global studies

THE REALITY OF THE EASTERN

BUSINESS MIND

Jacques G. Boettcher

During World War II American troops sent to Europe were

provided with small handbooks which contained a smattering of

words and phrases and comments on customs designed to permit

those troops to exist with the Dutch, the French, and even the

Germans. When dealing with people in the Pacific-Rim area mod-

ern American businessmen still use the ‘‘handbook approach,’’ and

they are frustrated when they can’t understand the attitudes,

subtleties, and procedures of Pacific-Rim business practice. They

know the details of the ‘‘handbook,’’ but they fail to understand the

roots of cultural differences. They fail to understand that they are

dealing with thousands of years of philosophy, ethics, and culture,

and for this necessary understanding they have to realize both how

and why their counterparts think as they do. The modern business

person should go back to Taoism and Confucius for an explanation

of contemporary business practices.

* * * * *

I. INTRODUCTION

One time when the author of this article was conducting a

seminar at the University of Detroit in American legal systems and

anti-trust for a group of visiting Chinese government officials he

resorted to a tactic common in American law schools. He began to

challenge the visitors in a Socratic approach with questions that

Jacques G. Boettcher is Associate Professor of Management at the University of Detroit Mercy in Detroit, Michigan.

THE INTERNATIONAL TRADE JOURNAL, Volume XXI, No. 3, Fall 2007 275 ISSN: 0885-3908 print/1521-0545 online. DOI: 10.1080/08853900701416374

forced them to be analytical and quick in the formation of answers---

questions that forced them to ‘‘think on their feet.’’ No one had

told him that these Chinese delegations are always seated with the

most important members sitting at the front of the room and the

less distinguished at the rear. He, thus, directed a question to the

man sitting directly in front of him, and the guest answered with a

pained expression on his face. He lowered his eyes, and for some

reason, even though his answer was slightly off course, the profes-

sor responded by saying, ‘‘I think you have studied far more

American law than what I was led to believe.’’ Immediately there

was a very slight smile around his eyes, and the delegates at the

rear of the room responded with affirmative nods.

This professor was not aware at the time, but he had come

dangerously close to humiliating that guest in front of his subordi-

nates, and that his comment about the guest’s knowledge of

American law permitted him to ‘‘save face.’’

II. THE FAR EAST AND THE WESTERN POSITION

‘‘Saving face’’ is a western expression legitimized in 1934 by the

Oxford English Dictionary, which, actually, fails to express the

importance of the matter. To the Korean, for example, or to the

Chinese and, to an extent the Japanese, there is a sanctity to

‘‘saving face’’ which incorporates one’s ‘‘integrity,’’ ‘‘pride,’’

‘‘honor,’’ ‘‘character,’’ ‘‘self esteem,’’ and ‘‘reputation.’’ It is

based on over 2,500 years of history. It dates back, at least, to

K’ung Fu Tau---Confucius---551--497 B.C. and there is little like it

in the western world.

This type of positional security or ‘‘saving face’’ is, at least,

secondary in the minds of many American business people and

even less important with American attorneys. We, at times, take

pride in the President Harry Truman approach to business of ‘‘let’s

cut out the crap,’’ or most commonly, ‘‘let’s get down to the

bottom line.’’ For Americans there is a sort of strength in this

276 THE INTERNATIONAL TRADE JOURNAL

approach and a feeling that it conveys a sense of forthrightness or

honesty. It never occurs to us that this ‘‘forthrightness’’ is not only

a source of embarrassment to our counterparts in the Pacific

business arena, and that it is a very serious violation of their

social-political business foundation. For these business counter-

parts ‘‘saving face’’ is an art form which has been cultivated not

only over generations but throughout centuries.

The phrase ‘‘saving face’’ or the idea of ‘‘saving face’’ is

obviously, only a part of the collage making up the far eastern

business mind, but its importance cannot be over estimated. In the

western world the idea of ‘‘crime’’ is coupled with the idea of

‘‘punishment.’’ It is individual and personal. In the eastern mind

the keynote is ‘‘shame’’ which is followed by ‘‘disgrace.’’ This

disgrace does not remain personal. It ripples out to infect friends,

families, coworkers, departments, and even entire business units.

For people inculcated with this fear the secret or solution is to

avoid the occasion wherein shame might arise, and this leads to a

formula wherein one does not make a decision and does not make a

commitment but seeks an escape into a rigid vertical protectionism

wherein one can hide within a committee or a bureau or an agency.

The keynote is ‘‘I didn’t do it, and I can’t be held responsible.’’

III. INDIVIDUALISM VS. COLLECTIVISM

When one tries to fathom this eastern self-protectionism one

wonders how an attorney or business person form the far east,

steeped in a neo-Confucian or quasi-Confucian non-confrontational

heritage would interpret the American Declaration of Independence.

