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The Road Less Traveled.
Effective Sino-Western Contractual Negotiation: A Cross-
Disciplinary Analysis
This paper was originally a thesis written for a Master of Laws at the
University of Sydney, Australia. After being offered the opportunity to turn
the thesis into a Phd, the author instead incorporated and expanded the
insights to unify systems of human potential from around the world and
define a new way to realize our potential as individuals, relationships,
families, companies, and members of the human community. This unified
system is called metacentering. Because the author has a deep connection
with India, the system was launched there to media acclaim in 2004. We
are currently preparing for global release in January 2011 together with
pioneering technology to help you live more harmoniously within yourself
and within the world. You can find out more at freedomsway.net
Prior to the new world order that arrived with September 11 – cross-
cultural understanding was advisable for effective business dealings in the
international arena. It was also advisable for humanity but we rejected that
need. The need was almost articulated as prophecy in 1968 by mythologist
Joseph Campbell:
“The difficulties posed are great. Chiefly they derive from the fact that the
values of both of the opposed hemispheres, the individual and the social,
are …mutually repellant. That is to say, the partisans of each banner view the values of the other side merely as negative to their own and
therefore, in every attempt either to attack or to achieve concord,
succeed only in dealing with their own negative projections, giving battle to their own shadows on the walls of their own closed minds – which
presents a fine circus of clowns for the laughter of the gods, but for
mankind with, increasing danger, a turba philosophorum that is being reflected not in a sealed retort but in the carnage of exploded cities.” 1
Developing an aptitude for cross-cultural understanding could determine
our very survival.
This paper will not just give you insight into the way people from other
cultures see the world – it will also show you how your own culture has
shaped your perception and it will show you ways to engage others with
superb and profound result.
1 Campbell J, Creative Mythology, First printed 1968,1991 (reprint edition), Arkana, pp314-315.
“It is not easy for westerners to realize that the ideas recently developed in the west of the individual, his[/her] selfhood, his[/her]
rights, and his [/her] freedom, have no meaning whatsoever in the
Orient … They are in fact repugnant to the ideals, the aims and orders of life, of most of the peoples of this earth.”2
“Human beings are drawn close to one another by their common
nature, but habits and customs keep them apart.”3
2 Campbell J, Myths to Live By, 1993, (reprint edition) Arkana, p61. 3 Confucius
The Road Less Traveled: Effective Sino-Western Contractual Negotiation.
Table of Contents
Focus ...................................................................................................... 2
1. Introduction ........................................................................................ 3
1.1 The background ................................................................................ 4
1.2 The underlying thesis ........................................................................ 7
2. The Negotiation Process Per Se ........................................................... 7
2.1 The importance of perception and culture to the structure of negotiation .. 9
3. Chinese Perception and Comprehension ............................................ 12
3.1 The Role of Cultural analysis in Sino-Western negotiation ..................... 14
4. Cultural Perception ........................................................................... 18
4.1Formal, informal and technical patterns of awareness. .......................... 18
4.2 Time ............................................................................................. 21
4.3 The relevance of perceptual differences t o negotiation ........................ 23
5. Individualism and Collectivism .......................................................... 24
6. Sino-Western Communication ........................................................... 27
6.1 High-context and low-context communication ..................................... 29
7. The place of law and the basis of contractual obligation ................... 31
7.1 The Structure ................................................................................. 32
7.2 Relationship-The basis of contractual rights ........................................ 35
7.3 Contemporary contract dynamic ....................................................... 38
7.4 The future role of traditional attitudes towards Sino - Western contracts 42
8. Conclusion ......................................................................................... 44
Bibliography .......................................................................................... 48
2
Focus
"The historical development of insulated disciplines housed in
segregated departments has produced a legitimating ideology that in
effect suppresses critical thought.”3
As a result, it has also stultified the evolution of multifaceted
disciplines, such as the science of bi-cultural negotiation. Similarly, it
has blinded the insulated discipline of Law and, especially, the study of
its role in other cultures. This ignorance cannot continue. It is the
product of an attitude which is antiquated and obsolete. As the global
village shrinks, and consequently, crossing cultural boundaries
becomes a habitual affair, we will have to wake up.
The People's Republic of China (hereinafter referred to as "China") is
centrally relevant to this perspective for two reasons. First, since the adoption of it's "open door" and socialist market policies, its relevance
to international political and commercial affairs has had an almost exponential growth rate.4 Secondly, and more specifically, the orientation of Chinese law, culture and psychology is, in effect, polar
to the West. Therefore, the Western lawyer/negotiator has before him
or her a vitally important challenge for which he or she is unlikely to be prepared.
3Giroux H, Shumway D, Smith P & Sosnoski J, The Need for Cultural Studies: Resisting
Intellectuals and Oppositional Public Spheres, (internet)
http:eng.hss.cmu.edu/theory/need.html. 4In six years, from 1991 to 1996, foreign direct investment in the PRC has grown from
4.4 billion to 42 billion dollars (US), (World Bank: World Investment Report, 1996, at
56) making China the second most popular country for direct foreign investment in the
world.
3
1. Introduction
The Chinese5 approach to contractual negotiation and the West's inability to
understand and work with it, has proven to be a significant stumbling block.
As one leading commentator states, cultural differences is "[u]nquestionably
the largest and possibly the most intractable category of problems in Sino-
[Western] business negotiations." 6 Ignorance of the cultural implications to
the Sino-Western negotiation process can be fatal. 7 As has been said of the
Japanese-Western experience
An attorney's failure to appreciate or become familiar with the
importance of the cultural influences ... often reveals itself at a critical
stage of the transaction, and the results can be disastrous. 8
Whilst, China is modernising rapidly, as is its previously anorexic commercial
legal structure,9 and a sense of predictability and reliability has slowly begun
to permeate the legal political
5In referring to the Chinese approach I do not intend to expound a stereotype but,
"to recognise that people do their business, act out their roles, take up their
attitudes in concrete, though complex, contexts that shape them and are not only
shaped by them." - Tay AE-S & Leung CSC, The Relation Between Culture, Commerce
and Ethics, in Tay AE-S & Leung CSC (eds), Greater China: Law, Society and Trade,
1997, LBC, p4. 6Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural Principles,
Quorum, 1992, p23. 7Cf East Asia Analytical Unit - Department of Foreign Affairs and Trade, China
Embraces the Market, 1997, p188.
8Walters RE "Now that 1 Ate the Sushi, Do We Have a Deal" - The Lawyer as Negotiator
in Japanese - US Business Transactions, (1991) 12 North Western Journal of
International Law and Business 335 at 335. 9 E.g. Company Law of the PRC, adopted 1993; Economic Contract Law of the PRC,
amended 1993; Foreign Trade Law of the PRC, adopted 1994; The Law of the PRC on
Foreign Equity Joint Ventures (1979), the clauses of which were vague and general
(characteristic of Chinese drafting), and hence very unpredictable, was revised, and
adopted on April 4 1990; Law of the PRC on Chinese-Foreign Co-operative Joint
ventures, adopted and promulgated in 1988 - The implementing Regulations were not
approved and promulgated until 1995; Rules for the Implementation of the Law of
the PRC on Foreign Capital Enterprises approved and promulgated in 1990; Income
Tax Law of the PRC Concerning Foreign Investment Enterprises and Foreign
Enterprises approved and promulgated 1991; Provisional Regulations of the PRC
Concerning Value-Added Tax, adopted and promulgated in 1993; Provisional
Regulations of the PRC Concerning Business Tax, adopted and promulgated in 1993.
4
climate, this cultural obstacle remains.10 Resources are being used
ineffectively, avoidable disputes are occurring at both the pre and post
contractual stage, and most importantly a substantial amount of capital is
being used inefficiently and the capacity to make more is being inhibited.
Moreover, the situation could intensify, for as Rubin and Sander observe, in
the wake of global inter-dependence, "the transactions are increasingly
complex and multicultured. Hence attempts to resolve disagreements through
negotiation increasingly require sensitivity to the possible contributing role of
cultural differences." 12
For these reasons, this paper will define these cultural implications, and
demonstrate how they impact on the Sino-Western negotiation dynamic. In
addition, it will refer to the inextricable connection between law and the
cultural system within which it operates, which on any substantive level is
ignored by most commentators.
1.1 The background
At the outset, it is helpful to be acquainted with the basic psychological
themes underlying these cultural implications, which Bond states "can be
used to make sense of a variety observations about Chinese behaviour."12
They are, inter alia:
[1]. Laws negotiated by men [/women] are rigid, artificial, and
insensitive to the changing circumstances of life. The judgement of
wise and compassionate men [/women] is a better way to regulate personal, political and social relationships.
10For example as Scogin states: "The continuing effect of traditional values and
assumptions on current practices is apparent to those engaged in the process of
negotiating and effectuating contracts in China today." Scogin Jr HT, Between Heaven
and Man: Contract and the State in Han Dynasty China, (1990) 63 Southern California Law
Review, 1326 at 1327. 11
Rubin JZ & Sander EX Culture, Negotiation and the Eye of the Beholder, (July 1991)
Negotiation Journal 249 at 249. 12Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991, Oxford
University Press, p118.
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[2]. Man [/woman] exists in and through relationships with others. The
goal of socialization is to train children for lifelong interdependence
with others by developing skills and values which promote harmony.
The family is a fundamental cradle of sure support across time and
requires especial commitment from its members.13
In this behavioural vein, there are two universally recognised cultural
variants in Sino-Western negotiation, central to this study. The first, is the
Chinese distaste for legal considerations, and their preference for moralist
and ethical principles.14 This is prevalent in,
the relationship between the parties as a source of obligation, the point
in the contracting process at which agreements become binding, the
personalised nature of negotiations, the insistence on flexibility in
responding to changed circumstances, and the effort of dispute
resolution a t facilitating compromise and maintaining relationships. 15
The second, is the protagonist role played by politics, economics and social
relations in the Chinese negotiation process, which the West, by comparison,
ignores.
As argued below, whilst a balance, which allows for commercial predictability,
needs to be struck between the culturally bi-polar attitudes towards law, it is
the West which needs to alter its approach to the latter. This is demanded by
a legal, commercial, all-pervasive political16 and social climate different to its
own.
13Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991, Oxford
University Press, p118. 14For example, as one respected observer of Chinese commercial practices states:
"The Chinese are not used to and do not like to sign long complicated contracts that
attempt to tie absolutely everything down. They will frequently refuse even to read a
lengthy contract, insisting that it be simplified and shortened." And in addition: "To
the Chinese, a contract is a commercial agreement, not a legal document, and
should not be the last word on anything. You might say that they sign contracts only
as formal confirmation that they intend to do business with you, not how they are
going to conduct the business." - De Mente Boye, Chinese Etiquette and Ethics in
Business, 1993, NTC, 121. 15
Scogin Jr HT, Between Heaven and Man: Contract and the State in Han
Dynasty China, (1990) 63 Southern California Law Review, 1326 at 1327. 16Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural
6
In addition, the need for effective negotiation is further compounded by two extra
factors. First, whilst the legislative structure has improved, and there has been an
attempt to install adequate enforcement mechanisms,17 the commercial legal structure
is not "well understood, respected [or] integrated", and in practice "getting legal
redress for failure to comply with a contract is just about impossible."18 Secondly, in a
"world dominated by social relationships",19 where the style of negotiation is relational
rather than transactional,20 litigation is a commercially inadequate remedy."
