A Study on the Background and Business Negotiation Styles of Chinese American

Dr. Lieh-Ching Chang, Associate Professor, Department of International Business Administration, Hsuan Chuang University,

INTRODUCTION

By the end of 1995, the total Chinese population in overseas region (excludes Hong Kong and Macau) is around 38.79 million. As for the Chinese population distribution, there are 29.8 million Chinese in Asia, which accounts for 77% of the total Chinese population. Chinese population in America is 6.93 million, 18% of the total Chinese population. It is 1.04 million in Europe, 2.7% of the total Chinese population. It is 0.86 million in Oceania, which accounts for 2.2%; and 0.15 million in Africa, which accounts for 0.4% ( Affairs Statistics R.O.C，2007). According to the statistics provided by Overseas Compatriot Affairs Commission R.O.C (Taiwan) in 2005, the top five countries which Chinese migrated to and its Chinese population respectively are: (7,566,200), (7,053,240), America (3,376,031) and (2,684,900). From the above information, we know that there are quite a number of Chinese who migrated to America. The total number of overseas Chinese migrated to America in 2005 was around 337 thousand, which ranks the fourth Chinese immigration country in the world. In addition, according to the result of the “Longitudinal Survey of Taiwanese Migrants to the U.S.”, America has the most number of Taiwanese migrants, around 55%, and is one of the most important overseas countries for Taiwan. Chinese migrated to other countries for better life. Business and trade are often the vital ways for making fortune. However, Taiwan is a small island country and the natural resources and demands are limited. Therefore, trade and transnational operation is very important to Taiwan’s economy. In the early years, Taiwan’s processing products export relied mostly on the popularization and purchasing by overseas Chinese which resulted in the success of Taiwanese export sales industry. The sample procurement by Chinese businessmen in the early stages was the key to success. During the last few years, new Taiwanese migrants in America and other countries and Taiwanese businessmen who invested in overseas countries expanded the popularization of Taiwanese products. In the meantime, Taiwanese export products changed from processing products to machinery equipments, synthetic industrial raw material, modules and components. Taiwan’s own brand name was built up. Investment in overseas market was developed and the government supported people to migrant to overseas countries to start business and to popularize Taiwan’s export products. Taiwanese and Chinese businessmen manufactured products in overseas countries to enhance the expansion of overseas Chinese business and trade industries. They brought out the interests of overseas economic cooperation and encouraged cooperation interests (Chen & Huang, 1997). America is the third biggest trading country of Taiwan. Therefore, the economic and trade relationship between Taiwan and America is very close and vitally important. Moreover, from the above we know that the Chinese population in America is quite large and according to the 2000 American general survey, the overall Chinese employment proportion is 61.4% (OCAC，2008). Chinese businessmen have a very close relationship with Taiwan’s economic and trade developments. The offspring of Chinese, the American-born Chinese, are the vital business partners for the transnational operation and the trade business between Taiwan and America. It means Taiwanese have a lot of chances to undergo business communication and negotiation with American Chinese. The chances are also very important.

Background of Chinese Immigrants Chinese formally entered America in the mid-19th century. In 1840, a number of Chinese labors were employed to Hawaii for agricultural cultivation. They are said to be the pioneers of Chinese immigration. In 1850, the same Chinese labors moved to the West Coast of America to work in mine fields. They were later the slave labors in railway

