SAVING FACE: HOW TO SUCCESSFULLY DO BUSINESS WITH AND IN CHINA

Joseph W. Leonard, Miami University, Department of Management, Oxford, OH 45056, 513-529-4239

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ABSTRACT

This paper mentions some of the primary key factors of successfully doing business with and in China and discusses the critical factor of establishing a system that allows for the Chinese counterparts to be able to “save face” when the situational circumstances require. This paper will discuss some of those factors briefly but the main trust of this paper is about dealing with one of the six parts of traditional culture in China. Certainly, understanding about “saving face” can make or break a business deal between a Western company and a Chinese enterprise. The critical factor of saving face will be explained, analyzed, and clarified with examples; and implications for Western firms will be made.

INTRODUCTION

Just about everyone realizes the myth of 1.3 billion eager and affluent people in China. But the reality is that China is a big market of more than 400 million urban consumers, many affluent and potentially valuable customers.

When the United States re-entered China in 1972, by all economic accounts, the People’s Republic of China was a poor country. But now more than 30 years later, the economy of China is greatly different – it is much stronger. And equally important, the political economy of China now is greatly different – it is based on supply and demand and is moving more towards a market economy every month. While the transition from 1972 to the present has not been smooth and without incident (the brief set back in June 1989, but quickly followed by the pro-democracy movement {Banthin & Stelzer, 1995}), the political and economy situation in China today seems to more predictable than any time in the past fifty years.

After 15 years of discussion and negotiation, on December 11, 2001, China became the 143rd nation to join the World Trade Organization (WTO). From 1986 when China first applied to enter into the General Agreement on Tariffs and Trade (GATT), the country went through a reform and opening period for the Chinese economy. Some of the highlights of this transition included the transition of the economy, rapid progress of privatization, and various domestic reforms (Toshiya, 2002). China’s entry into the WTO will require the country to cut tariffs significantly and to eliminate many restrictions about foreign ownership (Conklins, 2002). Obviously, China faces many challenges within the WTO. Some of these include rule of law issues, tariff-rate quotas (TQRs) in agricultures, trade-related aspects of intellectual property issues (TRIPS), the safeguards issue (transitional safeguard measures (TSM), and others (Abnett, 2002). Additionally, in its early months of the WTO, China is having implementation problems within the services sector of international business (Cassidy, 2002), which may or may not continue.

Overall, the WTO should enable China to make fairly rapid progress in reducing barriers in conducting business with firms around the world. China certainly has the potential to make rapid international progress, and evidence suggests that today China really is open for business (Li, 1998).

KEY FACTORS FOR SUCCESS

WITH AND IN CHINA

There are a number of key factors that firms, especially from the West, must practice and understand to be successful in doing business with and in China. These factors have a wide range from language, to religion and ethics (Economist, 2001), to nepotism and cronyism {Backman & Butler, 2003), to political risk, and to others. But the main factors for success include (1) remembering that there is not “the Chinese market’; (2) about everything in China takes time, patience and money; (3) start small, segment, and adapt to customers’ needs, and understand and don’t underestimate the strength of competition; (4) select a partner, agent, or broker carefully, and if it doesn’t work out then be flexible to change; and (5) moderate expectations, realize there may be a big difference between hype and reality (Backman & Butler, 2003, pp. 261-262).

SAVING FACE

In business and other situations, the concept and reality of saving face is important throughout the world. But evidence suggests that it is more important in Asia

than it is in the West (Fatehi, 1996). In China this is particularly true and is apparently even stronger that it might otherwise be because of the way that business and politics are intertwined. It is very important to respect and defend the dignity of others, often even in trivial matters.

The Chinese people have many unusual words, phrases, and saving about face: a person needs face as a tree needs bark, losing face, saving face, being concerned about face-savings, casting aside all considerations of face, having a respected face – enjoying due respect, having a “big” face – checking facial expression (consider the person’s willingness) before making a decision, and others (Quanyu and others, 1997).

According to Quanyu and others (1997), face-saving is deeply rooted in Chinese traditional culture. Why are the Chinese people so strongly concerned about saving face? While there may be thousands of reasons, five keys historic ones will be examined in this paper.

First of all, most Westerners, particularly Christians, acknowledge the concept of “original sin.” but the Chinese are very strongly influenced by the Confucian idea of the “fineness of human nature.” Almost every Chinese who has even a little bit of formal education will know that the first sentence of The Three Characters of the Confucian Classics reads, “At the beginning, human nature was good and honest.” Acceptance of “original sin” is to admit that there is a human ugly side. Based on this philosophy of faith, people are completely at ease dressing up their faces when they think their faces need to be fixed. In business, this is analogous to one who dares to recognize one’s mistake(s) in public and is willing to correct the mistake(s). However, since the Chinese do not accept “original sin,” they would not dare or be willing to face the ugly side of human nature. Thus, they always must hide their deficiencies. Furthermore, since most Westerners believe in God, they usually pray to beg forgiveness for their sins. The Chinese tradition advocates self-cultivation to achieve the perfect human life. These two understandings of human nature – one as evil and therefore dependent on an external God for salvation, and the other as good and therefore dependent on self-cultivation for the achievement of a state of spiritual happiness – illustrate why many Chinese people would not naturally adorn their faces in public places. Covering up deficiencies will be strongly concerned about his or her face. In other words, that person will be very sensitive to whether they can save face.

