Cross-cultural Communication

The single greatest barrier to business success is the one erected by culture (Hall and Hall, 1987). Culture
is primarily a system for creating, sending, storing, and processing information. Members of each culture
unconsciously understand how this information is communicated. Outsiders are initially unable to
communicate through that culture's use of words, material objects, and non-verbal behaviour. However,
these are the means by which to understand others and be understood by them. In order to transact
business successfully, language, objects, and non-verbal behaviour must be understood in the same ways
by both sender and receiver. These three forms of cross-cultural communication will now be addressed.

Language

Language communicates information about past, present and future events and defines social life for
participants in a culture (Terpstra and David, 1985). Through language people classify, code, prioritise
and justify reality in culturally sensible ways. These distinctions may not make sense to someone outside
of the culture. However, American business people in China have stated that knowing the Chinese
language is one of the most critical aspects of successful business transactions (Lee, 1988).

Chinese in the People's Republic of China (PRC) have been taught and exhorted to speak a standardised
national language for more than thirty years. Almost all Chinese can communicate in this common
language, called putonghua, although many choose to speak a local dialect in daily life. Standard Chinese
is the language of business; however many in the southern province of Guangdong prefer to use
Cantonese.

Some business people are able to speak English, particularly those under thirty years of age who have
attended college. Generally, the higher the position of the person, the less willing he is to speak in another
language.

National and personal pride keeps officials from speaking in languages other than Chinese. Large firms
interested in selling to foreigners usually have translators and interpreters for several major languages.
Reliance on these Chinese translators can be risky, since there is great potential for misunderstandings.
Typically, Chinese translators have received specialised training in a foreign language, yet possess little
understanding of business terms and concepts — particularly foreign business principles and practices.

The author observed a meeting between an American team interested in buying engine parts, and several
managers of a Hunan engine factory; a young Chinese translator with excellent English pronunciation
served as the interpreter. Communication became sluggish quickly over difficulties in specifying correct
translations of technical components and processes. Later, the American team described their desires for
quality control standards. However, through translation errors, the Chinese team had made the
interpretation that the Americans wanted to oversee production of each part. The negotiations never
proceeded to more subtle aspects of communication or to a consummated exchange. Anything that
interferes with effective communication hinders business transactions.

Successful marketing requires capability in the local language (Terpstra and David, 1985). Moderate
language skills of Chinese facilitate the development of a network of friends and acquaintances, since
most Chinese business people are unable or unwilling to interact in English. Opportunities to transact
business rise with the level of fluency one has in the language. When negotiations can be carried out in
one language, both parties have greater confidence that information is being transmitted and received
accurately. This trust and effective communication facilitated the formation of a successful cooperative
agreement that this author was involved with in Hunan Province. The agreement has been renewed
annually over the last five years.

There are several managerial implications related to language. It is very important in negotiations to bring
in people who are fluent in Chinese. Utilising managers who are bilingual is the most critical element in
facilitating communication. Overseas Chinese may be best equipped to negotiate and to engender trust
among the Chinese. Non-native speakers of Chinese generally need several years of full-time study to
approach the level of fluency needed in negotiations. One or two years of full-time study is sufficient only
to converse socially and to develop friendships.

Material Objects

Only 10-20 per cent of information is communicated through language. Material objects and non-verbal
behaviour provide most information. Tangible items inform others about one's status and power (Hall and
Hall, 1987).

Knowing who the most powerful decision makers are in Chinese organisations is crucial to effective
business negotiations. Unlike Japan's consensus-building process of making decisions, managers and
workers in Chinese organisations defer to those with the most authority. A lower-level manager in a state-
run company does not have the freedom to make most decisions. The top person in a factory, or perhaps
in the commission overseeing the factory, makes many of the decisions that involve foreign companies.
This person may be the Communist Party leader of the company, the stated director, or another person.

Foreign business people can identify several physical objects that give indications of who the most
powerful people are. Because salaries in China are approximately equal, tangible objects are particularly
important indicators of power. Automobiles, especially imported cars, are one of the highest status
symbols in China. Rarely can individuals afford to buy a car; rather, work units purchase small fleets of
automobiles. The top leader of the work unit (company) is chaufeurred in the most expensive car.
Apartment location is another indicator of power. The one with the most power is allocated the choicest
apartment — usually the unit on the top of the apartment building that faces the south or west. A
telephone in a personal apartment also reveals who the decision makers are. The number of phones per
capita is only one in 183 (Asia Yearbook, 1988). Almost all of these telephones are fixed to offices.
Apartment buildings with several hundred occupants may only have one or two units equipped with a
telephone.

