Introduction

　At the end of the 20th century, the People's Republic of China (PRC) has emerged as the largest communist trading partner in the world, with impressive accomplishments in the last twodecades. With its huge geographical size, great potential in natural resources, cheap labor, and large population, the PRC continues to offer bright prospects for increasing trade with other nations. However, due to cultural differences, many foreign investors feel uncomfortable communicating with the Chinese in business situations. As Adler (2001) and Hall & Hall (1990) indicated, the greatest barrier in business transaction process is the one embedded in culture. Because the PRC has its own unique cultural values and customs, its business behaviors, including business negotiation and bargaining, are naturally different from other nations. As a result, foreign negotiators have hard time understanding PRC negotiation or communication style. In order to reveal PRC business negotiating and bargaining behaviors, and to further develop successful business relationships with the Chinese, it is important to first understand Chinese culture (Graham, 1983; Osland, 1990). This study was designed to examine those cultural factors that affect PRC business negotiations. 

　Although Chinese culture encompasses a diverse range of philosophies, Confucianism is generally identified as the foundation of Chinese cultural traditions, and continues to guide the Chinese way of life in the contemporary age. According to G. M. Chen (2001) and Yum (1988), three cardinal concepts of Confucianism are combined to guide Chinese communication behaviors: ren (benevolence, humanism), yi (justice, righteousness), and li (propriety). Ren refers to love, trust, affection, and benevolence to others through selfrestraint and selfdiscipline in the process of communication (Chen & Chung, 1994), yi is the internal criterion of appropriateness that functions to guide communication behaviors (Chen & Chung, 1994), and li refers to norms and rules of proper behaviors in a social context, that is used to avoid embarrassing confrontation and handling ambiguous situations (Shenkar & Ronen, 1987).  

　The three cardinal concepts form a structured pattern in Chinese communication behaviors. G. M. Chen (2002) and Chen and Starosta (19978) pointed out that four factors originating from this communication pattern greatly affect Chinese conflict and negotiation behaviors: harmony, relation (guanxi), face, and power. The emphasis of these Chinese negotiation behaviors tend to be in contrast with the typical Western view of the process as one in which the parties attempt to direct the interaction in their favor and deal with the issues more straightforwardly and impersonally (Casse, 1981).

　Harmony, as the state ren, yi, and li aim to reach, is the ultimate goal of Chinese communication. The Chinese consider negotiation a process in which participants endeavor to develop and keep a harmonious relationship through mutual dependency. In other words, negotiation is not a process in which the parties try to direct the interaction to their own favor, but to provide participants with an opportunity to adapt to each other on the basis of cooperation and interdependence.  

　Harmony is achieved via the exercise of relation (guanxi) and face. Chen and Starosta (19978) indicated that relation represents the social network of Chinese interaction, and face is the mechanism that ensures or deters the free flow of information in the social network. Relation is regulated by the principle of wu lun, which provides guidelines for five basic unequalbutcomplementary human relationships, including relationships between ruler and subject, father and son, husband and wife, older brother and younger brother, and friends. Wu lun's emphasis on particularistic relationships leads the Chinese to specify a clear boundary between ingroup and outgroup members. This in turn leads to favor a personal rather than a businesslike atmosphere in business negotiations. Thus, Chinese negotiators tend to keep frequent contact, develop mutual understanding, establish personal relationships, and develop personal trust and mutual interests with their counterparts in order to ensure the success of the negotiation (Shenkar & Ronen, 1987). Moreover, it is a common practice for Chinese negotiators to give gifts before and/or after the negotiation in order to establish personal relationships, though occasionally gift giving might develop into a form of bribery. Consequently, particularistic relationships, which help to guide negotiators to avoid embarrassing encounters or serious conflicts, become a powerful resource used by the Chinese to influence, persuade, or control their counterparts in the process of negotiation (Chang & Holt, 1991; Chung, 1996; Hwang, 1988; Jocobs, 1979).  

　Showing respect for counterparts' feelings or saving their face in the process of negotiation is a way to heighten one's own selfesteem while promoting the mutual avoidance of emotional uneasiness or conflicts. Thus, maintaining face means maintaining friendship in the network of quanxi. Because facework is considered the spirit of Chinese people, losing control of facework means the loss of bargaining power and the breakdown in negotiations (Jia, 19978, 2001; Zhao, 2001). Even in an unavoidable conflict situation, the Chinese would show courtesy rather than using force, or would use an intermediary to help them solve the problem in order to save face. This indirect communication pattern leads the Chinese to pursue smooth verbal and nonverbal interactions in business negotiations. Thus, Chinese negotiators tend not to openly say "no" or show aggressive behaviors that are considered to be detrimental to the harmonious atmosphere of negotiation. As a result, Chinese negotiators would use all possible means to "earn face" or "make face" for their counterparts to establish a harmonious atmosphere of interaction (Chiao, 1981; Chu, 1983).  