We hold these truths to be self

evident, that all men are created

equal, that they are endowed by their

Creator with certain inalienable

rights. That among these are Life,

Liberty and the pursuit of Happiness.

Boettcher: The Eastern Business Mind 277

To the American business person the language of the

Constitution or the Declaration of Independence is an invitation

to individualism. And despite all of the efforts of the last ten years

to inculcate team work or team thinking, the American mind still

focuses on the ‘‘best team,’’ ‘‘on the best team thought,’’ and the

‘‘best team leader.’’ Individualism, personal accomplishment and

personal rewards have not been eliminated. They are still

rewarded, and they staunchly enforce the western approach to

business.

Americans still find romance in the concept of the ‘‘self-made’’

person---the Warren Buffit or Bill Gates---the person who rises

from obscurity, faces adversity, challenges the establishment and

finally triumphs. The northeast Asian---the Oriental world people

are far more likely to look on this illusion as egregious or, at least,

as an egocentric display. They are far more ready to move as a

unified whole and turn to the benevolence of the State or the

business director, (Clissold, 2004).

To the American attorney, for example, who is even slightly

infused with this individualism and who is drafting a contract, the

essence is to legally dominate---to anticipate every contingency, to

be prepared for every problem or question, and to be absolutely

complete. This author who has drafted contracts for thirty years,

has spent hours, if not days, in detailed analysis, and the phrase

‘‘but what if’’ becomes as common as punctuation. To attorneys

drafting commercial contracts disgrace lies in not being all-inclu-

sive, in not being prepared for a question, and in not considering

every possibility. As a consequence their documents are as exact

and detailed as possible.

IV. THE FUNCTIONAL ASPECT OF GRACE

To the Asian counterpart this approach is not only foreign, but

it contains a horrible or unthinkable potential. ‘‘Saving face’’ is not

only the most desirable personal attribute, but one can’t ‘‘save

278 THE INTERNATIONAL TRADE JOURNAL

face’’ if one inflicts embarrassment on or humiliates his colleague

by showing that person to be wrong. ‘‘Saving face’’ then is a two

way street, which can only be preserved or achieved by sensitivity,

harmony and grace, and ultimately, it is the balm which allows

avoidance of personal accountability and, possibly, ‘‘disgrace.’’

It is this objective that governs the organization, presentation

and undermining philosophy of the laws of many of the northern

Pacific-Rim countries, and many western business people fail to

realize that this personal characteristic not only dominates the

thinking of their Pacific counterparts, but that it is the essence

which permeates the being of their Pacific-Rim colleagues

(Fishman, 2005). It cannot be attributed to any sense of inferiority

or even personal modesty. It is the resultant of the amalgam of San

Chiao---the Three Doctrines, Confucianism, Taoism, and

Buddhism. It extends from the production worker in many

Pacific northern Rim countries who is dominated by the idea

that if his work becomes shoddy or if he doesn’t meet his quota

he will ‘‘lose face,’’ even up to the Chinese Central Committee

where a personal mistake may lead to disgrace (McGregor, 2005).

V. THE GRACE OF HARMONY

To the Korean people, for example, to the Chinese, the citizens

of Singapore, or the Japanese, ‘‘harmony,’’ ‘‘sensitivity’’ and

‘‘grace’’ cannot be achieved by preparing for a syntactical war or

by having one party to a contract dominate the premises by

preparing a contractual analysis which purports to consider

every eventuality, (McGregor, 2005).

To the western business person this is not only impractical, but

it is self-defeating. The western business person often is frustrated

by the fact that his carefully prepared and orchestrated approach

is not accepted immediately and at face value. This western busi-

ness person fails to understand that his Pacific counterpart is not

prepared to accept a previously prepared, all-inclusive package,

Boettcher: The Eastern Business Mind 279

has not gone through a completely orchestrated arrangement or

contract and is not fixed or dogmatic in his thinking. His approach

is not to attempt to deal with the whole, but to begin with a step by

step analysis, which allows adaptability in solution, circumvention

of the painful, and, if necessary, retreat and digression. Accept

problems as they arise, and if they never arise, then time has not

been wasted in useless preparation.

This approach begins with the first contact with the foreign

counterpart. This contact allows the establishment of a personal

base. It allows a time for ‘‘sizing-up’’ the foreign counterpart. It is a

time for analysis and preparation, and it is not a time for negotia-

tion. Americans, for example, at a business lunch, will look at the

menu, and then immediately start negotiations. This puts the

Korean, the Chinese, the Japanese, or the businessman from

Singapore in a defensive mode wherein a mistake might be made,

where prestige might be lost because of lack of preparation and/or

‘‘face’’ might be lost.

