Doing Business in Asia | Understanding Chinese Culture

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Doing Business in Asia | Understanding Chinese Culture
Dr Brian Monger
Asia’s rapid rise to economic prominence marks the beginning of a trend that will increase in the future. The Chinese economy, the second largest in the world, is currently attracting more direct investment than any other nation.
Asia’s growing economic dominance, on one hand, and the continuous search for new business opportunities, on the other hand, will drive Western businesses to have stronger economic ties to Asia in various forms: joint ventures; wholly foreign-owned enterprises; or direct investments.
Cultural values and business practices in Asia are different from those in the West. The challenge for Western businesses is to understand those values and find effective ways for operating successfully in Asia.

Asian Cultural Roots

Culture refers to the collective programming of the mind through socially transmitted values that shape the way people of the same social group think and act in various situations, including in negotiation. To understand the Asians’ mind-set and negotiating style, one has to understand its most influential cultural roots.

I. CONFUSIANISM (Confucius / Kong Fu Ze) - The Asian–Chinese culture is largely rooted in the teachings of Kong Fu Ze, known as Confucius, who lived in China from 551 to 479 B.C. The Confucian doctrine is a pragmatic moral and non-religious ethic that advocates virtuous behaviour such as, benevolence, righteousness, justice, propriety, trust, and sincerity. These moral ideals are designed to guide one’s daily life through a set of clear rules:
1. The first rule is the stability of society. Societal stability is based on five basic and unequal relationships, known as “wu lun.” The relationships are between ruler and subject, father and son, older brother and younger brother, husband and wife, and older friend and younger friend.
2. Second, family harmony is the prototype of all other social organisations. Family members are not autonomous to pursue their self-centered desires; they must restrain their impulses for the overall good of the family’s interests. Similarly, individual members in other social systems (groups, organisations and communities) should also submit to the interests of the collective. By extension, a business joint venture, for example, should be run on the basis of the “family model.” The role of the joint venture, therefore, is to serve the interests of the parent company the same way a child faithfully serves the family.
3. Third, Confucianism advocates virtuous behavior towards others. This consists of having good manners between civilized people who also have a sense of dignity and shame (“face”).
4. Fourth is mastery. One’s challenge in life consists of self-improvement - the tenacity to acquire skills and education through hard work and perseverance.
Confucian humanity, based on the principles of harmony, hierarchy and sincerity, is applied primarily to insiders - family and kinship “in group” members. It is not a universal morality that must be applied to all in all circumstances because “he who treats his enemy with humanity and virtue only harms himself….Using the rhetoric of virtue to maintain a pretense to others…is acceptable”

II. TAOISM (Lao Tzu) - Next to the wide spread influence of Confucianism is the influence of Lao Tzu, the founder of the Taoist philosophy. It advocates simplicity, contentment, spontaneity, and wu wei (inaction). The two key concepts of Taoism are yin and yang, and wu wei:
1. The yin and yang are contrasts that compliment each other and together create a harmonious whole. However, because life’s forces are not static, harmony is not permanent. When good changes to bad and fortune to misfortune, disharmony settles. Re-harmonisation of the yin and the yang is, therefore, an ongoing process of mutual adjustment. Conflict, from the yin and yang perspective, is a manifestation of imbalance between two opposing forces that can be resolved by mutual readjustment.
2. The Taoist principle of reversion – good changes to bad or fortune turns to misfortune - has profoundly shaped the Asian’s holistic mind-set that recognises the co-existence of contrasts and sees them together as a harmonious whole. Reversion, therefore, encourages caution, resilience, and hopefulness, when fortune, for example, is not separated from misfortune. In times of prosperity, one must be cautious and observe frugality to “buffer” against possible misfortune and hardship. And in times of misfortune, one must be resilient and hopeful awaiting fortune.
3. The principle of wu wei, translated into “inaction,” does not literally mean passivity and doing nothing. It means “action less activity,” to act without acting. It is the art of “mastering circumstances without asserting ones self against them; it is the principle of yielding to an oncoming force in such a way that it is unable to harm you”. It is an approach that accepts given circumstances as they are, not resisting, but instead, finding the best way within the given set of circumstances. It is the “water way.” Water is fluid and flexible and does not resist. It adapts by finding new ways to continue to flow.
The principles of yin and yang, and wu-wei, according to Fang (1999), form the foundation of the Chinese stratagems as described in the writings of the Art of War and the 36 Chinese stratagems.

