Why you should care
Because you only think you know whom you’re dealing with.
With an eye on a beautiful Berber rug, I go in low, offering $300. The Moroccan trader gasps, and so the negotiating begins. Try bargaining like that in Covent Garden and you’ll win nothing but a dirty look.
Smart tourism or stereotypical mischief? A recent study suggests that people may alter their use of ethically questionable tactics when negotiating with someone from another country, so these same kind of perceptions can also affect business. Researchers from Cambridge University, ShanghaiTech University and the University of Illinois looked at 810 adults from the United States and China to determine how likely they were to use ethically questionable tactics, like lying or offering bribes, depending on their counterparts. Americans, they found, were more likely to employ ethically fuzzy tactics if they thought they were dealing with someone from China. Chinese negotiators, meanwhile, were less likely to engage in less ethical strategies with an American and more likely to do so with countrymen.
Stereotypes and reputations we know of different countries influence how [we] will act.
David De Cremer, Cambridge University
The point isn’t to shame a nationality but to illustrate that “stereotypes and reputations we know of different countries influence how [we] will act,” says Cambridge University professor David De Cremer, noting how folks quickly assimilate to stereotypes. From the Americans’ perspective, this is based on “a belief that the Chinese, over all, are more unethical,” and by giving into these presumptions, he warns, we’re reinforcing stereotypes that aren’t necessarily true.
“But my rug trader expects to haggle,” I think, and I get a similar response from James McGregor, Greater China chairman for APCO Worldwide in Shanghai. “China has its own way of doing things,” he says, noting his disagreement with the use of the word “ethical.” He sees it more as an issue of trust. Both De Cremer and McGregor stress that relationship building is essential in China. In the U.S., thanks to a formidable legal framework, “we start out with 100 percent trust,” McGregor explains. But China hasn’t traditionally used the courts like this, so you “start with the basis of zero trust.”
McGregor would “never offer what you consider to be a fair deal” in the first round, because Chinese counterparts are “going to think that you’re offering a very unfair deal.” They expect to negotiate you back from that position, he says, and he doesn’t see this as unethical so much as dealing with different cultures and learning how people operate. De Cremer is planning to delve deeper into why Chinese participants were apt to use less ethical techniques with countrymen. But McGregor notes that Chinese negotiators likely assume that Americans, thanks to the Foreign Corrupt Practices Act, are legally forbidden from engaging in shenanigans. “So that comes off the table,” he says, “whereas if you’re from a Taiwan or a Hong Kong firm, they have a lot more wiggle room.”
People often argue that you can’t do business in a culture if you don’t adapt, De Cremer says. But that means they’re saying “how we do business depends on where we are,” rather than sticking to one’s own ethical framework.