The Koreans, for example, the Japanese, the Chinese are

simply not prepared for this immediate exactness. They prefer

the indirect, the vague or even ambiguous approach. Many

Americans have been completely frustrated by their inability

to come to grips with the Korean approach to business. When

an American business person hears his Korean counterpart

answer ‘‘yes.’’ He doesn’t know if that means, ‘‘Yes, I agree

with you,’’ ‘‘Yes, I hear you but am waiting for more informa-

tion’’ or ‘‘Yes I heard you, but I am trying to find a non-

offensive way to tell you that you don’t know what you are

talking about.’’

VI. HARMONY EQUALS SENSITIVITY

The key is ‘‘harmony and sensitivity.’’ To achieve this the least

precise terms, the least exact wording, the least direct approach

allows an ongoing procedure which allows for analysis of problems

280 THE INTERNATIONAL TRADE JOURNAL

as they arise, but what is most important is the fact that if the

terms, words or approach used are not pointed, exact and direct,

then the Korean, the Chinese, and the Japanese can’t be exposed

as being wrong, can’t be held accountable and ‘‘face’’ is preserved

or saved.

VII. WHERE EXACTNESS IS INTENTIONAL

Examination of the individual laws of various northern

Pacific-Rim countries reveals somewhat of a strange paradox

which is produced by accountability, (Cameron, 1952). In general,

the laws of the individual north Pacific-Rim countries, as written,

are exact and precise. For example, many of these laws reflect the

changing conditions imposed by the end of World War II, and an

indicator of this is to be found in the constitutions of these various

countries. The Constitution of Singapore, for example, which was

effective September 26, 1963, reflects, virtually, a civil law

approach similar to that found in France and Germany. This

approach purposefully avoids the vague and general and seeks to

deal with virtually every contingency.

The U.S. Constitution, on the other hand, reflects more of the

‘‘common law’’ approach wherein it purposefully anticipates change

and growth and as such it breathes with the nation as the nation

progresses. The Constitution of Singapore contains 163 articles and

204 sections. Article 10, for example, specifically prohibits slavery.

Article 14 parallels the 1st Amendment to the U.S.

Constitution, but is more detailed and then drifts into a rather

vague escape clause. Article 14 reads:

Article 14, Freedom of Speech, Assembly and

Association.

Subject to Clauses (2) and (3)

All citizens of Singapore have the right to assemble peaceably and

without arms and A1l citizens of Singapore have the

right to form associations.

(1) Parliament may impose

Boettcher: The Eastern Business Mind 281

(a) on the rights conferred by clause (1)(a)

such restrictions as it considers necessary or

expedient in the interest of the security of

Singapore any part thereof, friendly relations

with other countries, public order or morality

and restrictions designed to protect the

privileges of Parliament or to provide against

contempt of court, defamation or incitement to

any offense.

Always the precise is framed with an ‘‘escape clause.’’ Citizens

have ‘‘rights’’ subject to ‘‘ restrictions which are necessary and

expedient.’’

The Constitution of the Republic of South Korea, which was

effective as of July 17, 1948, contains 136 articles with the same

characteristics as found in the Singapore Constitution. Article 19

reads:

Article 19 (Conscience)

All citizens enjoy freedom of conscience.

Why this is a constitutional provision only leads to

speculation.

Article 21 (3) is equally speculative. It reads:

Article 21(3)

The standard of news service and broadcast

facilities and matters necessary to ensure

the functions of newspapers is determined by law.

The point to be considered is not the existence of the phrasing,

but the fact that it is obviously another attempt to be exact. The

exactness, however, allows considerable generality. Article 32(2)

again contains this facet.

Article 32(2)

All citizens have the duty to work. The State

prescribes by law the extent and conditions of

282 THE INTERNATIONAL TRADE JOURNAL

the duty to work in conformity with democratic

principles.

One of the more startling premises is contained in Article 119.

It states:

Article 119 (Regulation and Coordination)

(1) The economic order of the Republic of

Korea is based on a respect for the freedom and

creative initiative of enterprises and

individuals in economic affairs.

(2) The State may regulate and coordinate

economic affairs in order to maintain

the balanced growth and stability of the national

economy, to ensure proper distribution of

income, to prevent domination of the market

and the abuse of economic power and to

democratize the economy through harmony

among economic agents.

It is obvious that those who drafted these laws and provisions

were attempting to be all-inclusive.

