Contracts in China: How Relationship-Based Cultures View Contractual Obligations

When you do business in China, you may come across a common contractual clause.

This clause stipulates that if issues arise, the contracted parties will discuss them and the contract may potentially be redrafted.

China is a relationship-based culture.

Someone from a rule-based culture, like most Western societies, will likely take issue with this clause.

Contracts are supposed to be black-and-white. They are supposed to be unambiguous. They are supposed to regulate specifically every aspect of the business relationship.

Contracts exist to effectively end the negotiation stage and begin working together.

The clause makes it clear that the contractual agreement may be renegotiated at any time. That means, for instance, when the parties do face a dispute, it might not go to court in the city in which the contract stipulates, but rather in a city court where the established law may work in the other party’s favor.

So, why even negotiate a contract in China? If it’s so ambiguous, what does the contract stand for?

Relationship-based Values vs. Rule-based Values

The relationship-based culture of China values a mutually beneficial and respectful business relationship. The contract is symbolic as such.

The contract signifies that personal relationships exist amongst the parties, therefore future disagreements may be negotiated.

While in Western cultures, a signed contract might mark the end of the negotiation process, in China – and in other relationship-based cultures – it marks the beginning.

You might think you’ve nailed down prices, but even those can be renegotiated days or weeks after signing.

Although those from Western cultures might see such a contract as pointless, its signing is still very important in relationship-based cultures.

In fact, it’s so important, that a contract signed with a Chinese company traditionally involves a luncheon or ceremony when making it official.

As soon as a contract is signed, it signifies that the two parties – especially the leaders – are publicly friends and will be respectful of their business relationship.

Relationships-to-Home Life

Relationship-based societies also view work life and personal life as inseparable to the point that “personal relations” and “business relations” are concepts that don’t exist in these societies.

That’s because company rules are dominated by relationships, particularly if an employee’s in-group is their family or tribe.

This means that if you have a conflict with an employee, it can often extend to a conflict with his/her family, kin, or any other member of his/her in-group.

Next week, we’ll discuss how this situation might manifest, along with other conflicts that crop up in business in relationship-based cultures.

China and the Marriage Buyer’s Market

You might think there are universal norms regarding love and marriage, but that is certainly not the case.

Last week, we discussed Japan and the norm of marrying for economic advantage over love. In neighboring China, this idea is also ingrained.

And parents considering marriage prospects take the matter so seriously that, in Shanghai, Beijing, and other Chinese cities, “Marriage Buyer’s Markets” exist.

People’s Park Marriage Market

In the Marriage Buyer’s Market in Shanghai’s People’s Park, a summary outline of daughters and sons, alike, are presented by their parents on cardboard signs.

Similar to a job fair, other parents in search of proper partners for their children are invited to walk around, perusing the signs, which enumerate the pros of marrying the daughter/son in question and attempting to matchmake the best prospects.

Some selling points you might see on signs:

  • Born in the year of the dog/171cm/12.000 Yuan salary
  • Own apartment/76sqm/188cm

Chinese marriages are still dowry-based, like in India; but unlike India, the dowry is paid not by the bride’s parents, but by the groom’s, and is termed “bride prices.”

As detailed in The Economist:

“Most of China is patrilocal: in theory, at least, a married woman moves into her husband’s home and looks after his parents…The groom’s parents…are expected to pay for the wedding and give money and property to the couple. These bride prices have shot up, bending the country’s society and economy out of shape.”

This makes shopping for the right partner all the more difficult. If the groom’s family is unable to afford the bride prices, then he is not considered a good match. Moreover, with the male-to-female ratio being 105:100 according to a 2017 census, the gender imbalance in China makes the chances of finding a mate even slimmer.

The bride may also have difficulty. In fact, those women of high income and education who haven’t married before the age of 30 are christened with the derogatory term, “leftover women.”

What this all boils down to is that love is not the currency for successful marriages in China; horoscope, property, and income are.

As one Chinese mother summed up the culture’s values and norms regarding marriage:

“First you build your life, and only then also your love.”

Love Happiness vs. Team Happiness

In this way, the West’s focus on love equating a happy life differs from the Chinese focus on economic teamwork equating the same.

The perfect Chinese mate is someone to help you stay afloat financially, raise a family, and succeed mutually in the balancing act of life…and, perhaps most importantly, not be considered “leftover.”

And searching out this perfect mate is not a private concern; it’s a familial affair.

As Wlada Kolosowa, a journalist for the German magazine, Spiegel, sums up:

“In the Western world, love is a matter between two individuals; in China, it is a union between two families.”

Next week, we’ll talk about two-generation families versus extended-generation families. Stay tuned.