　Finally, power refers to the control of resources valued by the other party. In the hierarchical structure of Chinese society, power is embedded in one's authority and seniority. The system of wu lun ascribes elders, old generation, male, and those with high status with authority to hold power or control over others. In Chinese negotiation, authority often overpowers knowledge and expertise in making the final decision. Seniority is the locus of power in Confucianisminfluenced societies (Bond & Hwang, 1986; Carmichael, 1991). The elderly tend to receive a wide range of prerogatives in conflict resolution and the negotiating process (Chen & Chung, 2002; Chung, 1996). In Chinese society seniority is also equivalent to credibility that often determines whether a cooperative or competitive stance will be taken. The way PRC Chinese perceive power shows that power is viewed differently in different cultures, and the difference may cause difficulties in global negotiations.

　To summarize, harmony, relation, face, and power are the predominant factors that influence Chinese business negotiations. From the literature review above, we can note additional factors that relate to each of the four predominant factors. Those relating to harmony, relation, and face are avoidance of saying "no," bribery, credibility, emotional control, fairness, gift giving, honesty, humility, patience, reciprocity, selfrestraint, sincerity, and trick. Those relating to power include authority, expertise, seniority, and status.

　In order to understand Chinese negotiation behaviors, it is important to examine the impact of these factors. Thus, this study was designed to examine how these twenty cultural factors affect Chinese business negotiations. Moreover, this study identified the five most important factors that affect Chinese business negotiations and participants' explanations of these factors. Problems one might experience in business negotiations with PRC Chinese were examined as well. 

Method

Participants

　Participants were business persons who have negotiation experience with PRC Chinese. Among them, 14 were male and two were female. The average age of the participants was 35, ranging from 24 to 47 years old. They had been involved with PRC business people an average of six years. All participants were either owners of family businesses or managers in larger companies in Hong Kong. The nature of their companies was diverse, including textiles, toys, electronics, and jewelry. Each interview ranged from 42 to 95 minutes, with an average of 56 minutes.

Procedure

　Sixteen structured indepth interviews were conducted in Hong Kong. All interviews were conducted in English. With the permission of participants, the interviews were taperecorded. Participants were asked about the nature of their company, their position, how long had they been involved in business negotiations with PRC Chinese, and the pleasant sides and problems they experienced in the process of negotiation. Participants were also asked to rate 20 cultural factors generated from the literature review using a 5point scale (5 = very important, 4 = important, 3 = undecided, 2 = slightly important, and 1 = not important). These 20 cultural factors that potentially affect Chinese business negotiations are: authority, avoidance of saying "no," being humble, bribery, credibility, emotional control, expertise, face, fairness, gift giving, harmony, honesty, patience, reciprocity, relation, selfrestraint, seniority, sincerity, status, and trick.

　According to Kluckhohn and Strodbeck (1961), each society has its own unique way of solving the universal problems all human societies face. To rate the importance of the factors can help us understand the Chinese value orientations towards negotiation behaviors. The important factors identified by participants and explanations of these factors were reported.

Results

　Results of the mean ratings (N = 16) of the 20 factors are reported in Figure 1. Eight factors received an average rating higher than 4.0 indicating that they were considered "important" or "very important" by the respondents. The results for these 8 factors: relation, face, harmony, reciprocity, credibility, authority, patience, and status, are presented and discussed.

[TP2-2.TIF,BP]

Figure 1. The distribution of mean scores of the 20 factors.

　Note. The mean scores of the 20 factors are: relation (5.0), face (4.91), harmony (4.77), reciprocity (4.68), credibility (4.45), authority (4.41), patience (4.27), status (4.13), gift giving (4.0), seniority (3.81), sincerity (3.61), emotional control (3.50), selfrestraint (3.50), bribery (3.27), honesty (3.14), being humble (3.10), avoid saying no (2.95), expertise (2.69), trick (2.50), fairness (2.0). 

Relation

　Respondents indicated that having a relation between the parties is the most important factor (M = 5.0) in PRC business negotiation. An interviewee pointed out:

　If you are considered their own people in the PRC, they will take a special care of you; that makes business move much more smoothly. Guanxi (relation) determines whether you can succeed in the negotiation. After you have built up a good guanxi and become an ingroup member, you will gain a lot of advantages. 

