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Business and Finance

Rounds of negotiations

Mary Szto
We asked about the impact of China's 'ganbei' culture on business deals on the country where contracts come with more shakes than usual

Word is getting out that in China, professional success goes hand in hand with heavy, often excessive, eating and drinking. In fact, such practices have been known to have fatal consequences.

Medical researchers report that binge drinking has become an epidemic in China among adults aged 35 to 44. Among male drinkers, a staggering 57% binge, while for women, the figure stands at 27%. And this phenomenon extends to expats, male and female alike.

Harvard Business Review cites an example of an American CEO negotiating with a Chinese counterpart. At dinner, the Chinese CEO comments “…If you aren’t drunk tonight, there will be no contract tomorrow.” The American CEO drinks. The next day he can’t remember how he got back to his hotel. The Chinese CEO greets him with a “big smile, and a fat contract.” And this certainly isn’t the only account of negotiations broken via rounds of drinking.

Empty cup, full wallet

The traditional Chinese toast is ‘Ganbei‘, meaning ‘to empty one’s cup’. The beverage of choice is baijiu, which has been likened to kerosene or jet fuel. An American woman lawyer in Shanghai laments, “…[I] pretend I’m taking a sip of water… but I’m spitting [the baijiu out].” A female expat legal scholar says her pregnancy is “wonderful for baijiu avoidance.” One blog for expatriates advises that women don’t have to participate in drinking rounds, but if they do, they get double points for “ganbei-ing”.

Unlike a business lunch in the US, with probably around two courses plus drinks, a Chinese meal might consist of a whopping 20 servings of food, accompanied by rounds of toasting. The Chinese are not supposed to drink alone, so this is done in a group, and only when a toast is proposed. Hours of karaoke may follow. A 36-year-old Chinese businesswoman laments: “Repeatedly… clients come to me proposing toasts, and they won’t stop until I’m drunk.”

The practice has even seeped into recruiter requirements. A job post for a business manager at an engineering firm promises to prioritise “candidates with good drinking capacity”. Even law firms hire people who can drink heavily. This is because during drinking rounds, junior lawyers can drink on behalf of seniors.

According to reports in The China Daily, after heavy drinking during a meal, Chinese officials have been hospitalised; some have actually perished. Distraught relatives often want their deceased to be honoured as martyrs, dying in the line of duty. The situation is so severe that there are even classes on how to avoid drinking without endangering one’s career. Most attendees are Chinese entrepreneurs and private business owners. Some find refuge in rare AA groups.

Wining friends and inebriating people

Many foreigners know that ‘guanxi‘, or relationships, are important in China. For foreigners, guanxi facilitate business. For natives, guanxi also paves the way to other perks ‒ school admission for children, finding a job ‒ the list goes on. What many foreigners do not know, however, is that eating and drinking are essential to establishing guanxi. Many non-natives and natives don’t understand the ancient origins of these rituals and why they still hold such currency.

Eating and drinking in China are not an add-on to contract negotiations; they are at the very heart of contract formation. Stereotypically speaking, Westerners like to negotiate deals at arms’ length, and then cement them in a contract spanning hundreds of pages. These voluminous documents are supposed to cover every contingency. However, the traditional Chinese approach is to eat, drink and come to an agreement. Chinese philosopher Confucius taught that litigation was shameful. He also taught that ritual, not law, should rule a society. These values are still deeply ingrained in the country.

In traditional Chinese culture, business is not supposed to be conducted remotely. If a corporate Chinese meal sometimes feels like a wedding banquet to Westerners ‒ with guests getting drunk and singing ‒ that’s exactly what is intended. Historically in Chinese culture, business deals were like marriage, while marriages were business deals.

Similarly, every detail of a banquet plays a ritualistic role. According to the ancient Book of Rites, the host and guests were symbols of Heaven and Earth. Because the wind of righteous justice was said to be strongest in the north-west, the guest traditionally sits there. The host sits in the south-east, home to the wind of benevolence.

Linking the living and the dead

The family is by far the most important unit in Chinese society ‒ even the word for country, ‘guojia‘, means ‘nation family’. Ancestors are said to bring fortune and blessing, mediating between descendants and the rest of the spirit world. Therefore each social interaction is about finding and cultivating familial relations among the living and dead. This is done through China’s prime ritual: the offering of food. Sacramental food and drink are common in other traditions, but they do not play as prominent a role in business and other dealings.

Traditionally, food is first offered to ancestors before descendants and other guests can have their share. Eating together represents a distribution of resources; the amount of resources available depends on how many generations are being honoured at the event. In ancient China, the Emperor, as ‘Son of Heaven’, could make offers to the greatest number of ancestors.

A toast to the real social network

Ritual inebriation, meanwhile, can be traced to China’s Shang Dynasty, when a grandchild would be given so much alcohol that in their drunken state they would become a medium for a deceased grandparent.

Back then, drunkenness showed respect for ancestors. Today, however, the binge drinking fuelled by China’s increasing wealth is creating a public-health crisis. There are other drinks – non-alcoholic – that can show goodwill, trust and respect. The communal Chinese meal dim sum, which is traditionally accompanied by tea, can also be a great setting for dealmaking.

Those of us from cultures used to treating the written word as bond might also pay attention to the importance of strong personal bonds in business relationships.

By getting to know each other, we can better resolve any conflict that arises during contract negotiation. A strong bond is worth more than hundreds of pages of overly complex language.

Illustration: Christine Kim.


The practice has even seeped into recruiter requirements. A job post for a business manager at an engineering firm promises to prioritise "candidates with good drinking capacity".



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