Principles, Quorum, 1992, p23. As Blackman states Chinese officials tend "to use rulings and
approvals to induce foreigners to accept certain views and to sign agreements, and then change
them if they "no longer suit the interests of the ruling or approving authority or the Chinese
Partner." Blackman C, Negotiating China: Case Studies and Strategies, 1997, Allen and Unwin,
p40 referring to a complaint made, by a business consultant and former ambassador to China, to
Chinese officials attending the 1986 Australia-China Senior Executive Forum. 17
Due to the political and economic vulnerability of the local courts to the local authorities and
interested parties, the Supreme People's Court requires the next-highest-level court to review
any proposal to deny enforcement by a local court. - Notice of the Supreme People's Court
Concerning the Handling by the People's Courts of Issues Relating to Foreign Related and Foreign
Arbitral Matters, August 28 1995. 18
Blackman C, Negotiating China: Case Studies and Strategies, 1997, Allen and Unwin, p4. A
former President of the Supreme People's Court described the failure to enforce court decisions
as "the most outstanding problem in the administration of justice in the economic sphere." -
Zheng Tianxiang, Zuigao Renmin Fayuan Gongzuo Baogao [Supreme People's Court Work
Report], 1988 NPCSC Gazette No 4, at 29. Complaints about problems in enforcing judgments
are a regular feature of the annual Supreme People's Court work reports. See also for example a
report by the Australian Department of Foreign Affairs which says that "numerous studies
highlight the difficulties of enforcing contracts in China." East Asia Analytical Unit - Department
of Foreign Affairs and Trade, China Embraces the Market, 1997, p204 referring to the Economist
Intelligence Unit, 1996a, Investing, Licensing and Trading: China, Hong Kong. For a more
detailed analysis see Clarke DC, Dispute Resolution in China, (1991) 5 Journal of Chinese Law
245 at 263 - 268. 19
Smith C, People and Places in the Land of One Billion, Westview Press, 1991, p41. 20
Goh Bee Chen, Negotiating with the Chinese, 1996, Dartmouth Publishing Company, p3. 21
For example, due to its commitment to succeed in the Chinese market IBM "has had to bend its imperial rules...On a number of occasions, its Chinese customers have signed contracts only to come back after the merchandise has already been shipped, say they don't have the money to pay for the order, and ask that part of the shipment be given to them free, or that the price be reduced down to the amount of money they have - a common ploy. Rather than lose the business, IBM has both given additional discounts and withdrawn some of the less vital items from such orders." - De Mente Boye, Chinese Etiquette and Ethics in Business, 1993, NTC, 110.
7
1.2 The underlying thesis
Whilst there has been a significant amount of consideration on the
content of the Chinese culture and its relevance to Sino-Western negotiation,
little attention has been paid to its framework. It is through this framework,
however, that we can expound certain psychological and strategic processes,
such as perception, comprehension and communication, critical to
understanding the Sino-Western dynamic.
Thus, this paper will attempt to articulate the bi-cultural dynamic, including the
precipitate place of law and relationship, in Sino-Western negotiation by
reference to this cultural keystone. In doing so, it will also demonstrate how the
Western negotiator may redefine his or her awareness in responding adequately
to the cultural schism. It will also be tentatively suggested that certain Chinese
commercial strategies, such as the notion of market flexibility, should be
embraced by the West and incorporated into Sino-Western contractual planning.
2. The Negotiation Process Per Se
Most lawyers are unaware of the structural dynamics involved in the negotiation
process.22 Whilst it could be said that lawyers can and do manage to negotiate
in mono-cultural situations, largely unaware of the forces at play and minusthe
skills that would be useful in midwifing the process, this grace does not apply to
the bi-cultural arena. Awareness of the extra variables is vital.
This problem is made acute in that the Chinese are collectivistic and high
context communicators, contrasted with Westerners who are individualistic and
low context communicators. In addition, Westerners predominantly tend to have
what Hall23 has called
22For example see Fisher R, What About Negotiation as a Specialty, (Sept 1983) 69
American Bar Association Journal 1221 -1224. 23
Hall Edward T, The Silent Language, Doubleday, 1959, p95-96.
8
Informal awareness whereas the Chinese predominantly have formal
awareness. These concepts will be examined later.
Clearly, there is a considerably higher probability for a serious breakdown in
communication or misunderstanding between Chinese and Western parties.24
However, despite these two major differences, and, inter alia, differences in
values and rules, the structure of the negotiation processes of the two cultures
are "essentially similar".25 As demonstrated in the diagram below, "there are
common patterns and regularities of interaction between the parties in
negotiation irrespective of the particular context or the issues in the
dispute.”26 This is of some benefit, as it means that whilst the negotiation
style may change the inherent developmental stages to which both parties are
accustomed remains. There are several benefits to this, and also advantages in
being aware of them, as
they tell negotiators what to expect at each stage, give them guidance in
planning their own strategy and a basis for interpreting the strategies of
their opponents, facilitates coordination of the negotiation process with
the litigation process, and prevent the embarrassment and harmful
effects of mistakes in timing. 27
Furthermore, it assists in giving the two parties some unconscious sense of
commonality. However, largely, the relevant similarities stop here.
24As Pye observes: "When the cultural gap between parties is too great, the "logic" of
tacit negotiations cannot prevail. Whereas the differences between ... [Westerners]
and Chinese may not always seem so great, in many situations the gap is enough to
cause misunderstandings. "- Pye L, Chinese Negotiating Style: Commercial Approaches
and Cultural Principles, Quorum, 1992, p93. 25
Gulliver P. H., Disputes and Negotiations, Academic Press, 1979, pxv. 26
Gulliver P. H., Disputes and Negotiations, Academic Press, 1979, p64-5. 27
Williams GR, Negotiation as a Healing Process, [1996] No 1 Journal of Dispute
Resolution 1 at 34.
9
2.1 The importance of perception and culture to the structure of
negotiation
Many of us either take for granted, or are unaware of what cultural and
psychological mechanisms are brought into play during the negotiation
process.28 However, it is vital to acknowledge the main mediums of the
negotiation process per se, if we are to correctly place the Sino-Western
considerations in their deserved critical context. Gulliver states,
[t]hese matters include the interests, goals, expectations, strategies,
and psychological concomitants (attitudes, perceptions, emotional
dispositions, etc.) of both parties; the ambient reality of the situations
and changes in it that indicate the result of non-agreement; an
appreciation of the costs of the possible outcomes to each party; the
limits of the effective range of consideration for the issues between
them; whether and where respective expectations overlap; relevant and
potentially useful norms and rules and overarching principles; areas of
relative strength, weakness, and tenacity; the nature and strength of
outside interests and influences; and much more depending on the
particular parties, their inter-connections, and the issues in dispute. 29
(my italics)
For this study, the psychological concomitants, that Gulliver refers to is the
most crucial aspect of the negotiation process. This is because it is the
psychological concomitants that regulate our perception and comprehension of
reality and consequently, as shown in the diagram30 below, determine the
success or failure the negotiation.
Serious bi-cultural analysis requires examination of the framework of the
participating cultures, and not just their
28As Professor Roger Fisher, one of the world's leading authorities on negotiation,
states, "[m]any people consider negotiating like putting on their clothes: no need for
theory, just do it. But in negotiation, theory does help." - What About Negotiation as
a Specialty, (Sept 1983) American Bar Association Journal, vol 69, 1221 at 1222. 29Gulliver P. H., Disputes and Negotiations, Academic Press, 1979, p70 30Gulliver P. H., Disputes and Negotiations, Academic Press, 1979, p84.
10
content.31 For culture "is not just thoughts, it is a way of thinking," 32 and
reveals "the collective programming of the mind "33. As Hall states,
people from different cultures not only speak different languages but,
what is possibly more important, inhabit different sensory worlds.
Selective screening of sensory data admits some things while filtering
out others, so that experience as it is perceived through one set of
culturally patterned sensory screens is quite different from experience
perceived through another.34 (My italics).
In the same vein, culture provides the individual
with his [or her] theory of what his [or her] fellows know, believe, and
mean, his [or her] theory of the code being followed, the game being
played, in the society into which he [or she] was born.35
In other words depending on the set of concomitants belonging to A and to
B, A could see a particular set of circumstances critically differently from B.
Furthermore, depending on the same set of concomitants, the response
provided by A could also be critically different from B. This point is
accentuated in the Sino-Western situation. This is because our respective
culture is a system of knowledge which shapes and constrains the way our
brain acquires, organizes, and processes information and creates our
“internal modes of reality.” 36
31Thus throughout this study, the content of the culture, such as findings from
Sino-Western case studies, wil l by referred to in demonstrating the effect of the
framework and how it functions in commercial reality. 32Keightley DN, Late Shang Divination: The Magico-Religious Legacy, in
Explorations in Early Chinese Cosmology, Rosemont Jr H (ed), 1984, Scholars
Press, p11. 33Hofstede G, Culture's Consequences: International Differences in Work -
related Values, 1980 , Sage. 34Hall ET, The Hidden Dimension, 1966, Doubleday, 2. 35Keesing R, Theories of Culture, (1974) 3 Annual Review of Anthropology 73-97
at 89. 36Keesing, R, Theories of Culture, (1974) 3 Annual Review of Anthropology 73-97
at 89.
The cyclical mode) of negotiation: P, Party; O, Opponent.
Culturally specific differences in China and the West, such as the
individualist/collectivist and high context/low context communication split,
are derivatives of our cultural systems. They lead to substantially different
parameters of decision making.37
Furthermore, the bi-cultural situation in itself accentuates the cultural
tendencies of the individual, for when same culture people are in a group,
such as a negotiation team, the group tendencies. the cultural tendencies will
tend to dominate.38 In expounding this response, Roosens observes that
one’s culture is
Particularly attractive when one is continually confronted by others who
live differently... If I see and experience myself as a member of an ethnic category or group, and others – fellow members and outsiders -
recognize me as such, "ways of being” become possible for me that set
me apart from the outsiders.
37Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural
Principles, Quorum, 1992, p93. 38Keesing, R, Theories of Culture, (1974) 3 Annual Review of Anthropology 73 at 89.
12
These ways of being contribute to the content of my-self perceptions.
In this sense I become my ethnic allegiance; I experience any attack
on the symbols, emblems, or values (cultural elements) that def ine my
ethnicity as an attack on myself.39
Such a response fuels our ethnocentrism - "where we interpret and evaluate
other's behavior using our own standards ... caus[ing] us to evaluate
different patterns of behavior negatively, rather than try to understand
them."40 As explained below, this fact is compounded with the Chinese due to
their collectivistic orientation.
Thus, the need to consider the Chinese system of perception and the way it is
expressed in Sino-Western negotiation becomes immediate.
3. Chinese Perception and Comprehension
The perception of the Chinese,41 their sense of reality and their perceived
place in the universal Scheme42 is in accord with ideals which have not
basically changed for over 4000 years.43 Furthermore. these values have
been significantly endorsed for over 2000 years by the Confucian system,
which has been supported by the Chinese tripartite approach to reality
through Heaven, Earth, and the Tao, and the ruling emphasis of maintaining
39Roosens E, Creating Ethnicity , 1989, Sage, pp17-18 40Gudykunst W'B. Bridging Differences, 1991, Sage, pp66-67. 41The Chinese have, what Bond has described as, "holistic perception" Bond MH,
Beyond the Chinese Face - Insights from Psychology , 1991, Oxford University
Press, p23. This is exemplified, for example, by Francis Hsu's Rorschach ink-blot
research where the mainland Chinese gave relatively more whole-card, as opposed
to specific-detail responses, than did Chinese Americans, who in turn gave more
than Caucasian Americans. - Referred to in Bond p 23. 42ie Humans model themselves "on the earth; the earth models itself on the Heaven;
the Heaven models itself on the Tao; the Tao models itself on the Nature." - Lao
Tzu, Chapter 25, translation in Chan W-T, A Source Book in Chinese Philosophy,
1963, Princeton University Press, p153. 43Cf In fact, the eminent mythologist Joseph Campbell says the Taoist concept of a
socially manifest cosmic order (a rather matured precipitate of the notion of
harmony), arose in the early Bronze Age – Campbell J, Myths to Live By , 1993
(reprint edition), Arkana, p65.
13
harmony in all things.
Unlike many other societies, the phenomenon of Chinese civilization, has
created a vastly penetrating interconnectedness consisting of a social spiritual
philosophical fabric which enmeshes every aspect of life. Nothing is excluded
from this system of being. Law,44 the family structure, relationships,
government, communication, birth, death and even what one eats and the order
they eat in45 are all under the umbrella of this tripartite approach. Thus, "the
traditional Chinese fusion of custom, law and morality ... shimmer before
[one's] eyes, interweaving in intricate patterns until it is no longer easy to
distinguish one component from another."46
In this light, whilst "to a considerable extent contemporary Chinese attitudes
are the product of the Confucian tradition" and a "thorough knowledge of law in
communist China requires an understanding of China's imperial tradition and
legal order",47 an analysis which stopped at the level of legal theory and legal
culture would be inadequate for the purposes of this study as there are
significant "psycho" and "socio"-cultural forces at work during the cross-cultural
negotiation process.
