Trust in China


One day, in the autumn of 2009, I was riding my bicycle to the university. Suddenly, I was blocked by a traffic jam. I had to make a cut through one of the lanes. Just as I was cutting, a taxi driver was turning in my direction. I could not help but hit his right mirror with my hand, causing the mirror to fall and break on the ground. The driver demanded money for the broken mirror. It so happened that I was not carrying enough money to reimburse him for the mirror, so he agreed that I take his phone number and that I call him at a later time to give him the money.

Because the taxi driver trusted me to pay him back the money he deserved, the dispute was settled peacefully. However, other disputes are not always solved this way and can sometimes end in cheating and in acts of mistrust.

言而无信 (yan er wu xin) is a Chinese phrase literally meaning “the failure to keep one’s promise; go back on one’s words.” Going back on one’s words is acceptable in China, and numerous are the times when individuals agree on a price or conclude a deal, yet after the agreement, one of the parties raises the price or changes some aspects of the deal, thus “going back on his words.” This occurs due to lack of trust between the parties and due to motivation of one of the parties to try and gain more from the deal.

In a recent discussion group I had started on a website called Linked-In, I asked “if companies that are cooperating in China wish to achieve one goal – success, and that goal means money and prestige delivered to both sides, where does the motivate to cheat come from and why is it there?” One answer that left a mark on me was posted by Mr. Adrian Allen. He writes: “Another big issue is the different understanding of what a contract actually is. Whilst in the West we tend to see a contract as a final agreement binding both sides to do as agreed and setting out penalties if one side defaults, Chinese see a contract more as a discussion document. In many Chinese contracts we see the term any dispute will be settled by friendly negotiation. In general we hate this type of term. Not because we wouldn’t want to settle problems in a friendly way, but more because we believe it is better to be much more prescriptive. Our Chinese clients often see this as a very aggressive way of doing business where as we see these negotiations as a key part of doing business where each side commits to the other.”

Despite precautionary measures, when a dispute rises, the problem remains on how to resolve it. For that matter, a solution was found in the form of arbitration or mediation. According to Chinainfolaw, a leader in online Chinese legal research, mediation is “an effort by a third party to encourage parties to a dispute to voluntarily reach an agreement to resolve their dispute”, while arbitration is “a legal arrangement whereby both parties to a civil (commercial) dispute reach an agreement to voluntarily submit the case to a third party to adjudicate in accordance with specified procedures and rules and following the principle of impartiality, and whereby both parties are bound to enforce the ruling.”

These methods are becoming very popular and recognized by many business and government authorities in China. They prove to be efficient in resolving disputes and have come a long way since they were invented a few decades ago. One can only hope that these methods will prove effective in preventing people from cheating others, although there might be a long way to go until that happens.