Chinese millennial business professionals and their influence on Chinese business protocol applied to intercultural interactions with Western business professionals

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Chinese millennial business professionals and their influence on

Chinese business protocol applied to intercultural interactions with

Western business professionals

Written by: Jeffrey van der Meule

Email: Jeffrey_v_d_meule@hotmail.com

Phone: +31623989211

Student number: 11199229

Supervisor: Leo Douw

Second reader: Shan Shan Lan

Third reader: Laurens Bakker

Program: Contemporary Asian Studies

Date of submission: 09 October 2017

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Acknowledgement

This thesis, written as graduation piece for obtaining my Master of Contemporary Asian Studies, is the end product of a process in which I received great help from others. First I would like to thank professor Leo Douw for his unlimited patience with me and all the feedback he supplied me with. Without him I would not have been able to deliver this thesis. I would also like to thank all my respondents that took the trouble of filling in the questionnaire and the ones that were willing to proofread this thesis, Kim den Braber, Hu Jing and Daan Willighagen. Special thanks goes to all my informants. Without their valuable knowledge that they were willing to share with me I could not have achieved this feat. I would like to extend a final word of thanks to my friend, from Shanghai, that introduced me to the local Chinese business world, invited me to work in his office, and took me on business trips with him. Without him I would not have been able to make the numerous observations that I have used in this work.

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List of abbreviations

BPS Business Protocol Survey IDV Individualism (index)

IVR Indulgence versus restraint (index)

LTO Long-term orientation (index)

MAS Masculinity (index)

PDI Power distance index

UAI Uncertainty avoidance index

VSM2013 Values Survey Module 2013

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1. Introduction

1.1 How to thank someone for tea in China

The dishes arrived one by one and were placed on the lazy suzan1. Each time another dish arrived, the guests and the host told each other to eat, to try, and especially not to hold back. The lunch must have been halfway when I noticed a peculiar habit of the ‘older’ guests in which the host also joined. My friend, an amiable 48-year-old investor, hosted the lunch and picked up the teapot, and poured some tea into the cup of one of the guests. The guest, an official from the local tax office, about 50 years old, tapped the tabletop. He tapped the table top with his knuckles of the index- and middle finger near the cup during the time my friend poured him tea while continued speaking with another guest. The wife of the official, about the same age as her husband, was invited as well for lunch. She carried a colorful Louis Vuitton bag around like it was a little child and expressively placed the bag on a seat next to her at the beginning of the lunch. She also started tapping the table, the same way as her husband, the moment my friend poured some tea into her cup. This was also the case for the 45-year-old real estate agent, that was hired by my friend to sell some apartments he recently renovated. My friend tapped the table top with his knuckles as well when the tax advisor returned the favor and poured him some tea. The real estate agent had taken a young man, younger than 30, along for the lunch that was greeted expressively by my friend as shuaige (handsome one) before the lunch began. I guessed that he was an apprentice. However, when my friend poured him tea he did not, like the others , tap the tabletop. What was going on here? What did this tapping mean? Why did everybody tap the tabletop and this younger ‘shuaige’ did not?

After the lunch, when the guests of my friend were sent off at the elevator of the high-rise office block, I asked my friend what the finger tapping meant. He told me the following story. Once the emperor was traveling under disguise to observe his subordinates in the country, and his advisers and bodyguards were accompanying him. They stopped to have a rest in a teahouse, and the emperor tried pouring tea for one of his servants. This servant wanted to thank the emperor but the usual way of thanking, the customary bow with

1_{A revolving tray that is placed in the middle of a (often round) table that allows the ones sitting at} the table revolve multiple dishes at once without having to get up

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kneeling and touching the ground with one’s forehead, would jeopardize the disguise of the emperor. Instead, he knocked on the desk of the table with the knuckles of his index and middle finger to show his gratitude (resembling this customary bow).

The gesture of tapping the table with middle- and index finger meant, in other words, thanks. “But why then did the young real estate agent not tap the table just like his older patron did,” I asked my friend. Then my friend started to rant about how impolite and ill-mannered this young generation of ‘new’ business professionals was and that this young real estate agent was the perfect example of that. I asked my friend about how he thought of this young real estate agent and his manners. My friend replied that he thought lower of him and regarded him less professional than the others that were present for lunch.

1.2 Relevance of this research

Later, in some interviews with Chinese business professionals, I learned that these little gestures, or the neglect of them, can be regarded as minor mistakes. These minor mistakes possibly lead to deals being called off or relationships that become hard to manage. From the interviews with Chinese business professionals, I learned that a single mistake is not so problematic, especially for Westerners doing business with Chinese, since most Chinese are forgiving to Westerners. However, a string of (minor) mistakes might lead to problems. Examples of cross border Western-Chinese business deals gone wrong, because of insufficient understanding of Chinese business habits, are manifold, and also include big Western brands like Mattel, eBay and even Google (Carlson, 2013). Carlson quotes Mahoney, “It's a lack of understanding of the legal and cultural environment that leads to most failures,’ says Shawn Mahoney, managing director of the EP China consulting group. ‘The only difference between success and failure in my experience is that people who are successful are more willing to talk and learn about how things work on the ground (Carlson, 2013).” ‘On the ground’ in this context means actual behavior and practice that can be observed.

In short, it is important to understand Chinese business habits, and all that it entails, as a Westerner when doing business in China. As Sabath explains, “no matter where you go in the world or what you’re doing, there is always a ‘proper’ way to do things. Becoming knowledgeable in every country’s ‘silent language’ of etiquette is therefore essential for developing good business relationships overseas (Sabath, 2002, p. 1).”

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1.3 Business protocol

I define the ‘proper’ way of “doing things,” as Sabath describes it, as business protocol. I join Cortes in her definition of business protocol; it is “the integrated set of unwritten codes of business conduct governing extra-organizational customer relations interactions (Cortes, 2000, p. 140).”

