Calypso Consulting

(A version of this article was published in Chinese in CHO Magazine in July 2007)
 
            One of the foremost world authorities on trust is Francis Fukuyama of the Rand Corporation.  In his definition he refers to trust as “the expectation that arises within a community of regular, honest and co-operative behavior.”  When he discusses the Chinese in a management sense, he says that Chinese have a more difficult time than Westerners to become professional managers because of their inclination to deeply trust only people related to them or to whom they have a very close relationship.  On the other hand, says Fukuyama, Chinese are likely to distrust people outside of their family or close inner group.  In order to move quickly in business today, there is often not enough time to establish guanxi or to follow the habit of renqing.  Based on all of the above, he identified China as a “low trust” society.
            Before I write any more I want to say that I understand this is a sensitive subject and there may be subtle features of Chinese society that I still cannot comprehend.  On the other hand, to dismiss these ideas quickly because I am a foreigner and therefore “does not understand China,” is naïve.  I admit up front that this is a very complex issue, but I believe it is important for Chinese managers to understand how foreigners view their attitudes and behaviors around the subject of trust.
 
Contracts
            Let’s look at one example, written contracts.  In the West, such a document is binding between people and organizations.  A Westerner trusts that if such a document exists, then both parties will do all that they can to honor it.  If one party cannot honor their part of the agreement, then some form of compensation must be paid to the other party to make up for not doing what was stated.  In Chinese culture however, such an agreement is often just a memorandum explaining intentions and not a binding document at all.  In China, if there is a problem with the agreement, both parties will often work things out informally until there is a new agreement.  This new agreement, in turn, may again be changed.  Chinese business people understand this difference between China and the West and try to accommodate Westerners when there are the inevitable conflicts.  But generally, the Chinese still often want to re-negotiate agreements as situations dictate.  As such, many Western businessmen will believe that the Chinese counterpart is violating an already agreed upon agreement and is therefore not trustworthy.
 
Recent Chinese History
            It is not difficult to understand this difference in how to view trust.  Not so many years ago in China it was difficult to trust anyone.  Friends reported on friends, children told on their parents and sometimes even spouses reported the other to the local authorities for violating some form of expected behavior.  And in many cases, the consequence of this behavior was severe.  People lost their jobs, their status, and sometimes, their lives.  It is understandable then, that a society with such a recent course of events would encourage people to be very careful with whom they trust.  As a Chinese friend of mine recently told me, “It is very difficult to form a true new friendship in China.  We always hold back a little of ourselves.  We are not so willing to give all of ourselves away for fear of being exposed in some way.”
            I believe this also explains why it is often tough to extend trust among employees in a company.  Sometimes simple requests by one employee are greeted by doubt and question by other employees.  “Why do you want that?” Rather than a simple yes or no answer, there is often the suspicion that your intentions are dangerous and so, rather than expose themselves to that danger, the other employee will sometimes not comply with your request.
            Also related to this is the need for some employees to “guess” what is intended by a manager’s instructions.  I have been told that it is considered a corporate core competency in a Chinese firm not to ask too many questions.  Instead, the competent employee will properly guess the manager’s intention.  By intentionally being vague, the manager does not expose himself too much.  By guessing correctly, the employee does a good job without causing the manager to reveal too much. 
            To many Westerners, this kind of behavior is not easy to understand and causes some Westerners to accuse Chinese of being evasive and unsure of themselves.  While I do not believe that to be the case, I understand the Western concern and see how this can lead to misunderstandings between the two.  Especially in multi-national firms where Chinese and Western employees work side by side, this can be a cause of friction.
            Nandani Lynton, formerly of Thunderbird University, and an expert on Chinese business practices, has described the difference between the “personal trust” required in China, and the “formal trust” that is fostered in Western companies.  Formal trust allows you to trust a stranger who works in the company or even someone who works for another respected firm.  The assumption is that these others share the same business goals and values.  Lynton went on to say that if Chinese firms cannot encourage formal trust they will have a difficult time empowering others and this, in turn, can slow down their global expansion efforts.
 
The Legal System
Another example of the difference in trust between China and the West is in the basic premises of the two legal systems.  In the West you are presumed innocent until proven guilty.  In other words, the law trusts that you are not guilty of a crime and it is up to the state to prove otherwise.  In China, just the opposite is true.  Once you are arrested, it is first presumed that you are guilty.  There is not a formal trust that you are innocent.  The burden is on you to prove your innocence.  This basic difference, I believe, also points to a big difference in how leaders may first be viewed by employees.  In both China and the West we encourage leaders to be worthy of the trust from their employees.  But I believe there is a significant difference.  In the West, leaders are generally trusted at first simply because it is natural to believe that people are trustworthy.  Employees will lose their trust of their leader only if they are given proof of the leader’s untrustworthiness.  In China however, the leader is trusted primarily because of position.  If you have risen to the top of an organization, it is a role expectation that you will not violate your paternalistic role as head of the organization.  As long as you hold that role, in most cases, you will maintain that trust, no matter what behaviors may indicate otherwise.  But until you get to a very high level in the firm, it seems that the trust may not come as naturally in China as it would in the West.  Therefore, I often wonder if, in China, it is more difficult than in the West for junior leaders to attain the trust of their employees.
 
Truth vs. Courtesy
One more subject related to trust that is different in China versus the West is how we treat truth here.  Often, employees in China will sacrifice truth in order to be courteous.  Both cultures are truthful and both cultures are courteous.  But Westerners are more direct and therefore more willing to get to the truth at the expense of courtesy.  Chinese, on the other hand, are more likely to circumvent a direct response in order to allow everyone to save face.  At my prior firm in Beijing, as head of the firm, I needed to know everything I could about our company and the competition.  With a weak knowledge of the language, I was totally dependent on my staff to let me know what was happening so that I could react accordingly.  But I was almost always the last one to know when the news was bad.  If a competitor won a project, I needed to probe to find this out.  (In the U.S. I would have been flooded with e-mails.)  If someone was going to leave the firm, especially to join a competitor, neither the employee nor his supervisor would let me know that.  There was usually some excuse about going to graduate school or leaving to visit abroad.  A few weeks after they left I would learn that they were now working for a competitor. Then I would learn that everyone else knew this but they did not want me to feel too bad about it so they kept it from me.  Western leaders get frustrated in China with this focus on courtesy over information.  Likewise, Chinese leaders are often frustrated by the expectations of foreign employees and their foreign headquarters to know quickly what is happening, regardless of the impact on “face.”
 
Conclusion
                Until Chinese and Western employees are able to see eye-to-eye on the subtle meanings of trust in China, there will still be breakdowns in communications.  This will slow things down and prevent companies from moving as quickly as they should.  I hope that this article helps break down some of these misunderstandings.  I also welcome anyone’s comments to either add to or refute my ideas.