Non-verbal Behaviour

Hall and Hall (1987) postulate that non-verbal behaviour communicates more than both words and
material objects. These "hidden dimensions" are the code breakers to understanding another culture. Hall
and Hall's model will be discussed and evaluated as to its appropriateness in understanding the process of
doing business in China. Three elements of non-verbal behaviour have been isolated for this study; a
dichotomy is utilised with each to facilitate understanding. For the purpose of this study, it will be
assumed that the northern European culture is the dominant one in North America. It is recognised that
these features are essentially ones of emphasis and relative importance between cultures. It is also known
that there are substantial individual, regional, and organisational differences in any society.

The Chinese culture and northern European culture will be compared and contrasted on three elements:
(1) The speed with which information is sent, decoded, and acted on. Fast messages or slow messages
may dominate a culture.

(2) The amount of information that must be sent in a message. Cultures range from "high context", Halls'
Cross-cultural Communication Model Communication occurs through: • Language • Material objects •
Non-verbal behaviour — Speed of the information: fast or slow — Amount of the information: high or
low context — Use of time: monochronic or polychronic requiring much background information, to ''low
context", necessitating little additional information with a message.

(3) The way in which time is used to communicate. Time is structured in monochronic or polychronic
ways. In monochronic cultures people focus on one task at a time; whereas, in polychronic cultures
people are involved with several things at once.

Fast and Slow Messages: Finding the Appropriate Speed

Messages vary greatly in the amount of time it takes to understand and respond to them. Hall and Hall
(1987) state that cultures are tuned to different frequencies. Some people may be geared to slow formats
such as those found in books, art, and deep relationships. Examples of fast messages include television,
headlines, and quick acquaintances. A slow message sent to people who are accustomed to fast formats
will usually be missed, even though the content may be understandable. Those who send fast messages to
people geared to slow messages will also find that the message is not received and responded to as
intended. A related concept is that cultures differ in the speed with which people form relationships, and
in the capacity to form deep friendships.

This dichotomy seems to describe accurately a difference between the Chinese culture and the northern
European culture. Obviously, generalisations do not explain the behaviour of each individual in a culture.
However, it appears that the Chinese culture is dominated by slow messages and the northern European
culture by fast messages. In the United States, for example, people develop acquaintances and friendships
in a short period of time. The geographical mobility of people hastens the need to be able to form
relationships quickly. Outsiders to this culture complain about the lack of depth in the relationships (Hall
and Hall, 1987). In contrast, personal relationships in China often take a long time to develop, and are
characterised by their depth. Friendships usually continue throughout one's lifetime.

Chinese desire close relationships with Westerners. Business people would be wise to try to take the time
to develop a few close friendships. Besides the inherent meaningfulness of a friendship, these
relationships also help a foreigner to become more successful in doing business in China. They facilitate
cultural understanding and sensitivity, and are useful in getting assistance in dealing with bureaucratic
and other difficulties. Because China is a "slow message" culture, this process takes more time than in
"fast message" cultures. It also takes longer to understand China and her messages than Westerners are
accustomed to. Once a friendship has been developed, foreigners can expect Chinese to maintain
longterm personal loyalty and affection, despite political and economic upheavals.
High and Low Contexts: The Appropriate Amount of Information

"Context" is the information that surrounds an event and is inextricably bound up with the meaning of
that event. The elements that combine to produce a given meaning — events and context — are in
different proportions depending on the culture. It is thus possible to order the cultures of the world on a
scale from high to low context (Hall and Hall, 1987, p. 7).

In high context cultures people have large networks of family members, co-workers, and clients with
whom they have close relationships. They do not need or ask for much background information in daily
interactions because people understand one another quite well. Information is exchanged continually and
often unconsciously. The backgrounds, associations and values of the communicators are most important.
In constrast, people in low context cultures lack these well-developed networks of well-known and trusted
individuals. The focus is not on the communicators, themselves. Rather, numbers and written promises
are most important (Keegan, 1989). Thus, when decisions must be made or a task carried out, specific
information related to the task or project is required and sought out in formal ways. Moreover,
communication in low-context countries is more straightforward then in high-context countries. Hall and
Hall (1987) classify Japanese, Arab, and Mediterranean cultures as high context, and northern European
cultures as low context.

For the most part, China is a high-context culture. Chinese are often more concerned about the
trustworthiness of foreign business people than about legal contracts. In addition, messages are often
given in indirect ways. For example, after receiving a request a Chinese may say, "that is difficult", or "it
is not convenient". This is an ambiguous way of informing the supplicant that "it is not possible".
Moreover, it is true that people generally have large networks of relationships and work hard to maintain
and extend these networks. However, events such as the Cultural Revolution and the squashing of the
prodemocracy movement have reduced trust between people. Information is not freely given and
received. Attempts to maintain secrecy in the Government and Party lead to many rumours among the
masses.

