Avoiding Cross-Cultural Misunderstandings Manuela Reintgen Business Development Associate Dezan Shira & Associates www.dezshira.com

Agenda The Experiment Cultural Dimensions Potential Conflict Factors Specific Characteristics Where to adopt this knowledge? www.dezshira.com

The Experiment Two groups: 5 Chinese vs. 5 Germans Ph.D. candidates/Young professionals Pretest: One strong negotiating position 600 Yuan guaranteed return One weak negotiating position 150 Yuan guaranteed return Task: Divide additional 3000 Yuan Amount only available if they form a consensus www.dezshira.com

Cultural Dimensions (Geert Hofstede) Small vs. Large Power Distance Individualism vs. Collectivism Masculinity vs. Femininity Weak vs. Strong Uncertainty Avoidance Long vs. Short Term Orientation By Yang Liu www.dezshira.com

Cultural Dimensions (Geert Hofstede) Small vs. Large Power Distance By Yang Liu www.dezshira.com

Cultural Dimensions (Geert Hofstede) Individualism vs. Collectivism By Yang Liu www.dezshira.com

Cultural Dimensions (Geert Hofstede) Masculinity vs. Femininity www.dezshira.com

Cultural Dimensions (Geert Hofstede) Weak vs. Strong Uncertainty Avoidance By Yang Liu www.dezshira.com

Cultural Dimensions (Geert Hofstede) Long vs. Short Term Orientation vs. www.dezshira.com

Potential Conflict Factors Time China US/Europe Polychrome time perception Monochrome time perception Negotiation as a long-term process “Don’t care if they are in time or not” Focus on short-term success “Time is money” www.dezshira.com

Potential Conflict Factors Relations China US/Europe No differentiation between business and private life “Don’t mix business with private life” Character of business partner really important Try to focus only on business www.dezshira.com

Potential Conflict Factors Dealing with Conflicts China US/Europe Want to “ensure Harmony” “Confrontational” Counterpart Reaction:  Lack of understanding & Provocation  Retraction www.dezshira.com

Specific Characteristics Chinese Group Discussion leader at beginning = Leader during negotiations  Phenomenon of hierarchy Strategy without considering the nationality of the opponents Clear allocation of roles Try to communicate on personal level Veiling of own opinion/plan Postpone important parts to the end Interested in long-term relation www.dezshira.com

Where to adopt this knowledge? Agent/Local Distributor Freelancer Representative Office Wholly Foreign Owned Enterprise Joint Venture www.dezshira.com

Joint Venture Typical Use: Can engage in special manufacturing, processing & assembling, services & consulting and/or trade Advantage Disadvantage Able to enter a restricted market Same bed, different dreams New network or sales channels Contract negotiation time-consuming & eventually expensive www.dezshira.com

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Dezan Shira & Associates The Asian Practice 19 years in China 10 Offices in China, 5 Offices in India, 2 Offices in Vietnam 2000 clients from 81 countries Provide business incorporation, tax & accounting, legal and HR services www.dezshira.com

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THANK YOU FOR YOUR ATTENTION! Discussion manuela.reintgen@dezshira.com Mob: +86 136 9353 4146 THANK YOU FOR YOUR ATTENTION! www.dezshira.com