4 - Social Organisation

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4.1 Social organisation
4.2 Values
4.3 Family matters
4.4 Role of women
4.5 Religion
4.6 Mutual respect

4.1 Social organisation

Us, them, you, me and her

The final decision maker in any form of business is the individual consumer. It is the autonomy of the individual decision maker - whether buying a product or service or as a business partner - is the central notion that underpins Western business methods.

Success in China requires adapting this notion to what is still in many respects a highly collectivised social structure. In the first decades of its rule, the Chinese Communist Party (CCP) sought to replace traditional Chinese social structures with class-based categories grouping people together as workers, peasants, intellectuals or technicians. This form of labelling has largely been abandoned as China’s economy has diversified. In recent years, the government has sought to underpin its legitimacy by promoting the legacy of Confucius, the philosopher whose ideas gave us what many people still think of as the defining characteristics of Chinese society.

Briefly, Confucius sought to promote harmony by giving every person a particular role in society, with every role having a position within a fixed hierarchy. The male was above the female, the old above the young, certain occupations carried more honour and merit than others - with the merchant or businessman at the bottom of the pile, below the farmer! A person could rise in rank through professions by the exercise of his talent and could accumulate seniority simply by growing old.

It would be wrong to say that modern Chinese society is Confucian - Confucius' ideas were never applied fully even in his own lifetime - but his ideas still inform the way in which people behave within Chinese organisations and how they relate to people outside those organisations.

The uniform, not the man

In Western business the idea of leadership is regarded as a set of qualities that can be learned and applied by an individual. In China, a leader is accepted as such due to his position in the hierarchy of his or her organisation. As with the armed forces, it is the uniform that is saluted, not the person wearing it.

However, China is not without concepts of autonomous leadership. One such is the idea of 'Wu Wei' (literally ‘without having to do’). This term refers to a natural authority through which a leader is able to exert authority on those around by means of what is best described as masterly inactivity. A true leader's presence is felt even in his or her absence.

Big plan, big man

Understanding who is who within the hierarchy of a Chinese organisation is an essential task for the foreigner doing business in The People’s Republic of China (PRC). Chinese perceptions of your place in the hierarchy will determine how seriously you are taken, who you will meet and whether that person will have the authority to make a decision by him or herself or will have to report upwards. If a company's Chinese project requires a big commitment, this must be reflected in the status of the person chosen to carry it forward.

Like meets like

In China, formal business is done between equals, i.e. between people equal in status in their respective organisations. This principle also carries forward into co-operation between Sino-foreign teams, each of whose members will have an equivalent or "shadow" on the Chinese side.

To the Chinese, equality of status underpins mutual respect. This in turn contributes to a trusting relationship between individuals on each side, with personal trust regarded as a necessary precondition for business to take place at all. A formal contract, by contrast, is simply a legal requirement.

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4.2 Values

Trust and connections

Connections - guanxi - are one of the best-known aspects of doing business in China and the subject of much speculation. The importance of guanxi partly reflects the uncertain status of businesspeople within modern Chinese society until comparatively recently. With their formal position liable to changes in political outlook, personal trust became a necessary precondition of a business relationship. And China's complex bureaucracy meant that unofficial networks were needed to get things done. In the context of foreign business, Chinese businesspeople preferred to navigate unfamiliar economic waters through making foreign contacts they felt able to invest personal trust in.

Even now when China has become the world's largest destination for Foreign Direct Investment (FDI), relationship building remains an important component of doing business. A successful venture in China may establish the foreign partner as part of the Chinese partners network of guanxi. However, although that network may extend from China to the UK, this is no guarantee that it will extend any further, even to a different department of the same Chinese company. A Chinese business group may contain several hierarchies, often organised within departments and each under the patronage of a different leading figure. This means that the Chinese partner in any business may seem to have a remarkably widespread network of influence outside his company but have little say over what happens in the office down the corridor.

The pursuit of happiness

Business in the West is conducted according to the theory of enlightened self-interest. Simply by doing business honestly and competently, the businessperson makes the best contribution possible to the wider society. In order to do business effectively, it is preferable for partners and suppliers to have good relationships with each other. But it is not essential provided everyone honours their contracts and a practical compromise can be worked out.

In the Chinese view, harmony is not a process that produces better business results. It is an outcome - part of what the two sides are doing business to create. It is an end in itself. This notion affects every aspect of a Sino-foreign business relationship from its strategic goals to the attitude and demeanour of the individuals involved. Without this, it is unlikely that any business partnership in China can survive even though the partners might ultimately share the same business goals.

These are some of the characteristically Chinese aspects of business culture, which the foreigner can expect to encounter. These aspects may be more developed in some companies than others. Some take a "traditional" approach to doing business. Others pride themselves on becoming more westernised - or "internationalised", to use the tactful term. China's rapidly evolving business environment often creates hybrid cultures, mixing international business methods in some areas with Chinese attitudes in others. Foreigners cannot expect to venture into China without encountering some or all of the business styles outlined above.

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4.3 Family matters

One child policy

Results of China's 2001 census gave the population as 1,260,000,000, an 11% rise over the 1991 figure. The immense market size this represents has been China's primary attraction for foreign business. It has also been a matter of great concern for the Chinese government. In the early years of Communist rule, population growth was encouraged under Mao Zedong's slogan that "every stomach has two hands to feed it." But as the population approached 1 billion during the 1970's pressure on China's resources, especially the ability to feed itself became intense.