construction. By the end of the 19th century, as the number of migrants got larger, the U.S Federal Government decisively adopted the Close-door Policy and controlled the immigration of Chinese and Japanese through legislations such as the Chinese Exclusion Laws (1882) and Gentleman’s Agreement (1908). The Federal Government refused to give the settled Chinese migrants the right to become citizen (1917). The Immigration and Nationality Act of 1952, also known as The McCarran-Walter Act was legislated. It eliminated the limitations made to American Chinese. The situation was changed. By the end of 1960s, the Government restored its Open-door Policy and attracted quite a number of well educated and skilled Asian migrants (Su, 1995). Immigration and Nationality Act of 1965 abolished the national-origin quotas and terminated the strict number limit to Asian migrants. The adopted preference system emphasized on family reunification and provided the chance for workers with the skills and professions needed by America to migrate to America. From mid-1960 to mid-1980, the high proportion of Taiwanese overseas students in America was due to their excellent education and professional skills which allowed them to migrate to America. That is the so-called “Brain Drain” phenomenon that attracted a lot of attention (Xu, 2005). Since 1984, America began to separate the quota for Taiwan and and allowed 20 thousand migrants for each of the countries each year. The quota was doubled. In 1987, the quota for Hong Kong was increased to 5000 from 600 each year. It was at the same time the Reform and Open-door Policy of China was initiated, the number of students who went overseas for education was increased rapidly. In addition, The Tiananmen Incident caused many overseas students to apply to stay in America due to political factors. In 1990, America continued to release business and investment immigration which resulted in a large amount of people who migrated to America. With the addition of the “1997 Due Date of Hong Kong”, the Chinese immigration mood was encouraged further. The wealth, education and knowledge of the new immigrants have become important characteristics of the new immigrants. They made huge impacts on Chinese society (OCAC，2003).

Career and Economy Profile of American Chinese Chinese who went to America to make a living in the early stages were labors in gold mining, railway constructing and other employment business. Although there began to be some Chinese who conducted small business by sole-source investment or partnership investment, most of them still sold their labor for living in exchange of wages to solve material life problems. The business in American Chinese society consists of catering trade, laundry service, garment making, medicine distribution, jewelry selling and agricultural industry. Those are the traditional overseas Chinese livelihoods model. Since then the range of economic activities of American Chinese widened, they could be seen in job fields such as government employees and teachers, SOHOs, financial industry, enterprise operation, electronics manufacturing companies, Chinese medicine and acupuncture, tourism services, hotel management and industry and investment etc. Generally speaking, Chinese have the traditional virtues of being loyal, reliable, industrious and frugal. They have a habit of saving money and like to buy real estate properties (Ci, 1988). According to historical information, early Chinese migrants migrated overseas only to improve poverty. But after the mid-20th century, Chinese immigration showed a diverse trend. Most of the migrants were social elites who sought better development chances (OCAC, 2003). During the last 30 years, along with the rapid growth of the Chinese population and the increase in the overall education level, the selection of jobs for overseas Chinese are getting more diversified. Their economic status continued to rise and the social influence is lifted. According to the “2004 American Community Survey” established by the U.S. Census Bureau in 2007, 49.2% of the American Chinese of above 25 years old have college degree (the average in America is 27%). 68.8% of American Chinese of above 16 years old have jobs. As for career distribution, 51% American Chinese are in the management and other professional field (the average in America is 34.1%). 21.5% American Chinese are in the sales and office-work field. 17% are in the service trade field. As for family income, the average family income of an overseas Chinese family is US$ 66,649 (the average in America is US$53,692) and the average individual income is US$26,344 (the average in America is US$24,020). As for real estate properties, 62.2% American Chinese have their own real estate property and 37.8% rent houses. 12.9% of the American Chinese live below the poverty line (the average in America is 13.1%). Generally speaking, the career and family economic situations of American Chinese are better than the average American standard. The main income for American Chinese still relies on general salaries or medium and small business and restaurant management. The average income is acceptable although

there is no high-end result. There are not many Chinese who manage large industries or financial groups. American Chinese who are in core career such as lawyer, judge, doctor, senior manager, college professor and top scientist are very rare. Moreover, many Chinese working immigrants are still in the low income and troublesome group (Zhu, 2007).

