Cultural Values in China and it’s Implications in Business

Author: Eric Castro

China business networks are sustained by cultural values and traditions from China. When these values disappear, the networks will collapse. Trust, reciprocity, face, time, harmony, hierarchy, power distance, long-term orientation has been identified as the key cultural values from China.
These cultural values from China are the main representations of the seven core rituals of Confucianism: Benevolence, Harmony, Midway, Forbearance, Filial Piety, Trust and Cautious Words.
In China, chronic suspicion prevails. China people ‘appear to be quite suspicious and cold towards strangers with whom relationships have not been established’. Nobody could be trusted except one’s kinfolk in the form of the extended family. As China people do not trust outsiders, a social network consisting of family members, relatives, friends, classmates, colleagues etc is the immediate sphere on which trust can be established, reciprocated and developed. Such an obsession with trust is caused by another, often neglected, phenomenon in China, dishonesty. In business transactions, a great deal of adulteration of goods is practiced, for example, weights and measures are juggled. To protect one’s interest and ensure that opportunistic behaviors such as cheating are kept to a minimum, trust must be established before any serious business relationship can be cemented. Trust-based ‘guanxiwang’ is the alternative to the market, which is often driven by opportunistic behaviors.
Not coincidentally; for both transaction cost theory and network theory, trust has been also regarded as a critical component of the network (Thorelli 1986; Jarillo 1988; Williamson 1988). Williamson advocates that exchange relationships based on personal trust will survive greater stress and display greater adaptability. Thorelli observes that trust in Oriental cultures may even take the place of contractual arrangements.
Face, Hierarchy and Power Distance
Face is a concept of central importance because of its pervasive influence in interpersonal relations among Chinese. Chinese face can be classified into two types, ‘lian’and ‘mian-zi’. ‘Lian’ represents the confidence of society in the integrity of ego’s moral character, loss of which makes it impossible for him to function properly within the community, while ‘mian-zi’ stands for the kind of prestige that is emphasized, a reputation achieved through getting on in life, through success and ostentation’. When ‘lian’ is lost, the person will feel that he/she can no longer live in the world.
Loss of ‘lian’ within a guanxiwang as a consequence of opportunistic behavior means that peers will no longer have confidence in the persons or firms concerned. As a result, their membership within a ‘guanxiwang’ and in society will be untenable. Therefore, face can be another hostage which minimizes the possibility of opportunistic behavior within a guanxiwang. This is another reason why ‘guanxiwang’ cannot merely survive but can also develop in mainland China and overseas Chinese communities.
‘Mian-zi’ can also be used to form new guanxiwang. One of Confucius’ virtues is to respect authority and the elderly. Someone with authority, often elderly and with a good reputation, can ask favours of others. The person may act as a common agent to start a new exchange relationship. Favours can also be asked between friends. It is an accepted norm that as ‘old friends’ one should give face to the other when favour is requested. Once again, it has been shown that the cultural values from China such as face, hierarchy and power distance are closely related to the creation and development of the business network.
This article was researched and produced by Posicionarte for China Trading Company , 2007
Author Bio:
Eric Castro Mattas, is chief editor of Posicionarte researching and producing articles for China Trading Company. If you need products from China please visit

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