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Australia China Business Council

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Australia China
Business Council
Importance of cultural due diligence in
doing business successfully with China
Dr Carl Hinze
23 April 2015
© HoldingRedlich2014
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Three key considerations
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Reasons for interest – how to provide desired value?
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Financial
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Market access
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Management know-how
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Customer needs
Cultural and sub-cultural differences
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How to balance “knowhow of the West” with “culture of the East”
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International best practice meets feelings and sensibilities
Language barriers – mitigating resultant inefficiencies
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Culture – What is it?
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“What really binds human beings together is their culture, -- the ideas and the
standards they have in common.” (Ruth Benedict 1934)
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Importance of culture?
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Mergers “succeed or fail more often because of cultural factors than
for any other reason.” Stachowicz-Stanusch, Journal of
Intercultural Management, April 2009
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Different cultural perspectives
 Australian: post-Enlightenment Westerners
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Behaviour driven by reason and enlightened selfinterest
Deny “irrational” emotions
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Behaviour driven by emotions
Deny “self” (zisi) interests
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 Chinese: Cultural vacuum surrounded by swirling
development and fragments of traditional culture
 Sense and sensibility
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My personal view is…
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Who’s the boss?
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Who am I?
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What’s my way of living?
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What do my relationships look like?
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What happens when I encounter a
problem?
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What happens when I have a social
gathering?
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Dangers of “cultural handbooks”
 Respect ‘face’
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“essential component of the Chinese national
psyche” (British Embassy, Beijing)
“to be polite is to pay attention to ‘face’” (Mao,
1994)
 What is it, really?
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‘Face’ – A closer look
 Chinese Mianzi vs Lian
 What others think of you…
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National ‘face’ (goal of strengthening China shared
by all)
Individual ‘face’ – public offense vs public glory
 Collective social currency
一人得道鸡犬升天 ‘yi ren de dao, ji quan sheng tian’
 Critical to social relationships
人有脸,树有皮 ‘ren you lian, shu you pi’
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Dangers of “cultural handbooks”
(cont.)
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Understand the real role of ‘Guanxi’
It’s all about relationships, but what type of
relationship and between whom?
Neutral concept – without connotations of “you scratch
my back, I’ll scratch yours”
Complex connections among guanxi, renqing, and
mianzi – three pillars of Chinese trust
Both emotional and pragmatic/instrumental
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Instrumental concern of maintaining status/power
Emotional concern of maintaining self-respect/affection
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Truly understand local cultures
Valuing individual vs group/collective
Valuing egalitarianism vs hierarchy
Valuing sincerity vs harmony
Valuing problem solving vs relationship
building
 Valuing familiarity vs formality
 Valuing reason/logic vs emotion
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Truly understand local
languages
 Understand primary language and local
dialects
 Employ reliable and trusted translators
 Understand what is gestured and implied
 Listen to what is not being said
 Agree on the language of negotiation
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Appreciate different negotiation
styles
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Do not expect a fair, win-win deal
Do not expect short meetings
Do not rush to get a deal done
Try to control the agenda
Expect changes of mind and authority
Do not expect direct discussion of interests
Do not expect sequential discussion of issues
Endure
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Choose local partners very
carefully
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 Thorough DD is required – investigate the
background, histories and track record of
partners
 Try to learn and understand their motivations
and objectives
 Do not rely on information at face value –
check and re-check
 Only rely on trusted intermediaries
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Be aware of cultural similarities
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Desire to look good
Desire to avoid looking bad
Desire to secure a good deal
Importance of relationships
©
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©Holding
HoldingRedlich2014
Dr Carl Hinze
Partner
T 07 3135 0630
E carl.hinze@holdingredlich.com
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©
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©Holding
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