For this research, I subdivided business protocol into various fields: personal relationships, communication, institutional setting, and visions. The field ‘personal relationships’ is about guanxi (networking), gift giving, entertaining, et cetera to construct and maintain a professional relationship. Communication is another important factor and is displayed in direct or indirect communication, the way people dress, et cetera. Institutional setting is about established protocol and/or traditions. Hierarchy and business cards are good examples of certain established traditions, thus institutional setting. Visions are the underlying construct in which behavior is set, changing visions implies changing behavior.

In conclusion, when doing business with Chinese, as a Westerner, it is important to understand that the ‘little’ things matter and that therefore it is useful to have knowledge of Chinese business protocol. However, I have observed that the generational differences make the understanding of business protocol more difficult, like the example described earlier about tapping one’s knuckles on the table. In this thesis, I will research this generational difference regarding Chinese business protocol towards Westerners. I will investigate the group of younger Chinese born between 1980 and 2000 (millennials) and will compare this group with the generations born before 1980 (older generations). I will discuss what the differences between these groups are, based on Chinese business protocol, and where these differences originate.

1.4 Main question and sub-questions

The main question for this research is: “How is Chinese business protocol, towards Westerners, different when comparing Chinese millennials with older generations of business professionals, and where is this difference arising from?”

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To be able to answer this main question, I divided the main research question into two sub-questions. The first sub-question will answer whether there are any differences in Chinese business protocol when comparing Chinese millennials vis-a-vis older Chinese generations doing business with Westerners, and what these changes exactly entail. The sub-question is: “What are the differences in Chinese business protocol when comparing Chinese millennials vis-à-vis older generations of business professionals, doing business with Westerners?”

My findings sometimes indicate a preference of millennials towards a more ‘Westernized’ Chinese business protocol when they do business with Westerners. However, preferences and practice sometimes differ, seemingly under the influence of the institutional setting. Older generations sometimes align their actual business protocol behavior with the preferences of millennials, if institutional setting allows, but seem to be plagued by a negative stereotype that they are only able to do business the ‘old fashioned’ way.

The second sub-question will investigate where the differences between millennials and older generations of Chinese, and their different approach of Chinese business protocol, are coming from. The sub-question is: “Where do the differences between Chinese millennials and older business professionals regarding Chinese business protocol towards Westerners originate?”

Regarding the second sub-question I have found that generational differences can be observed when Chinese business professionals are doing business with Westerners. These observations show that certain factors are significant contributors to different behavior. These factors are education or work experience abroad, a highly valued skill set, geographical area (North comparing South), descent (well off or poor), and whether the business professional concerned lives in a well-developed city or a developing city in the opinion of the Chinese government.

1.5 Research methodology and setting

For my research, I combined two theories. Generational theory as proposed by Strauss and Howe (Strauss & Howe, 1997) and Hofstede’s theory (Hofstede sr., Hofstede jr., & Minkov, 2010). With Strauss and Howe’s generational theory I would be able to make a functional distinction between groups (generations) and compare these groups with each other

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regarding their business protocol behavior when doing business with Westerners. With Hofstede’s theory, I aspired to unravel the cause of changing business protocol behavior.

1.5.1 Generational theory

Strauss and Howe define a generation as, “the aggregate of all people born over roughly the span of a phase of life who share a common location in history (Strauss & Howe, 1997, p. 16).” This definition is based upon the claim of Strauss and Howe that history repeats itself roughly every 80 to 100 years in 4 “turnings.” Every turning represents a generation experiencing certain events that fit in the period after the turning, like the Kennedy assassination or Pearl Harbor in the case of the USA. These events are so influential according to Strauss and Howe that this translates into different behavior, which in its turn creates history. Because of this cyclical pattern of roughly 20 years in which generations create history and history creates generations, each 20 years or so a new generation is born (Strauss & Howe, 1997).

Generations show different behavior “that seems to determine how and when we participate as individuals in social change - or social upheaval (Strauss & Howe, 1991, p. 8).” In my research I am looking at this social change through behavior related to business, otherwise defined as business protocol. In theory, certain generations should show some dominant (business protocol) behavior that can be described as typical for a generation. Strauss and Howe claim that generation’s collective mind sets are powerful enough to influence the individual mindset whether one likes it or not. If one does not agree one will be battling this mindset for its lifetime (Strauss & Howe, 1991).

Strauss and Howe argue that stress in cross-generational relationships start appearing “when people of different ages expect others to behave in ways their peer personalities won’t allow (Strauss & Howe, 1991, p. 13).” When living in Shanghai in 2013, I noticed that the newspapers were filled with columns and articles that described how this new generation of “little emperors” behaves differently. This different behavior was often described as wrong. Examples include job hopping, spending money on things parents did not approve of, et cetera. These “little emperors” are usually associated with the generation born between 1980 and 2000. This generation is also being referred to as balinghou and jiulinghou, which literally means after eighties and after nineties (Kan, 2013; Liu, 2015;

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Sabet, 2011). This concept of referring to the decade in which a generation was born originated in Time magazine and was quickly adopted by Chinese literature (Rosen, 2009).

I will stay true to the definition of generations presented by Strauss and Howe regarding the millennial generation. This generation consists of a cohort born in two decades time in a certain location (China). I will group the balinghou and jiulinghou together as one generation and will refer to these as millennials, as Strauss and Howe suggest and coined the term for this generation born between 1980 and 2000 (Sharf, 2014; Balda & Mora, 2001). In other literature, this group of Chinese millennials is also referred to as ‘Generation Y’, ‘little emperors’ or the ‘me generation’ (O'hara-Devereaux, 2013; Balda & Mora, 2001).