The Constitution of Japan parallels the construction and

intent of those of South Korea and Singapore. This constitution

was effective as of November 3, 1946, and it is a lengthy and

specific document similar to those previously considered. It is

inclusive in that it attempts to deal with a multitude of considera-

tions, and at times it wanders into the obscure. Article 13, for

example, states:

Article 13

All of the people shall be respected

as individuals. Their right to life,

liberty and the pursuit of happiness

shall, to the extent that it does not

interfere with the public welfare,

Boettcher: The Eastern Business Mind 283

be the supreme consideration in legislation

and in other government affairs.

Article 27 states that all people have the right and the obliga-

tion to work, which is similar to the clause found in the

Constitution of Singapore.

Article 13 couples with Article 35, which reads:

Article 35

1. The right of the people to be secure

in their homes, papers, and effects against

entries, searches and seizures shall not be impaired except upon

warrant issued for adequate cause and particularly describing the

place to be searched and things to be seized. . . .

It seems obvious that those who assembled the Constitution of

Japan were familiar with the U.S. Constitution, (Inoue, 1991). But

the Japanese Constitution also becomes most specific, and in

Article 36 the ‘‘infliction of torture by any public official and

cruel punishments are absolutely forbidden.’’

Article 88 even considers that the property of the Imperial

Household belongs to the state and the expenses of the Imperial

Household shall be appropriated by the Diet (Luney, 1946).

There is little in the Constitutions considered that even indir-

ectly deals with the problems of preserving ‘‘harmony, ‘‘sensitiv-

ity’’ and ‘‘grace.’’ But with the Chinese Constitution one finds an

amazing combination of the specifics found in the other

Constitutions with the evasive vagueness sought in the establish-

ment of ‘‘harmony,’’ ‘‘sensitivity’’ and ‘‘grace,’’ (Fairbank,

Reischauer, and Craig, 1973).

The Chinese Constitution dates only to 1982, and there is an

essential difference to be noted when considering the constitutions

of other Pacific-Rim countries. China is the last country, with the

exception of Vietnam and North Korea, to emerge into the world

of international commerce. At the time the constitution was

284 THE INTERNATIONAL TRADE JOURNAL

adopted China did not have a civil code or a commercial code as

did the other nations. Commerce was controlled by the Central

Committee, China relied on a number of laws such as the 1982

‘‘Economic Contract Law of the People’s Republic of China,’’ the

1985 ‘‘Foreign Economic Contract Law,’’ the 1986 ‘‘Civil Code

plus a host of ‘‘Regulations.’’ With China, then, there is a major

problem in reconciling the constitution with the developing codes

and with the dictates of the Central Committee.

VIII. A DIFFERENT MOTIVE

Many Pacific-Rim countries have a commercial law, which

deals in the public law involving business formation, contracts,

sales, bailments, carriage of goods, insurance, etc. These countries,

generally, have a separate civil law, which deals with such matters

as banking, securities regulation etc. In order, thus, to understand

the law of sales it is necessary to blend the civil law with the

commercial law (Cameron, 1960).

This introduces an interesting fact of life in the northern

Pacific Rim. The drafters of laws tend to be exact. The interpreters

of laws tend to lose this specificity, and those who use the laws do

simply that---they ‘‘use’’ the law. China, for example, has a specific

law for the protection of intellectual property. They take pride in

tracing their intellectual property protection back to the Tang

Dynasty of 932 A.D. China’s modern laws on the protection of

computer software---‘‘Computer Software Regulation’’ date 1991.

China’s Trademark Law of 1982 is based on the Chinese

Constitution. It is very specific yet it recognizes protection to

‘‘famous marks,’’ yet it is interpreted as giving protection to

‘‘famous marks’’ which are ‘‘famous’’ in China. Coca-Cola might

have trouble proving that its trademarks are ‘‘famous’’ in China.

Thus the drafters are specific, the interpreters are less than specific

and the ‘‘users’’ go their own way. The Business Software Alliance

now estimates that 92% of all software in China is counterfeit.

Boettcher: The Eastern Business Mind 285

The interesting point lies in the fact that on the one hand the

Constitutions of these countries are, or try to be, exact. This is

acceptable since few business people are going to debate constitu-

tional law with their trading counterparts. But on the other hand,

when it comes to the laws effecting such things as international

sales, the sale or trading laws suddenly become less vivid, less

accurate and even obscure.

Most northern Pacific-Rim countries, with the exception of

China, have a commercial code, which is a type of law of ‘‘private

obligations.’’ The codes, generally, deal with sales, leases, manufac-

turing, publishing, loans, insurance, trusts, forms of doing business,

etc. These are matters, which arise from commerce. There is a

separate ‘‘Civil Code’’ sometimes called ‘‘The General Private

Law,’’ which deals with the obligations of contracts, detailed sale

provisions, etc. While they are separate there is an obvious overlap,

and the one is more specific than the other. The ‘‘specific’’ is to be

preferred to the ‘‘General.’’ It is thus necessary to review both codes.