III. JI / THE ART OF WAR (SunTzu) - Another deeply embedded cultural root that influences Asian culture and negotiating style is the 2300 years old concept of Ji, or as it is known in the West, the Art of War developed by Sun Tzu, the Chinese military strategist. Ji means to plan, to create strategies or stratagems. Stratagems are not just simple acts involving trickery and deceit.
Ji is both tactic and strategy, and a method of using “mental wisdom instead of physical force to win a war”.

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Jaap de Jonge, CEO, Netherlands, Editor
Thank you Brian for your excellent summary of several key Chinese and Asian philosophies and values which are resulting in mindsets and behavior.
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Tom Lesnikowski, Business Consultant, Australia, Member
Brian, I couldn't agree more with your sentiment and opening remarks. Too often we hear of people complaining about doing business in China. Quite oft...Sign up

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Ibrahim Rasheed, Director, Maldives, Member
Remember that most business men and negotiators from Asia have been educated and lived in the west... So they understand western teachings and behavio...Sign up

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@Marcel Wiedenbrugge: I agree, it is often a high risk business environment for outsiders....Sign up

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KC Lim, CEO, Malaysia, Member
This is a good start but there is more to just the ancient Chinese philosophies to look at and again in different Asian/South East Asian countries. Ou...Sign up

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Dave, Business Consultant, China, Member
Yes, may be this is true for Taiwan, Hong Kong, or other east-Asian countries.
But after the cultural revolution and economic reform, most people...Sign up

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Satya Nistala, India, Member
It was nice to read the gist of all 3 Masters in one place. Cultural Assimilation is the key.
"Be a Roman while in Rome" may still be valid.So Be...Sign up

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JORGE GALLARDO, Professor, Ecuador, Member
Great discussion. Many good points have been brought up, so everybody learns. The Chinese are set to conquer the world, but they might still need the ...Sign up

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@Dave: Really Dave? That has not been my impression at all. I am not saying it is patently obvious, or that it is ea...Sign up

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srinivas, Lecturer, India, Member
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yousefi, Strategy Consultant, Iran, Member
Doing business is nowadays the most important reason for having relations between nations. But when do we require a good understanding of the culture ...Sign up

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Regis Nyere, Financial Consultant, Zimbabwe, Member
True, Asian culture is fundamentally different from that of the West. However, with the influx of businesses from the western world I think very soon ...Sign up

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Tom Lesnikowski, Business Consultant, Australia, Member
I maintain that it is critical to respect the legal and cultural elements of the markets (east, west, north, south) that you seek to conduct business ...Sign up

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Leodegardo M. Pruna, Professor, Philippines, Member
Dr. Monger's observation of understanding cultural roots and values in dealing with business and enterprise development is noteworthy especially at th...Sign up

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Marcel Wiedenbrugge, Consultant, Netherlands, Member
@Dave: I fully agree. Talk about this subject with HK-ers and see how much they will tell you about Confucianism, et...Sign up

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Shih, Management Consultant, China, Member
Who can share real life work experiences or anecdotes in interacting with the Chinese Business community? Thank you......Sign up

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@Marcel Wiedenbrugge: Culure is never truly monolithic. It varies per person and it changes.
Playing "smart" sh...Sign up

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Dave, Business Consultant, China, Member
@Shih: But it seems you are already at China, why ask this again... If you need some special information, yoiu are ...Sign up

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KC Lim, CEO, Malaysia, Member
Indeed Shih. You are already there.
I guess your area will be business related and this can be negotiation, managing a subsidiary in China, outso...Sign up

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@Dr Brian Monger. Would you like to share some more of your business experience in China? Was it profitable and how much time did it take you to becom...Sign up

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Arif ur Rehman, Professor, Pakistan, Member
@Mackinnon: Entirely true! China today ‘is a new wine in a new bottle’. Until the West comes to this realization – t...Sign up

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Mackinnon, Entrepreneur, United Kingdom, Member
@Arif ur Rehman: Glad you picked up the theme. Pakistan always was close to China (India was seen by both as a prob...Sign up

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Asian cultural roots may affect the business if local and national invested entities are the sole players of the market. But if you as an internationa...Sign up


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