Three managerial implications related to "context" may be useful. First, since most Westerners are "low
context", it is helpful to realise that we often seek more taskoriented information than Chinese are willing
or able to reveal. A leader in an export development agency asked the author for help in finding foreign
investors who would help finance capital equipment purchases for an enzymeproducing plant. A list of
questions that potential investors would ask was then presented to him, regarding annual sales, names and
locations of major customers, etc. Two months later the author received an apologetic letter stating that "it
is difficult" to provide such information. A second implication is related to this idea. Since Chinese focus
on the communicators, Westerners must be willing to take the time at banquets and other social occasions
to allow Chinese the opportunity to acquire an understanding of one's values, position, and
trustworthiness. Third, the need to learn the language to be able to discern the meanings of apparently
ambiguous phrases is another managerial implication. As Westerners learn more about Chinese methods
of communication, frustration and ineffectiveness should decrease.
Monochronic and Polychronic: Two Systems of Time

There are many views of time in the world. Two kinds that are highly different from one another are
monochronic and polychrome. Monochronic people pay attention to doing only one thing at a time. Time
is scheduled and compartmentalised in highly structured ways. Polychronic people are involved with
many things at once. They have extensive involvements with people more than with tasks, so that
relationships take on higher importance than holding to schedules (Hall and Hall, 1987).

Northern European cultures are primarily monochronic. "Time is money", and "time waits for no man"
are monochronic aphorisms that reveal a linear orientation of time as a tangible object. Plans and
schedules are adhered to religiously. Part of this is a function of the need to organise people in large
groups for work and education.

In contrast, Latin American and most Asian cultures are polychronic in orientation. Business
appointments and schedules hold little importance. Relationships of the moment are of greater concern.
Plans are changed often and easily (Hall and Hall, 1987).

China possesses elements of each time system. The centrally planned economy of the Communist Party
involves strict control over urban peoples' lives. The day's activities are highly structured, beginning with
public address system wake-up music and news at 6 a.m. Workers and students are required to be prompt,
and are punished if they are late. Business meetings begin exactly at the scheduled times. The
monochronic slogan "time is money" appeared on factory walls as motivations to workers in 1986.

At the personal level, though, Chinese seem more polychronic. Outside of work and school, people are
less time conscious. Workers on the way to buy vegetables at a street market often stop to talk with
associates and friends. In these situations people can be quite inquisitive, asking the latest about
everything and everybody.

Chinese accept the "long lengths" of time it takes to transact business at both the organisational and
family level with few complaints. Much of the slowness is as a result of malfunctions in the centrally
planned economy, and low levels of technology in this developing nation. Some of the slowness is a
result of higher priorities being placed on family and friendship relationships. Northern Europeans who
are highly time conscious are easily frustrated by the large amounts of time required to complete business
transactions in China.

There are several implications of these time and relationship orientations for marketers in China. First,
because of the extensive networks of relationships with significant interaction between people,
communications among Chinese consumers for a given product may be diffused very quickly. Word-of-
mouth publicity takes on greater importance in China than in most Western nations. The reference group
for a Chinese consumer is relatively small. Thus, mass advertising may not be as effective or as necessary
as in the West. Second, punctuality is necessary for business meetings and formal meals. Third, patience
is an essential requirement for foreigners as they deal with the massive bureaucracy, undeveloped
infrastructure, and relational time orientation of the Chinese.

Hall's model of cross-cultural communication is intended to improve understanding of any culture,

especially in comparison to the home culture of the reader. Attempts were made to understand better
Chinese business culture compared to northern European cultures from this framework. Although some
insights can be drawn from the concepts, an explicit discussion of prominent relational cultural values in
China may be even more useful to researchers and business people interested in the transaction of
business in China.

Interpersonal Relationship Values

Chinese cultural values are largely formed and created from interpersonal relationships and social
orientations (Yau, 1988). Relationships with others take on importance in China in ways that are often not
observed in northern European cultures. Business is transacted in the context of relationships. Thus, a
focus on relational values in the Chinese culture seems most appropriate. Four values are highlighted: the
importance of guanxi (connections), group orientation, face, and deference to age and authority.

Guanxi

Guanxi is a significant driving force in China. Although it has similarities to other relational concepts, it
is a distinctively Chinese phenomenon (Alston, 1989). The term refers to a special relationship between a
person who needs something and a person who has the ability to give something. Guanxi, from the needy-
person's perspective, concerns having connections with others who have power, influence, wealth, special
possessions or abilities. The logic of guanxi is that people are expected to seek out personal connections
when they find themselves in difficulty or in need of assistance (Pye, 1986). Most guanxi ties stem from
shared relationships that have an objective, situational context. These contexts include mutual friends,
home towns, schools, military experiences, and work situations. As was discussed previously, Chinese
are, in many ways, a "high-context" people. Guanxi is expected to operate between two people who share
a certain context, even though the individuals may be strangers. It is less a personal relationship than a
matter of carrying out a role expected of one because of one's past or present situation. Due to reasons out
of both's control, one is now in a favoured position and the other in a dependent one.