Population Structure and Residential Distribution of American Chinese By the end of 2006, there are around 3.66 million Chinese who migrated to America (OCAC, 2007). Immigrants from China began to increase rapidly by the end of 1980. In 1997, immigrants from China surpassed immigrants from Taiwan. The amount of immigrants from China surpassed Hong Kong in 1999. In only ten years, immigrants from China became the second biggest Chinese immigrant ethnic group in America. Looking at the Chinese population trend from the past, it appears American Chinese population is increasing steadily. Fourteen years since 1990, the number increased to 1.56 million. The average annual population growth rate is 4.69% (OCAC, 2005). By observing the location selection for Chinese migrants in 2000, it appears that the degree of compact is relatively high. Out of the 51 states in America, 80% of the Chinese are in eight states. State accounts the most as 38.94% of the Chinese are there. Also, 15.68% of the Chinese are in State. These two states make up more than half of the total Chinese population. Other states with significant Chinese population are Hawaii State, State, New Jersey State and Massachusetts State. The percentage of the total population, respectively, is as the following: 5.9％,4.22％,3.83％ and 3.21％. Chinese population in the rest of the states accounts less than 3% (OCAC, 2003), which represents the compact life-style characteristic.

American Chinese (1) Population Generation of American Chinese Immigrants of the first generation came all the way from home country to the residence country and the offspring born in the residence country are seen as local-born. Therefore local-born Chinese can then be divided into the second generation and the third generation etc. From the 2004 Composition Table for the Estimated Chinese Population Generation in America (as shown Table 1), we can see that Chinese migrants of the first generation consisted around 2.09 million people (62.9%) and there are around 1.23 million (37.1%) American-born Chinese. In addition, there is already a small number of the fifth generation American Chinese. The generation composition structures of Hong Kong and Taiwan are similar in which the first immigration generation accounts for 65%, American-born Chinese accounts for 35% while the forth generation is less than a thousand people. As the immigration of Chinese from China began late, offspring who are born in America is rare. The first immigration generation accounts for 83% and American-born Chinese only accounts for 17% (OCAC, 2005). There are a lot of Chinese of the second generation who were born in America, which makes the American Chinese age structure younger. American Chinese who are younger than 15 years old are around 47.67% (OCAC, 2003).

Table 1: 2004 Composition Chart for the Estimated Chinese Population Generation in America Per person

Total Immigrants Immigrants After War Before War Chinese Chinese Chinese from Chinese from from from Hong Kong other places Taiwan China Total 3,327,743 330,230 528,638 815,320 613,241 986,315 First generation Local 2,093,851 31,344 369,594 676,946 395,367 620,600 Born Chinese 1,233,892 298,885 213,044 138,374 217,874 365,715 Second generation 796,662 95,664 161,526 126,368 176,981 236, 124 Third generation 351,195 146,079 49,475 11,573 39,977 104,091 Fourth generation 85,992 57,113 2,043 433 916 25,487 Fifth generation 41 29 0 0 0 12 Resources from Overseas Chinese Affair Note: War is Chinese Civil War in 1949.

(2) Ancestry of American Chinese Overseas Compatriot Affairs Commission, R.O.C. (Taiwan) (OCAC) (2005) estimated there are 85.7% of pure Chinese in America and14.3% half-blooded Chinese. Before the Chinese Civil war in 1949, old overseas Chinese did not only have intimate relationship with Chinese only. In 2004, the half-blooded Chinese proportion was as high as 45% and there are 24% of the third generation who are half-blooded. After the war, and as there has been more than 50 years of intermarriage and reproduction for Taiwanese and Hong Kong people, the half-blooded proportion is around 12%. Chinese from China have only been migrating to America during the last twenty years, there are only 5% half-blooded offspring. The identity of American Chinese is a weak creation and may disappear through intermarriage (Liu, 1999). (3) Education, Career, Labor, Income and Language of American Chinese The education (51% have college degree), language ability (84.98% are able to speak fluent English), relative economic conditions such as labor participation (68.7%), career (43.24% are managers and 36.97% are technical managers) and family income (US$65,586) of American-born Chinese are all better than migrants who are born in other countries. However, the work income, $11,698, of the American-born Chinese is less than other immigrants who migrated to America before 1980 (US$24,598). The reason for that is the average employment age of American-born Chinese is younger, as show in the table 2 (OCAC, 2003).