44This applies to the place of law in the system of governance and the practice of it in daily
life. For example the ritual aspect of formalising contracts in the Han Dynasty was "invested
with cosmological significance". Scogin Jr HT, Between Heaven and Man: Contract and the
State in Hon Dynasty China. (1990) 63 Southern California Law Review 1326 at 1326. The
Han view was that "Rites are the meeting-corner of the yin and the yang. [the link]
connecting all the affairs of [men[/women]], that wherewith Heaven and Earth are revered,
the spirits are treated, the order among the high and the lowly is maintained, and the Way of
man[/woman] is kept straight." - PAN KU, 2 PO HU T'UNG (Tjan Tjoe Som trans 1949)
referred to in Scogin Jr HT, Between Heaven and Man: Contract and the State in Han
Dynasty China. (1990) 63 Southern California Law Review, 1326 at 1352-1353.
45De Mente Boye, Chinese Etiquette and Ethics in Business, 1993, NTC, 16. 46Tay AE-S, Law in Communist China - Part 1, (1969) 6, no2 Sydney Law Review 153 at
154. 47Lung-Sheng T, Law in Communist China, read to the Chinese Studies Colloquium at Brown
University, October 30 1969, p30 of the manuscript referred to in Tay AE-S, Law in
Communist China - Part 2, (1969) 6, no2 Sydney Law Review 335 at 337, fn 1.
14
As Geertz has noted, "culture patterns - religious, philosophical, aesthetic,
scientific, ideological - are 'programs'; they provide a template or blueprint
for the organisation of social and psychological processes. " 48 And, as Rubin
and Sander believe, culture
is a profoundly powerful organising prism, through which we tend to
view and integrate all kinds of disparate interpersonal information. 49
The cultural fabric of the Chinese, therefore, requires emphasis, as it
reveals how the mind has been programmed.50 And, as Bee Chen Goh states
one needs "to be familiar with the Chinese mental software" if negotiating
with the Chinese is to be successfu1.51
Furthermore, it is necessary to have some understanding of how these
culturally determined elements affect the communication style of the
Chinese negotiator, otherwise much of this information stagnates as theory,
absent of practical application.
For these reasons, the significant "psycho" and "socio" - cultural building
blocks will be examined prior to and as an aid to understanding the legal
cultural forces which affect the Sino-Western negotiation process.
3.1 The Role of Cultural analysis in Sino-Western negotiation
Through identifying the isolates52 - of the Chinese culture we are provided with a looking glass through which we can seek to understand the Chinese
way of being and perceiving." For as
48Geertz C, Ideology (is a Cultural System, in Ideology and Discontent, Apter DE (ed),
1964, New York, p62. 49Rubin JZ & Sander EA, Culture, Negotiation and the Eye of the Beholder, (July 1991)
Negotiation Journal 249 at 249. 50Hofstede G, Culture's Consequences: International Differences in Work-related
Values, 1980, Sage. 51Goh Bee Chen, Negotiating with the Chinese, 1996, Dartmouth Publishing Company,
pvi. 52See Hall Edward T, The Silent Language, Doubleday, 1959, p50. 53As Edward Hall states: culture "is man [and woman] in a greatly expanded
15
Keesing notes, culture is an individual's "theory of what his [or her] fellows
know, believe, and mean, his [or her] theory of the code being followed, the
game being played, in the society to which he [or she] was born." 54
This whilst, seeming excessively philosophical or scientific to the pragmatic
observer, provides the Western negotiator with profitable dividends. By the
same token, however, one cannot expect to understand the motivations and
mechanics of a culture or a foreign negotiator in "three easy steps". As Hall
believes, "the job of achieving understanding and insight into mental processes
of others is much more difficult and the situation much more serious than most
of us care to admit." 55 Hence, it is advantageous before proceeding that we
have some concept of the fabric of culture - the framework.
The Chinese, it could be said, have one of the most distinct56 cultures on earth.
This is for two reasons. First, the culture has had time to develop and intensify
because of its ancient age.57 Secondly, the Chinese people for two thousand
years58 have been intensely subjected to the Confucian form of social existence
and way of being, strictly enforced by both society and the administration. The
Confucian teachings were used by the various dynasties as a powerful
mechanism for social conformance control. As Bond and Hwang state the ruling
educated elite
exercised power according to Confucian prescriptions. As cultural
transmitters, they advocated Confucian philosophy as a way of
rationalizing the political and social order by writing
sense. Culture is the link between human beings and the means they have of interacting
with others." - Hall Edward T. The Silent Language, Doubleday, 1959. p213. 57Keesing, R, Theories of Culture. (1974) 3 Annual Review of Anthropology p 73.
Hall Edward T, The Silent Language. Doubleday, 1959, p52. 56For a social system to be qualified as a cultural system, Hall says that it must be
"[c]apable of analysis in its own terms without reference to other systems and so organized
that it contained isolated components that could be built up into more complex units" - The
Silent Language, Doubleday, 1959, p61. 57Many historians argue that the Chinese civilization is the oldest. 58From the Han
Dynasty onwards Confucianism became recognized as the official philosophy of the State -
Fairbank JK & Reischauer EO, China: Tradition and Transformation, Houghton Mifflin.
16
legends, drama, folk stories, and folk songs for the peasantry. Thus all
Chinese people were enmeshed in the Confucian tradition.59 (My italics).
In effect it shares some powerful similarities with Chinese Communism60 and
perhaps explains why the Confucian style strongly remains in Chinese
behaviour.61
Both these facts largely explain why,
both in basic assumption and in institutions and practices judicial
administration in contemporary China displays some striking resemblances
to its predecessor under the Chinese empire.62
Furthermore. the Communist continuity factor is especially important to the
cultural argument. For as Hall points out, it is "essential that there be no breaks
with the past"63, if cultural causation is said to be responsible for particular
current human behavior.
The application of Confucianism and the Taoist concept of a socially manifest
cosmic order64 to life in traditional (and ancient) China permeated through
59Bond Michael Harris & Hwang Kwang-Kuo, The Social Psychology of the Chinese
People, in The Psychology of the Chinese People, Oxford University Press. 1986, p
215. 60Traditional China's "agricultural economy tied the vast majority of the population
to the land and its constraints, supporting the peasants at only a subsistence level.
Their livelihood became even more precarious in years of famine when a great
portion of China's huge population faced starvation. This kind of ecological backdrop
predisposed the Chinese peasantry to accept Confucian philosophy, which encourages
restraint over one's desires and unequal distribution of the limited resources among
members of a group (the family in most cases. The educated elite became members
of the ruling class by passing examinations based on the Confucian classics."(My
italics) - Bond Michael Harris & Hwang KwangKuo, The Social Psychology of the
Chinese People, in The Psychology of the Chinese People. Oxford University Press,
1986, p215. 61As Tay states. "there are areas of Chinese Communist ideology and strains within it
where it is not at all easy to distinguish the heritage of Marx from that of Confucius"
- Tay AE-S, Law in Communist China - Part 2, (1969) 6, no2 Sydney Law Review 335
at 335. 62Cohen JA, introduction to Essays on China's Legal Tradition, Cohen JA, Edwards
RR & Chen F-MC (eds.), 1980, Princeton University Press, p4. 63Hall Edward T, The Silent Language, Doubleday, 1959, p52. 64Campbell J, Myths to Live By, 1993 (reprint edition), Arkana, p65.
17
Chinese consciousness to the extent that it became rooted in, what Hall has
described as, bio-basic activities65. It has moulded a framework through which
the Chinese interact with their environment, associate through a hierarchical
social structure, subsist, learn66, play67, define their territoriality,
temporality68 and modes of defense69 and methods of exploitation70.
Therefore, Confucianism takes "centre stage in almost all approaches to Chinese
social behavior. "71
65Hall Edward T, The Silent Language, Doubleday, 1959, p60. - this is a
fundamental requirement for any cultural system. 66"Education and educational systems are about as laden with emotion and as
characteristic of a given culture as its language" - Hall Edward T, The Silent Language,
Doubleday, 1959, p71. 67As Hall states "play and learning are intimately intertwined, and it is not too difficult to
demonstrate a relationship between intelligence and play ... games like Chinese checkers
are almost entirely a function of a specific type of intellectual development." Hall Edward
T, The Silent Language, Doubleday, 1959, p75. 68"The balance of life in the use of space is one of the most delicate in nature" - Hall
Edward T, The Silent Language, Doubleday, 1959, p68. The flexible lateral Chinese sense
of and relation to space and is very different from the rigid or linear Westerner's. This is
evidenced in Sino-Western negotiation, which often results in exasperation and frustration
on the part of the Western party. Furthermore. the lateral "harmonious" temporal nature of
the Chinese contrasts heavily with the West. 69
The defensive techniques are evident, as Hall states, in not only warfare, but medicine,
law and religion - Hall Edward T, The Silent Language, Doubleday, 1959, p76. Just as the
analogy Sun Tzu in The Art of War makes to medicine, that minimal action in achieving
ones aim is the true art, similarly the Chinese have applied this rule to litigation and the
Confucian emphasis on harmony. Furthermore. this "style" is evident in the negotiation
process, and the constant attempt to maintain good relations, whilst still achieving the
parties' objectives. 70The Chinese methods of exploiting their environment be it social, commercial or
otherwise is famous and has been embodied in various military texts and philosophies.
Suffice to say maintaining harmony is still the foundation principle, and this requires the
negotiator to be acutely aware of and responsive to one's legal, financial, strategic and the
demands and style of the other side. 71Bond Michael Harris & Hwang Kwang-Kuo, The Social Psychology of the Chinese
People, in The Psychology of the Chinese People, Oxford University Press, 1986, p 214.
- "The essential aspects of Confucianism in constructing a Chinese social psychology are
the following: (a) man [and woman] exists through, and is defined by, his relationships to
others; (b) the relationships are structured hierarchically; (c) social order is ensured
through each party's honouring the requirements in the role relationship." - p216. See also
De Mente Boye, Chinese Etiquette and Ethics in Business, 1993, NTC, p21.
18
4. Cultural Perception
As mentioned above in the section on negotiation, perception i s critical
to the negotiation process. Suffice to say, understanding that the other
negotiating team may perceive things differently from us is a fac tor critical to bi-cultural analysis. There is a relationship between people and the way they
perceive things. "Groups", states Hall,
can be defined by the relation of their members to a certain pattern[72].
The individuals of a group share patterns that enable them to see the same
thing and this holds t h e m together.73
This means that if a bi-cultural negotiation is to be held together then a
sufficient commonality of pattern needs to be established.
4.1 Formal, informal and technical patterns of awareness.
As mentioned above, Westerners and Chinese have different patterns of
awareness. Hall says there are three patterns of awareness shaped by culture.
They are formal awareness74, informal awareness75 and technical awareness76.
Whilst all three
72Hall defines a pattern as a "meaningful arrangement of sets shared by a group." Hall
Edward T, The Silent Language, Doubleday, 1959, p149. 73Hall Edward T, The Silent Language, Doubleday, 1959, p148 -9. 74Cultures that "invest tradition with an enormous weight... Formal awareness is an
approach to life that asks with surprise: 'Is there any other way?' Formally aware people
are more likely to be influenced by the past than they are by the present or future." -
Hall Edward T, The Silent Language, Doubleday, 1959, p97-8. 75"Situations in which much of what goes on exists almost entirely out-of -awareness".
This allows for a high degree of patterning. The informal is made up of activities or
mannerisms which once learned becomes so much a part of ordinary life that they are
done unconsciously. In fact as Hall states, they often become blocked when awareness
takes place. Hall Edward T, The Silent Language, Doubleday, 1959, p96. 76This type of awareness contains both informal formal awareness, however in this case i t
is fully conscious behaviour. "Its very explicitness and the fact that it can be written
down and recorded and even taught at a distance differentiates it from the other two
types of integration". - Hall
Edward T, The Silent Language, Doubleday, 1959, p97
19
are present in any given situation irrespective of cultural background, the
pattern which will dominate will vary.
