Impact on Chinese Culture on International Business Analysis

Table of Content

At present time, most companies are exposes to operate internationally. This further emphasis by the declaration of globalization among countries, which willing or unwillingly a company should expand to another country to success. One of the emerging markets that show an enormous development and will be the future world economy is China. Many western companies see China as a huge consumer demand and future prospect (Coyler, 2005). The main complexity is lies within the Chinese culture than regulations.

So, the international business could help foreign countries to do business in other countries. 1. 2 The Objectives and Scope of the Report The main objective of this paper will try to find out business relationships in China and the impact of foreign market especially Western and Asian companies intending to do successful business in China. The scope of the study will focus on the cultural dimensions to explain the impact of Chinese business style to Western and Asian companies.

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2. 1 Power Distance

  • 2. 1. 1* Power Distance in China
  • 2. 1. 2 Power Distance in the USA

Power Distance in the USA has a low power distance (see table 1). This indicated that US has flatter organizations, supervisors and employees considered almost equal; tips to approach are use teamwork and involves as many people in decision making (MindTools, 2009, internet). As low power distance, there will be equal distribution of power and wealth. This is very contrasted with China has a high Power Distance dimension. So, for westerners should noted on these issues before entering China.

2. 1. 3 Power Distance in Indonesia

According to Hofstede, Indonesia has the highest rate in at 78 (see table 9).

Similar to China, its indicate a low level of wealth and power distribution and was accepted as cultural heritage (Hofstede, 2003c, Internet). This inline with China’s dimension and will be not be big issues for Indonesia to enter the Chinese market. 2. 2 Individualism vs Collectivism *2. 2. 1* Individualism vs Collectivism in China Individualism in China is found to be the lowest compared with many other countries, which score only 15 (appendices table 4) as a contrast to the US at 91 (Kriss S. & Sagatori, 2006, internet). From the article Turkovic (2007) stated that strong leadership is on company ethics and principle.

This would indicate the Chinese low level of individualism or focus on group. It showed that China has a strong commitment with groups and loyalty to members of groups is value at high price (Kriss S. & Sagatori, 2006, internet). Additionally, Hofstede found that low Individualism (IDV) has characteristics like work for interinsic rewards and harmony more important than honesty (MindTool, 2009, internet). Westerners who want to enter Chinese market should show respect on age and wisdom, suppress feeling and emotion, and respect tradition and introduce change slowly (MindTools, 2009, internet).

Nakane from the research of group with low IDV found that managers and workers will be discouraged to move from company to company (Hill, C. W. L. , 2005). 2. 2. 2 Individualism vs Collectivism in USA Individualism in USA was rated at the highest at 91 point (Hofstede, G. , 2003b). High Individualism has the characteristics of value high on people time and freedom, enjoyment of challenges and rewards for hard work, and respect for privacy; with some tips to handle are acknowledge accomplishment, do not ask too much personal information, and encourage debate and personal ideas (MindTools, 2009, internet).

Benefit of individualism is high level of entepreneurship in activities such as developing new products, but will have difficulties in building team or achieved team’s objective (Hill C. W. L. , 2005). This section truly opposite with China and should be noted before entering. 2. 2. 3 Individualism vs Collectivism in Indonesia Indonesia has the lowest ranking in individualism at 14 (see table 9), this indicate Indonesia is truly country of collectivism (Hofstede, 2003c, Internet). Relevant to Chinese, Indonesia will have similar share of common with China. 2. 3 Masculinity *2. 3. 1* Masculinity in China

Masculinity in China is approximately aligned with the rest of the western countries (see table 5). Within this role there will be no difficulties for entering China market by westerners. Moderate masculinity characterized by clear different roles from men and women that should aware of expectation from men and women job and men should not discuss emotionally (MindTools, 2009). While low are characterized by a woman can do anything a man can do, powerful and successful women; with some tips avoid ‘old boy club mentality’ and ensure job design and practices are not discriminatory (MindTools, 2009).

So China might be in between of high and low. 2. 3. 2 Masculinity in USA Masculinity in USA was considered high as shown in table 1. This means USA has a high degree of gender differentiation with male domination on society and power structure (Hofstede, G. , 2003b). High masculinity in USA might encounter different masculinity with China as in average level. 2. 3. 3 Masculinity in Indonesia Masculinity in Indonesia shown an average level at around 42 (see table 9), which indicate some proportion for men and women roles in society (Hofstede, 2003c, Internet).

