Introduction

Marketing has been defined in a number of ways, but invariably effective marketing is associated with the need to link producers and consumers (McCarthy and Perreault, 1993) or the need to facilitate exchanges (Kotler and Chandler, 1990; Lamb et al., 1994; Zikmund and D'Amico, 1989). Bennet (1988) on behalf of the American Marketing Association defines marketing as "the process of planning and executing the conception, pricing, promotion, and distribution of ideas and goods, and services to create exchanges that satisfy individual and organisational objectives". Thus marketing is largely, but not solely, about negotiating and considering how to influence and carry out negotiations in order to facilitate exchange.

It has a wider context of highlighting the market, then segmenting it and identifying target market segments. It is concerned with understanding buyer behaviour within segments and choosing the appropriate strategies which involve how to position the product in the customer's mind. It is also about retaining customers through offering quality, reliability and service and ensuring the whole system hangs together by developing a feedback and control system. The marketing effort in the wider context thus sophisticates the exchange process.

This is highlighted by the fact that at some point, no matter how simple or complex the marketing system, negotiations between buyers and sellers take place. When buying decisions are sizeable or complex, and especially when overseas negotiations are involved, negotiation techniques can play a major role in the successful conclusion of the business deal. It is unrealistic to assume that one negotiation style fits all cultures.

The development of the paper

The paper commences by highlighting the importance of the Chinese ethnic market to Western business, and identifies the major cultural differences between Chinese and Westerners. This is followed by a consideration as to how culture impacts on preferred Western and Chinese style negotiations. The debate includes the need to defer to seniority which can often slow down the finalisation of the business deal as Chinese negotiators need to seek the authority of their immediate bosses. Three real life examples are used to illustrate the importance of Guanxi, the expectation of contract re-negotiation and the problem of dealing with Chinese bureaucracy.

Chinese-based economies may mean big business

One of the most rapidly developing economies, and a giant by any measure, is the Peoples Republic of China (PRC). Approximately one-fifth of the world's consumers live there, the country is currently undertaking vast infrastructure projects and there is a continued commitment to market-based reform. McKinsey estimates that by the year 2000 there are likely to be 200 million fairly affluent Chinese by world standards (Leung et al., 1995). Moreover, the Tiger economies, largely of Chinese ethnicity, portrayed in the Asia Pacific Profiles prepared by the Asia Pacific Economic Group (1994), also experience rapid growth, but are already enjoying a comparatively high standard of living based on global standards. These factors have contributed to the increasing attention from Western business. Imports to China, Hong Kong, Singapore and Taiwan have exceeded US$336 billion in 1993.

Cultural differences add to the challenge

Its size aside, the PRC appears to be one of the most challenging environments in which to conduct negotiations, a factor shared with other Chinese-based economies such as Hong Kong, Singapore and Taiwan. China is a high context culture in which people are deeply involved with others and information is widely shared (Hall, 1976). The cultural variable has been explained by Guanxi, yet Guanxi would appear to be a dependent variable derived from the cultural and pragmatic necessities of Chinese society. Notable research to explain cultural differences between countries was carried out by Hofstede (1991) who identified four dimensions of culture:

- (1) power distance (measured from small to large);

- (2) collectivism versus individualism;

- (3) femininity versus masculinity;

- (4) uncertainty avoidance (from weak to strong).

Later the author added a fifth dimension: long-term orientation in life versus a short-term orientation. In the empirical work Hofstede (1991) did not publish measurements for the PRC except for "long-term orientation", but it is possible to utilise the author's work to make comparisons between Western-based cultures, such as the USA, Great Britain and Australia, to Chinese cultures such as Hong Kong, Singapore and Taiwan.

In terms of power distance Singapore scored 74 on the power distance index, Hong Kong 68 and Taiwan 58 compared to the lower scores of USA 40, Australia 36 and Great Britain 35. Power distance is a measure of the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally. The Western economies generate a lower average result compared to the Chinese economies. This indicates that people in the Chinese countries accept the fact that power is unevenly distributed in society and business.