The Chinese hierarchical system is formal however a substantial number of
the rules are technical.77 The Westerner, on the other hand, tends to operate
from an informal level of awareness. Furthermore, Westerners tend to
communicate more inattentively78 than Chinese - like on semi-"automatic
pilot".79 Thus, "untold difficulty" is prone to arise in Sino-Western
communication.80
An additional impediment is whilst Westerners, such as
Americans and Australians, have few technical or formal restrictions, they
have many informal ones. As a result Westerners "are apt to be quite
inhibited, because they cannot state explicitly what the rules are. They can
only point to them when they are violated."81 This trait further reduces the
effectiveness of the unaware Western negotiator in a bi-cultural situation.
Additionally, Hall found that the formal, informal and technical patterns were
bound by three laws – order82, selection83 and congruence84. In the
hierarchical structured formal and technical Chinese cultural system, order
plays a significant role, it determines largely in negotiations what is said and
77Hall makes this statement of the Japanese, who share a similar cultural system to
the Chinese. Hall Edward T, The Silent Language, Doubleday, 1959, p 149.
781 say this as, people generally communicate largely on "automatic pilot" as
"much of behaviour is habitual or based on scripts we have learned" - Gudykunst
W. Bridging Differences, 1991, Sage, p26. However, due to the non- technical and
informal nature of Western society this fact applies even more so to the West. 79Gudykunst W, Bridging Differences, 1991, Sage, p26. 80Hall Edward T, The Silent Language, Doubleday, 1959, p96. 81Hall Edward T, The Silent Language, Doubleday, 1959, p151. 82"The laws of order are those regularities governing changes in meaning when order
is altered" - Hall Edward T, The Silent Language, Doubleday, 1959, p155. 83"selection controls the combination of sets that can be used together" - Hall
Edward T, The Silent Language, Doubleday, 1959, p157. 84This is a more complex concept than order and selection, "its subtle dictates",
states Hall, “... may [also] be more binding". "Unlike order and selection, which
have to do with the patterning of sets, the law of congruence can be expressed as a
pattern of patterns." - Hall Edward T, The Silent Language, Doubleday, 1959, p159. It
could be said to exist when one makes use of all the potentials of the pattern.
20
when, the roles of each team member, and even, what order the team members
walk into the room. Most importantly however, the Confucian order dictates that
relationship comes before business.85 Furthermore, as one commentator puts it,
the Chinese negotiate in three dimensions - the social aspect, the pre-
contractual aspect and then "really getting down to the give and take after the
contract is signed."86 This contrasts strongly with the Western technique, where
negotiation consists of "two dimensions - presentation and closing (followed by
the smooth implementation of the contract."87 Similarly, the Confucian style
dictates the manner of selection, which is very different from the style of the
West.
Most importantly however, Hall's notion of congruence is embodied in the
principles of Confucius, therefore there is a congruent template of proper action
that the Chinese attempt to adhere and aspire to both consciously and
unconsciously88.
Whilst China's new "socialist market economy", and Western influence, is
presenting Chinese negotiators with another way of doing and seeing things, it
would seem that any substantial departure from the Confucian cultural system
is unlikely. First, because this system is firmly embedded in the Chinese psyche
and Chinese society due to the passage of time and the rigour with which
85"At the interpersonal level ... it appears to be 'Friendship first, competition second", as
the Chinese proverb so neatly puts the issue." - Bond Michael Harris & Hwang Kwang-
Kuo, The Social Psychology of the Chinese People, in The Psychology of the Chinese
People, Oxford University Press, 1986, p 263. 86De Mente Boye, Chinese Etiquette and Ethics in Business, 1993, NTC, 122123. Pye refers
to the Chinese style of negotiation as a two tiered process: "(1) the manifest level of
bargaining about concrete agreements and (2) the latent level at which they are trying to
strike "emotional bargains."" - Pye L, Chinese Negotiating Style: Commercial Approaches
and Cultural Principles, Quorum, 1992, p99. It is this "latent level" which is culturally alien
and unfamiliar to the Western experience of negotiation. Furthermore, for reasons which
will be discussed, unfamiliarity with this level can greatly retard the Sino-Western
negotiation process. 87De Mente Boye, Chinese Etiquette and Ethics in Business, 1993, NTC, 122. 88"As Keesing states "the actor's theory of his [or her] culture, like his [or her] theory of
his [or her] language may be in large measure unconscious. Actors follow rules of which
they are not consciously aware, and assume a world to be "out there" that they have in
fact created with culturally shaped and shaded patterns of mind." - Keesing, R, Theories of
Culture, (1974) 3 Annual Review of Anthropology 73-97 at 89.
21
Confucian values, and similar Communist values were enforced. Secondly,
because the Chinese way of negotiation works, to the extent that even Western
negotiators are studying the eastern tactical philosophies, such as the Art of
War. Lastly, the flexible, action based on response style, cohabits infinitely
better, than the rigid Western alternative, in the haphazard unpredictable
Chinese market, and the Chinese communist "feel-as-we go" style of commercial
policy and law making. In fact a s will be discussed below, the Western
negotiator and foreign investor would benefit if they observed the Chinese
manner of handling the unfamiliar Chinese commercial, social and legal climate
rather than struggle with a linear formula which is not suited to the Chinese
situation.
4.2 Time
Another bi-cultural distinction which often frustrates Sino-Western negotiations
is the individual's culturally derived perception of time. Westerner's are, what
Hall89 describes as, "monochronic" - meaning "they compartmentalise time,
scheduling one thing at a time and become disoriented if they have to deal with
too many things at once"90; whilst, the Chinese are "polychronic" - which is
characteristic of collectivistic cultures, tending to undertake multiple tasks at
the same time.
In addition to this, Chinese and Westerners perceive, what we in the West would
call, "inaction", fundamentally differently. In the West, people continually make
a distinction of whether or not a person is engaged in an activity -
distinguishing between the "active" and the "dormant" phases of everything
around them.91 Hall labels this characteristic as "ageric".92 In China, like many
other collectivistic cultures, this distinction is not made. It is for these reasons
that the Chinese negotiators "seem impervious to the possibility that time may
work against them rather than form
89Hall Edward T, The Hidden Dimension, 1967, Doubleday, p162. 90Hall Edward T, The Hidden Dimension, 1967, Doubleday, p162. 91Hall Edward T, The Silent Language, Doubleday, 1959, p178. 92Hall Edward T, The Silent Language, Doubleday, 1959, p178.
22
them""; and that "the first rule in negotiating with the Chinese is the need for
abiding patience."94 Because, the way they perceive and relate to time is very
different from that of the Westerner. As Williams states:
We are impatient with delay, or it makes us feel we are wasting time. We
seem to be guided by a metaphor that time is money, and we do not
permit ourselves to waste it. This attitude reduces our effectiveness in
doing business in many countries of the world, where meaningful
interpersonal relationships are necessary preconditions for doing business
together.95
Furthermore, it is especially important that we be aware of these differences as
the Chinese are very aware of the ageric monochronic nature of the Westerners,
and use it very effectively to their strategic advantage.96 An additional reason
that this occurs is due to the observant formal/technical nature of the Chinese
as opposed to the informal nature of the Westerner.
However, whilst we cannot alter the way we perceive, as Hall states, much of
the potential difficulty between the interaction between polychronic and
monochronic people can be avoided through "proper structuring".97 In terms of
negotiation, this means communication and the ability to be flexible and make
allowances in terms of time and scheduling. In other words, as has been the
experience of many Western negotiators,98 making a tight schedule without
accounting for the unexpected is fancifully unrealistic. Such preparation will also
93Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural Principles,
Quorum, 1992, p83. 94Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural Principles,
Quorum, 1992, p58. 95Williams GR, Negotiation as a Healing Process, [1996] No 1 Journal of Dispute
Resolution 1 at 29. 96Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural Principles,
Quorum, 1992, p83-85. As Tay and Leung state the Chinese are "not accustomed to
giving anything away quickly - including revealing their own position. Bu quing chu
("not clear") is the most common response to awkward questions; it is courteous,
laconic and gives nothing away including just who, or what, lacks clarity." - Tay A E-S
& Leung CSC, The Relation Between Culture, Commerce and Ethics, in Tay AE-S & Leung
CSC (eds), Greater China: Law, Society and Trade, 1997, LBC, p6. 97Hall ET, The Hidden Dimension, 1987, Doubleday, p 162. 98See for example case studies 4 (p139) and 6 (p171) in Blackman C, Negotiating China:
Case Studies and Strategies, 1997, Allen and Unwin.
23
largely diffuse Chinese attempts to use the Westerner's ageric monochronic
tendencies to their advantage.99
4.3 The relevance of perceptual differences t o negotiation
Therefore, contrary to the majority's unconscious assumption that regardless
of culture one's experience of a particular event will be uniform, Chinese
culture and Western culture, rather, can be said to be relative to each other on
the pattern level. It is now being realised that people
have no direct contact with experience per se but that there is an
intervening set of patterns which channel ... [their] senses and ...
[their] thoughts, causing ... [them] to react one way when someone else
with different underlying patterns will react as ... [their] experience
dictates. 100
As Hall states, 101 a lack of awareness about ones cultural patterns can lead to
serious financial mishaps. It is, furthermore, for this reason,
that one of the most promising developments in the intercultural field
has to do with research directed towards bringing informal patterns to
awareness. 102
Much would be gained if the Western negotiator, who has a tendency towards
informal awareness, negotiated from the elevation of technical awareness,
coupled with a knowledge of the cultural make-up of his or her Chinese
counterpart.
99"It is better to sense out the situation and the people involved, to make haste slowly,
to ensure or pretend that all parties are satisfied." - Tay A E-S & Leung CSC, The
Relation Between Culture, Commerce and Ethics, in Tay AE-S & Leung CSC (eds), Greater
China: Law, Society and Trade, 1997, LBC, p6. 100Hall Edward T, The Silent Language, Doubleday, 1959, p145-6. 101Hall Edward T, The Silent Language, Doubleday, 1959, p153. 102Hall Edward T, The Silent Language, Doubleday, 1959, p153.
24
Whilst, it would be unwise and, in Halls vocabulary, "incongruous", to attempt
to imitate the content of the culture and out do the Chinese,103 much is to be
gained from understanding and applying knowledge of its dynamic. As Pye
states
Effective negotiation requires a constant alertness to the distinctive
qualities of the Chinese to appreciate the meaning behind their actions,
so as not to be misled or to mislead them.104
Therefore rather than dangerously performing to a cultural script, the Western
negotiator can predict and understand the culturally motivated behaviour, and
apply it to negotiation strategy.
5. Individualism and Collectivism
Individualism and collectivism, concepts similar to egocentrism and
homocentrism, is "the major dimension of cultural variability used to explain
...[Sino-Western] differences in behaviour.”105
In Chinese, collectivistic, behaviour the individual sees their self as a part of
the social whole. Their sense of identity and the way they see the world is
perceived through their relationships and the groups they belong to . 106 Group
goals take precedence over individual goals. It is for this reason that the
problem for the Chinese “has always been how to make the individual live
103For "one can only act superficially in accordance with the rules of the Chinese
culture." - Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural
Principles, Quorum, 1992, p110. To become a real part of a culture, we really need to
be born into it with the appropriate genes (Muhlmann H, The Nature of Cultures - A
Blueprint for a theory of Culture Genetics, 1997), and be constantly subjected to the
intertwining fabric it threads through and around us. 104Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural Principles,
Quorum, 1992, p110. 105Gudykunst W, Bridging Differences, 1991, Sage, p45. See Hofstede G, Cultures
Consequences, 1980, Sage; Kluckkohn F & Strodtbeck F, Variations in Value
Orientations, 1961, Row Peterson; and Triandis HC, Collectivism v Individualism, in
Cross –Cultural Studies of Personality, Attitudes, and Cognition, 1988, Macmillan. 106Triandis HC, Cross-Cultural Studies of Individualism and Collectivism, in Berman J
(ed), Cross-Cultural Perspectives, Nebraska Symposium on Motivation 1989, University
of Nebraska Press, 1990, p81.