In business relationships, commercial laws are the core of con-

tracts and trading agreements, and while the parties may even

ignore the constitution these commercial laws will be closely exam-

ined by the parties. If these laws are too specific they produce an

impasse---a situation wherein one of the parties cannot escape. The

consequence is a loss of ‘‘harmony,’’ ‘‘self-esteem,’’ ‘‘reputation’’

or, again, ‘‘loss of face.’’

IX. THE SOUTH KOREAN PERSPECTIVE

The Commercial and Civil Codes of South Korea, because of its

late entry into international trade and the dramatic necessity of being

able to compete in the marketplace, are less obscure than those codes

of other countries, but they still evidence the lack of specificity.

Article I of the Commercial Code reads:

Applicable law to commercial matters:

Where there is no provision in this

286 THE INTERNATIONAL TRADE JOURNAL

Code as to a commercial matter, the

commercial custom shall apply; and

if there is no such law, the provision

of the Civil Code shall apply.

For an American attorney or business person the immediate

question is what is meant by ‘‘commercial custom,’’ where is it to

be found and what happens if neither the commercial code or the

civil code treat the matter in question?

This is the introduction to the ‘‘Escape Clauses’’ in South Korean

law. (Kim and Lawson, 1989). It introduces to the western mind the

fact that the South Korean businessman is not going to be pinned

down to an exact wording or position. Exactness breeds contention

and the potential for being shown to be wrong. The loss of ‘‘har-

mony,’’ the loss of ‘‘sensitivity’’ leads to the loss of ‘‘dignity’’ or ‘‘face.’’

Probably the best example of this type of thinking lies in the

escape provision of Article 51 of the Commercial Code. The article

reads:

ARTICLE 52. Binding Force of Offer of

Contract inter absentes.

(1) An offer to enter into a contract

in respect of which no period of

acceptance has been fixed, when made

inter absentes, shall lapse if notice

of its acceptance is not dispatched

by the offeree within a reasonable

time.

(2) The provisions of Article 530 of the

Civil Code shall apply mutatis

mutandis to the case mentioned in the

preceding paragraph.

This translates to mean that if a contract offer is made to a

person and that parties are not directly facing each other (inter

absentes) the person to whom the offer is made must notify the

other within a reasonable time. However, this is subject to

Boettcher: The Eastern Business Mind 287

‘‘mutatis mutandis’’ which is a phrase which translate as ‘‘With

the necessary changes in points of detail.’’ This should mean that

matters or things are, generally, the same but to be altered when

necessary. This would, normally, apply, to names, offices, etc., yet

the interpretation is wide enough to permit change. It is as though

the South Korean is saying to his counterpart that, yes, we have a

signed contract but you should realize that changes will be made

when unanticipated conditions arise.

Mutatis mutandis appears with consistency within the South

Korean Code.

The South Korean Codes, then, are perfect examples of the

rhetoric of escape or vagueness, and they fit perfectly with the

Japanese and the Chinese.

X. THE JAPANESE POSITION

The Japanese Codes, while not similar to the South Korean,

still have this non-direct, non-confrontational aspect. The wording

within the Japanese Commercial Code, while coming very close to

the Uniform Commercial Code of the United States, still demon-

strates the masterful art of evasion or generality. The section in the

Commercial Code dealing with rescission of contracts reads:

Article 50 (Rescission of contract)

(1) Where the parties have not fixed

the duration of the contract

either may rescind it on giving two months notice.

(2) Where compelling reason exists, either party may

rescind the

contract at any time irrespective

of whether the duration of the

contract has been fixed or not.

Thus under this code, even though there is a binding contract,

either party may rescind it if they can claim a ‘‘compelling reason’’

(Redden, 1989).

288 THE INTERNATIONAL TRADE JOURNAL

XI. THE CHINESE ATTITUDE

The Chinese, the last major entrant in international world of

trade, have not lost the non confrontational basis of their new

commercial code.

Article 154 of the Code of 1999 which deals with the quality of

goods sold, reads:

Article 154---Absence of Prescribed Quality

Requirements:

Where the quality requirements for the

subject matter were not prescribed or

clearly prescribed and cannot be

determined in accordance with Article 61

hereof, Item (I) of Article 62 applies.

Turning to Article 61 we find:

Article 61---Indeterminate Terms-Subsequent

Agreement:

If a term such as quality, price or

remuneration or place of performance

etc. was not prescribed, or clearly

prescribed, after the contract has taken

effect, the parties may supplement it

through agreement; if the parties fail

to reach a supplementary agreement

such term will be determined in accordance

with the relevant provisions of the contract

or in accordance with relevant usage.

