Journey to China
I first arrived in China in 2001 as the President of a major Western consulting firm. There were nearly 200 employees in four offices stretching from Hong Kong to Beijing. One of my responsibilities was finalizing contracts with clients. Initially, I tried to give clients a fair price in return for excellent work. This was aimed at making their companies more effective in human resources to be more competitive in the market – for both product and talent. No matter what I tried, I always left the negotiations feeling like I had lost. At the time, our strategy in China was to gain the highest market share. To do this, I was willing to give deep discounts. Even when I did this, potential clients still wanted more. Sometimes we just “walked away,” but often we conceded to win the business.
After about six months, our revenues continued to grow, but our profit margins stayed in the red. It was around this time that I had an epiphany. It occurred to me that we were playing by a totally different set of rules. Western managers took a negotiation approach of “win-win;” Chinese managers played a game of “win-lose.” The “win-win” approach of Western business is based on a concept of trust which is different from that in China. In China, trust is strongest in the family and among close friends. The further one moves from the inner circle of family and friends, the more trust diminishes. Chinese executives often expect the stranger they are negotiating with to be less worthy of trust. They are unwilling to believe that someone would offer a “fair” price unless they had previously worked together and had established guan xi (reciprocal relationship) that, in turn, would lead to building trust.
I share this story to point out how even someone with experience and the best of intentions could still be culturally blind to Western and Chinese differences. Learning about another country’s culture can reveal why one’s own long-held and trusted beliefs about best practices are often different.
Chinese vs. Western values
All the values I am listing below are important in both Chinese and Western, particularly American, cultures. However, these seem to play a more prominent and influential role in their respective culture:
♦ Reverence for family
♦ Trust in others
When we understand that leaders authentically represent the values reflecting their culture, then we can recognize why some of the practices of leaders in China and the West are different. Employees in each of these cultures will expect their leaders to represent their values and may be unfamiliar and uncomfortable with differences. The challenge and opportunity is to appreciate and respect the differences in other people, rather than discounting or dismissing them. The goal is to find common ground to co-create a shared future.
Understanding Cultural Differences
In social psychologist Geert Hofstede’s seminal work Cultures and Organization, he presents various cultural dichotomies to emphasize important differences. The Hofstede dichotomies below are echoed by my personal experiences.
Individualism vs. Collectivism. Western leaders are taught to seek the consultative advice of their peers and subordinates, but then they may act independently to make decisions. Chinese leaders work toward consensus to come up with a decision that is deemed to be best for the group. The Chinese approach can lead to a “safe” decision or worse, to no decision. In China it is often better to wait things out than to force a decision based on one person’s opinion. In this regard, Chinese employees sometimes see their Western managers as reckless and inconsiderate. On the other hand, Western employees often see the Chinese manager as indecisive. Both situations cause enormous frustration.
Equality vs. Hierarchy. In the West, despite one’s position in an organizational hierarchy, we intend to treat each person with equal respect and dignity. In China, status differences through positional power are sometimes observed. This can be seen through perquisites and status symbols. I remember the discomfort of my Chinese staff when I asked for a smaller office and car. I realized that, in China, certain status-related things were expected of a CEO, different than my Western egalitarian experience.
Change vs. Tradition. Westerners generally think some kinds of change are good. We frequently change jobs, move our homes to distant locations, often trade in our cars and tend to make decisions from an individual, rather than a family, perspective. Chinese, on the other hand, are more inclined to stay – in their firms, their homes and their families. China is a much more traditional society than many of those in the West, although there is a trend away from this in their workplaces. Chinese employees often express dissatisfaction with their firms and their leaders if change is too frequent. Although Western employees may have similar feelings about too much change, their tolerance for change-oriented leaders tends to be greater than in China.
Doing vs. Being. Westerners climb a mountain with one purpose in mind – to get to the top. Chinese can climb a mountain every day and never reach the top and still be extremely satisfied with the experience of just being on the beautiful mountain. We have a saying in the U.S. about the importance of “stopping to smell the roses.” This is probably one area where both cultures can benefit from the other. In the new global economy, Western leaders need to focus more about process to benefit results; Chinese leaders need to look more closely for results.
Truth vs. Courtesy. Both cultures are truthful and both cultures are courteous. Westerners are more direct and are often willing to get to the truth at the expense of courtesy. Chinese, on the other hand, are more likely to avoid a direct response to allow everyone to save face.
From my experience at my prior firm in Beijing I felt I needed to know everything about our company and the competition. With a weak knowledge of the language, I was dependent on my staff to let me know what was happening, but I was always the last one to know when the news was bad. If a competitor won a project, I needed to probe to find this out. In the U.S. I would have been flooded with e-mails.
In this blog post I tried to share some personal experiences as a Western leader in China. I make the point that, even when one thinks that they know the “right” way to do something, there still might be other ways that are more culturally appropriate. Chinese and Western leaders in multinational corporations (MNCs), who jump to a conclusion based on their own culture and interpretation, need to acknowledge that their deepest held beliefs are the hardest to see.
To MNCs that want to follow a Western approach in China, such as “empowering” their employees, having a “pay for performance” culture, or expecting contracts to be the last word on agreements because these practices were extremely successful elsewhere, take a second look. These may work in the West, but a company and their leadership must be mindful, flexible and patient to implement such business practices well in China.
I have been a stranger in a strange land. As an American, I’ve learned to navigate effectively within Chinese business cultures. I have practiced being respectful, withholding judgment, and, to paraphrase Stephen Covey, seeking first to understand.
In thinking about my experiences, I wonder what cross-cultural experiences have changed your perspectives and practices? Why don’t you join us in exploring this question and others you may have as we continue the conversation at the JBL&A forum.
- Frank Gallo