25
according to accepted customs and rules of conduct, not how to enable him
[or her] to rise above them."107 This psychological orientation is inextricably
connected with Confucian (and Communist) ideology.
In the West, on the other hand, the reverse applies. The individualist identifies
their self from an isolated view point focused toward realising their own unique
set of talents and potentials.108
Whilst collectivistic people give priority to group goals, they do distinguish
between out groups and in groups109.
Thus whilst the Western individualist tends to be universalistic and apply the
same standards to all, the Chinese collectivist tends to be particularistic and,
therefore, applies different value standards to members of his or her "ingroups"
and "outgroups".110 An ingroup 'is a group whose norms, goals and values shape
the behaviour of its members".111 An outgroup, on the other hand, "is a group
with attributes dissimilar to those of the ingroup, whose goals are unrelated or
inconsistent with those of the ingroup, or a group that opposes the realisation of
ingroup goals (competing)". 112 Furthermore, strength of identity with a group,
"introduces the risk of apathy about or even hostility towards other groups."113
Therefore there are limits to growth if this dynamic is encouraged. Also,
potential outward displays of conflict are largely absent due to the Confucian
107Hsu FLK, Americans and Chinese: Passage to Differences, (3rd ed), 1981, The University
Press of Hawaii, p135. 108Waterman A, The Psychology of Individualism, 1984 Prager, p4-5. 109Also known as collectivities: Hofstede G & Bond M, Hofstede's Culture Dimensions,
(1984) 15 Journal of Cross-Cultural Psychology, 417. 119Gudykunst W, Bridging Differences, 1991, Sage, p46. 111Triandis HC, Cross-Cultural Studies of Individualism and Collectivism, Berman J (ed),
Cross-Cultural Perspectives, Nebraska Symposium on Motivation 1989, University of
Nebraska Press, 1990, p53. 112Triandis HC, Cross-Cultural Studies of Individualism and Collectivism, Berman J (ed),
Cross-Cultural Perspectives, Nebraska Symposium on Motivation 1989, University of
Nebraska Press, 1990, p53. 113Redding G & Wong GYY, The Psychology of Chinese Organizational Behaviour, in The
Psychology of the Chinese People, Oxford University Press, 1986, p 262.
26
emphasis of harmonious relationships. 114
Therefore, a Western negotiation team is perceived as an outgroup at the
beginning of the negotiation process. However, "such grouping is perceptual and
changes in accordance with one's association. "115 Thus, the success of the
negotiations will largely depend on the Western team's ability to become an
ingroup"116 - a fact which most Western teams are oblivious to. This also
basically explains why the first dimension117 of Chinese negotiation is regarded
as a social one.
As will be discussed, the collectivist orientation of the Chinese also helps to
explain why "the main characteristics of Chinese law are to found in the concept
of family and in the ideology of the stratification order."118
Furthermore, individualism and collectivism provides a powerful explanatory
framework for understanding cultural variances in Sino-Western communication,
fundamental to the negotiation process.” 119
114See below. To see an analysis on the dynamic process of coping with interpersonal
conflicts in Chinese culture see - Bond Michael Harris & Hwang Kwang-Kuo, The Social
Psychology of the Chinese People, in The Psychology of the Chinese People, Oxford
University Press, 1986, p 263. 115Goh BC, Cross-Cultural Perspectives on Sino-Western Negotiation, (November 1994)
Australian Dispute Resolution Journal 268 at 272, where the author refers to Triandis HC,
Cross-Cultural Studies of Individualism and Collectivism, in Berman J (ed), Cross-Cultural
Perspectives, Nebraska Symposium on Motivation 1989, University of Nebraska Press,
1990, p81. 116It is for this reason that Blackman observes that "[b]ecause the Chinese use different
rules for out groups, it is important for Westerners, the ultimate outsiders, to move the
ground inside the Chinese camp." Blackman C, Negotiating China: Case Studies and
Strategies, 1997, Allen and Unwin, p16. It is also due to this that it is acceptable for the
collectivistic Chinese to cheat a person in business transactions whilst they remain a
stranger: See Triandis HC, Cross-Cultural Studies of Individualism and Collectivism, in
Berman (ed), Cross-Cultural Perspectives, Nebraska Symposium on Motivation 1989, 1990,
University of Nebraska Press, p73. 117See above. 118Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p10. 119Gudykunst W, Bridging Differences, 1991, Sage, p50.
27
6. Sino-Western Communication
Having "pattern awareness", referred to by Hall, and an alertness to the
distinctive qualities of the Chinese, that Pye refers to, contributes to the
importance of having a heightened awareness of how we communicate, what
Howell120 calls "conscious competence" - where we think about our
communication behaviour and consciously modify it to improve our
effectiveness. Gudykunst labels this state of attention in communication as
"mindfulness"121.122 Having this awareness will prevent "polarised
communication''123, which inevitably leads to or endangers a breakdown in
negotiations. 124
Similarly, having this awareness also entails an awareness of the distinction
between the "content"125 and "relationship"126 dimensions of a message. 127
When humans communicate we "combine a set of symbols into messages that
we encode to send to others".128 Similarly, we engage in a process of decoding
every time we receive a message and seek to understand its meaning. This
encoding and decoding is embodied in our cultural, sociological and
psychological background." 129 As, mentioned above, these three contributors are
120Howell WS, The Empathic Communicator, Wadsworth, 1982. 121Ellen Langer, another advocate for this principle identifies three qualities of mindfulness:
"(1) creation of new categories; (2) openness to new information: and (3) awareness of
more than one perspective". - Langer E. Mindfulness, 1989, Addison-Wesley, p62. 122Gudykunst W'B, Bridging Differences, 1991, Sage, p4. 123"[T]he inability to believe or seriously consider one's view as wrong the other's opinion as
truth" - Arnett RC, Communication and Community, 1986, Southern California University
Press, p15-16. 124As Gudykunst states - "polarised communication exists when groups or individuals look out
for their own interests and have little concern for other's interests''. - Bridging Differences,
1991, Sage, p5. Clearly this factual matrix is present in the pre and post contractual
negotiation process. 125The information in the message - eg what is said. 126How the message is transmitted and how the participants relate to each other. 127Watzlawick P, Beavin J & Jackson D, The Pragmatics of Human
Communication. 1967, Norton. 128Gudykunst W, Bridging Differences, 1991, Sage, p8. 129Miller G & Steinberg M, Between People, 1975, Science Research Associates.
28
all tightly knitted into one another through China's Confucian heritage. Also, as
explained in the discussion on Sino-Western perception and culture in 2.1, the
thoughts, feelings, emotions, attitudes, values and experiences of the Chinese
are quite different from those in the West.
Therefore, an important acknowledgment especially for the bicultural negotiator,
is that "communication is effective to the extent that the other person attaches
a meaning to the message similar to what we intended."130
Furthermore, during any negotiation the parties make cultural, social and
psychological predictions131 about how each other will respond. However, in the
bi-cultural arena we cannot base our predictions of ones behaviour on our own
culturally motivated rules and norms. "This", as Gudykunst states, "will
inevitably lead to misunderstanding." 132 For this reason alone, if a Western
negotiator wishes to communicate effectively with the Chinese he or she "must
use [his or her] knowledge ... [of the Chinese culture] to make predictions" 133.
If the Western negotiator has little or no knowledge of the Chinese culture then
they have "no knowledge... for making predictions." 134 This scenario is
Potentially fatal in the Sino-Western negotiation process.
Obviously this theorem, applies equally to the Chinese. However it is
compounded by their collectivist nature, as there "is a n increased chance of
misunderstandings occurring because ... [they] are likely to interpret others'
behaviour based on ... [their] group me memberships. ''135
130Gudykunst W, Bridging Differences, 1991, Sage, p9. 131"When people communicate they make predictions about the effects, or outcomes. of
their communication behaviours; that is they chose among various communicative
strategies on the basis of predictions about how the person receiving the message will
respond." - Miller G & Steinberg M, Between People. 1975, Science Research Associates. 132Gudykunst
W W
Gudykunst
W
Gudykunst
W
W Bridging Differences, 1991, Sage, p18. 133Gudykunst
W st W, Bridging Differences, 1991, Sage, p18.
134Gudykunst
W t W, Bridging Differences, 1991, Sage, p18.
135Gudykunst
W t W, Bridging Differences, 1991, Sage, p21.
29
6.1 High-context and low-context communication
As referred to above, the collectivistic-individualistic orientation of a person
affects how a message is communicated. The Chinese collectivist culture
engages in high context communication - where "most of the information is
either in the physical context or internalised in the person, while very little is
in the coded, explicit. transmitted part of the message." 136 The Western
individualist cultures, on the other hand, communicate with "the mass of
information ... vested in the explicit code." 137
Furthermore, as illustrated below, this high and low context distinction helps
to explain how "individuals are dominated in their behaviour by", what Hall
has described as, "complex hierarchies of interlocking rhythms."138 As Bond
points out, this observation "is rich and consistent with a host of
observations about the Chinese, especially those concerning their negotiation
behaviour.” 139 Specifically, in high context cultures much more attention is
paid to the interaction process itself, and as a result "getting into synch" has
become necessary for an exchange to succeed. 141
As stated by Gudykunst, "the level of context influences all other aspects of
communication"141:
High-context cultures make greater distinction between insiders and
outsiders than low-context cultures do. People raised in high-context
systems expect more of others than do the participants in low-context
systems. When talking about something that they have on their minds,
a high-context individual will expect his [or her] interlocutor to know
what's bothering him [or her], so that he [or she] doesn't have to be
specific. The result is that he [or she] will talk around and around the
136Hall ET. Be yond Culture, 1976, Doubleday, p79. 137Hall ET. Be yond Culture, 1976, Doubleday, p70. 138
Quoted in Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991.
Oxford University Press, p51. Source not specified. 139
Bond MH. Beyond the Chinese Face - Insights from Psychology, 1991, Oxford
University Press, p51. 140
Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991, Oxford
University Press, p51. 141Gudykunst W, Bridging Differences, 1991, Sage, p50.
30
point, in effect putting all the pieces in place except the crucial one.
Placing it properly - this keystone - is the role of his [or her] interlocutor. 142
(My italics).143
This observation is highly relevant to Sino-Western arena, as the placing of
the keystone rests on the unfamiliar low-context Western negotiator.
Therefore, the competency of the Western negotiator to undertake this
responsibility, may be crucial.
Another relevant factor, is the Chinese fundamental concern with
maintaining interpersonal harmony which explains the typical structure of
Chinese discourse. As has been commonly observed,
Chinese discussants first present the common problems and
contextual restraints which are binding on all the participants, before
stating their own position. This strategy results in their appearing
diffident and vague to most Westerners, but effectively prevents a
polarisation of positions and resulting conflict among the
participants. 144
In this way. the Chinese believe that hostility is avoided, as thereby is
loss of face, yet control over the outcome of the dispute is maintained. 145
However, as case studies indicate, the typical structure of Chinese
discourse is not obviously effective in the bicultural situation, as it is not a
structure common to both parties. "The cultural differences here", states
Bond, "revolve around.
142Hall ET. Beyond Culture, 1976, Doubleday, p98.
143Another for this behaviour, is that it is a way for the Chinese to maintain face".
One study has shown that the involvement of face is common in Chinese
negotiation and financial decision making - Redding SG & Ng M. The Role of Face in
the Organizational Perceptions of Chinese Managers. (1982) Organization Studies, 3,
pp201-19. As De Mente states, "in all relationships, personal and business, it is
critical to the Chinese that they maintain "face" and avoid of fending the "face" of
others. ... Failure to preserve the [face] of others is tantamount to robbing them
of their social status and bringing great humiliation to them." De Mente B, Chinese
Etiquette and Ethics in Business, 1993, NTC, p61. 144Bond Michael Harris & Hwang Kwang-Kuo, The Social Psychology of the Chinese
People, in The Psychology of the Chinese People, Oxford University Press, 1986, p 262.
