Negotiation Conflict in China – Resolution or Dissolution?

Resolving Business Conflict – Chinese Style

This series of posts on Chinese negotiation conflict has taken care to avoid the word “resolution” , because more often than not Westerners and Chinese have a very different idea of what the word means.  Americans, with our bias towards justice and legal solutions, like to dig out the facts, determine who was at fault and resolve the situation with a settlement or penalty.  It’s all very public, final and transparent.   While American businessmen view a court of law as an arena where warriors slay or get slain, Chinese tend to see them more as sandboxes where spoiled children throw unseemly tantrums.

The Chinese idea of resolution is more quiet, subtle and passive.  Parties to a dispute are expected to move forward without complaint or fuss.  In many cases a third party exerts influence on one or both parties to the dispute.  Other times, the more powerful of the two will appeal, either directly or not, to the other side’s sense of pragmatism or self-interest.  Disputes are handled quietly, with an eye toward expedience and continuity.  The interests of the entire group outweigh the needs of a single participant, regardless of how worthy his claim might be.  Face must be protected at all times.  No blame is assigned, no penalties assessed – compensation will come in the form of favorable terms in a future transaction.  While the Chinese often refer to this mode of conflict resolution as “harmony”, to Americans it looks an awful lot like “surrender”.   In a business environment characterized by unwritten rules, conflicting regulations, nepotism, cronyism and corruption, the Chinese style of dispute resolution is seen as yet another example of inequitable treatment facing foreigners  – not part of a serious business solution.

The New Resolution

We can see the outlines of a new type of conflict resolution emerging between western and Chinese partners.  This is a hybrid approach to managing conflict that experienced negotiators from both Western and Chinese camps have naturally developed over times.  It serves the Western interest of insuring that the source of the dispute is identified, corrected and won’t repeat.  It also serves the Chinese notion of preserving face and strengthening the business relationship.

  • Problems get diagnosed without assignment of blame or fault.
  • Forward-looking solutions that balance out positions in subsequent transactions
  • Ongoing negotiation about new procedures and best practices
  • Increased communication and joint consultation about sensitive issues that are the source of conflict

Should you stay or should you go?

Some Westerners will deny that this approach to conflict resolution is feasible for their situation.  From their perspective, the Chinese partner may have no interest or plan to resolve the conflict at all, let alone equitably and fairly.  The underlying problem here is one of partner selection – not cross-culture conflict management.

When you are involved in business conflict in China, your only real choice is whether or not you continue this relationship.  If you have not laid down a solid foundation or one of the interested parties doesn’t trust the other, then there is really nothing to save.  This sounds simplistic, but all too many western negotiators continue dealing with Chinese counter-parties they don’t trust for far too long.  Maybe they feel that they can’t do any better or that they have no choice – maybe they think the situation will improve by itself over time.   But continuing to do business with a Chinese partner you don’t trust is lose-lose negotiation at its simplest.  In the West contracts, regulations and courts offer you a measure of protection.  The situation in China is improving, but the glue that binds commercial agreements is still personal relationships – not legal contracts.

Resolution vs. Satisfaction

One thing is certain – successful resolution to a Chinese conflict is rarely satisfying or dramatic.  You won’t get your money back.  You won’t get an apology.  No one will admit that they were wrong or that you were right.  The most you can hope for is that the wheels of commerce will turn a little more smoothly and a bit more on track.

In China, court cases and confrontation tend to yield pyrrhic victories – even if you win, it’s rarely worth it.  You might not care about quaint Chinese customs like face, harmony and guanxi – but your counter-party does.  No matter how difficult you found your Chinese partners before a shouting-match or court case, you can be sure that it will be much, much worse afterwards.  Make sure that you have solid alternatives in place before you try to “get satisfaction”  in a Chinese business dispute.  You will probably need it.

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