There are several managerial implications of guanxi in China's cultural environment The weaker member
of this link calls on the other for special favours. Gift-giving often precedes the requests. The stronger
member, then, has a sense of obligation to fulfil the weaker member's request. Both parties gain benefits.
The weaker member receives what he asked for and the stronger member gains respect and honour. The
honour comes from the recipient of the favours, as well as from others who hear of the situation. The
subordinate is also expected to remain loyal to the superior. Pye (1986) mentions that the 1980s
restoration of the pre-1949 relationship between Otis Elevator Company and its Chinese partner occurred
easily, as if there had been no break.

Equal reciprocation is not expected, however. Guanxi does not involve the mutual-give-and-take that
Americans expect (Pye, 1986). Repeated calls for favours frequently occur.

An unfortunate result of the planned economy mechanisms in China is frequent misallocation of

resources, and extensive inefficiency in business and governmental transactions. Guanxi is an informal
solution to the problems of living and operating in China (Alston, 1989). Those who have connections
with officials in power can transact business much more effectively than those who lack guanxi.

In China, acquiring personal and freight transportation can take hours and days of waiting in lines. At
peak times of demand such as during the Chinese New Year, and in a few cities at most times of the year,
the overloaded conventional ticketing system basically ceases to operate. "Pulling guanxi" is the Chinese
way to overcome this problem. Asking a powerful person, with whom one has connections, to help to
acquire tickets is often the only way to get things done in a timely manner. The people in power at the
various levels of ministries, commissions, and bureaus have the broadest networks of connections.
Guanxi relationships give these bureaucrats access to goods and services not available to ordinary
citizens, as well as access to foreign magazines, movies and travel opportunities (Wang, 1985). An
underlying reason for the widespread support of the pro-democracy movement in May of 1989 was the
masses' disgust at the special privileges that the bureaucrats (cadres) were able to acquire and utilise.

The importance of guanxi in business is summarised by Tai (1988): A key to doing business in China is
personal connections (guanxi). The right connections can bring cheap and reliable material supplies, tax
concessions, approval to sell goods domestically or for export, and provision of assistance when problems
arise (p. 8). There are several managerial implications of guanxi in China's cultural environment.

Those seeking to do business with the Chinese for the long term must develop connections with those in
crucial positions. This author often tried to cultivate relationships with individuals who themselves had
good connections with people in power. Because political power shifts are frequent in China, cultivating
relationships with people of a variety of ages and political views is preferable to limiting one's contacts to
one segment of society. It is probably easier for foreigners to relate to various segments of society than
for Chinese, especially if one can speak the language. Nevertheless, foreigners need assistance from those
on the inside to determine who wields high levels of influence. A person's rank or organisational position
may not reflect his or her power (Alston, 1989). Persons of low rank and ability may possess great
influence because of guanxi relationships. This author found that many Chinese are eager to "pull guanxi"
to show their influence, and ability to operate successfully in their difficult business environment. Giving
small, but meaningful, gifts is a means for outsiders to reinforce ties that have been established. Items
from the West are especially popular.

Foreigners must also be aware of the negative implications of developing guanxi. Sometimes
organisations use the logic of guanxi as a negotiating tactic to gain concessions from another
organisation. Pye (1983) suggests:

The driving purpose behind much of Chinese negotiating tactics is the goal of creating a relationship,
characterized as friendship, in which the American partner will feel strong, and not precisely limited,
bonds of obligation toward the Chinese.

When American companies have accepted the role of the stronger partner, Chinese organisations will
often use this to obligate and to shame the Americans into providing special considerations for the
Chinese. This author observed a large, well-known US company fall into this entrapment. The signed
contract conceded 80 per cent of the first two years' profits to the "weak" Chinese partner in the joint
venture. Companies that have gained wisdom about doing business in China have learned that they must
be willing to walk away from a deal that provides too many concessions to the Chinese buyer, seller, or
partner (Eiteman, 1989).
Face

A concept that is related to guanxi is that of "face". It, too, has a pervasive influence in interpersonal
relationships in China. Yau (1988) suggests that there are two types of face. One type represents the
confidence of society in a person's integrity and reputation. The loss of this confidence makes it
impossible for a person to function properly in the society. This kind of face can only be lost through
misconduct. It cannot be gained. A second type of face stands for the prestige that can be achieved or lost.
In this regard, the amount of face a person has is a function of his social status. Yau (1988, p. 50) states,
"It may be obtained either through personal qualities, or derived from non-personal characteristics such as
wealth, social connections, and authority through personal efforts''. It may be lost when social
expectations or other societal standards are not carried out. Failing to provide favours or assistance in a
guanxi relationship causes the person to lose face. The person is made to feel a sense of shame. Thus,
society exerts a powerful influence on an individual's behaviour.