Once again this is relevant to China dimension at moderate level of Masculinity. 2. 4 Uncertainty Avoidance 2. 4. 1 Uncertainty Avoidance in China Comparing with other westerner countries, Uncertainty avoidance in China relatively low at around 30 point (table 6) Low Uncertainty Avoidance has the characteristics of informal business attitude, concerned with long term strategy than daily, and accepting change and risk (MindTool, 2009). Some tips to handle are do not impose rules and structure unnecessarily, be calm and contemplating situation before speak, and express curiosity when discover differences (MindTool, 2009, internet). . 4. 2 Uncertainty Avoidance in USA USA has a relatively low uncertainty avoidance at 46 compared with the world average at 64 (Hofstede, G. , 2003b). This is in line with China, which has lower rate at 30. Within the low rate it is not difficult for USA to enter China by considering this dimension. 2. 4. 3 Uncertainty Avoidance in Indonesia Indonesia uncertainty avoidance was considered low at 48 (see table 9), this is also similar to China category that shown a low level of uncertainty Avoidance (Hofstede, 2003c, Internet). . 5 Long Term Orientation 2. 5. 1 Long Term Orientation in China According to Hofstede China has the highest long term orientation in their culture as shown in table 7. In this case, China ranked highest at 114 compared with most other countries, which means time is important and societies willing to overcome any obstacles over time (Kriss S. & Sagatori, 2006, internet). This indicate when making a deal time is important and Chinese needs longer time to make decision (Kriss S. & Sagatori, 2006, internet).

Additionally, high long term orientation shown characteristics of family as the basis of societies, parents and men have more authority than younger people, strong work ethic, and high value on education andt training (MindTool, 2009). Some tips when encountered this situation are respect to tradition, no display extravagance, reward, loyalty, preservarence, commitment, and do not do anything caused other to lose face (MindTool, 2009). 2. 5. 2 Long Term Orientation in USA Within this dimension, USA has low level of long term orientation at only 29 (Hofstede, G. 2003b). This was truly different from China as a highest long term orientation. Low level have the charateristics of promotion of equality, high creativity, treat others like yourself, and self-actualization; with some tips to handle like expect to live by the same standards, respect others, and introduce change (MindTools, 2009). US will have more on spending culture and will have a hugh borrowing funds compare with China will save for next generation. 2. 5. 3 Long Term Orientation in Indonesia Indonesia has a low level of long term orientation as mention in table 1.

This is the only dimension that contrasted with China at high level, which means Indonesian will spend more and save less for latter. 3. 0 Weaknesses of Hofstede Finding Hofstede assumed one culture applied to nationwide; however one country may have different culture (Hill, C. W. L. , 2005). This is relevant to current situation where globalization took place rather than closed economy like Hofstede era. Hofstede’s research team was composed of Europeans and Americans in which it will cause bias on setting up questionnaires (Ball D. A. , 2008).

Lastly their researched was based on one company called IBM and this excluded lower social classes and unskilled manual workers (Hill, C. W. L. , 2005). 4. 0 De Mooji’s Research 4. 1 De Mooji Appeal on Hofstede In reference to Hofstede, Mooji argued that high power distance culture may refers to status of symbols, where low power distance for independence culture. Secondly, direct communication apply in individualistic, however indirect suited for collectivistic societies. Thirdly, masculine cultures tend to demonstrate personal success, while feminine concerned with caring for others and safety.

Fourthly, country with high uncertainty avoidance shown by structure, stability, looking good, feeling relaxed and comfortable, but low uncertainty avoidance reflected by less concerned with looks and concerned more with results on job (Mooji M. D. , 1997). 4. 2 Application on Mooji’s Research to China High power distance would indicate large differences in people social status. To add Mooji stated that symbol in China is important or culture, family, and belonging are grouped by symbol (Mooji M D. , 1997). Additionally, Mooji said that approaching to Chinese should be indirect way (1997).

Secondly Masculinity index is not so high than other elements (see table 7), but still feminine is not dominant in China. Tips to enter China Company must demonstrate some social status (Mooji M. D. , 1997). Lastly, the long term orientation in China is very high, which mean they find long-term obligations are important and they will save money or avoid paying high price for next generation (Mooji M. D. , 1997). 5. 0 The Important of Chinese Language From the article written one would impress Chinese must be able to speak few phrases and get respect (Turkovic D. , 2007, Internet).

This statement is supported by Mooji said that strategies to translate Western name into Chinese will contribute to great success and divided into three strategies like pronounce oriented (no meaning); creating meaningful Chinese name; and making new name has meaning in Chinese (2004). Furthermore Trompenaars & Woolliams argued that western name more accepted by the younger generation, while older preferred more translating to Chinese (2004). 6. 0 Impact on Companies Intending to Enter China For westerners companies will have a great impact for entering Chinese market, where they have extremely different dimensions compare to China.

Westerners should change its language or at least make it sound like Chinese words. In addition, their company culture should focus on collective work rather than individual rewards. However for Asian countries such as Indonesia will not find too much difference from China, this will be plus for them to negotiate and enter business with China. To add, a country to enter China one must be shown in symbol and focus on long-term orientation company. *7. 0 Changes in Trend* in the Future As mention earlier, changes will happen in the young generation, whereby acceptance on Western culture was started to be adopted. English language started implemented in school and women started to enter the role of men. In the future, there will be some value shifting in China compared with last period. This will be a good opportunity especially for westerners intending to enter China. However, some part should follow with Chinese culture rather than original business culture from home country adopted in China. 8. 0 Recommendation Business in China should concern about Chinese cultural effect.

