process, in which negotiations often only begin after an initial agreement has been carved out.

To sum up, if you aren’t comfortable in continual negotiations after the formal signature of agreements, you might have to adjust your mindset if you want to do business with the Chinese.

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