In business negotiations one must be careful about public criticism of Chinese

Certainly, losing face is more important to a Chinese manager than to a Western one, and is felt more
deeply. Three-quarters of a sample of Shanghai managers agreed that face was important (Lockett, 1988).
Chinese try to avoid any public embarrassment and criticism by minimising or covering up big mistakes
and ignoring small ones (Yao, 1987). To conceal mistakes, fabrications and procrastinations are utilised.
Protecting the face of an individual, family, company, or country is seen as a higher value than honesty
and effectiveness in a task (Yao, 1987).

Several managerial implications can be drawn from this concept of face. Much can be gained by helping
Chinese gain face, and much can be lost by any affront or slight, even if unintended (Pye, 1983). In
business negotiations and relationships with personnel, one must be careful about public criticism of
Chinese. Firing a worker is the ultimate in public criticism. Job terminations are extremely rare
occurrences in Chinese organisations. In advertising, statements or innuendos tha criticise other brands
may be counterproductive for the entire product category. Tse et al. (1988) found that Chinese executives
were more likely than Canadian managers to persist with an unprofitable line of products. This behaviour
is due to sensitivity over saving face. For guanxi and face reasons Chinese managers were also
significantly more inclined to maintain long-term exchange relationships, as in joint ventures, than Hong
Kong or Canadian executives (Tse et al., 1988). In addition, managers and top leaders often rely on
mediators to carry out negotiations with foreigners, to protect their prestige and avoid potential loss of
face (Yao, 1988).

Group Orientation

Another crucial factor in understanding Chinese culture is the relative importance of the group. Styles of
behaviour within organisations differ significantly across cultures (Terpstra and David, 1985). Some
societies have an individualistic orientation, while others have a more collectivist orientation. In cultures
with individualistic orientations, importance is attached to the functions each individual is to fulfil.
Personal needs and goals, such as a higher salary, are usually more important than group goals. In
societies with a group orientation, group functions are more important than individually identified
contributions. National and organisational goals are basically the sole considerations.
A contributing and valuable member of Chinese society is one who puts group goals ahead of individual
needs (Nevis, 1983). "In the PRC the ultimate sin is that of selfishness. China's heroes are people who
have sacrificed themselves for the larger interests" (Pye, 1986, p. 209). Before the Communists came to
power in 1949 the family was the group to which there was the greatest attachment. Family members
were, and still are, more motivated towards achieving the goal of the extended family than with
individualised self-fulfilment (Yau, 1988). While the family remains very important, the Communist
Party has attempted to create other groups to which individuals should be even more committed (Lockett,
1988).

In urban areas a person's life revolves around the work unit (danwei). Associated with a Chinese work
unit for three years, this author observed the awesome control that the work group holds over its
members. On 4 graduation from school, young people are assigned to a work unit for life. This group
holds the power over members' jobs, housing, social status, health care, marriages (occasionally), family
planning, children's education, retirement benefits, and other areas. People identify themselves on the
basis of their work units, rather than their family, home town, school, or occupation.

Work units are nearly self-contained. Typically, brick walls surround the work unit complex, which
contains factories, apartment buildings, cafeterias, concrete playgrounds, schools, stores and warehouses.
A vice-director of an educational work unit in Hunan compared work units to fiefdoms. Workers are
totally dependent on the leaders and little communication occurs between work units. Jockeying for
"kingship" in a work unit is a primary activity of the top leaders, who often represent different Party
factions.

The advantages of belonging to a secure group with life-time employment exert a strong influence in
Chinese society

Mobility between work units is very difficult. "Pulling guanxi" is the only way that mobility can occur.
Discreet payoffs to work unit leaders of up to one year's salary may be required to receive permission to
join another work unit. With salaries of approximately US$300 per year, the individual must belong to a
work unit for physical survival. For city dwellers, obtaining alternative housing is almost impossible, due
to limited supply and high prices.

The successes of the state and of work units in providing necessities for people have produced a welfare
mentality. People expect to be taken care of by their local leaders. The guanxi relationship enters the
picture again. For the provision of needs, recipients give the leaders honour and loyalty. Relationships
between workers and work unit leaders reveal a sense of indebtedness on behalf of many of the
subordinates.