See also Young LWL, Inscrutability Revisited, in Gumperz (ed), Language and Social
Identity, 1982, Cambridge University Press, pp72-84.
31
contrasting expectations about the consequences of direct versus indirect
approaches to potentially volatile situations." 146 Consequently, negotiations
often break down for this reason.
Furthermore, the high-context style of the Chinese people helps to explain147
their preference for generalised, simple and short contracts, 148 and their
tendency towards drafting vague generalised legislation. 149 However, as
discussed, this style of drafting also allows the contract or legis lation to be
compatible with the unpredictable political and legal climate.
7. The place of law and the basis of contractual obligation
The Chinese perception of and attitudes toward contractual negotiation and
dispute resolution can only be seen when viewed against the traditional
backdrop of Confucianism, its tripartite basis. and the consequential
subordinate place of law. For as Scogin states "[t]he continuing effect of
traditional values and assumptions on current practices is apparent to those
engaged in the process of negotiating and effectuating contracts in China
today." 150
145Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991, Oxford
University Press, p66; and Blackman C, Negotiating China: Case Studies and
Strategies, 1997, Allen and Unwin, p4.
146Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991, Oxford University
Press, p66. 147For contract and legislation are in essence a set of promises and reliance , embodied in a
form of formalised communication. In effect it is an encoded message subject to the same
high and low context forces that accompany any message. 148eg De Mente Boye, Chinese Etiquette and Ethics in Business, 1993, NTC, 121: and Chu
C-N, The Asian Mind Game, 1995, Stealth, p288. 149Nb Parker RB, Law, Language and the Individual in Japan and the States. (1988) 7 No 1
Wisconsin International Law Journal 179 at 200: - "If it is true that Japan is a society of
'contextuals' [or collectivists] rather than 'individuals' and that the use of language in Japan
is highly contextual [ie high context], then we should expect that law in Japan to also be
'contextual'. It is." 150Scogin Jr HT, Between Heaven and Man: Contract and the State in Han Dynasty China,
(1990) 63 Southern California Law Review, 1326 at 1327. See also, Tay AE-S, Law in China -
Imperial, Republican, Communist, Centre for Asian Studies, The University of Sydney, Annual
Lecture on Asian Studies, No3, 1986.
32
The benefit of such a comparative analysis in China's case is particularly
useful due to it's unique "static "154 legal history, in which for over two
thousand years "the fundamental conditions which determined the
structure of Chinese society remained unchanged.” Because of this, "the
influence of the ancient structure of Chinese society and of ancient Chinese
law, as well a s of the Chinese views on the function of law, remains to this
day - in the fields both of public and of private law." 153
7.1 The Structure
Traditional Chinese law154 was not formulated on Western notions, rather it
was a mechanism which was used to maintain order, and not as in the
West, to provide a system by which to live by and under. Where the rule of
law rules, the separation of powers doctrine applies and all are perceived
equal.155 In fact the bedrock of Confucian ideal is irreconcilably different
from the Western notion of law as it
denied that uniformity and equality were inherent in any society. [It]
emphasised that differences were in the very nature of things and that
only through the harmonious operation of these differences could a
151 In using the expression "static", I am not asserting that the legal history was
stagnant, as Scogin may assert. Rather, whilst, as Scogin argues, the response to
contract has been "anything but static", the fundamental conditions which
determined these responses, essentially, have not. See Scogin Jr HT, Between
Heaven and Man: Contract and the State in Han Dynasty China, (1990) 63 Southern
California Law Review, 1326 at 1328 - 1329 and Fn 10. 152Hulsewe AFP in his foreword to Ch'u T-T, Law and Societv in Traditional China, 1965,
Mouton & Co, p2. 153Hulsewe AFP in his foreword
foreword
f
o
r
e
w
o
r
d
t
o
to Ch'u T-T, Law and Society in Traditional
China. 1965. Mouton & Co, p2. C
o
,
p
2
.
M
y
i
i
My italics. 154I use this expression loosely a
s
as a mode to Western understanding,
and and subscribe to the conceptual l imitations enunciated by such c ritics as Stephens
- see FN 199 and accompanying text. In addition, as Needam and Granet observe,
"the idea of predetermined, rig id, universal imperatives governing conduct and
imposing order from without is not there" : Stephens TB. Order and Discipline in
China, 1992, University of Washington Press, p8. 155This structural difference has occurred due to fundamentally different
metaphysical orientations.
33
fair social order be achieved. 156
Furthermore, the attitudes associated with this approach, have not
swayed.157 Bond states, that a unifying theme running through Chinese
behaviour today is
The Chinese belief in the naturalness, necessity, and inevitability of
hierarchy. It is self-evident to the Chinese that all men [/women] are
born unequal. An efficient society requires a broadly accepted
ordering of people. The alternative to hierarchy is chaos (luan) and
anarchy which are together worse than a harsh authority.158
Essentially law was and still is perceived by the Chinese as only a device
with which to rectify discord.159 And, that its effect on society is
temporary.160 "The elimination of disputes and disorder", states Ch'u, was
"the minimum requirement for maintaining the social order". 161 This stance
is well illustrated with the medical analogy given by Sun Tsu in The Art of
War, where the most effective practitioner is the one whose patients never
get sick. Litigation was perceived as evidence of the sickness of a society
because the Chinese "moral absolute is all on the side of
156Ch'u T-T. Law and Society in Traditional China, 1965, Mouton & Co, p227. is for this
reason that Cohen stresses the need for a "particularistic analysis" of the
continuity/change arguments in relation to the PRC and its traditional past - Cohen
JA, introduction to Essays on China's Legal Tradition. Cohen JA, Edwards RR & Chen
F-MC (eds.), 1980, Princeton Universitv Press, p4. 157See also text accompanying fn 13 158Bond MH. Be yond the Chinese Face - Insights from Psychology, 1991, Oxford
University Press, p118. 159As Ch'u states "law ...was subordinated to li and ethics", it was an instrument
for implementing li. "Law was seen as more or less identical to punishment. which
was invoked whenever li or moral principles were violated. Consequently, law
played only a secondary role in society. It failed to develop a body of rules
independent of li and ethics." - Ch'u T-T, Law and Society in Traditional China, 1965,
Mouton & Co, p283-4. In its modern day socialist market application, as Deng
Xiaoping argued, "law must be used to establish stability and order for economic
development." Chen J. China: Constitutional Changes and Legal Developments, in Tay
AE-S & Leung CS (eds), Greater China: Law, Society and Trade, 1995, LBC, 141.
Referring to Deng Xiaoping, Implement the Policy of Readjustment, Ensure Stability
and Unity, in Selected Works of Deng Xiaoping, 1984, Foreign Languages Press, p335-
355. 160Ch' u T-T, Law and Society in Traditional China, 1965, Mouton & Co. p250. 161Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p239.
34
peace." 162 Litigation did not support the Chinese moral absolute. Nor does
it currently do so.
Instead, true order, rather than being outwardly maintained, was self
regulated and maintained through "a body of approved behaviour
patterns"163. The reason being that:
If the people be led by laws, and uniformity sought to be given them
by punishments, they will try to avoid the punishment, but have no
sense of shame ... If they be led by virtue, a n d uniformity sought
to be given them by the rules of propriety, they will have the sense
of shame and moreover will become good. 164
Therefore, theoretically this approach avoided the need for law. The focus,
thus, turned towards self-cultivation. The rationale for this is deduced in
the Great Learning:
The ancients who wished to illustrate illustrious virtue through the
kingdom, first ordered well their own states. Wishing t o order well their
states, they first regulated their families. Wishing to regulate their
families, they first cultivated their persons.165
This was sought through the li, which Ch'u def ines as "the rules of
behaviour varying in accordance with one's status defined in the various
forms of social relationships." 166 Another enlightening definition is:
the rules of propriety, that furnish the means of determining the
(observances towards) relatives, as near and remote; of
162Fairbank JK, Varieties of the Chinese Military Experience, introduction in Chinese
Ways in Warfare, Kierman Jr FA & Fairbank JK (eds.), 1974, Harvard University
Press, p7. 163Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p230. 164Lun Yu Chu-Su, 2, 1a-b; Legge, Chinese Classics, I, 9: Ch'u T-T, Law and
Society in Traditional China, 1965, Mouton & Co, p251. 165Li chi chu-su, 60, la; Legge, Texts of Confucianism, IV, 411-412; Couveur, Li Ki, II,
156 referred to in Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co,
p255, fn 160. 166Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p230-231.
35
settling points which may cause suspicion or doubt; of distinguishing where
there should be agreement, and where difference; and of making clear what is
right and what is wrong.167
Philosophically, it was an attempt to align human activity with the tripartite
structure, seeking to achieve perfect harmony in all relations. However, of
more immediate concern to the administration, the li was a mechanism which
was "able to divide the people, to cause them to have the classes of poor and
rich of noble and inferior, so that everyone would be under someone's
control."168
It is for these reasons why, Ch'u observes that, the "main characteristics of
Chinese law are to be found in the concept of family and in the ideology of
stratification order."169
7.2 Relationship-The basis of contractual rights
The backbone of the concepts of family and the ideology of stratification order,
was the single minded emphasis on the maintenance of and harmony in all
relationships. In order to realise this abstract ethical and moral principle, "li
were formulated to regulate the expected, reciprocal attitudes and behaviour
between persons occupying different social statuses."170 It was due to these
differentiations, manifestly crystallised in wu-lun - the five human
relationships, that the Confucianists believed their ideal society would be
realised on the basis of "human relationship". 171
167Li Chi C0u-Su, 1, 6a; Legge, Texts of Confucianism, III, 63; Couvreur, Li Ki, I, 3:
in Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p232. 168Hsun Tzu, 5, 4a; Dubs, I, Works of Hsuntze, 65: in Ch'u T-T, Law and Society in
Traditional China, 1965, Mouton & Co, p233. 169Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p10. 170Ch'u
T-T, Law and Society in Traditional China, 1965, Mouton & Co, p234. 171Ch'u T-T, Law
and Society in Traditional China, 1965, Mouton & Co, p236.
36
Therefore, relationship not law became the linchpin of society. Similar to the
Gemeinschaft strain, traditional Chinese justice was "based on the primacy of
traditional social relationships and not on the primacy of the right-and-duty-
bearing individual, on social ties rather than contractual obligation." 172 It was
virtue not law which was the chief mechanism for ensuring the execution of
contractual duties.173 Rather, legal sanction was used to enforce "the principles
and spirit of the li together with its concrete rules of behaviour." 174
Therefore, to seek adjudication of a dispute under this umbrella was seen as not
only an indignity but as a personal failure and a s a failure of the officials 175, as
a failure of the Imperial Government and as a failure of Heaven176. It meant
that harmony, for which everything stood, had not been maintained. This is why
Confucius considered "the state of no litigation as the ultimate end."177
Furthermore, under this virtuous umbrella the rights of the individual were and
remain today subject to the nature of the circumstance they are said to arise in,
"as their rights are relative and arise from changing human and social
relationships and corresponding duties."178
Instead, the emphasis was and is on obligations and duties which maintains
harmonious relationships and therefore order. Thus, whilst it could be said that
172Tay AE-S. Law in Communist China - Part 1, (1969) 6, Sydney Law Review 151 at 156. 173See Ch 'u T-T. Law and Society in Traditional China, 1965, Mouton & Co, p244-5. 174Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p274. 175For example. before the Chancellor of the Kingdom of Chiao-tung "went out to hear a
case, he always closed his door and placed the blame on himself. Sometimes he went to the
village to effect a compromise. Thereafter litigation was greatly reduced. Some officials even
acknowledged their faults and resigned." - Hou-Han shu, 64, 3a referred to in Ch'u T-T, Law
and Society in Traditional China, 1965, Mouton & Co, p253. 176Conversely, a document on court procedure from around 1300 AD for example instructed
that if guilt was not found "all [should] stand in awe of Heaven's majesty." - The Book of
Documents, Karlgren B (trs) in Bulletin the Museum of Far Eastern Antiquities 22, Stockholm
1950, referred to in Van Gulik RH, T'ang-Yin-Pi-Shih, Leiden, 1956, p49. 177Lun Yu Chu-Su, 12, 4b; Legge, Chinese Classics, I, 121: in Ch'u T-T, Law and Society in
Traditional China, 1965, Mouton & Co, p249. 178Kim HI, Fundamental Legal Concepts of China and the West, 1981, Kennikat Press,
p121.