Face

　As the mechanism that determines the free flow of information in the social network, face was identified as the second important factor (M = 4.91) in this study. Face is considered a must in the process of Chinese business negotiation. Losing one's face might cause a challenge to one's position in the hierarchical structure of relationships. As one interviewee said: "Any behavior that would damage their face would cause negative impact on the negotiation." Another mentioned: "Their attitude would change sharply if you lose their face in negotiation. They may even become uncooperative." 

Harmony

　The third important factor is harmony (M = 4.77). Chinese culture pursues harmony due to its collectivistic orientation. In business negotiation, PRC representatives may even change the original plan in order to establish a harmonious atmosphere, as one interviewee mentioned:  

　PRC businessmen are used to making decisions or operating a negotiation with consideration of collective interests rather than individual interests. They emphasize cooperation. If it is reasonable to do so, they will modify the original business plan in order to pursue a harmonious atmosphere of business negotiation.

Reciprocity

　Reciprocity (M = 4.68) plays an important role in maintaining a good relation in the PRC. Without a good reciprocal relationship, it is very difficult to reach a satisfactory outcome in Chinese business negotiation. An interviewee stated:

　It is a Chinese norm to help someone who has helped you before. That means if you help the Chinese to solve a problem or do them a favor, they will remember and pay you back in the future.

Credibility

　Credibility (M = 4.45) is the fifth important factor in PRC business negotiation. If they trust you, the negotiation will move much easier. As indicated by an interviewee:

　A good business partner in the PRC will offer a good start of business. This is especially true for jointventure businesses in China. If the credibility of PRC partner is bad, it will hinder the development of the company. On the other hand, the investor should show his company is credible to his PRC business partner, it can help to develop mutual trust and a good quanxi on the negotiation table.

Authority

　The next important factor is authority (M = 4.41). The hierarchical structure of Chinese society demands Chinese people to show respect to their leaders or superiors. As an interviewee mentioned:

　The PRC organizational structure is highly centralized. That is, most decisions are made by the leaders. I found that the authority in many companies is not delegated down to the subordinates, thus, in business negotiation, the subordinates have to consult their leader all the time. Therefore, if you have a good relation with the leader, you'll gain more convenience and benefit in business transaction.

Patience

　Respondents also identified patience as an important factor (M = 4.27) in Chinese business negotiation. For example, another interviewee pointed out:

　It takes a long time to negotiate with Chinese counterparts, especially with those you've never met before. Business meetings will begin with extensive social interactions over many banquets to establish social rapport... It is quite timeconsuming because they are never ready to make a decision.

Status

　Finally, status is the last factor (M = 4.13) that plays an important role in negotiating with PRC business persons. As an interviewee indicated:

　They tend to perceive people from their status and power, and like to associate with those prestigious people. If you have a higher status, they'll give you more respect and feel gaining face in dealing business with you. 

Discussion

　The results of this study not only illustrated important factors that impact business negotiation, but also provide useful guidelines for a successful business transaction with PRC Chinese.

　First, to have business dealings with PRC Chinese, building the relationship is necessary in the very beginning of the transaction. Without the relation it is very difficult to move on in a business negotiation, because PRC Chinese are unwilling to meet a person not belonging to their relational network. In other words, PRC Chinese evaluate relationships based on the level of intimacy. They treat a friend and a stranger very differently in business negotiation. A statement from one of the interviewees can illustrate this:

　When they treat you as a friend, they become more friendly and easy to talk to. Usually, they would negotiate with you in an informal setting where the atmosphere is more free and social. Once they know you, you'll gain their trust. If you are a friend of theirs for life, all doors will be unlocked for you. Guanxi is used to keep negotiations alive.

　Face practice is a core value of Chinese culture. Jia (2001) argued that face practice constitutes "a systematic grammar of action and a unique way of life" in Chinese society (p. xi). Because maintaining face means maintaining friendship in the network of quanxi, saving face is especially emphasized when interacting with ingroup members. As one interviewee indicated that, based on the principle of reciprocity, PRC Chinese will return a favor to those who save the ingroup member's face. This will lead to the convenience for dealing business with them. Thus, the ability to exercise guanxi and facework in order to become an ingroup member is key to success in the Chinese social or business interaction.

　The emphasis of harmony leads PRC Chinese to avoid argument and try to develop trust and moral support between each other. This is also true in business negotiation in which PRC Chinese often endeavor to develop a harmonious situation to ensure a smooth discussion. One of the interviewees especially pointed out that a way to keep harmony with PRC Chinese in business negotiation is to avoid criticizing their collective identity, or the negotiation may be unexpectedly deterred.  The reason is:  

　As the Chinese identify strongly with their group, they derive a sense of pride in their unique national and ethnic background. Therefore, never criticize the national events or background of the PRC while dealing business with them.