Foreigners should not assume that most Chinese are eager to leave the security of the work unit system,
with its centrally planned features, for the risks of private jobs in a free market system. Resistance to a
market economy is found not just among old leaders at the very top of the Communist Party. The
advantages of belonging to a secure group with life-time employment and benefits exert a strong
influence in Chinese society.

As a socialist entity the state administers housing and social benefits through the work unit. Work units
purchase both industrial and consumer goods. Food and consumer goods are often provided directly to
each household in the work units. Products such as cars, vans, cameras, and televisions are purchased for
the shared use of the entire work unit. Those with the most power and guanxi are the dominant users of
these goods.

When a certain product is set as the normative standard, Chinese consumers are not likely to switch to a
competitive good

A key managerial implication of the group orientation is that most promotional appeals for industrial and
consumer goods should be directed to work unit leaders. Most purchases are made at this level. These
official leaders also set the group norms of behaviour. When a certain product is set as the normative
standard, Chinese consumers are not likely to switch to a competitive good or deviate from the accepted
product category (Yau, 1988). Advertising of personal care products are most appropriately oriented to
the entire family, rather than to an individual. Older members of the household are appropriate targets for
convenience and shopping goods. Much of the household buying is done by retired grandparents, since
husbands and wives are both required to work from 8 a.m. to 5.30 p.m., six days a week.

Deference to Age and Authority

Another reason that advertising appeals are appropriately directed to work unit leaders and grandparents
is the Chinese cultural value of deference to age and authority. In contrast, some cultures in the West
place higher value on youthfulness and ability (McCracken, 1988). In China age reflects maturity,
trustworthiness, and seniority (Yao, 1987). The roots of the Chinese respect for authority is in Confucius'
five cardinal relations: between sovereign and minister, father and son, husband and wife, old and young,
and between friends (Yau, 1988). Yau (1988) explains:

These relations have served effectively to control social behavior in society. Chinese have to observe and
act according to the norms prescribed for each instance of interpersonal relations (p. 49).

Each person has a well-defined role that he or she is responsible to carry out. Forms of address reveal
these roles and one's relative status, such as "lao" for one's seniors and "xiao" for one's subordinates. (A
degree of emotional attachment is also associated with the use of these titles before a surname.)

Although wage scales are approximately equal across and within job categories, some differences in pay
exist according to one's age. Thus, young physicians receive lower salaries than old janitors of a hospital.
The importance attached to members of a group of foreigners is also clearly based on age (Lockett, 1988).
Young members of foreign firms often face problems of credibility with their Chinese associates. Young
people in China are not considered dependable and experienced, and often face discrimination in
employment and promotion (Yao, 1987).

Tse el al. (1988), in a study of Chinese, Hong Kong and Canadian executives, found that Chinese
manifest unquestioned respect for superiors. They also prefer authoritarian decision styles, unlike the
other two groups who prefer participative management styles. When problems arise, Chinese prefer much
more than Hong Kong or Canadian managers to consult superiors. Lindsey and Dempsey (1985) also
noted the high dependence on authority and authority figures. They found that a leader is chosen to head
almost every meeting or group due to the assumption that groups must have leaders to avoid chaos.

Outsiders can also expect that decision making by the Chinese will be time consuming
Managers would be wise to rely on older employees during negotiations, and in sensitive interfaces with
Chinese in operational stages of doing business. Strategic alliances that match young foreign managers
with Chinese managers who are significantly older, can expect to face some difficulties, due to the
cultural preferences for age and experience. Outsiders can also expect that decision making by the
Chinese will be time consuming. One reason is that the decision makers for most foreign business
transactions are older, top leaders who are often far removed from the negotiation process.

The Pervasive Influence off the Communist Party

Business researchers and managers in market-oriented economies often separate political considerations
from the cultural environment of international business (Cateora, 1987; Daniels and Radebaugh, 1989).
However, politics is an all-pervasive influence in China. From the age of two, in day-care centres, until
they face death, Chinese are acculturated into accepting and confirming the primacy of the Chinese
Communist Party. "Young people are taught that they should have no personal ambitions — only an
overriding desire to 'serve the people' and to do what the Party requires" (Pye, 1986, p. 209). Perhaps no
other

• Interpersonal relationship values

— Guanxi

— Face

— Group orientation

— Deference to age and authority

• Primacy of the Communist Party

cultural factor is so important for foreign businessmen to understand as this dominant institution with its
attendent values and goals.

Officially, the roles of the State and of the Chinese Communist Party are distinct, with clearly defined
organisational charts and responsibilities (Wang, 1985). In practice the situation is much different.
Business, factories and workers in China exist by and for the Party. Wang (1985) observes:

The Chinese Communist Party alone determines the social, economic, and political goals for the society.
The attainment of these goals is pursued through careful recruitment of its members and their placement
in party organs which supervise and control all other institutions and groups in the society (p. 72).