Most literature written by Strauss and Howe focuses on the USA but are to some degree applicable to China, especially after the opening up of the economy in 1978. The digital revolution and participation in the World Trade Organization are good examples of events that affected generations worldwide, including the Chinese (millennial) generation(s). However, the history influencing generations in China is different compared to the USA, especially before the opening up. Since China was more or less sealed off from the rest of the world, the generations before the opening up do not comprise two decades, according to O’hara-Devereaux. Instead she, probably inspired by Strauss and Howe, linked generations to major events in Chinese history and proposes generations that comprise only one decade. For my research, this is not essential since the focus will be on the millennials. However, I will be comparing the Chinese millennial generations with three older Chinese generations which I clustered and defined in this piece as the older generations. These older generations consist of the ‘Cultural Revolution generation’ born between 1946 and 1955, the ‘recovery generation’ born between 1965 and 1967, and the ‘sandwich generation’ born between 1968 and 1979 (O'hara-Devereaux, 2013).

During my research I have found that generational differences can be clearly distinguished. However it seems that certain behavior aligns with that of the older generations over time. For example, if millennials grow older they establish certain networks and develop different opinions on hierarchy; the behavior related to these phenomena changes as well and aligns more with the current older generations.

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The reason for applying generational theory to my research was to create a functional distinction between generations that would allow me to compare certain groups in Chinese history with each other and point out differences in business protocol behavior that would change the way Chinese do business with Westerners.

1.5.2 Hofstede’s dimensions

Hofstede ‘measures’ national culture in six different indexes, otherwise referred to as dimensions. The six dimensions are power distance index (PDI), individualism index (IDV), masculinity index (MAS), uncertainty avoidance index (UAI), long-term orientation index (LTO), and indulgence versus restraint index (IVR) (Hofstede sr. & Minkov, 2013).

Each dimension is expressed in a number between 0 and 100. The number indicates a vision of a society (or group of respondents) when confronted with a certain ‘situation’. Based on the vision, certain behavior follows in order to cope with the situation. The end of each scale, 0 or 100, represents extreme visions and thus extreme behavior. For example, the PDI consists of the two ends: high power distance (100) and low power distance (0). It measures the extent (the vision) to which a society accepts and expects that power is unequally distributed (Tayeb, 2015). The extremes translate into certain behavior. In low power distance societies, subordinates expect that they are consulted by their superiors, whereas in high power distance societies subordinates expect directions from their superiors and do not talk unless requested by their superiors (Hofstede jr., Pedersen, & Hofstede sr., 2002). Each dimension, relevant to this research, will be thoroughly discussed in the corresponding chapters. For now, a short overview of the visions related to each dimension is sufficient.

The IDV consists of two ends, which are referred to as individualism versus collectivism. It measures to what extent society comprises of separate individuals towards groups with a collectivist consensus; the existence of tight frameworks with in- and out-groups. The MAS consists of masculinity versus femininity. It measures to what extent societies expect tough or tender behavior. The UAI consists of high versus low uncertainty avoidance. It measures the extent to which a society is comfortable with uncertainty and ambiguity. The LTO consists of long-term orientation versus short-term orientation. It measures in which time frame a society thinks. The IVR consists of indulgence versus restraint. It measures the extent to which a society allows freedom to enjoy life and have fun (Hofstede sr., Hofstede jr., & Minkov, 2010).

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The score of the dimensions is based on feelings and opinions of individuals and in some cases ‘hard’ data like average household savings. These variables correlate worldwide with a particular dimension, which subsequently represents certain behavior. For example, short-term orientation, one extreme of the LTO, is closely correlated with being proud of one’s nation and therefore protectionist behavior regarding traditions, whereas long-term orientation (the other extreme of the LTO) is correlated with average household savings (Hofstede sr., 2015). However, to make his dimensions easily applicable for others wanting to measure them, Hofstede created a questionnaire, of which the Values Survey Module 2013 is the latest. From here on I will abbreviate this instrument as VSM2013 (Hofstede sr. & Minkov, 2013). The VSM2013 consists of a multiple-choice questionnaire consisting of 30 questions. There are 24 questions about preferred behavior in certain situations, thus 4 for each dimension, and 6 demographic questions (Hofstede sr. & Minkov, 2013). Besides the questionnaire a manual is supplied with the VSM2013 as well, to calculate the scores for each dimension (Hofstede sr. & Minkov, 2013).

One important reason for selecting Hofstede’s dimensions as model for this research is the size of the study. It is the biggest study in cultural values ever set up and arguably the most elaborate (Kwon, 2012). Secondly, it is well known to many people, including business professionals. Thirdly, the dimensions of Hofstede also apply to the Asian society as shown by Bond and Hofstede (Minkov & Hofstede sr., 2011).

1.6 Research methods

Combining Strauss and Howe’s generation theory with business protocol enabled me to distinguish various generations from each other when researching the use of business protocol by these various generations. Hofstede’s dimensions were embedded in the research in the hope to find underlying causes (different visions) of different behavior regarding the business protocol. Hofstede’s theory is suitable for this research because it acknowledges generational differences as proposed by Strauss and Howe. Hofstede writes the following “every person carries within him- or herself patterns of thinking, feeling, and

potential acting that were learned throughout the person’s lifetime. Much of it was acquired in early childhood because at that time a person is most susceptible to learning and assimilating (Hofstede sr., Hofstede jr., & Minkov, 2010, p. 4)”. In other words, a different

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score on a particular dimension and different associated behavior regarding business protocol within that dimension is created by experiences, mainly in early childhood.

1.6.1 Interviews

Interviews (qualitative data) are the primary source for this thesis. The topic list that I used to guide the interview in a certain direction, is based on desk research of business protocol. I therefore focused on business protocol and practical business situations during the interviews but I left my informants to guide the interviews to a maximum extent. I interviewed 5 Chinese older generation business professionals and 13 millennial business professionals in order to research business protocol from their perspective. I also interviewed 6 Westerners that were based in China, most with multiple years of experience, to verify certain findings from the interviews but also to uncover any ‘blind spots’ in business protocol that Chinese nationals might have since they might display certain behavior they are unaware of. I used above described interviews as primary source because other methods yielded less results, statistical irrelevant results or just not enough statistical data.

Another 13 interviews were held with the older and millennial generation in order to research the field in general and get acquainted with different visions of generations. These interviews focused on life style instead of business protocol. The latter will hardly be discussed in this research.