37
there were contractual rights per se, which were, contrary to popular
speculation,179 claimed and duly enforced from the inception of the legal
system,180 these rights were founded on a collectivistic notion which considered
the individual only against the wider social spectrum.181 It is for this reason that
when a breach occurred and relief was sought, the alleged breach was measured
through the circumstances which motivated it. 182
179For example one distinguished treatise states "[t]he penal emphasis of this law, for
example, meant that matters of a civil nature were ... ignored by it entirely (for example,
contracts)." - Bodde D & Morris C, Law in Imperial China 4 (1967); similarly, see the
comment of CH Peake quoted in Fairbank J, The United States and China, (rev. ed 1958),
p96, referred to in Brockman RH, Commercial Contract Law in Late Nineteenth-Century
Taiwan, in Essays on China's Legal Tradition, Cohen JA, Edwards RR & Chen F-MC (eds),
1980, Princeton University Press, p131 Fn 16; And, Tay AE-S, Law in Communist China -
Part l, (1969) 6, Sydney Law Review 153 at 160: "Law was thus concerned with State
interest; there was no conception of civil law as a State matter, of the resolution of
disputes or the determination of rights by an impartial legal order." However even today,
some writers still persist in a dogmatic uncompromising fashion with the idea - eg Lee TV,
Risky Business: Courts, Culture, and the Marketplace, (1993 ) 47 University of Miami Law
Review 1335 at 1337: "The idea of law as a means to bring order to commerce was alien to
China." 180Scogin Jr HT, Between Heaven and Man: Contract and the State in Han Dynasty China,
(1990) 63 Southern California Law Review, 1325. Specifically at 1329. Some caution is
necessary in resorting to this research. On closer inspection, it is revealed that many of the
findings are academic implications, albeit strong ones. As Scogin points out at 1349, it
must be noted that the factual details of the Han documents which have been found, do not
reveal their legal significance. Therefore, any deductions made as to whether the
documents embody a notion of obligation, is by inference only. Similarly, therefore, as
Scogin prefaces his observations, "the real extent of party discretion to the terms of these
obligations is unknown."(At 1353). Furthermore, to what extent the rights were claimed
and enforced is unclear due to "the extreme paucity of the sources" - Scogin Jr HT,
Between Heaven and Man: Contract and the State in Han Dynasty China, (1990) 63
Southern California Law Review, 1326 at 1336. Furthermore, it is basically impossible
(today, let alone over two thousand years) to accurately assess the extent to which
disputes were settled prior to litigation. It should also be noted, however, that the extent
of litigation whilst present, was still small in comparison to extra-judicial means. 181As Scogin states "The sharpest contrast is found in the ritual process [of creating a
contractual obligation between the parties]. The Roman rituals were essentially unilateral
and gave one party an absolute rights or power, which the other party acknowledged.
These rituals could be conducted reciprocally, but their legal significance was not
determined by the fact of reciprocity. The Han rituals and their predecessors, on the other
hand, expressed an ongoing relationship with moral significance. Generally, rituals were
invested with cosmological forces during the Han. Heaven and man [/woman] were seen as
a continuum, with rituals serving to create order and harmony."- Scogin Jr HT, Between
Heaven and Man: Contract and the State in Han Dynasty China, (1990) 63 Southern
California Law Review, 1326 at 1375. 182Such a stance was also founded on Taoism. See below.
38
As Tay states, in drawing a comparison with the Gemeinschaft type of social
regulation, the individual
is not there as an abstract right-and-duty bearing individual, as just a
party to the contract or as the ower of a specific and limited duty to
another. Justice is thus substantive, directed t o a particular case in a
particular social context and not to the establishing of a general rule and
precedent.183
7.3 Contemporary contract dynamic
Therefore, rights did not create relationships, relationships created rights. This
structural variance to the Chinese form of obligation goes far in articulating
the Chinese approach to contract drafting and execution. It also explains why
even today in China "duties created by contracts are not closely linked to the
possibility of remedial action"184 and why there is "[no] evidence of the
existence of well-articulated principles conditioning the remedies for violation
of a contract." 185 Rather as a brief discussion186 on inter enterprise
agreements points out, the party injured by its contractual breach must handle
economic problems arising from the breach "in the spirit of seeking truth from
facts", which as Lubman187 states, "seems to imply that enterprises must not
rely legalistically on the contract as the exclusive source of the parties' duties
...".
An additional dimension to understanding the Chinese attitude to contract is
the typically Taoist conceptual framework of the Chinese in responding to
182Such a stance was also founded on Taoism. See below. 183Tay AE-S. Law in Communist China - Part 2, (1969) 6, no2 Sydney Law Review 335
at 338. 184Lubman S, Methodological Problems in Studying Chinese Communist "Civil Law", in
Contemporary Chinese Law, 1970, Harvard University Press, p256. 185Lubman S, Methodological Problems in Studying Chinese Communist "Civil Law", in
Contemporary Chinese Law, 1970, Harvard University Press, p256. 186Sung Chi-Shan, A Brief Discussion, p65 (translation modified) in Lubman S,
Methodological Problems in Studying Chinese Communist "Civil Law", in Contemporary
Chinese Law, 1970, Harvard University Press, p256. 187Lubman S, Methodological Problems in Studying Chinese Communist "Civil Law", in
Contemporary Chinese Law, 1970, Harvard University Press, p251.
39
market forces. This framework places a different emphasis on the role of
contract and the place of law in determining obligation.
In his revealing paper on the Han Dynasty188 Scogin refers to traditional
attitudes which provide clarity on the current trend, he states:
in the syncretic milieu of early Han thought, which was influenced by
Taoism, laws and institutions could be legitimate and effective only if
they were in harmony with the cosmos. The Taoists believed, however,
that knowledge of the workings of the cosmos was beyond human
capacities. The contradiction arising from the need to accord with that
which was unknowable was symptomatic of the contradictions
underlying all phenomena. For the Taoists, this contradiction could be
accommodated only by a policy of adaptability and flexibility. Thus. they
felt that laws should be kept to a minimum as n o t to disrupt the
natural order.189 (My italics).
Today, the Chinese still adopt this idiosyncratic response to contractual
execution, namely, obligations which would b e hindered by market forces
should be avoided. Whilst, the commercially minded Chinese parties do not,
on the large, consciously adopt the Taoist philosophy in dealing with their
obligations, it is, as stated above, an entrenched cultural response which is
part of the Chinese mindset. As Chu comments of modern dav commercial
habits:
The Chinese feel that any decision, agreement or contract can be
modified to respond to changed circumstances. Those engaging in
business with the Chinese should not be surprised to have the Chinese
request changes at any phase of a project, even long after the contract
is signed and work has begun.190
188"Emerging in 207BC, "the Han was the first enduring, unified Chinese empire." It
was the "first dynasty to establ ish a long-lasting and universal legal system", and
it "saw written contracts acquire legal as well as moral significance." - Scogin Jr
HT, Between Heaven and Man: Contract and the State in Han Dynasty China, (1990) 63
Southern California Law Review, 1325 at 1334 -1335. 189Scogin Jr HT, Between Heaven and Man: Contract and the State in Han Dynasty China,
(1990) 63 Southern California Law Review, 1326 at 1388. 190Chu C-N, The Asian Mind Game, 1995, Stealth, p240.
40
To adapt and be flexible to change, simply makes sense to the Chinese. As
referred to in the introduction to this paper, it is also a necessity in doing
business in China where the commercial atmosphere is haunted by "the all-
pervasive influence of politics"191 and commercial unpredictability. 192
The notion of fixidity, as implied through Western contractual tradition is
unnatural and uneconomical in this environment.
However, this Taoist response, is also collectivistically motivated,193 as it is not
the means but the end which is important in order that the group's objectives
are met,194 and in the Chinese view if a contractually impermissible variation is
required so as to ensure that the parties still profit then it is justified. The
emphasis is on the retention of the relationship, not on the contract which is
regarded as cosmetic by comparison.
For these reasons, as Brockman195 indicates, the commonly held belief that the
traditional Chinese attitude towards contractual obligation resonates around
"the contract on the basis of some ill defined promise of good faith with later
191Pye L. Chinese Negotiating Style: Commercial Approaches and Cultural Principles. Quorum, 1992, p23. 192This response was demonstrated in the Shanghai experience in the century before 1949,
where "Shanghai's chaotic economy inspired strategies in business transactions designed to
cope with the uncertainty." - Lee TV, Risk y Business: Courts, Culture, and the
Marketplace, (1993) 47 University of Miami Law Review 1335 at 1345. 193Cf Parker RB. Law, Language and the Individual in Japan and the United States. (1988) 7
No1 Wisconsin International Law Journal 179 at 200. Parker states of the culturally similar
Japanese: "In a society of 'contextuals' for collectivists] . the wants and desires of the
people in the immediate situation are what is most important. The harmonization of those
wants and desires into a coherent pattern of interpersonal behaviour, which for
'contextuals' is constitutive of the self, is always the primary goal .... The formal surface of
human relations and the reality of real human beings in a real situation, indicates the
willingness of the Japanese to set aside general rules or principles (including law),
whenever the immediate needs and wants of the people in the immediate situation require
it... For the Japanese, both morality and law are concerned less with rule following and
more with people's attitudes." (pp200-201). 194Cf Blackman C, Negotiating China: Case Studies and Strategies, 1997, Allen and Unwin,
p71. 195Brockman RH, Commercial Contract Law in Late Nineteenth-Century Taiwan, in Essays
on China's Legal Tradition, Cohen JA, Edwards RR & Chen F-MC (eds), 1980, Princeton
University Press, p79.
41
disputes to be settled on the basis of a mutual sense of natural justice" is a
superficial one.
Furthermore, as explained above, such theories do not account for the
formal and technical nature of the Chinese, and are inconsistent with the
intricate and penetrating role of the li and law in maintaining harmony and
the social order. For instance, as recent research reveals, self-enforcing
mechanisms were written into the contract which ensured protection for
both parties in the event of breach.196 In the same spirit, the Chinese today
"always arrive at carefully worded contracts", and as Pye reveals, "the
Chinese [are] quick to exploit legalisms if they [can] be turned to China's
advantage."197
However, whilst this recognition is important, we must ensure that we do
not make a Western dissection of Chinese contractual tradition. for the
differences extend to conceptualisation and perception.198 Stephens
articulates this concept well. He explains:
In Western thought, the antithesis of chaos is order, and order is
conceived of ... as an artificial objective deliberately brought about.
managed, and controlled in pre-determined forms according to the
conscious will of a transcendent power exterior to the flux, by the
enforcement of codes of rigid, universalistic, specific, imperatives
constraining conduct.
In Chinese thought and cultural tradition, the antithesis of chaos is
harmony, which is thought of as a natural characteristic of a state of
196The use of self- enforcing mechanisms seems to go as far back as the Han
Dynasty - see Scogin Jr HT, Between Heaven and Man: Contract and the State in Han
Dynasty China, (1990) 63 Southern California Law Review, 1325 at 1354-1355. This was
also done in Shanghai in the century prior to 1949 - Lee TV, Risk v Business: Courts,
Culture, and the Marketplace, (1993) 47 University of Miami Law Review 1335 at 1395 &
fn 265 of that article.
197Pye L. Chinese Negotiating Style: Commercial Approaches and Cultural Principles.
Quorum, 1992, p24. 198As Scogin argues, whilst there is an individualist or autonomous Western flavour
to the Chinese contractual tradition, in terms of the discretion of the contracting
parties, it is a superficial one, limited only to form. Scogin Jr HT, Between Heaven
and Man: Contract and the State in Han Dynasty China, (1990) 63 Southern California Law
Review, 1326. See, specifically 1334. Cf Parker RB, Law, Language and the Individual in
Japan and the United States, (1988) 7 No1 Wisconsin International Law Journal 179 at
200-201.
