This essay critically analyses the differences and similarities between the United States of America and the Republic of China. Firstly, this essay identifies the main theories of intercultural communication by applying Hofstede´s intercultural framework. Secondly, the Chinese and United States negotiators style will be discussed followed by an explanaition about how to manage negotiation in both countries. Thirdly, the similarities and differences between China and the United States will be compared.

“Negotiating with the Chinese is an important topic in international business and cross-cultural management since China is playing an increasingly active role in doing business with the western countries […] negotiating with Chinese is also becoming increasingly important for international business successes in particular, since after China joined WTO in December 2001”. (Zhu et al., 2007: 354)

The aim of this study is to compare the Chinese and United States American negotiation styles on the general cultural differences to help to get a better understanding when doing business in China or the United States. Chaney and Martin (2004) as cited in Zhu et al. (2007: 355) “define cross-cultural negotiation as” conversation or “discussions of common and conflicting interests between persons of different cultural backgrounds who work to reach an agreement of mutual benefit”. International managers can profit from studying similarities and differences in negotiating behaviours to recognize what precisely is happening during the negotiating process (see Appendix A). However, managers first need to understand their own negotiation styles, to understand the similarities and differences in intercultural communications (Deresky, 2000).

2. Intercultural communication and their main theories

In 1959 the phrase ´intercultural communication` was firstly used by the cross-cultural researcher Edward T. Hall as he divides cultures into two types, high-context culture and low-context culture (Aneas and Sandín, 2009; Hall, 1976). Further in 1980 the management researcher Geert Hofstede analysed data from more than 100,000 IBM employees and developed his Cultural Dimensions Model. His theory is based on the assumption of four dimensions: Power Distance Index (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS) and Uncertainty Avoidance Index (UAI) (Powell, 2006). The fifth dimension Long-Term Orientation versus Short-Term Orientation (LTO) was identified by Geert Hofstede and Michael H. Bond in 1988 (Fang, 2003). Finally, Fons Trompenaars and Charles Hampden-Turner developed a model of seven dimensions of culture to help explain intercultural differences. These dimensions are called Universalism versus Particularism, Individualism versus Communitarianism, Specific versus Diffuse cultures, Affective versus Neutral cultures, Achievement versus Ascription, Sequential versus Synchronic cultures and Internal versus External control (Trompenaars and Hampden-Turner, 1998).

3. Hofstede´s intercultural framework

In this study the focus is on Hofstede´s well-established management theory. Figure 1 displays the intercultural framework of Hofstede. According to Hofstede and his model it is of high significance to consider the high cultural differences between Chinese and American people to be successful in doing business across borders.

Figure 1: The 5D Model of professor Geert Hofstede

Source: Adapted from: Itim International (n.d.). ‘Geert Hofstedeâ„¢ Cultural Dimensions’ [online]. Available at: URL:http://www.geerthofstede.com/hofstede_dimensions.php?

culture1=18&culture2=95#compare [Accessed 20 January 2010].

The Power Distance Index (PDI) stands for the hierarchy of power within a society and its general acceptance amongst the country’s people. China’s ranking is almost 80 which is a very high level compared to United States ranking with 40. The level of inequality of power and wealth is high but, according to Hofstede, accepted by the Chinese society. Thus, that the level of power distance is very high in China, the boss is in the authority and in the position to decide over everything. American culture however allows more equal power and respect for every rank in a business, which means for our business that our Chinese employees will probably need to be educated to make decisions on their own.

Regarding Individualism versus Collectivism (IDV) China ranks noticeably low in individualism (20) compared to the United States (91). Consequently, the Chinese culture is strongly collectivist; being integrated into a group is crucial and society values loyalty as well as strong relationships to both friends and family. The high ranking of the United States means that the society is very individualistic. More precisely the integration into groups does not play such a big role as it does in China.