1.6.2 Questionnaire VSM2013

Measuring the dimensions of Hofstede (quantitative) was done with the help of a questionnaire that I had build in Surveymonkey. I constructed this questionnaire with the help of the earlier described VSM 2013. I used the 24 questions designed for ‘scoring’ the dimensions, which were already conveniently translated into Mandarin (Hofstede sr. & Minkov, 2013), and deleted the six demographic questions to add some other demographic questions of my own to the questionnaire. From this moment on, when discussing VSM2013, I will be referring to these 24 questions as described above.

1.6.3 Questionnaire business protocol

Besides the measuring of the dimensions, I also added quantitative questions regarding business protocol to the questionnaire. I included various questions but I will mainly discuss

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the scores which generations assigned to certain business protocol elements in this thesis. When referring to the Business Protocol Survey, from here on abbreviated as BPS, I target the questions that were added on top of the 24 questions that I used from the Values Survey Module 2013.

1.6.4 The questionnaire

It might look as if there were two questionnaires, but this is in fact not the case. VSM2013 and BPS were all part of one questionnaire. The target group however was different. Whereas any Chinese national could fill out the VSM2013, the BPS was only meant to be filled out by Chinese business professionals. A filter question after the VSM2013 made sure that only Chinese business professionals doing business with Westerners were able to fill in the BPS. For the VSM2013 it should not have mattered where the respondent came from since this instrument measures national culture. For the BPS it mattered where respondents came from. Nonetheless, since Chinese business professionals who do business with Westerners are highly mobile, I expected to find a consistent image regarding the behavior that generations displayed.

The VSM2013 was already translated into Mandarin whereas the BPS still had to be translated from English to Mandarin. Multiple native speakers carried out the translation of the BPS and the complete questionnaire was then tested with 3 native Chinese. Minor changes were made to the questionnaire, including the VSM2013, to prevent any possible confusion. In total, the questionnaire comprised of 25 questions. I streamlined the VSM2013 in which I clustered a considerable amount of the 24 questions. For the (Mandarin) questionnaire conducted see attachment 2. For the original (English) VSM2013 see attachment 3. For the translated version of the original VSM2013, see attachment 4. For the (English) questions of the BPS, see attachment 5.

To acquire respondents for the questionnaire I activated my network in Shanghai and to a lesser extent Beijing. I mainly used Wechat (comparable to Whatsapp) to activate my network and asked them to forward my message in which I described shortly what the purpose of the research was. With some follow up within my network, I eventually gathered 150 entries via Surveymonkey of which 133 were completed. All 133 of these entries finished the VSM2013. The BPS resulted in 58 complete entries.

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Initially, I hoped to find 10 older generation informants and at least 50 older generation respondents for my questionnaire with snowball sampling and activating my network. These goals turned out to be too ambitious and were therefore not achieved. My analysis on the struggle of obtaining enough older generation respondents and informants is described in paragraph 1.7. Not achieving above-described goals led to some measures. Only 24 older generation respondents versus 109 millennials completed the questionnaire. To create a sufficient sized group of older generation respondents I added the millennials born in the year 1980 to the older group, bringing the group size up to 29. All scores given in this thesis for older generations and the statistical analysis is based on this group described above. Another method for compensating the shortage of older business professional informants was used. I asked my millennial informants to describe how older business professionals do business vis-à-vis themselves. This led to some interesting results.

1.6.5 Observations

I was allowed to work in the office of a Chinese friend of mine for my research and could observe him doing business with Chinese and Western business professionals.

By means of observation, certain findings which were already obtained from literature and research could be verified. Moreover, these observations made it possible to ask questions on the spot, which resulted in a more complete and comprehensive picture as to my entire research.

As mentioned before, Hofstede’s theory forms the backbone and inspiration of my research, in each chapter I will discuss a particular relevant dimension. However, MAS and IVR will not be discussed since these dimensions did, in my opinion, not represent any of my findings, on which I will elaborate in attachment 6. First, I will conclude this chapter with my fieldwork experience. After this, I will discuss all relevant dimensions in following order: LTO (Ch. 2), IDV (Ch. 3), UAI (Ch. 4), and PDI (Ch. 5). In each of these chapters, I will elaborate on what behavior in business protocol is typical for each end of the dimension, what is described in literature as to business protocol in relation with the dimension, and what behavior from business protocol I have found in interviews and observations. In the final chapter (Ch. 6), I will conclude the research and discuss the possibilities for generalization of this research.

When discussing the literature with regard to business protocol, I have to point out that English literature seems to be mainly focused on American or North European business

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professionals. I will be discussing this literature extensively in this piece and I will write from a North European and American point of view. If I refer to the West, I am discussing North European and North-American business practices.

1.7 Into the field

I conducted fieldwork, to answer my main question, in January, March, and April 2017 in Shanghai. I selected Shanghai as my research base since Shanghai is one of China’s most advanced cities in business (Jumpstart, 2016). Besides this, Shanghai has been in close contact with foreigners since the Qing era with the exception during the communist establishment of the People’s Republic of China and the Cultural Revolution (Spence, 2013; Henriot, 2010). Nowadays Shanghai counts roughly 150.000 registered foreigners, although this number might be much higher according to worldpopulationreview.com (Flannery, 2015; World population review, 2016). Zhang and Wu concluded that exchange among Chinese and foreigners leads to different cultural values that affect how Chinese do business (Zhang & Wu, 2014). Shanghai conducted and still carries out a lot of business with foreigners. Therefore, I expected to see a hybridized business protocol. I expected, and still expect as will be elaborated further below, this hybridized business protocol to spread over China. A final reason for choosing Shanghai as my research base had to do with the fact that I lived there for one year, during which I established a network that might help me get informants and respondents.