42
affairs that arises and persists automatically in a hierarchical universe so
long as all the individual parts of the universe, even the smallest, and all
the persons in it, perform their duties and offices faithfully according to
internal necessities of their own natures i n whatever station or function
in life they find themselves born to or assigned to by superior
authority.199
Thus. the underlying structure of and attitudes towards contract requires
insightful contextualization "with the Chinese values and concepts from which
they sprang."200 Whilst the Chinese will rely on and even take advantage of
their contractual entitlements, they will do so from their own value sys tem and
conceptual framework. 201
7.4 The future role of traditional attitudes towards Sino - Western
contracts
As Hulsewe states, the occidental challenge to China "can only bring for th a
Chinese 'response '".202 Thus, an area of central importance to understanding
the motivations of other cultures and ourselves. yet seemingly insufficiently
acknowledged, if not perversley ignored, is the direct almost inextricable
connection of culture to law. As discussed, this particularly applies to China,
due to its Unifying philosophy. One could almost reverse engineer the
tendencies of a cultural system through dissecting a typical contract and the
attitudes associated with it. As Hall observes
In spite of the fact that cultural systems pattern behaviour in radically
different ways, they are deeply rooted in biology and physiology ... He
[/she] is distinguished from the other animals by virtue of the fact that
he [/she] has elaborated what I have termed extensions of his[/her]
organism. By developing his extensions, man[/woman] has been able to
199Stephens TB. Order and Discipline in China, 1992, University of Washington
Press, p4.
200Scogin Jr HT. Between Heaven and Man: Contract and the State in Han
Dynasty China, (1990) 63 Southern California Law Review, 1326 at 1334. 201Cf Parker RB, Law, Language and the Individual in Japan and the United
States. (1988) 7 No] Wisconsin International Law Journal 179 at 200. 202Ch'u T-T, Law and Society in Traditional China, 1965, Mouton & Co, p1.
43
improve or specialise various functions.203
Contract is an extension of the Chinese cultural system.204
Therefore, as Hall warns:
Because of the interrelationship between man [and woman] and his
[and her] extensions, it behoves us to pay much more attention to
what kinds of extensions we create, not only for ourselves but for
others for whom they may be ill suited. 204
It is then alteration to Western would be beneficial in negotiation
social and legal climate in which the resultant contract has to operate. 206 As
Walters advises, in dealing with the culturally similar Japanese,
important to take heed of the extent to which a n legal and
contractual negotiation style streamlining the Sino-Western contractual
process, and in accounting for the Chinese political,
Understanding that cultural differences may create barriers and developing
ways to overcome them will do much toward success of the transaction.
Ignoring those differences a n d insisting on the terms of a written document
most often will broaden the gap.207
203Hall FT. The Hidden Dimension, 1987, Doubleday, p 3. 204The contract and the creation of it's legal notion per se, is, using Hall's
terminology, an extension, albeit a fairly complex one, in that it is an agreement
associated with socially and legally enforceable rules. Its "extension-like" nature is
furthered by the preference that it be in writing. Furthermore, it is culturally
constructed with the mental dynamics. such as the Chinese collect ivistic and high-
context communicative orientation, of the parties that are inextricably associated
with it. 205Hall ET, The Hidden Dimension, 1987, Doubleday, p177-8. 206It has been argued that this has been successfully done before by Sino-Western
parties, under arguably less conducive circumstances; in Shang hai in the century
prior to 1949. Lee TV, Risky Business: Courts, culture. and the Marketplace, (1993) 47
University of Miami Law Review 1335 at 1395. However, due to the political and
economic instability "all of the mechanisms ultimately depended on the strength of
the relationship involved." (p1395). 207Walters RJ. "Now that I Ate the Sushi, Do We Have a Deal" - The Lawyer as Negotiator
in Japanese - US Business Transactions, (1991) 12 North Western Journal of
International Law and Business 335 at 359.
44
Furthermore, an appreciation of the Chinese cultural-philosophical tradition,
such as the Taoist approach to market forces in China's unique commercial
atmosphere, may suggest some helpful alternatives to Western negotiation
technique which would improve the quality and effectiveness of the Western
negotiation process.208
8. Conclusion
The Western negotiator cannot afford to ignore China's unique collectivistic
heritage consisting of its traditional tripartite approach to it's political, legal,
social and commercial environment, and its attempt to thread it through the
fabric of human action, manifested in the pivotal role of relationships. For, as
Scogin argues, the "evolution of these approaches in response the to the
interaction of economic change continues to the present day."209
Therefore. whilst, China's economic door is destined to open wider to the West
and the Chinese style of negotiation will change,210 the change will not be
208Cf Dellios R, How May the World Be at Peace?": Idealism as Realism in Chinese Strategic
Culture, in Hudson VM (ed), Culture and Foreign Policy, 199?. Lynne Rienner, p201- 230.
This work discusses the contribution Chinese strategic culture could make to achieving "a
less dysfunctional and conflictual international system than the one, based on Western
realism, we now have."(p201). It is tentatively submitted that this analysis could be
equated to improvements which could be made to the Western contractual negotiation
process. 209Scogin Jr HT, Between Heaven and Man: Contract and the State in Han Dynasty China,
(1990) 63 Southern California Law Review, 1326 at 1404. 210This will be strongly dictated by the "need for universalistic rationality in the emerging
market...". - King AY, Kuan-Hsi and Network Building, in The Meaning of Being Chinese,
Cohen ML (ed), 1994, Stanford University Press, p124: Cf Lee TV, Risky Business: Courts,
Culture, and the Marketplace, (1993 ) 47 University of Miami Law Review 1335 at 1409-
1412, which examines the Shanghai experience in the century prior to 1949 and the
positive effect of litigation on the commercial environment. However bear in mind that the
political climate was not communist and the enforcement of law was supported by direct
Western influence in terms of the Mixed Court. Though the study does present "evidence
that calls into question the proposition that anti-litigiousness is a timeless characteristic of
Chinese legal culture." And, it goes tentatively further to assert that "economics can
override culture to encourage litigiousness."(1411); However, Cf Pye L, Chinese
Negotiating Style: Commercial Approaches and Cultural Principles,
45
fundamental. As Bond perceptively states, "[t]o confuse modernisation with
Westernisation is to confuse process with origin."211 The oldest civilization on
earth cannot abdicate aspects of its cultural system overnight. 212 Nor, more
importantly, would it want to.213 It believes in it's system214 and, to an extent,
the superiority of its culture.215 Furthermore, the ancient strategies
Quorum, 1992, p55, whose research indicated that most Western businessmen believed the
Chinese were no longer going through a "learning process", resulting in more legalistic
procedures. 211Bond MH, Beyond the Chinese Face - Insights from Psychology, 1991, Oxford University
Press, p112. As Yang Kuo-Shu observes of the Japanese experience "Strong traditional
values such as group solidarity, interpersonal harmony, paternalism, and familism are
coexisting with quite modern values such as achievement and competition, and ... along
with democratic values exist beliefs in hierarchical social structures and in authority,
obedience, and inequality of men and women."(quoted in Bond p114). 212A s Hall states "no matter how hard man [/woman] tries it is impossible for him [/her]
to divest himself [/herself] of his [/her] own culture, for it has penetrated to the roots of
his [/her] nervous system and determines how he [/she] perceives the world. Most of
culture lies hidden outside voluntary control, making up the warp and weft of human
existence. Even "when small fragments of culture are elevated to awareness, they are
difficult to change, not only because they are so personally experienced but because people
cannot act or interact at all in any meaningful way except through the medium of culture."
- Hall ET, The Hidden Dimension, 1987, Doubleday, p 177. 213A s Tay and Leung state the traditions "are most likely to survive even among the very
modern Chinese when there is advantage to the Chinese side in staying with the old ways."
- Tay A E-S & Leung CSC, The Relation Between Culture, Commerce and Ethics, in Tay AE-
S & Leung CSC (eds), Greater China: Law, Society and Trade, 1997, LBC, p6. As a
comprehensive survey indicates, kuan-Hsi (personal relationship) is seen as essential to
the Chinese in social-economic life. More, surprisingly younger people are seeming to place
greater importance to kuan-Hsi than older people - Chu G & Yanan J, The Great Wall in
Ruins: Cultural Change in China, 1990, East-West Centre - where they drew a stratified
probability sample of 2000 respondents. including 1,199 from metropolitan Shanghai, 304
from two towns in Qinpu (a rural county outside Shanghai), and 497 from twenty villages
in four of the twenty rural districts. The intention of the findings is to give us an overall
view of what contemporary Chinese culture looks like. 214There is considerable evidence that despite the ongoing erection of the commercial
legal framework, the Chinese at large are unconvinced by the legal principles and
processes that these laws enshrine Zweig D, Hartford K, Feinerman J and Deng J, Law,
Contracts, and Economic Modernization: Lessons From the Recent Chinese Rural Reforms,
(1987) 23 no 2 Stanford Journal of International Law 319-364. 215This is widely acknowledged. Bond states that the Chinese " show great concern about
the potential loss of their Chineseness, but believe they can modernize without
Westernizing. They consider it possible to industrialize, to embrace democratic institutions,
and to fraternize with those outside their own culture without compromising their strong
family traditions, their self-restraint, and their cultural pride." -Bond MH, Beyond the
Chinese Face - Insights from Psychology, 1991, Oxford University Press,p166. See further
46
inextricably associated216 with it work at the Sino-Western negotiation table.217
In addition, the alternative collectivist and high-context psychological make-up
will prevent any convincing adoption of the Western method of negotiation, for
the Chinese negotiation process does not just reflect a unique style, but a way
of being.
Thus, the influence of Chinese culture and tradition in Sino-Western
negotiation will not disappear, but it will, characteristically, continue to evolve,
dynamically responding in true Taoist fashion to Western market demands.
Whilst the face of Chinese negotiation is likely to Westernise, its fundamental
structure will not. Rather, it will adapt to the bi-cultural environment.
becoming less physically apparent, yet retaining its role of directing the
Chinese negotiators perceptions, and strategy. Whilst this cultural camouflage
may make the role of the cultural system and the influence of heritage more
subtle, it will also make it more sophisticated. This will only make the Western
negotiators' need for cross-cultural awareness more acute and urgent.
As Fisher and Brown of the Harvard Negotiation Team believe, 218 it only takes
one participant to change a relationship. If we alter the way we react to
others, they will alter the way they react to us. The objective of change is
developing "a relationship that can deal with differences."219 Dealing with
cultural differences becomes a formidable task in the Sino-Western context.
Pye L, Chinese Negotiating Style: Commercial Approaches and Cultural Principles, Quorum,
1992, p94; and, Cf Tay A E-S & Leung CSC. The Relation Between Culture, Commerce and
Ethics, in Tay AES & Leung CSC (eds), Greater China: Law, Society and Trade, 1997, LBC,
p8. 216eg Chu C-N, The Asian Mind Game, 1995, Stealth, p15 & 19. 217For example. "(1) A tendency to disesteem heroism and violence, not glorify it.
and to prefer non violent means in overcoming others achieving one's aims; ...
(2) A tradition of land warfare that prefers defense to offense and stresses the
exhausting of an attacker or the pacification of a rebel as less costly than their
extermination...." Such strategies produce very effective negotiators. Fairbank JK,
Varieties of the Chinese Military Experience, introduction in Chinese Ways in Warfare,
Kierman Jr FA & Fairbank JK (eds.), 1974, Harvard University Press, p25-6. 218Fisher R & Brown S, Getting Together: Building Relationships as we Negotiate,
1988, Houghton Mifflin. 219Fisher R & Brown S, Getting Together: Building Relationships as we Negotiate,
1988, Houghton Mifflin, p3.
47
It is a three step process which entails identifying the differences; being
dynamically aware moment to moment during the negotiation process in order
to isolate the differences as they arise; and lastly, being capable of altering our
response so as to work with and around the difference and even benefit220 from
it rather than clash with it. Whilst this skill is not acquired overnight, it is
achievable. Moreover, the proof is in the pudding - the integration of it into the
negotiator’s repertoire will be validated by the results.
220Such as pre-empting a particular culturally motivated strategy.
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