China has for centuries been a dream for western businessmen because of its vast size and population. The chance to bring a product to China and win a part of the potential market has caused foreigners to flock to China after the doors to the Middle Kingdom were gradually opened to the rest of the world in the late 1970s. This inflow of foreign businessmen was also encouraged by the Chinese government who needed the investments and business in order to bring China closer to modernization at a fast pace. Though the government has shown fluctuations in their policies towards the foreign business conducted in China as conservative and liberal forces within the government have battled for power. The prevailing attitude seems to be one where the presence of foreign businessmen is tolerated and to some degree encouraged as the money, technology and knowledge that they bring is essential for China’s development, but at the same time the government attempts to keep a short leash on them and control their activities as much as possible in order to avoid exploitation or a situation where China becomes vulnerable and dependent. The massive presence of foreign and in particular western businessmen in China has made the issue of business negotiations a hot topic, especially because of all the problems and difficulties that are perceived as being present in the situation of cross-cultural negotiation. Not only is the Chinese negotiator in a special position as he or she will know that China has something that the foreign part wants, and most likely has actively sought out by coming to China in order to do business, and thus they can make demands and still end up with a deal. The Chinese also have the advantage of operating on their home turf, as the foreigners come to them, and thus they are the host of the negotiations and have more control over the proceedings. In addition to the Chinese side starting out with some advantages, there are other issues complicating the matters. The language barrier is hard to surmount, and the presence of an interpreter might have an effect on the proceedings of a business negotiation. The many accounts of the experiences of western businessmen in China that are sold in bookshops around the world suggest that China is a rather different place to operate in, and that there are many possible dangers that might arise when westerners and Chinese attempt to negotiate a business deal. The most prominent source of difficulties in cross-cultural negotiations seems to lie in the cultural backgrounds of the participants in the negotiations. It might be too easy to blame all difficulties that arise on culture, this troublesome concept that is so hard to define. A person cannot be seen simply as a vessel for his or her culture, there must be given room for individual personalities and other sources of influence on actions that are taken. But it also seems impossible for a person to act totally independently from his or her culture, it will always be a part of the mindset and will be likely to color a person’s thinking and actions. Difficulties might arise when people belonging to different cultures attempt to negotiate and thus are forced to in some way adapt to the culture of the other person, or at least understand it and make allowances for it. If there is little understanding between the parties, or maybe wrongful assumptions, the ground is laid for misunderstandings and problems in the negotiating process. Further complicating the situation of business negotiations in China is the fact that the cultures of Chinese and westerners are so fundamentally different. The Chinese practices of guanxi for instance, can be difficult for a western businessman to fathom, just as a Chinese businessman might have difficulties dealing with the directness of a westerner. The westerners and the Chinese also adhere to very different business practices, and have for instance different tactics and strategies to gain advantages in a negotiation, practices that might puzzle a negotiating partner new to the situation. Some have suggested that an international business culture is evolving, but though new ways of thinking and corporate practices are developed, it seems unlikely that a national culture can be completely shelved.The special situation in China when it comes to politics and the legal environment also complicates the picture. The Chinese government is still very much involved in the business carried out on domestic soil, and negotiators will have to take into account government policies when working out a deal in China, something that might limit the freedom of action in certain ways. Chinese policies are known to be subject to quick and extensive changes, thus creating an unstable business situation. The underdeveloped legal system in China contributes to an insecure business environment where a signed contract cannot be trusted to be observed and legal redress is not really an option. Take for instance the state of intellectual property rights in China today.Through the method of discourse analysis I have analyzed collected material from a business negotiation in China where an Australian businessman, a Chinese cartoonist and bureaucrats from a Chinese town attempt to arrange a performance for children. The transcript of these proceedings, though suffering from certain weaknesses, offer insight into the situation of negotiation between westerners and Chinese. I found instances of difficulties that support the theory that cross-cultural negotiation are indeed subject to certain obstacles. Certain types of behavior shown through speech acts seemed to be misunderstood, such as the display of politeness on both sides and the directness and indirectness shown by the western and the Chinese party respectively. I also suggest that a few Chinese cultural keywords that I identified in the transcripts, “cooperate,” “common understanding” and “help,” carry some connotations that are most likely overlooked by the western party. The most telling evidence of misunderstandings in the proceedings was found in the private conversation held among the side of the negotiations that I was very fortunate to obtain a transcript of. Their discussion suggests with some certainty that there were indeed misunderstandings and uncertainties during the negotiations, which the Chinese side sensed but could not quite solve. I found that there was a case of non-alignment, as the parties did not understand the intentions of the other with regards to the basis for purchasing equipment for the performance. Despite the lack of understanding, the parties continue the negotiation on the basis of the misunderstanding, creating an awkward situation as shown in the private conversation.The private conversation also offers insight into the view held by the Chinese concerning the interpreter, as they are aware that his translations are not accurate. The problem of finding good interpreters in China is a grave one as there is a lack of qualified candidates, and thus it is often necessary to resort to less qualified interpreters that might harm negotiations. This problem is further aggravated by the fact that Chinese interpreters tend to step out of their neutral role and meddle in the negotiations, as it seems that participants do not always strictly adhere to their given role. Due to the weakness of the material and a limited timeframe, I cannot make bold or weighty statements, but I humbly suggest that there is a link between cultural background and negotiating behavior, and that this affects negotiations between Chinese and westerners to a larger extent as the gap between the cultures is a large one. I also suggest that the cultural differences are in many cases the source of difficulties that might arise in the process of cross-cultural business negotiations.