During my fieldwork, I rented a room near Hailun Road metro station from parents of a friend of mine. His parents’ Chinese hospitality was great, though sometimes a bit suffocating. Nevertheless, I am thankful for their hospitality since it got me up and running within a week. After a couple of weeks, a friend of mine contacted me and invited me to use his office. Although the commute was 45 minutes, I gladly accepted his offer. This friend worked in investment and gave me the opportunity to observe how he did business, networked, visited the mayor of cities and gave presentations.

The population I targeted for my interviews and observations had to be residents of Shanghai, although not necessarily with a Shanghainese household registration -which entitles a resident of Shangai to local welfare for example-, this means that domestic migrants were part of the population as well. All of them had to be white collar since only white collar employees deal with Westerners in business. For the millennials I targeted a

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population born between 1980 and 2000, and the target population for the older generations comprised of business professionals born before 1980. Interviewing Westerners was also part of the research plan, for which I mainly targeted Western business professionals who worked in China for more than five years.

For the questionnaire, I targeted Chinese nationals born before the year 2000. Gender, profession, education or social descent did not matter to be able to participate in the questionnaire. This resulted in many respondents outside of Shanghai. With respect to the BPS, I acquired data outside of Shanghai as well.

Most informants and respondents were acquired using the so called snowball method. Since I lived in Shanghai for about a year, I had a small network present that could help me acquire respondents and informants mainly through Wechat. I am well aware that this could possibly influence my results. However, my network in Shanghai is very diverse, so I expected this would not lead to any biased results. Unfortunately, a problem that occurred after a short time in this research is that older generations of business professionals for interviews or respondents for the questionnaire were hard to find. I did not manage to find an explanatory reason for the aforementioned problem. However, I noticed that the millennials were more than willing to fill in the questionnaire and to spread my questionnaire among their peers. Older generations, conversely, did not become involved in this process although I asked many of my millennial respondents to ask their parents to fill in the questionnaire. In conclusion, I think that this method did not succeed because I lacked guanxi (a personal connection). As I would later find out during multiple interviews a deep distrust exists among Chinese (particularly among older generations) and therefore guanxi is of utmost importance when working with the older generations. I have also observed that older generations are usually more reserved than millennials. This became very clear to me when I tried to acquire some older informants in the park. My friend translated for me and explained to the older (potential) informants that I wanted to have a short chat with them about their opinions on the millennial generation. We tried several elders but all of them rejected. Some said that the topic was too sensitive; others were just too busy with eating ice cream and chatting with each other, thereby indirectly showing they were unwilling to contribute to my research.

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Another problem with the older generation business professional informants was that they generally were very occupied. Instead of being able to ask all the questions I prepared, I had to shorten the interview because they gave me only an hour. I usually stretched this limit, sometimes up to 45 minutes extra but in most cases the older informant ended the interview in a subtle way.

My position as a Westerner was in some cases helpful, and in some cases this made matters more complicated. Especially when requesting interviews among Westerners in the expat community it was helpful to be Dutch since there is a Dutch community present. However, it also made matters more complicated since I am not fluent in Mandarin Chinese. So, in some cases, I relied on an interpreter. Therefore, in some interviews I missed a lot of context and interviews lasted too long which cut my list of topics short. I had to rely on interpreters multiple times during my research. In all of these situations, the informants were part of the older generation. They usually granted me merely an hour, but effectively being able to speak about 40 minutes while the interpreter used the rest of the time. Although being a Westerner did not always make it easy, I was able to observe how Chinese business professionals treat Westerners, since I was the Western subject of the discussed business protocol as used in some cases.

1.8 Ethics

All the names of the informants mentioned in this thesis are made anonymous to protect their identity. The questionnaire results were anonymous from the beginning.

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2. Long term orientation index (LTO)

The long term orientation (index), sometimes referred to as the long term orientation dimension, abbreviated as LTO, is one of the dimensions that enabled me to group particular behavior regarding business protocol along the dimensions of Hofstede’s model.

The LTO is comprised of two extremes, long-term orientation and short-term orientation. “Long term orientation stands for the fostering of pragmatic virtues orientated towards future rewards, in particular perseverance, thrift, and adapting to changing circumstances (Hofstede sr., Hofstede jr., & Minkov, 2010, p. 521).” Whereas “short term orientation stands for the fostering of virtues related to the past and present, such as national pride, respect for tradition, preservation of face, and fulfilling social obligations (Hofstede sr., Hofstede jr., & Minkov, 2010, p. 521).”

Taking the above mentioned definitions and business protocol into consideration I will discuss the business protocol elements in the following order:

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The concept of face: in long term oriented societies losing face to achieve one’s goal is permissible while in short term oriented societies saving face is of the utmost importance (Hofstede sr., Hofstede jr., & Minkov, 2010). My findings indicate that millennials preferences lean towards the long-term orientation.

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Traditions: according to Hofstede, societies with a short term orientation defend their traditions, while in long term oriented societies traditions are adapted to modern context (Hofstede sr., Hofstede jr., & Minkov, 2010). I argue that millennials show long-term preferences for the business protocol elements business cards and business attire, and try to adept these traditions.

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Reciprocity: Hofstede describes this as meeting social demands. Social demands should be met no matter the costs in short term oriented societies whereas in long term societies this applies to a lesser extent (Hofstede jr., Pedersen, & Hofstede sr., 2002)

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Gift giving: millennials view gift giving differently compared to the older generations. Sometimes this leads to different behavior. However, sometimes they are held back. It also seems that some older generation

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business professionals are using this element in a different way compared to their peers.

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Entertainment: in search of efficiency some forms of entertainment are changing under the influence of millennial preferences. Some other changes regarding entertainment are less clear.

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Hongbao; is an element not preferred by millennials but in some cases still used. Value creation seems to be a decisive factor, for millennials and older generations, in deciding whether this method is required or not.

To conclude this chapter I will discuss the significance of the findings and relate the overall LTO-score to my findings.

