Need to know : lessons from Sino-Australian business negotiators on the importance of guanxi, emotions and generational differences in Chinese negotiation behaviour

The forces of globalisation over the last few decades have created opportunities for intemational business as never before, whilst leaving no organisation immune to competition. With the Global Financial Crisis impacting the world economy, the BRIC economies as a group - Brazil, Russia, India and China, have steadily benefited from continuing growth in 2008 and 2009 (Bhattacharya, Hemerling and Waltermann,2010). Despite China being a key international trading partner for Australia, the number of successful joint ventures and negotiations between the two countries remains limited. A closer examination of the international business interactions between Australia and China is thus urgently needed. When negotiating with the Chinese, Western managers may not always be aware of what they are really negotiating for. To be successful, they have to be equipped with the 'specialised knowledge', a form of 'tacit or implicit knowledge', which comes with experience (Nonaka, 1994, Pavesi, 2003) in communicating and negotiating with their Chinese counterparts. The Chinese way of business negotiation can challenge the logic of Western business thinking. This, coupled with possible generational differences or changes in the Chinese business counterpart's way of doing business, means we must try to understand the business communication and negotiation process from not only the Western but also the Chinese perspective. In particular, in addition to the contextual (Phatak, & Habib, 1996; Risberg, 1997), social (Ghauri, & Fang, 2001), and cognitive factors (George, Gareth, & Gonzalez, 1998) focused on by past researchers, the intangible aspects of negotiation must also be considered. These include trust, reputation, relationship quality (guanxi in the case of the Chinese), and the moods and emotions that shape the processes and outcomes of communication and negotiation (Griffith, 2002; Hartel & Ma, 2006; Ma & Hartel 2005; and Zhao & Krohmer, 2006). This paper reports on a qualitative investigation of the communication processes occurring in negotiations between Australian and Chinese managers and entrepreneurs. The examination is based on a theoretical framework looking at emotions and culture from an affective events theory (AET) perspective. Both interview and focus groups techniques were used. Findings identified guanxi, core to relationship development and maintenance in Chinese culture, together with emotions as major determining factors of negotiation outcomes. Findings also suggest there are generational differences in attitudes among Chinese managers with Gen. X and Gen. Y placing a different emphasis on guanxi in business. These findings suggest that the popular advice to people doing business in China is out of date.