Obviously, then this leads to Article 62 (1):

Article 62 (1)

If quality requirement was not clearly

prescribed, performance shall be in

accordance with the State standard or the

industry standard; absent any State or

industry standard performance shall be

in accordance with the customary standard

Boettcher: The Eastern Business Mind 289

or any particular standard consistent with

the purpose of the contract.

Obviously the parties to this contract would grow old arguing

standards, customary standards, and consistent standards.

On first analysis it may appear that the language of these codes

is simply tactical rhetoric. That is, the language is consciously

designed to give an advantage to the Korean, Japanese, or

Chinese businessman.

Such, actually, is not the case, and, on the one hand, American

business people or even western business people seem to recognize

that this rhetoric flows from a perspective of which they are not

fully aware.

XII. SHALLOW MARKETING

The libraries of American corporations are stacked with

volumes of books purporting to show the novice---‘‘How to Do

Business with . . . .’’ These books are full of interesting and

somewhat important information for agents marketing in

Pacific-Rim countries. For example, the newly initiated is told

that at a business meeting in South Korea one should sit so that

the soles of their shoes are not pointed at their counterpart. This

causes him to ‘‘lose face.’’ In Japan one does not stare at a

luncheon guest if that guest slurps noodles. This causes the

guest to ‘‘lose face.’’ In China if given a gift, one does not open

it in the presence of the giver. The slightest hint of displeasure

will cause the giver to ‘‘lose face.’’

In many of these countries, especially China, when a Chinese

executive presents his business card, it is to be accepted with both

hands and never, never, summarily, placed in a shirt pocket. In

these countries if an executive arrives late for a meeting this is to be

expected. If he arrives with his subordinates he ‘‘loses face’’

because it will be assumed that his position is equal to that of the

subordinates.

290 THE INTERNATIONAL TRADE JOURNAL

XIII. SUGGESTIONS OF CHANGE

While these points or factors are important, it also has to be

recognized that they are acts, and as acts they will change in time.

The educated, young, modern executive in Japan is now beginning

to view slurping noodles as vulgar but to be accepted with patience

when dealing with elders. This presents a potential trap because

the foreign businessman does not know if his counterpart holds to

the old traditions, is in transition, or has become westernized.

What is more important is the fact that these acts are reflective

of an underlying tradition, philosophy, or way of life. The protocol

of chopsticks is important. The foreign businessman realizing what

might embarrass his host or guest causing that host or guest to

‘‘lose face’’ is more important. And what is most important is

realizing that while the business people within the Pacific-Rim

countries may seem westernized, they are permeated with a strain

of thinking which is at least twenty-five centuries old, which can

become evident with the simplest gesture and which still governs

their business relationships.

XIV. THE ROCK OF AGES---‘‘TAOISM’’

The foundation of the thinking in these countries and the

foundation of both business and social relationships go back, at

least, to Taoism and Confucianism, circa 500 B.C.

There are others, of course. In China folk tradition and ‘‘legal-

ism’’ still plays a part, and in Japan there is Shintoism, but the

dominant pressure still comes from the Tao and the Analects of

Confucius.

Tao---‘‘The Way’’ or ‘‘The Path’’---comes from the recorded

thoughts or teachings of Lao Tzu---‘‘The old Master’’---who was

possibly a contemporary of Confucius or, allegedly, a teacher of

Confucius some 2,500 years ago. ‘‘Taoism’’ is a non-pragmatic or

transcendental view of existence, which stresses that life is real, it

is to be lived, but it is subject to the natural constraints of realty.

Boettcher: The Eastern Business Mind 291

‘‘The path’’ is the recognition that the pursuit of human desires is

folly. To think that the self is separate from all other beings is

ignorance. This may appear to be problematic, but in the simplest

terms if a duality is recognized between the speaker and the

listener unity or harmony is destroyed. The Tao or the ‘‘Path’’ is

lost.

In the simplest of terms:

Thus . . . the holy man fully

recognizes the relativity of

notions like good and evil, and

true and false. He is neutral and

open to the extent that he offers

no active resistance to any

would-be opponent, whether it be a

person or an idea. ‘‘When you argue

there are some things you are failing to

see. In the greatest Tao nothing is

named: in the greatest disputation

nothing is said.’’

If this is brought forth into a modern stream of consciousness it

is seen in the idea that if one argues it is because of ignorance and

one ‘‘loses face.’’ If one claims superiority one is seeking personal

aggrandizement and one ‘‘loses face.’’ If one belittles his counter-

part by showing him to be wrong one forgets the idea of unity and

loses the Tao---the path, and with this one ‘‘loses face.’’