Since 1978, all urban and many rural couples have been restricted to having one child per family. This has been both a radical change to China's traditional demographic of extended families and a source of international controversy. With population growth slowing down, these restrictions have been eased. For perhaps most people in China, the one child policy is regarded as a disagreeable necessity and it remains a highly sensitive subject, especially if raised by foreigners.

Marriage and the family

One of the paradoxes of China's modernisation is that it allows certain traditional practices to make a comeback. Ostentatious marriage is one of these. Up until communist times, marriage primarily united families, with the female partner moving into her husband's household, in which she - at least initially - had little or no status. Condemned as a "feudal relic" by the Communist Party, this practice ceased. Elaborate ceremonies were replaced by simple civil unions, with both parties enjoined to treat each other as equals.

Cultural liberalisation has seen the return of elaborate marriage ceremonies involving much banqueting and exchanges of presents, with the added twist that "western-style" marriages have become fashionable. They have also become expensive affairs, with the consequence that the age of marriage tends to be in the late 20's or early 30's, especially in urban areas. It takes that long to save up for a place of one's own and to equip it to the necessary standards.
This has not seen a return to the Confucian extended family, however. The improving status of women and the one-child policy has seen to it that Chinese couples now tend to live in nuclear family units. The consequences of the one child policy best known in the West in the widely reported phenomenon of little emperors and empresses. The reality is more complex. Sole children may be pampered if their parents can afford to do so - especially if they are responding to their own more austere upbringing - but they also carry the burden if intense parental and family expectations, especially in regard to education.

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4.4 Role of women

Under the Confucian view of society, women occupied a fixed position at the bottom of the social hierarchy. Prevented from rising occupationally, such authority that could be accrued came through age and seniority within the household. Improving the lot of women was an important goal of successive generations of Chinese reformers and 20th century governments. Full formal legal equality was established under Communist rule, under the slogan "women hold up half the sky". According to UN figures, earnings for women across China run at just over 80% of men's, a roughly equivalent figure to the UK.

In practice, it is still fairly rare to meet a woman in a leadership position in either the public or private sectors in China (conversely, there are slightly more women in managerial roles in traditionally male occupations, due to the Communist Party's traditionally gender blind approach to education and training). It should come as no surprise to meet women working their way up through the ranks of their respective organisations. Foreigners should adopt and stick to a gender-neutral approach, treating the individuals concerned with the respect that their position and seniority merits.

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4.5 Religion

China is still an officially atheist and materialist society. However, in recent years the government has stepped back from its previous outright hostility to imported and native religious practices. It does take an active role in the administration of various faiths, requiring believers to belong to officially recognised churches and bans groups that it considers to be harmful or a threat to its power.

Many in China still take the view that "harmful superstition" will hold China back. But in recent years, traditional beliefs of all kinds have enjoyed a renaissance. In general, the Chinese have always taken an eclectic view of religion, believing that there are many paths to enlightenment or spirituality, rather than that one religion only promotes the truth on these matters.

Most Chinese religious customs derive from the Buddhist or Taoist traditions, which in turn combine with a plethora of folk beliefs specific to different parts of the country. Metaphysical practices like geomancy and numerology also have a widespread following. These are mainly undertaken in the spirit of Pascal's wager. They do no harm and may even do some good, so why not? Foreigners should respect such practices as part of the general fabric of Chinese life, but they will not be expected to share them. Nor should you be under the illusion that because Chinese partners might wish to launch an enterprise on a lucky day, for instance, that this will in any way effect the efficiency with which that enterprise is run.

(For more information, see http://www.sacu.org/religion.html)

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4.6 Mutual respect

This is broadly true of many aspects of government policy, especially where these relate to social or economic problems within China and the measures adopted to solve them. Whatever their private opinions on such issues as corruption, pollution, crime or the Chinese political system, people interpret adverse comment from foreigners on these matters as an attack on China itself. Even raising them in a neutral manner or in small talk may be considered tasteless. Should these matters be raised by the Chinese side in any meeting or discussion, the foreigner will be expected to defer to the opinions expressed, whatever his or her own views.
One exception to this rule is where the business at issue may help to provide a solution to a social, economic or environmental problem. One example would be in selling "green" technology. While a positive environmental impact is a definite selling point for anyone doing business in China, a tactful approach is still necessary. Above all, it is vital to avoid giving the impression that you have come to the rescue with superior Western know-how and technology of a situation caused by Chinese incompetence or mismanagement.

This sensitivity applies across many areas of business and it can prove to be a trap for the unwary. In the early years of China's opening up process, many foreign companies took the opportunity to dump their obsolescent technology on to the market, which became in Chinese eyes another example of the willingness of Westerners to exploit Chinese people. It also reflects a wider sense that "only the best will do" for China.

Yet while advanced technology, and the prestige it brings, is a positive selling point for business, foreigners must avoid conveying the notion that China is itself in any way "backward." Every Chinese child is taught that his or her country gave the world the "four great inventions" (paper making, printing, gunpowder and compass) and historically served as a fount of technological innovation. Consequently, internal alarm bells will ring at anything that smacks of technological one-upmanship from foreigners.

(For more information, please see http://www.bosonbooks.com/boson/nonfiction/china/china.html)

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