Table 2: Comparison Chart for the Economic Characteristics in Chinese Society Local Year 1980-1990 Immigrants Before Year 1980 Immigrants ％ Born Total U.S. Non-U.S. Total U.S. Non-U.S. Chinese Citizens Citizens Citizens Citizens Education High 93.14 69.72 73.14 68.95 70.61 76.21 50.86 School 51.00 37.65 29.43 39.48 39.82 44.16 24.49 college Career 43.24 27.77 24.40 25.64 39.98 42.22 24.17 Professions 36.97 25.59 34.17 25.20 29.78 30.46 21.67 Technique Employee 68.7 61.1 74.3 58.2 70.2 74.0 57.0 rates 3.7 6.4 4.6 6.9 3.6 3.1 5.6 employed unemployed 65，586 34，250 42，948 31，955 61，576 65，006 46，509 Income 11，698 9，968 14，027 9，079 24，598 27，348 15，428 Family 8.4 22.8 12.5 25.1 8.2 6.4 14.2 Work Poor Ratio 52.74 97.20 96.81 97.28 92.67 92.36 93.67 Language 84.98 29.21 35.99 27.73 46.78 50.34 34.90 Chinese 37.72 26.41 32.80 25.01 39.45 42.70 28.57 English 15.02 70.79 64.01 72.27 53.22 49.66 65.10 Both 47.26 2.80 3.19 2.72 7.33 7.64 6.33 Only 13.95 52.42 45.14 54.03 28.89 26.09 38.24 Chinese Only English No English Source: U.S. Census Bureau 2000

(4) Ideology and Racial Philosophy of American Chinese American-born Chinese Eric Liu (1999) in his book “The Accidental Asian” stated the racial philosophy of American-born Chinese: I am here, in a new country. I am not an exile nor a stranger but a citizen. I can speak a little bit of Chinese and cook a few simple Chinese dishes. I have been to China and know a bit of the Chinese history. But I cannot live by as a real Chinese. I do not want to admit I am a “white man inside.” I don’t want to be white. I only want to blend in. I agree with those white people with economic and political influences not because they are white but

because they have powers. When I blend in among the white people who influenced our culture, I imagine myself seeking their influence power rather than their skin color. Based on the following facts, you can say I am white: I listen to Public Broadcasting Service on the radio. I wear khaki suits. I eat salad. I am married to a white woman. I speak perfect English. When the editorial in American newspaper states “us,” I think I am one of them. I do not usually pay attention to my racial belonging. I think I am neither an exile nor the opposite. I have yellow skin; my ancestors also had yellow skin. But just like many other second generation American Chinese, I find myself situated in a unique, new position: we are treated as white people. Many white people describe me as “honorary white” and other Asian call me “banana.” Whether it is an honorary name or a nickname, they all come from the same idea which is that I have, to certain extend, moved closer to the center of American life. My insights have become white. “Some people are born white, some people try to be white and some people have become white without knowing.” I think that is the meaning of assimilation. My assimilation has begun long before I was born. First, it was my parents who, came to America with the affection for western life. They worked hard and adapted gradually. To cut it short, I grew up in an assimilative atmosphere and have believed that I belong to this place. However, the identity of American Chinese is a weak creation and may disappear through intermarriage (Liu, 1999). From the above we know that as American Chinese grow up and live under American political system, social environment and education system, their thoughts and behavior have been assimilated by American. They are the same as American people and have already blended in the American culture. They have thoughts and actions like the general American population.