Second, it is common sense that before a person acts in a role on stage, that person must put on makeup. However, traditional Chinese culture praises social roles but strangles the self so that Chinese people usually act various social roles rather than being themselves. Within Chinese culture, people often “perform” their actions on the social stage. When they make a decision, they usually do not consider “Whether or not I should do this” but “How will others view what I am doing?” This is a concern of face saving. In many cases, when a Chinese person associates with someone in reality, he or she always thinks and acts a role such as a manager. He or she usually does not act as an individual. Therefore, the person often tries to be perfect, thus be very concerned about face-saving.

A third reason why the Chinese are concerned about saving face is the customary arrangement of society in order between senior and junior. In the workplace environment, China is a society where stratification and seniority are emphasized much more than in the West. In the United States workplace, a subordinate may often question the manager’s orders. In Chinese traditional culture, obedience from juniors is unconditional, and offers a respected face – enjoying due respect is what seniors experience at home or in the workplace. Since Chinese people do not accept “original sin,” they try to cover up their deficiencies (Quanyu and others, 1997, pp. 223-224).

A fourth element of face-saving is collective, rather than individual thinking. When Chinese people represent themselves, he or she may be concerned about face-saving; when one represents a group or a company, he or she may be strongly concerned about face-losing. Since the individual concept has been weakened for thousands of years in Chinese culture, individuals usually consciously or unconsciously think they are representing a collective (or company). For example, study is not viewed as an individual but as a collective affair. In school the child thinks of representing the family (not the self). A Chinese man wrote about his family’s experiences living overseas in Japan. His daughter, a first-grader, came to Japan will no knowledge of Japanese language or culture. The parents were worried that she would not adapt. The girl often said to her parents, “If I cannot do a good job, they (her Japanese classmates) will that that Chinese people are unable to achieve. I must gain a respectful ‘face’ for our Chinese people.” So for this seven-year old girl, the collective idea to “gain a respectful ‘face’ for our Chinese people” was the issue (Zhang, 1995).

Fifth, distinguishing between inside and outside could be a cause of face-saving, but might also be a result of face-saving. Chinese language directly differentiates between grandparents. A father’s parents are called and considered as (inside) grandparents, but on the mother’s side, the grandparents are called “wai” or outside grandparents. Also, cousins are considered as outside. Chinese people have a whole set of behavioral norms for differences inside and outside (Qyanyu and others, 1997, pp. 225-226).

Implications for International Business

There are many things that Western business firms should remember about the importance of saving face within Chinese traditional culture. Issues of saving face can manifest in many ways in business, in virtually any of the business functions of manufacturing/operations, finance, human resource management, or marketing. In the context of marketing, a product represents the extension of a person. Thus, a manager who initiates a product may make a decision to bring the product to market even if the product’s weaknesses are significant. This could be taken as an issue of face losing in some situations.

How Face-Savings Affects Business & Decision Making

Face-saving is extremely important and may even has a crucial impact on Chinese business and the decision-making processes. When a person/company/nationality is overly concerned about face-saving, consequences may be ignored. Therefore, Western firms must be careful and aware of there traditional cultural differences.

Face-saving has strongly influenced business decision making in China as well. There are at least two issues in marketing to be considered. One is what individuals want to consume; the other is how business decision making can meet consumers’ needs. To answer these questions, other questions probably should be asked, such as “Why will individuals want to consume in a certain way?” or “Why will consumers want to buy certain products?” or “How can we meet consumers’ needs if we provide a certain product or offer a certain service?” Thus, ‘face-saving’ is one appropriate root to be explored to arrive at a solution.

How To Handle Face-Saving Effectively

Western firms need to know how to avoid or at least minimize problems with face-saving with operating within China. The best way to do this is to do a combination of methods that can save Chinese face and at the same time, try not to make Chinese people or enterprises feel as if they are losing face. Sometimes what at first seems to be a knotty problem may be able to be clarified by simply using different wording for the problem.

Another way to avoid the loss of face is for the Western firm to give the Chinese individual or enterprise to find a way out of the dilemma. The emphasis is on giving an opportunity to extricate the Chinese from an awkward position. When a conflict occurs, a wise way to resolve the problem is to give the Chinese a way to get out without making them lose face. Chinese people are very sensitive to hints, so being subtle is often sufficient. For example, if a Chinese factory does not deliver the sample product on the specified delivery date, the Western firm might sent a fax or e-mail and suggest that the samples may have been lost in the mail. Then give the Chinese factory another date (say one month or six weeks later) and specifically communicate to the Chinese factory that the samples are required by the new date so that the Western firm can provide them for their customer’s final schedule date. This is a way of offering an ‘out’ to the Chinese factory without face-losing, but also sets up a deadline with a warning.

It is important for a Western firm to not miss an “out” that may be given from a Chinese enterprise. When a both parties are in deadlock or when a negotiation has reached an impasse, it is not unusual for the Chinese side to give their opponent a chance for an out. This could occur as an obvious situation or it could occur as a mild hint. So it is important for the Western side to watch careful and pay attention to the discussions. A good government-to-government example of this occurred in February 1995. On February 4, 1995, the Clinton administration imposed punitive tariffs on more than $1 billion of Chinese products. This was the largest trade sanction in U.S. history. The U.S. federal authorities warned of further action if China continued to refuse to crack down on the piracy of U.S software, movies, and music. The U.S. decision to impose 100 percent punitive tariffs on products such as silk clothing and cellular telephones was met almost immediately by Chinese announcement of tariffs against U.S.-made products such as cigarettes, film, alcoholic beverages, and others (Cincinnati Enquirer, 1995). Luckily for the U.S. and China, the U.S. backed off a little by delaying the effective date to February 26. This was a good decision by the U.S. On February 6, the U.S. and China reopened negotiations and a deal was worked out giving the Chinese government a way to save-face.