At the moment a great number of Western companies are trying to enter the Chinese markets which are growing at a very rapid pace. Many of these organizations have to struggle with the cultural differences, existing between them and their Chinese partners.
This paper is aimed at discussing the negotiations between Ericsson and local telecommunication companies. In particular, it is necessary to single out those strategies which proved to be useful and those which did not succeed. We are going to focus on such aspects as communications and relations.
The first thing that we should mention is that the management of Ericsson took a very thoughtful approach to building rapport with their Chinese companies. In particular, they realized that it had been of no use to hasten the negotiation process and at the beginning they invited their partners to Sweden to show them facilities and plants (Ghauri & Fang, 2001, p 12).
This gesture of hospitality proved to be very beneficial because their Chinese partners began to put more trust in them. Additionally, the representatives of Ericsson paid close attention to the indispensible values of Chinese culture, in particular, the importance of keeping and saving one’s face or reputation (Ghauri & Fang, 2001, p 8).
For instance, during one of negotiation sessions, one of Chinese managers made a serious factual mistake; yet his Swedish counterpart did not argue with him. This tactics also turned out to be helpful since it furthered friendly relations between the two sides. Overall, it is possible to argue that the representatives of Ericsson were quite versed in intercultural communication.
Nonetheless, they overlooked some very importance differences existing between Sweden and China, and this presented them with several difficulties. First of all, China is a bureaucratic state with a very complex workplace and governmental hierarchy. This is a country where a power distance is very high which means that the subordinates are very reluctant to make any independent decisions and take initiatives (Ghauri & Fang, 2001, p 17; Mead & Andrews, 2009).
In fact, such behavior may contradict their value system and ethical principles. Many scholars argue that in Eastern cultures the subsidiaries do not usually take the responsibility of their managers since such a decision can result in punishment or at least reprimand (Samovar, Porter & McDaniel, 2009, p 203). The key problem is that the Ericsson representatives had to negotiate with people who were fully authorized to sign the contract or were afraid of doing it.
As a result, they had to make the same presentation more than twice. These peculiarities of Chinese bureaucracy led to considerable delays and expenses. Therefore, prior to conducting negotiations with Chinese partners, the managers of Western companies should make sure that the counterparts are sufficiently empowered to take any initiatives and decisions. Unfortunately, Ericsson managers did not take this precaution.
On the whole, Ericsson’s experience should be taken into account by other European or American enterprises which are planning to operate in China. This case can assist those people, who intend to conduct negotiations with Chine organizations or want to work as managers in this country.
These people should always remember that the idea of employee leadership or empowerment is alien to Chinese business culture. Moreover, one will to learn more about the bureaucratic culture of this country since this knowledge will enable him/her to establish better relations with governmental agencies.
References
Ghauri Pervez & Fang Tony. 2001 The Chinese Business Negotiation Process: A Socio-Cultural Analysis. Journal of World Business. 36 (3). pp 1 – 29. Web.
Mead Richard & Andrews Tim. 2009. International Management. NY: John Wiley and Sons.
Samover Larry, Porter Richard, & McDaniel Edward. 2009 Communication Between Cultures. NJ: Cengage Learning.