2.1 The concept of face

The concept of face, in pinyin miànzi, is applicable to the West as well. Seligman compares face with the Western notion of a “persons reputation, dignity, and prestige (Seligman, 1999, p. 198).”However, in China the manifestation of face is different compared to Western countries (Wang, Wang, Ruona, & Rojewski, 2005). Wang et al. describe face as “an individual’s public image, gained by performing one or more specific social roles that are well recognized by others (Wang, Mohammed, & Kau, 2007, p. 215).”

In China one can lose face and even give face. Losing face can be related to the action of another party. For example, a subordinate points out a mistake of the manager in front of the whole team, while the manager is present. This form of directness can be related to losing face. Declining an invitation with a brief no is perceived as an attack on the inviting parties face. Losing face can also occur, without any other party involved, by losing self-control. With getting angry, emotional or even severely drunk, one can make himself lose face. People can give face to another by showing how they envy the other person, how they look up to the other party. Complimenting in general and the use of correct business titles when communicating with the other party is often linked to giving face (Seligman, 1999).

Hofstede et al. describe that the characteristic of saving face is related to short term orientated societies, whereas in long term orientated societies, losing face to achieve one’s goal is acceptable (Hofstede sr., Hofstede jr., & Minkov, 2010). From the interviews and observations, I concluded that the preferences of millennials indicate that they appoint less significance to face than the older generations. To verify this qualitative finding I asked my

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respondents in the questionnaire to grade the importance of face. Whereas millennials scored the importance of face with a 6.9 (scale 1:10), the older generations assigned a score of 7.3 to the importance of face. These scores seem to verify my conclusion.

Almost all of my informants (Western and Chinese) noticed the difference between older generations and millennials in perceiving face. When I asked my informants how these differences were noticed, they explained that the directness of millennials denotes that they care less about (losing) face.

Michael, a Chinese 33-year-old CEO, for example, explained me that he clearly notices difference when doing business with a manufacturer: if he asks a manufacturer to produce a certain quantity of products for a particular price. If the price is not right in the eyes of the manufacturer, the young manufacturer usually tells him that it is impossible to produce for that price and might even recommend another factory that can deliver for that price. The older generation manufacturer will avoid to decline the request, as was done in the previous example, but he will not say yes to the offer either. Michael told me, “usually you don’t hear anything so after three weeks you pick up the phone. The usual answer that you then get is that they are busy or that they are still trying to work it out.” Situations like that will not occur with younger business professionals according to Michael. Although he added that it is usually the white-collar, Shanghai-based worker that cares less about face and is more direct. Emma, a Chinese 35-year-old consultant, tells me that she heard some millennials say that you cannot eat mianzi. According to Emma (who is a high educated white collar worker herself) this saying implies that if you cannot earn any money with it, you should not bother. Asking whether she thinks the same about mianzi she had to admit she did.

Michael2_{makes a distinction between the young educated, white-collar millennials based in}

Shanghai and other millennials. Not only Michael makes this distinction, but also John, a Chinese 49 year-old managing partner, told me that this group of high-educated white-collar millennials in particular does care less about face. John added that other factors also influence whether a person cares about face or not. John gave me an example of one of his well-off female employees. She dressed inappropriately, hence John told her to wear more decent clothing. The employee did not take it seriously and asked if John thought she was

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not sexy. However, another employee (from the countryside, not well-off), could not handle any critique. If any feedback was given, even when expressed gently, she became insecure and silent, John told me. Also William, a European 46-year-old consultant, notices that millennials usually become silent after loss of face.

Face seems to play a less significant role for the high-educated white-collar millennials compared to older generations. Especially keeping face in mind when it comes to directness seems to play less of a role with millennials. Although a clear trend can be distinguished (face is becoming less important), there is still a considerable group of millennials that do care about face.

2.2 Traditions: business cards & business attire

According to Hofstede et al. short term oriented societies have great respect for traditions, while long-term orientated societies have a tendency to think traditions can be adapted to modern context (Hofstede sr., Hofstede jr., & Minkov, 2010). When it comes to the tradition of business cards and business attire we can see a clear shift in preferences around these business protocol elements. Whereas millennials adapt these traditions, older generation business professionals stay true to these traditions.

There is a big difference between older generations and millennials when it comes to business cards. Millennials see business cards more as branding or related to identity than an actual medium of information exchange. Related to business attire, millennials prefer to keep it casual or business casual compared to the older generations that prefer formal attire.

Business cards

Asking my respondents to grade the importance of business cards on a scale from 1 to 10, millennials scored this business protocol element with a 7.3 while older generations scored ‘business cards’ with a 6.6. Generational differences with respect to the valuation of importance of business cards can be clearly observed.

I did not expect above-mentioned scores, because from my qualitative findings I concluded that business cards are more important for older generation business professionals than for millennials. All my older Chinese informants carried their business cards with them and

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handed one to me when I gave them my business card in the first meeting. Millennials however, began apologizing that they did not bring any business cards with them, when I gave them mine. Based on this I would conclude that older generations tend to carry their business cards at all times while millennials only carry their business cards with them when they expect to use them. I have observed that the older generation business professionals seem to study the business card and usually make a comment based on my title (giving face) whereas some millennials not even looked at my business card.

Differences indicating that older generations might value business cards more than millennials do not stop there. As John explains me, in China, there is a standard ‘ceremonial’ practice when it comes to exchanging business cards. However, I have noticed this is only done by the older generation. Millennials tend to give their business card with one hand.

Analyzing the literature, this seems unconventional in China (Seligman, 1999; Sabath, 2002). However, Richard, one of my Western informants, noticed the same and explained that usually the Chinese millennial who studied abroad hands over the business card in the “Western way”, with one hand. Also, the “fake nice comments” as Richard describes it, are absent. He told me that millennials might take a look at your business card but they will usually not compliment on how important you are, while older Chinese generations will do this for sure. Other differences indicating that millennials do not seem to care much about business cards is that millennials sometimes keep the card in their hands instead of putting it on the corner of the table, as literature describes. I have even seen some millennials who played with the cards in their hands, bending them and handing them over to coworkers of lower rank, although this behavior is discouraged in literature (Sabath, 2002).