Business Negotiation Styles of American Chinese (American) 1. Overseas Chinese are in many countries around the world. They believe in provincialism. They are diligent and capable of enduring hardship. They respect honesty and value friendship. Due to different experience and environment, their negotiation habits are different from the locals and are also different from Taiwanese. They are decisive, efficient and effective. They are good at bargaining. Mostly the boss would participate in the negotiation him- or herself. Even if an agent or an employee is presented in the initial stage of the negotiation, the final decision is still in the boss’ hands. Therefore, understanding the boss and impressing him with every effort is the most important (Wang & Li, 2007). 2. American culture usually treats last name with the lowest standard and neglects the title (Zhang, 1999). 3. In addition, when an American says to an Asian “why don’t you find a time and come here?” to American it usually implies that appointment must be made before visiting. But to Taiwanese, it is not necessary to make appointments and anytime is a good time to visit, whether it’s late at night or early in the morning. Americans tend to respect time. They attend meetings on time and do not waste other people’s time. As it symbolizes high productivity and efficiency, they believe being early is better than being late. Asian on the other hand do not see time as important, they believe the focal point of the negotiation is the mission itself and do not ask how much time it would take (Zhang, 1999). 4. Risk Propensity：Negotiation culture with entrepreneur's specialties such as the American culture stresses on facts and efficiency. Before they have the full information, they are willing to make decisions (Zhang, 1999). 5. Collectivism/Individualism：America is a country with individual colors. They value independence, courage and uniqueness. In a country of individualism, it is often that one person is responsible for the final decision. However, Taiwan is a country of collectivism and believes team is far superior than individual and that individual demand is usually placed after team demands. The final decision of the negotiation is often obtained after group discussion therefore everyone in the team is responsible for it (Zhang, 1999). 6. Kluckhohn and Strodtbeck (1961) believed there are obvious differences in the social cultures of each country. They found western culture is more aggressive and focuses more on the individual competition relationship. It is future-orientated and the time concept is linear. Western culture believes space and resources are unlimited and science, i.e. facts, is rather important. On the contrary, eastern culture is passive and often seeks harmony between nature and people. It thinks group is more important than individual. It is present- or past-orientated and the time concept is reversible. Eastern culture believes space and resources are limited and that truth does not need to be scientifically proved.

7. Western people find the negotiation behavior of Chinese is of a certain pattern. At the beginning of the negotiation, Chinese would explain the basic standard and the common goal before entering technical details. It is to avoid direct opposition. Western people think introduction is only a standard procedure and they hastily enter the real negotiation. Once conflict appears, these basic standards would be the foundation Chinese argue for. Western people like to discuss question by question but Chinese like to save sensitive topic and compromise to the last (Ze, 1993). 8. Western people treat laws very important but Chinese on the other hand think interpersonal communication can solve problems. During the last stage of contract negotiation, whether or not to include legal terms in the contract would be a topic of argument. Western people are often informed not to hold excessive stubborn attitude toward legal problems. They are advised to adopt the Chinese style as in having flexible attitude. In America, small argument would lead to legal proceedings. However, being at law with someone for Chinese is the most unwilling behavior. Even if the contract is signed, reopening of the negotiation is not impossible if the condition is changed (Ze, 1993 ). 9. For different business standards, the negotiation behavior requested is also different. The American life rhythm is fast. Americans treat time as money and they like fast negotiation therefore quite a number of them complain the length of time used in negotiating with Chinese is too long. Some people believe it may be the slow life rhythm of Chinese or the extra time used for internal coordination. Other people also believe it may be because Chinese are more cautious due to unfamiliar or it may be Chinese’ delaying tactic (Ze, 1993). 10. American’s characteristics are that they are arrogant and are impatient for success. Therefore, delaying on purpose during business negotiation may wear off their patience and maybe they would eventually give in (Jiang & Zhang, 2005). 11. In North America, good negotiation result is the most important and individual relationship is not very important. In Latin America and Mediterranean countries, socialization comes before work. Face to face contact is the best method rather than telephone and facsimile negotiations (Ze, 1993). According to the research relating to Chinese business manager interview in China, Hong Kong and Taiwan announced by the American “Business Review (1998)”, it appears that Chinese negotiators are often group-orientated. They value group interests and harmonization while avoiding uncertainty. The respondents think American businessmen are material-gain, alert and resourceful negotiators. They also think American businessmen come prepared and are familiar with each other’s business (Ze, 1993). 12. Americans are open-minded, self-confident and decisive. They value actuality and utility. They judge people by success and failure. Therefore they are straightforward, value efficiency and seek actual interests during negotiation. Americans are used to discuss details in the order listed in the contract. They like to solve one question and move on to the next to shorten the negotiation time. They are very good at bargaining and winning with intelligence and tactic. They know how to persuade the opponent with actual facts, from domestic market to international market trends and even the attitude of the user-end. Eventually they would advise the opponent to accept the price. In negotiations with Americans, it is best to avoid expression way that is full of twists and turns. It is best to differentiate between right and wrong clearly and ask when in doubt otherwise it is very easy to initiate interests conflict for both parties which would make the negotiation be at a deadlock (Wang & Li, 2007). 13. There is a division in western world：Chinese culture is “collectivism” and western culture is “individualism.” Therefore, Chinese negotiators often have to consider internal group harmony and even administrative intervention from local government. Western negotiators on the other hand often have individual authorization and respect personal mobility. If an accidental progress occurs during negotiation, the mobility of the Chinese negotiator is tested. Western negotiators often need to find the final decision maker of the negotiation (Ze, 1993). 14. Chinese culture is a “high power distance culture” and western culture is a “low power distance culture.” Therefore, Chinese respect authoritativeness and the elderly. Americans on the other hand treat them with indifference (Ze, 1993).

