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China National Tobacco Corporation is the largest tobacco producer in the entire world owned by the Chinese government (Young, 2006). The major reason as to why CNTC entered into joint venture with the U.S Company called Celanese Fibre Corporation was to seek partnership in building a tow-making plant back in China. Their negotiation process was faced with obstacles until they came into an agreement (Chen, 2001).
1982 CNTC and Celanese negotiation
It is in the year 1982, when CNTC decided to fully increase their quantity of filter cigarette production (March, 2012). The reason behind this plan was simply to lookout for international suppliers. This was because; all other external tow producers completely refused to sell and even share trade technologies with China. To solve the problem, China approached one of the world largest tow producer called Celanese Corporation. The main objective of this move was to negotiate with Celanese to form a joint venture. However, Celanese did decline the offer following a two year arm-length and procedural long distance discussion. The Celanese explained the decline stating that it would destabilize their international tow markets (March, 2012).
1984 Negotiation
Nevertheless, in the year 1984, LEC reviewed the previous negotiation CNTC had with Celanese and realized that the deal’s benefit was mutualistic (March, 2012). Through the senior LEC executive as the mediator, Celanese was requested to fully usher out permission allowing LEC to continue with the joint-venture mediation process that was previously declined. This motivated the Chinese who in turn readily accepted Celanese as their number one supplier of tow. The mutual relationship was to permit CNTC to source for tow only from Celanese. Additionally, this joint venture helped the Chinese to conserve the country foreign exchange enabling CNTC not to import tow from abroad. In fact, the top management was to be shared between the two parties fifty-fifty (March, 2012).
Key culture shocks during the negotiation
Cultural problem often came up frequently during the negotiation process. This precisely came up whenever the Celanese colleagues differed in terms of ideologies with their Chinese counterparts. Notable to mention is that, it is during the stage three of this mutualistic deal, when new cultural difficulties came up (March, 2012). This was noted during the construction of the plant at Nantong city. The contradiction came up daily when the western performance imperatives did collide with the Chinese practices. It came to the Celanese employee’s attention that; occasionally, the Chinese subcontractor’s crews do disappear for a number of days leaving the ongoing work incomplete.
Furthermore, it was also noted that the Chinese interpreted as affront whenever the Celanese pointed out shortcomings and errors committed by their crews. More cultural difficulties was seen whenever the Chinese instead of discussing their problems with their US venture colleagues, they preferred doing so with their seniors at CNTC. In fact, they used their native tongue in meetings held by their managers (March, 2012). This totally displeased the other venture colleagues. Such cultural difficulty is an international problem encountered whenever there is a joint activity. Each party will always try to have all procedures done the way they always do back at home.
Solution to culture conflicts in international negotiation
The opinion is that, these cultural difficulties can be solved when each side try to understand, being patient and working hard to focus on the success of joint relationship. Moreover, individual venture parties must amend their law and regulation allowing them to operate easily. All parties entering a joint venture must be flexible and ready to resent their attitudes positively and adjust their cultures. Finally, both sides of the joint venture must be ready at all time to solve any upcoming issue without adapting the stereotypical format (March, 2012).
Conclusion
Despite encountering difficulties throughout the entire negotiation process, both CNTC and Celanese eventually came into an agreement. This joint venture turned out to be successful thanks to the LEC’s role as the mediator.
References
Chen, M. (2001). Inside Chinese Business: a Guide for Managers Worldwide. Harvard Business School Press. pp. 152-153. Web.
March, B. 2012. A Rare Success in China- the Celanese Joint Venture. Web.
Young, M. 2006. Marlboro County’s Borderline with China. Web.
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