Organisations that foreign businessmen deal with are almost certainly Government firms. State-run firms
are, in reality, Party-run firms:

The Chinese Communist Party (CCP) controls and directs the complex system of government machinery.
It is through the agencies of the government that the policies and programs approved by the party are
implemented. The CCP closely monitors how the government executes its directives (Wang, 1985, p.
102).
In China's centrally-planned socialist economy, the products of an enterprise belong to the State. The
enterprises turn over to the State not only most of their profits, but most of the money set aside to cover
depreciation costs (Xue, 1986).

In China's centrally planned socialist economy, the products of an enterprise belong to the State

Theoretically, the Party Committee of firms is responsible for policy making, as an executive board. In
practice, the Party leader also plays a primary role in day-to-day decision making, as a supervisor
(Lockett, 1988). This author met several factory directors who were also the top Party leader for their
unit. In other situations the factory director was found to be a member of the Party Committee. The
Party's influence is pervasive. A leading Chinese economist and spokesman, Xue Muqiao (1986), states:

Economic activities in a socialist society are brought into play through the conscious, planned, and clearly
aimed activities of the people under the leadership of the Communist Party (p. 296).

In 1979 Deng Xiaoping set forth four basic principles to guide the actions of all Chinese. These principles
have often been repeated in Chinese newspapers and among Party officials for the last ten years:

(1) Keep to the socialist road

(2) Uphold the dictatorship of the proletariat

(3) Uphold the leadership of the Communist Party

(4) Uphold Marxism-Leninism-Mao Zedong thought.

Events of 1989 have demonstrated China's renewed commitment to the basic tenets of socialism. These
include policies of the dominant role of the public sector, the supreme status of the Party above the law
and public supervision, and rejection of institutions that are overtly capitalist (deRosario, 1989). Socialist
values such as equity, stability, frugality and self-reliance have also gained political and cultural
ascendancy.

The Communist Party's influence is pervasive

Moreover, the Communist dictum: "From each according to his ability — to each according to his need",
may have furthered the use of guanxi in China. This value provides justification for the weaker partner
making requests of the stronger member. It may also help to explain how Chinese companies are able to
ask for so many seemingly outrageous concessions from "rich foreigners".

The fact that the Party dominates China helps foreigners to realise that a Chinese business partner often
will place Western-assumed values and goals, such as efficiency and profit, underneath socialist values
and goals. This is especially true in the current business environment. Partycontrolled institutions serve to
enforce some of these values and goals in China's firms in ways that are much different from open
societies. Omnipresent security personnel are an active part of these forces.

The Public Security Bureau works to maintain the leadership of the Party in daily life, and, to ensure that
people co-operate with Party laws and policies:
The Public Security Bureau (PSB) is responsible for maintaining law and order, including the surveillance
of the movements of citizens and foreigners, and the investigation of all criminal cases. Local public
security personnel are usually all members of the party or of the Communist Youth League. At times
public security offices have even been operated as organizations of the local party apparatus. Because of
close ties with the party, the PSB reflects the view of the party leaders in control (Wang, 1985, p. 126).

The PSB keeps a personal dossier on every Chinese and most foreign residents (Jaivin, 1989). This file
follows a person around for life, accumulating assessments and accusations by teachers, classmates, job
supervisors, coworkers, and party secretaries (Jaivin, 1989). Chinese recognise and fear the control
exerted over them by the Party through the use of this system.

In June 1983 the Sixth National People's Congress approved a new Ministry of State Security, modeled
on the Soviet Union's KGB. This national security agency was established because of the expressed need
to protect the state security and to strengthen China's counterespionage work (Wang, 1985, p. 126).

China is trying to intensify its domestic surveillance to prevent "leaks" of "state secrets", particularly to
foreigners. This author was indirectly accused of being an "economic spy" after conducting marketing
research. The research involved interviewing factory managers and sending questionnaires to former
management students across China. An agreement was reached when our company conceded observation
and control of all research activities to our Chinese partner.

According to the Confucian ideal, government is at the heart of civilisation

This dominating influence of the Party is, in some ways, congruent with traditional Chinese culture.
According to the Confucian ideal, government is at the heart of civilisation. The Confucian ideal involves
a sense of cultural and political unity for all members of society (Pye, 1986). As discussed earlier, urban
dwellers' lives revolve around the work unit, which administers the directives and policies of the Party.
For most of the 1980s, all workers were required to attend one four-hour political meeting per week. In
late 1989 this requirement stretched to one to two days per week to try to reinculcate the primacy of the
Party with its values and policies in the minds of the people. Those with pro-democracy thoughts were
forced to write lengthy self-criticisms. All people were expected to hold the same values and ideas so that
unity would exist, under the power of the Party.