Although above-described differences seemingly indicate that business cards are not that important for millennials, it might only indicate a shift in the tradition of handling the business cards and not so much in how generations value the importance of it. When millennials were not able to hand me their business card because they did not have one available at that moment, they sincerely apologized when I gave them mine. It also seemed like a very uncomfortable moment for them.

Talking about business cards with millennials showed that they value business cards, hence the relatively high score compared to older generations on this business protocol element. Almost all of my millennial informants indicated that not taking a business card to a meeting

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was bad news for the other party, usually they apologized again during this conversation for not taking any business card when meeting me. Millennials also showed me that they carefully considered what text to use on the business card, usually resulting in a business card with less text compared to older generations. Some millennials also consider the shape of the card and the material that it is made of. Millennials, when they gave me their business card, tended to have different shapes, sizes, and materials for the business card. I have learned that these unconventional designs are there to stand out, but it is also closely related to identity creation. For most of the millennials the business card was not so much about information exchange, but merely a marketing tool.

The information exchange, most millennials indicated, is based on Wechat (comparable with Whatsapp). By ‘scanning’ each other on Wechat the information exchange is completed and a business card becomes obsolete. This is the most cited reason that they did not use business cards after the ‘ceremonial’ exchange in China (in some cases millennials told me that an exchange of business cards was not even conducted). Although older generations also use the functionality on Wechat, as above described, the exchange of business cards still takes place in a ceremonial way and the cards themselves are conventional. All findings indicate that business cards are as important as ever, also for millennials, but that the traditions relating to business cards have changed.

Business cards seem to be as important as ever but traditions with respect to the business cards are changing under the influence of millennials. Less fanfare around the ceremonial exchange, different materials and a complete new perception of the meaning of the business card and the business card as a marketing tool instead of a medium for information exchange, all indicate that millennials are influencing the phenomenon of the business card. Whatever this might mean for the future, almost all of my informants (Western and Chinese) cautioned me to take a business card to an initial meeting at all times; coming without one is always bad news for the other party. Therefore business cards seem to be as important as ever.

Business attire

In the questionnaire asking how important dressing formal is when doing business with Westerners, I found a small difference. Millennials scored, on a scale from 1 to 10, a 7.6

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while the older generation scored a 7.5. These scores are surprising in the light of my interviews, which indicated millennials would score higher.

The surprising scores can most likely be explained in view of the fact that older generations seem to think in black and white when it comes to clothing: clothing is either formal or informal. The concept of business casual, although I have observed some older generation business professionals wearing business casual, is not well established among older generations. As Sabath explains, “what Westerners consider business casual attire should not be worn, because this type of dress is not common at Chinese business gathering (Sabath, 2002, p. 34).”Interesting is the fact that almost all of my informants stated that business attire is not that important as compared to the West, but they nevertheless all had very outspoken opinions regarding (the way of) clothing.

The scores from the questionnaire that are mentioned above were not expected because older generations seem to dress more formal than millennials. Older generations have a pretty singular opinion on the business attire of millennials: it is too casual. John3_gave me an example of one of these moments in which he confronted one of his employees. In his opinion, this employee was dressed too casual, “she dressed like a hooker, I am serious, I should not use this word but she was dressed in something like underwear. One day she just came to the office like that.” Also James, a Chinese 48-year-old investor, complained how casual millennials tend to dress. He told me, they are going to the office dressed up in outfits for watching TV on the sofa, he is afraid that they do not only go to the office like that but that they are meeting clients like that as well. His fear seems to be substantiated: Logan, a European expat manager of a logistical firm, experienced once that a young person showed up in a jogging suit to sign a multi million-dollar contract. It did not directly affect the signing but Logan told me it felt as if he was not important enough to wear something decent.

The young generation on its turn complains about older generations, mainly about the choice of clothing combinations. Interestingly, this opinion is not solely reserved for millennials. A couple of my older informants agreed with the popular opinion of millennials that older generations tend to dress inappropriate or even “weird” sometimes. James4_told me “don’t be surprised if later an older business men enters. You are going to think that this

3

_{Chinese, 49 years old, managing partner, industry: logistics consultancy}

4

_{Chinese, 48 years old, CEO, industry: agricultural investment}

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guy just got out of prison, be aware that these guys sometimes have pocket of 200 to 300 million Yuan. Bold guy, golden chains around their neck, suit in combination with gym shoes and a women’s bag. It looks ridiculous, but downstairs he will get into his 12 cylinder Mercedes with driver.” Another Chinese informant of 49 years old agreed with that notion but told me that the older generations are shifting slowly towards a more “stylish” look.

Generational differences can be distinguished, as described above, but are not the only factor which influences how Chinese business professionals dress. One of my informants pointed towards the different industries in which professionals are active. Michael5_, working

in IT, is a perfect example of wearing casual clothes. He always wears a T-shirt, jeans and a cap, even when visiting clients. Lucas, a Chinese 30-year-old banker, works in wealth management and therefore always dresses up in a suit when he is meeting clients, or business casual when going to the office. Both are millennials, but differences regarding the industry they work in demand different behavior as to business attire. This forces Lucas to wear at least business casual while he actually might want to wear something more casual.

Another influencing factor of business attire is the workplace itself. It seems that if the workplace is foreign managed, business casual or formal dressing is normally required. If the workplace is managed by local Chinese, then usually casual is the norm. A good example at hand is Ava, a Chinese 28-year-old CEO. She told me that she and her staff wear whatever they want. Another informant6_{told me that her cousin works in a local accounting firm, she} usually wears less formal clothing compared to the other cousin working for a Western led joint venture.

In general can be concluded that generational differences are the basis for differences in preferences and behavior regarding business attire, but industry differences and whether the organization is led by a local or foreigner seem to be other factors that might have an impact on business attire in China as well.