CONCLUSION

Even though the ancestors of American Chinese are Chinese and that American Chinese have Chinese origin, they have been educated with American education and lived in American society. As each country has its own social culture,

it has a certain degree of influence on its people. Therefore, the thoughts and the concepts of society, culture, education, economy and law of American Chinese are very different from Chinese. American Chinese are important business partners for Taiwan. Business communication and negotiation are often applied. However, communication and negotiation behaviors are strategic and the strategy is based on culture. Therefore, the behavioral strategic presentation of the negotiator is closely related to the cultural background. Understanding the cultural background of American Chinese in order to enhance the knowledge and ability in business communication and negotiation is the key to successful enterprise management and business negotiation.

REFERENCES

Chen, Huai-dong & Huang, Hai-long (1997), Current Trade Situation And Prospects of Overseas Chinese Businessmen. Ci, Tu-zheng (1988), Research on the Current Situation of American Chinese Society, P59-64. Jiang, Shu-qin & Zhang, Wen-zhen (2005), Trans-Cultural Socialization in Transnational Business Negotiation, V8, 4th Issue, Journal of Jimei University, Tian-jin University. Kluckhohn, F. & Strodtbeck, F. (1961), Variations in value orientations, Evanston, IL：Peterson. Liu, Eric (1999), The Accidental Asian, P33-37, 54-55, 196. Overseas Compatriot Affairs Commission (2008), Report of the Fifth Year of the Long-term Follow-up of Overseas Taiwanese in America (2007), P27. Overseas Compatriot Affairs Commission (2007), 2006 Annual Overseas Chinese Affairs Report, P10-11. Overseas Compatriot Affairs Commission (2005), Chinese Population in Each Country, V2, P15, 17, 57. Overseas Compatriot Affairs Commission Edited and Printed (2003), Chinese Population in Each Country, P2. Overseas Compatriot Affairs Commission (2003), Chinese Population in Each Country, Introduction, P10, 22. Su, Fu-xing (1995), 3rd Issue of Overseas Chinese Study, Overseas Chinese Studies in Scandinavia, Current Situation and Problems Faced by American Chinese, P254. Wang, Xiao-xia & Li, Yan-hong (2007), Prevention and Solution of Interest Conflict During International Business Negotiation, Market Modernization, 507th Issue, P16. Xu, Rong-chong & Chen, Li-ru & Zhang, Hui-ping & Zhong, Jia-jun & Zhang, Wei-guang & Wang, Jian-lang (2005), “Comparative Research on Overseas Chinese in America, and ”, Contracted Unit：Taipei Municipal University of Education, Edited and Printed by Overseas Compatriot Affairs Commission, P26-27. Ze, Xi (1993), Cheers：The Decoration and Etiquette of Business Negotiation in Confucian Culture, Business Forums, Los Angeles, USA. Zhang, Guo-zhong (1999), Cultural Characteristics and International Negotiation, Minghsin Journal, 22nd Issue, June, P86-87. Zhu, Hui-ling (2007), Around the War World II, Changes and Trends of Jobs and Economic Situation of Overseas Chinese in America during the Last Thirty Years.