The pro-democracy movement of 1989 endangered the Party's ultimate control. The top leaders in China
perceived the movement as a threat to everything the Party believed it had achieved (Delfs, 1989).
Internal Party documents and a speech by military leader Yang Shangkun leave no doubt that a small
group of octogenarians, not the official politburo, decided to impose martial law in Beijing and oust Zhao
Ziyang as Party General Secretary (Delfs, 1989). These survivors of China's founding revolutionary
generation remain the Party's ultimate arbiters and real decision makers. Except for Deng Xiaoping, this
group of ten or so lack formal power; yet theirs is the ultimate authority in China today.

foreigners must be willing to accept continual surveillance of both company and personal business

The primacy of the Communist Party provides several managerial implications. Two will be discussed.
First, managers must recognise and accommodate differences in goals between a Chinese firm and a
foreign company. The Chinese firm must help advance economic and social goals developed by the Party.
These relate more to the macro-economy or for example: trade balance reduction, foreign exchange
acquisition, and inflation reduction. A wise manager would attempt to operate a business, develop a joint
venture, or make a transaction that allows both his organisation's goals and Party goals to be attained.
Second, foreigners must be willing to accept continual surveillance of both company and personal
business. The degree of actual surveillance varies with location and time. However, in selecting
employees to live in China, companies should evaluate the employee and his family's ability to deal with
life in a police state. Expatriate residents are advised to take occasional trips outside of China for relief
from the tensions that may exist.

Conclusions

The cultural values that have been analysed in this article provide an explanation for the crushing of the
prodemocracy movement in 1989. Chinese defer to age and authority. The leaders in the Party submitted
to the wishes of the octogenarians, with their "pure" Communist ideals. The decisions that came down
from Beijing were, in turn, accepted by Party officials across the country. These lower officials
recognised the power of the Party, especially through its control of the People's Liberation Army and the
Public Security Bureau.

In addition, the official leaders, such as Premier Li Peng, had lost "face" to students who had held
Tiananmen Square for nearly a month and who had criticised them directly. In the Chinese culture it was
expected that Peng and the Party, which had been criticised, would seek to regain face. Their branding the
movement "counterrevolutionary" provided a justification for their brutal suppression of it, as they
attempted to regain face and power.

The octogenarian leaders also wield the most guanxi in the country. Of particular importance are their
guanxi relationships with the military and the PSB, who carry out the Party's policies and directives. The
military is loyal to those who have provided generously for them throughout the history of the PRC.
Guanxi loyalty was demonstrated in the military takeover of Beijing. The killings on and near Tiananmen
Square also revealed that China's leaders are willing to sacrifice national interests to maintain the primacy
of the Party.

This author carried on personal discussions with dozens of urban Chinese in Changsha, Hunan, just
before the military crackdown. These people, aged 20 to 60, represented academic, industrial and retail
sectors. Every person indicated a lack of faith in the Communist Party and its leaders. A Party leader of a
university told me, "Communism is a failure". A long-time journalist in China (Delfs, 1989, p. 64) stated
his belief that, "Deng's four basic principles remain eternally true only to a small group of very tired old
men".

Chinese partners appreciate the maintenance of commitments and relationships

Business executives involved in co-operative agreements and other contracts are advised to persevere in
the current period of enforced, high-profile Party control of all facets of society. Chinese partners
appreciate the maintenance of commitments and relationships, and can be expected to give face to those
foreign firms and people who remain steadfast. China's leaders still recognise the need for foreign
exchange; thus, opportunities to buy from China are readily available. Raw and semi-processed
commodity items remain attractive. China is the world's largest producer of certain grains, fertilisers, non-
ferrous metals, and semi-processed textile materials. Labour-intensive consumer goods, such as garments
and toys, can continue to provide manufacturers with competitive cost advantages.

It seems that it is a matter of waiting until the "Old Revolutionaries" die before significant new
opportunities to sell products to China will occur. A new three-year retrenchment plan, drafted by the
State Planning Commission (deRosario, 1989), limits Chinese firms' new investments and purchases. The
values of frugality and self-reliance are being implemented.

Those with an understanding of China's culture can more accurately weigh the costs and benefits of doing
business in China. Through their skills in cross-cultural communication they will recognise the interplay
of the cultural factors of guanxi, face, deference to age, group orientation, and the primacy of the Party.
The decisions that are made will undoubtedly differ, depending on the firm's current degree of
involvement, product type and confidence in dealing with China's culture.