5

_{Chinese, 33 years old, business owner, industry: IT}

6

_{Chinese, 48 years old, managing partner, industry: consultancy}

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2.3 Reciprocity: gift giving

Gift giving is a major part of reciprocal behavior that is associated with short-term oriented societies. I have found that preferences regarding gift giving are different for millennials compared to older generations. It seems that millennials value gift giving less than older generations, gifts become smaller and even homemade. Millennials appear to focus on the professional relationship itself and influence this relationship less with gift exchange.

Above stated conclusion seems to be verified by the data acquired in the questionnaire. Asking my respondents to grade, on a scale from 1 to 10, how important gift giving is when doing business with Westerners and how important it was to receive gifts, millennials scored 4.3 on receiving gifts and 5.6 on giving gifts while older generations scored 4.9 on receiving gifts and 7.7 on the importance of giving gifts.

Literature aligns better with the above-mentioned scores of the older generation compared to the millennial generation when discussing gift giving. Literature is relatively clear about gift giving and favor exchange. Gift giving and extending favors is an important part of social obligations (Yen, Barnes, & Wang, 2011) that Hofstede describes as a characteristic of short-term orientation (Hofstede sr., Hofstede jr., & Minkov, 2010). In literature these social obligations are often called renqing. Renqing creates commitment through reciprocity. Techniques of renqing are gift giving, assisting contacts in need, money, services or goods (Berger, Herstein, Avi, & Bradley, 2015; Chang, 2012). It seems that literature describes the behavior of the older generations correctly but that millennials prefer a different practice.

Robert, a Chinese 49-year-old CEO, noticed a difference in gift giving when comparing millennials vis-à-vis older generations. Millennials tend to give more sincere gifts, it is not so much the value that counts but the gesture he explained to me. Robert even explained to me that he has seen millennials giving gifts that they made themselves. Benjamin, a millennial Chinese informant, self-employed as business translator, actually extends gifts that he makes himself. He is making pottery and sometimes gives these to his Western clients. Asking what kind of gifts Robert usually gives resulted in a very different answer: “pen, watch, wallet, clothes, all big brands... Apple laptop, iPhone.” When I asked if these gifts were limited to “only expensive items” Charles confirmed this and adds that usually the most expensive “present” is the hongbao. The phenomenon of the hongbao is discussed in paragraph 2.5.

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I have observed that millennials tend to give smaller gifts and also receive smaller gifts. Whether this difference can be accredited to changing values or behavior, less disposable income, or smaller business deals is hard to say. It seems that millennials value the gesture over the quantitative value of the gift. Thus, the focus is shifting from an instrumental relationship to a more expressive formed relationship. In the latter, parties are not focused solely on gaining from the relationship but value the actual contact (Chen & Chen, 2004). Benjamin7 with his homemade gifts is a good example. Instead of giving expensive gifts (which he can afford) he makes the gifts himself and whenever he is traveling and happens to be close to one of his clients he visits his Western client. This signals an expressive form of relationship building. One millennial informant, Emma8_{, does not always bring gifts when}

she visits clients and Ava9_{is never giving gifts at all. These examples support the theory that}

gift giving is changing under the influence of millennials.

However, I have observed some millennials extending big gifts as well (bags, statue, iPhones, et cetera) and I interviewed older generation business professionals that seemed to favor the millennial ‘approach’ on gift giving (small gifts with minimal value). In principle, older business professionals told me about textbook examples when I asked them about gift giving: extending big or expensive gifts to build a reciprocal relationship. However, delving deeper into the subject of gift giving, I noticed that some older informants behaved in accordance with the preferences of the millennial generation. There seems to be a discrepancy between preferences and reality, which applies to millennials as well as the older generations, under the influence of other factors than generational differences. These factors are the industry the business professional is operating in, the leverage of parties, the time, and the value proposition.

Gift exchange is dependent on the industry

Gift exchange is highly dependent on the industry the business professional is operating in. In business-to-consumer selling no gifts are necessary in order to build up a relationship, while in business-to-business selling gifts might be required. One of my informants, Robert10_,

7

_{Chinese, 32 years old, self-employed, industry: translation}

8

_{Chinese, 35 years old, consultant, industry: automotive}

9

_{Chinese, 28 years old, CEO, industry: real estate}

10_{Chinese, 49 years old, CEO, industry: furniture}

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used to work in landscape design. He explained to me that when he worked in business-to-business selling he had to give gifts in order to get assignments. However, now, he explained to me, he works in the furniture industry selling business-to-consumer, he no longer had to exchange gifts because there is no need to build up a relationship with individual clients. Loyalty programs (sometimes with rewards or presents) and other marketing programs for selling to his customers were put in place, which he viewed similar to the methods used in the West.

Beside the distinction business-to-business and business-to-consumer selling, many informants also made a clear distinction between state owned and state regulated fields vis-à-vis private companies and less strictly regulated industries. Many informants often described industries that are highly regulated by the Chinese state as industries in which gift giving is necessary. The same applies to state owned companies. For many of my millennial informants, and in some cases older generation business professionals, this was a good reason not to deal with state owned companies or strictly state regulated fields since they preferred not to extend gifts.

Gift exchange is dependent on the leverage of parties

Gift exchange is dependent on the leverage in the business relationship. Sourcing parties11 (Western or Chinese) in China are usually not expected to extend gifts. Multiple informants explained to me that as a sourcing party they have the power to grant the assignment. Therefore the supplier will try to persuade the sourcing party with gifts, dinners, and sometimes even illegal practices like a red envelope containing cash, while the sourcing party is not expected to return the favor (except for extending the assignment).

Although a small token by the sourcing party extended to the supplier might be appreciated, for Jackson, a young European purchaser, this goes already too far, thus he never extends any gifts. Jackson does accept small gifts that are offered to him out of courtesy, such as food items. However, Jackson declines items that represent actual (notable) value. The reason for Jackson not to extend nor to accept any gifts that represent actual value is linked with the leverage in the relationship. Giving and accepting gifts in business relations is a slippery slope and before one can realize it ”you become part of the guanxi network”. This

Chinese millennial business professionals and their influence on Chinese business protocol applied to intercultural interactions with Western business professionals