But what about the executive that enters a meeting late so

that his entry is separate from that of his subordinates. Is this not

personal pretentiousness? The answer is no---since the Tao recog-

nizes that there are differences which are to be accepted. It is living

life while noting these differences, which is the Tao.

XV. CONFUCIANISM

While Taoism seems, at first, to have an identity of its own,

there is an unusual compatibility with the teachings of Confucius.

292 THE INTERNATIONAL TRADE JOURNAL

Taoism is a mandate to live life but to live it within the created

limitations. For Confucius man is assigned a role in the nature of

things. It is said ‘‘Let the ruler be a ruler and the subject a subject;

let the father be a father and the son a son.’’

The ideal for Confucius was the Chun tzu which can be trans-

lated as a ‘‘Man of nobility,’’ or more perfectly, a gentleman or a

‘‘Superior Man.’’ It is the ‘‘Superior Man’’ who possesses upright-

ness or inner integrity, righteousness, conscientiousness or loyalty,

reciprocity, and human-heartedness. The ‘‘Superior Man’’ was a

man of culture. The ‘‘Superior Man’’ was the Renaissance Man of

500 B.C. but with more personal introspection.

To understand the concept of the ‘‘Superior Man’’ one has to

examine the Analects of Confucius. Whereas the Tao was fluid the

Analects reveal a far more rigid and structured approach to har-

mony. With Confucius the moral-social-political relationship and

responsibility begins with the three relationships: parents and chil-

dren, husband and wife, elder brother and younger brother, and in

each of these the superior member has the duty of benevolence and

care for the subordinate member and the subordinate member has

the duty of obedience. These three, then, are extended to the ruler

and subject, teacher and student, and friend and friend.

The relationship is based upon Jen, which is benevolence,

charity, humanity, love, and kindness. This is coupled with Li

which is propriety, good manners, politeness, and with Yi which

is right conduct, morality, and righteousness. One who possesses

or practices these responsibilities comes close to having Jen---the

character of the ‘‘Superior Man.’’ The ‘‘Superior Man’’ is right-

eous, trustworthy, practices filial piety, gives fraternal respect,

possesses familial affection, etc.

In Analect 15:23 Confucius said that ‘‘What you don’t like

done to yourself, don’t do to others.’’ In 15:17 he said, ‘‘The

Superior Man takes righteousness as the essence He actualizes it

through propriety, demonstrates it in humility, develops it by

truthfulness.’’ For Confucius and for the Chinese, the South

Boettcher: The Eastern Business Mind 293

Korean, and the Japanese the essence in being is ‘‘propriety’’ and

‘‘reciprocity.’’ Analect 4:16 states that ‘‘the Superior Man is aware

of righteousness,---Jen---The inferior man is aware of advantage.’’

For the Chinese it is Jen. For the Japanese it is Giri (Jiri)

which is just, right, and reasonable coupled with Ninjo which is

respect for the nature of things as given. Ninjo is the rule or rules of

conduct affecting Giri. It is written that Giri is the duty and even

the state of the person bound to a noted manner of behavior

toward another person. A person to whom Giri is owed cannot

demand the conduct owed. If he does he loses or violates his own

Giri. He ‘‘loses face.’’ The Giri of the subordinate is not the same as

the Giri of the dominant person. The relationships within Giri are

perpetual. The thread, then, is established. It might be said that

one who loses the Tao loses his Giri and the resultant is the loss of

Wa, which is ‘‘harmony.’’

XVI. THE SPIRIT OF CONTRACTS

Thus, for the Pacific-Rim business person, it is the spirit of the

contract rather than the semantics or the absolutes. For the wes-

tern business person seeking to sell pizza making equipment to the

South Korean, Chinese, or Japanese it is obviously important for

them to realize that in Japan the Japanese prefer fish on pizza. It is

obvious that demographics must be studied.

It is equally obvious that it must be realized that marketing in

Japan, in South Korea, or in China, is not just business. The

business relationship and the business environment fall within

the social-political-philosophical parameter, and this is still domi-

nated by ‘‘face.’’

In the Pacific-Rim ‘‘face’’ can be lost by a glance, a question, or

even an invitation. In Japan, for example, an excellent way for an

American business person to get to know his Japanese counterpart

is to entertain him at a good restaurant. That is not just a good

restaurant but an exclusive restaurant wherein the American has

294 THE INTERNATIONAL TRADE JOURNAL

‘‘face,’’ where the American is recognized for special treatment.

Take the Japanese to simply a ‘‘good’’ restaurant and he loses face

because he has received only average treatment. Take that Japanese

to an exclusive restaurant wherein the American is known by name

and vicariously by transference the Japanese gains ‘‘face.’’