　Reciprocity is based on fairness between two parties, PRC Chinese not only feel obliged to return a favor to those who help them, but also expect to have a favor returned. Xiao (2002a) indicated that the principle of reciprocity serves not only a regulative and restrictive element, but also a dynamic mechanism of Chinese social interaction. Only through the practice of positive and polite response, can a harmonious interaction be facilitated. Thus, reciprocity is the rule in all Chinese business negotiations that benefits both parties. In addition, reciprocity can become a strategy used to manipulate business transactions and negotiations. For example, an interviewee described that reciprocity can be used to "deepen the relationship and ensure the future business" and do a favor in advance "as a form of social investment, or return to others more than they have received in order to put the other in debt."

　Credibility refers to the degree of trust between interactants. In negotiation or conflict situation credibility may determine whether a person adopts a cooperative or competitive attitude (Nadler, Nadler, & Broome, 1985). In PRC business negotiation, gaining trust means gaining guanxi and a ticket to become an ingroup member. However, this study also showed that although it is important to gain trust from PRC business persons, it is not necessary to mean that PRC business persons can be trusted. Several interviewees reported their frustration on the contract issue. They found that there is no guarantee of fulfilling the responsibility in PRC Chinese business negotiation even if an agreement contract is signed. For example, one said, "There is no contractual guarantee before the ink dries on the agreement. They may stop the negotiation any time without showing any signal or reason beforehand," and "PRC businessmen change their minds and decisions frequently. So the final is not necessarily the final, it may still be modified at a later date. Due to this everchanging habit, contract is mostly seen as less significant... Signing contract with them is useless." It will be interesting for future research to further examine why this kind of inconsistency exists in the process of Chinese business negotiation.

　Patience plays an important part in negotiating with PRC Chinese. Most interviewees in this study were frustrated by the PRC Chinese due to the slow pace of work, common delay of order, longer time for transmitting messages, indirect communication style, language barriers, and the lack of emotional expression. In addition, respondents also found that it is "a quite timeconsuming in dealing business with PRC Chinese, because they are never ready to make decision." All these demand a great patience for a successful transaction with PRC Chinese. Because the sense of time will impact the negotiation process (Adler, 2001), future research may study if PRC Chinese consciously use time as a strategy when negotiating with people having different time orientation, such as Americans' sense of urgency.

　Finally, authority and status are the locus of power in the Chinese society. The Chinese hierarchical structure of particularistic relationships ascribes superiors, males, and elders with authority and status to receive more power or control over others. As Cai and Gonzalez (19978) indicated, the Chinese decision making is characterized by a positional society where communication is downward, centralized and lacks dialogue and openness. This orientation has two implications in PRC business negotiation. First, as a respondent pointed out that the Chinese negotiator on the table is "the representative only, the real boss is that person of authority and status behind the curtain, who is responsible to make decisions and approve the contract"; and second, the Chinese negotiator is more willing to deal with persons with high authority and status, as illustrated by another respondent, "In the beginning, he is less eager in talking with me... When he knows that I am the director of the company, he changed his attitude and manner dramatically."   

Conclusion

　The findings of this study are generally consistent with the existing literature regarding PRC business negotiation (e.g., Chen & Pan, 1993; Pye, 1982; Shenkar & Ronen, 1987), that shows the importance of being aware of cultural differences in a successful business transaction between the Chinese and other cultures. The findings also show that no matter how great the sociopolitical change over the last two thousand years, PRC Chinese behaviors continue to be influenced by Confucian teachings. The emphasis of ren, yi, and li leads PRC Chinese to develop a belief that harmony is the ultimate goal in social and business encounters, and in business negotiation the pursuit of a harmonious atmosphere is regulated by relation building, face saving, reciprocity, and credibility, authority, patience, and status. These are factors that govern Chinese business persons' negotiation styles and patterns.   

　Nevertheless, it will be na?ve to think that Confucianism is the only source that influences Chinese behaviors because Buddhism, Legalism, Taoism, and other schools of thought as well deeply penetrate Chinese life. Among them, Lao Tze's dialectic interaction of yin and yang, Han Fei's idea of authority and power, and Sun Tze's observations in the book of The art of war especially dominate the strategic aspects of Chinese negotiation, compliance gaining, and conflict resolution (Chen & Holt, 2002; Chen & Zhong, 2000; Chu, 1991; Chaio, 1988; Cleary, 1988; Li, Yang, & Tan, 1989; Senger, 1988; Wang, 1976). In order to fully understand PRC business negotiating behaviors, future research needs to explore the strategic aspects from nonConfucian perspectives.

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