Q&A with Steven P. Feldman
In today’s global economy, multinational companies must do business in China. In his recent interview with The World Financial Review, Steven P. Feldman, author of Trouble in the Middle: American-Chinese Business Relations, Culture, Conflict, and Ethics, discusses the challenges of corruption, the role of the middleman, the importance of ethical norms and the realities of business in China.
What are the major historical and cultural factors that shape Chinese-American business relationships?
I’ll list a few. One is the rule of law. Americans habitually settle conflicts in court. The courts are over-used in the U.S. In China, it’s the opposite: The courts are dominated by the government. One might not get an impartial, fair, or even unambiguous hearing in China. Two, Americans have an individualistic culture, the Chinese a collective culture. The Chinese are plenty individualistic too, as can be seen in their entrepreneurship, but they tend to do things through informal networks. Family relations are dominant in many aspects of Chinese business. Americans use networks too, of course, but to a lesser extent. They rely more on legal code and general norms. Family and “friends” play less of a role. Three, in China the two great institutions are family and government. There is not much in between except for these family-anchored networks. In the U.S., civil society plays a great role. Business between strangers is more accessible. Business between strangers in China is high risk. Unfortunately, the great middle in American society is weakening as excessive individualism and sub-group inflexibility undermine general bonds of trust.
Can you discuss the ethical and cultural assumptions both American and Chinese business cultures bring to business relationships in China?