The key is the Tao or Wa or Jen. It is the philosophy of the

‘‘Superior Man.’’ And it must be recognized and, consequently

treated with caution in that even if the Korean executive wears a

western style suit and orders a hamburger for lunch, lurking some-

where in that South Korean mind is ‘‘face.’’ If a Chinese business

person drinks warm beer from a bottle at some time the Analects

will dictate. If a Japanese business person expects to be taken to a

fashionable nightclub it is possible that Lao Tzu or Confucius or

even Budda will direct where he sits, how he is addressed and how

he is served.

XVII. CONCLUSION

It is not enough that the manuals teach the etiquette of pour-

ing wine for a dinner quest or bowing to the same angle as your

counterpart has bowed. What is important is to know what your

Pacific-Rim counterpart is thinking and even more important is to

know how he thinks or why he thinks as he does.

The American business person seeking to market pizza equip-

ment in the Pacific-Rim could do worse than review some of the

background of Taoism or Confucianism. He might, then, learn to

alter his approach to business and to recognize the subtleties of

Pacific-Rim behavior. He might realize that there is a depth to the

thinking in the Pacific-Rim countries, which cannot be learned

from a handbook.

REFERENCES

The Constitution of the People’s Republic of China. 1989. In Law

in the People’s Republic of China. Folsom, R. H. and Minan,

Boettcher: The Eastern Business Mind 295

H. ed. Dordrect, The Netherlands: Kluwer Academic

Publishers.

The Constitution of the People’s Republic of China---1982. 1987.

The laws of the People’s Republic of China. Beijing: Foreign

Language Press.

The Constitution of Japan---1946. In Japanese Constitutional

Law, Luney Jr., P. R. and Takahashi, K. eds. Tokyo:

University of Tokyo Press.

The Constitution of the Republic of Korea. 1969. In Laws of the

Republic of Korea, Seoul: The Korean Legal Center.

The Constitution of the Republic of Singapore. 1963.

Cameron, M. E., Mahoney, T. H. D. and McReynolds, G. E. 1952.

China, Japan and the Powers. New York. The Ronald Press Co.

Chiu, T. C. W., 1988. China Trade Agreements. Philadelphia:

Taylor & Francis.

Clissold, T. 2005. Mr. China. New York: Harper Collins.

Confucius. 1960. The Analects, Sources of Chinese Tradition,

J. Barzun, et al., eds. New York: Columbia University Press.

Crow, Carl, Four Hundred Million Customers, New York: Harper

& Brothers: 1999.

Contract Law of the People’s Republic of China. 1999. San Bruno,

CA: Bablecom.

DeBauw, F. and Dewit, B. 1982. Code of the Foreign Trade Law of

the People’s Republic of China. Brussels.

Fairbank, J. E., Reischauer, E. O. and Craig, A. M. 1973. East Asia:

Tradition in Transformation. Boston: Houghton Mifflin Co.

Fishman, T. C. 2005. China Inc. New York: Simon & Schuster.

Folsom, R. B., and Minan, J. M. 1988. General Principles of Civil

Law: Law of the People’s Republic of China. Dordrecht, The

Netherlands: Martinus Nihoff.

Inoue, K. 1991. MacArthur’s Japanese Constitution, Chicago:

University of Chicago Press.

Japan---The Commercial Code. 1989. Basic Laws of the World.

Ormand Beach, FL: Foreign Tax Law Publications.

296 THE INTERNATIONAL TRADE JOURNAL

Kim, C., and Lawson, C. M. 1989. The Law of the Subtle Mind.

Modern Legal Systems Cyclopedia, Redden, K. M. ed. Buffalo,

NY:.

Korean-The Commercial Code. 1989. In Basic Laws of the World.

Ormand Beach, FL: Foreign Tax Law Publications.

Laws of the People’s Republic of China, 1979--1982. 1987. Beijing:

Foreign Languages Press.

Lee, L. T., and Whalen, U. L. 1989. The Chinese Conceptions of

Law: Confucianism, Legalism and Buddist. In Modern Legal

Systems Cyclopedia, Redden, K. A. ed. Buffalo, NY: Willialm

S. Hein Co.

McGregor, J. 2005. One Billion Customers, A Wall Street Journal

Book. New York: Free Press.

Muller, C. ‘‘The Analects of Confucius’’ translated 1980

www.hm.tyg/jp-ac,I;;ercpmtacama;ects/htm.

Regulations of the People’s Republic of China. 1997. Hong Kong:

Institute ‘‘The Constitution of the People’s Republic of

China,’’ Statutes and of Chinese Law Ltd., and University of

East Asia Press.

Zheng, H. R. 1988. China’s Civil and Commercial Law. Singapore:

Butterworth & Co.

Boettcher: The Eastern Business Mind 297