Successful or not a foreign company might determine on whether they could meet its culture criteria. For Westerners, they must adjust their ways of operation as the culture really contrasted from China counterpart. According to Hofstede dimension, Westerner like American should adjust the company in term of team work than individuals, provide a large gap on hierarchical organization, and emphasize on top management. However for Asian, it’s approximately the same with Chinese’s cultural dimension and will not find so many difficulties in entering China market.

One main consideration within cultural dimension in China is that long-term orientation, whereby many countries did not focus on future goal or saving for next generation. This is applicable to both Western and Asian countries. Furthermore, within De Mooji research, some consideration relevant to article is the language of China, which company should translate their company name into mandarin in order to get acceptance such as Coca Cola is kekuo kele means tasty and happy (De Mooji, 2004). Additionally, symbol should be an important to show collectivism in China. 9. Conclusion Foreign companies intending to enter China market should take some consideration within different cultural dimension with China. This is applicable to Westerners who should take account more on its cultural differences with China nation. For Asian like Indonesia, should consider only the long-term orientation part. The weaknesses to test this analysis is that sample for Westerners is America and Asian is Indonesia, other word few sample was taken. So, culture will be a great impact for foreign countries intending to enter China market.


Taken from: Hofstede G. (1993), “Cultural Constraints in Management Theories”, Academy of Management Executive, February 1993, pg. 91 Table 2 {draw:frame} http://www. geert-hofstede. com/hofstede_china. shtml (2 July 2009) Table 3 Power Distance (PD) {draw:frame} Table 4 Individualism (IDV) {draw:frame} Table 5 Masculinity (MAS) {draw:frame} Table 6 Uncertainty Avoidance (UAI) {draw:frame} Table 7 Hofstede’s Cultural Dimensions – scores for China {draw:frame} Taken from: Hofstede G. , (2003a), “China Cultural Dimension? ”, itim International, cited on: http://www. eert-hofstede. com/hofstede_china. shtml (2 July 2009) Table 8 Hofstede’s Cultural Dimensions – scores for USA {draw:frame}

Taken from: Hofstede G. , (2003b), “ USA Cultural Dimension? ”, itim International, cited on: http://www. geert-hofstede. com/hofstede_united_states. shtml

(2 July 2009) Table 9 Hofstede’s Cultural Dimensions – scores for Indonesia {draw:frame} REFERENCES Ball D. A . , et. al. , (2008), “International Business – The Challenge of Global Competition”, 11th eds. , McGraw Hill, International Edition Coyler, E. 2005), “Branding with Chinese Characteristic”, Brandchannel. com, January 17 2005 cited on Cummings &Worley, (2002), “Organizational Development and Change”, 7th eds. , Mason Ohio, Thomson Learning Hill, C. W. L. (2005), “International Business – Competing in Global Market Place”, 5th eds. , McGraw-Hill Hofstede G. (1993), “Cultural Constraints in Management Theories”, Academy of Management Executive, February 1993, pg. 91 Hofstede G. , (2003a), “China Cultural Dimension? ”, itim International, cited on: http://www. geert-hofstede. com/hofstede_china. html

(2July 2009) Hofstede G. , (2003b), “ USA Cultural Dimension? ”, itim International, cited on: http://www. geert-hofstede. com/hofstede_united_states. shtml (2July 2009) Hofstede G. , (2003c), “ Indonesia Cultural Dimension? ”, itim International, cited on: http://www. geert-hofstede. com/hofstede_indonesia. shtml (2July 2009) Kriss S. , Sagatori (2006), “Hofstede’s Five Cultural Dimensions”, May 22, 2006, Customer Think, cited on: http://www. customerthink. com/article/hofstedes_five_cultural_dimensions (11th July 2009) Marcouse I. et. l, (2003), “Business Studies”, Hodder Arnold Press, 2nd eds. MindTool (2009), “Hofstede Cultural Dimension – Understanding Workplace Value Around World”, cited on: http://www. mindtools. com/pages/article/newLDR_66. htm

(9 August 2009) Mooij, M de (1997), “Global marketing and advertising, understanding cultural paradoxes”, Chapter 8: Value paradoxes in Advertising Appeals, Thousand Oaks, Sage Publications. Internationalisation reader course ID 4140 TU Delft, 2004. Mooij M. de (2001), “Convergence and Divergence in Consumer Behavior”, Admap, October cited on: http://www. ariekedemooij. com/articles/demooij_2001_admap. pdf (2 Sept 2009) Robbins S. P. , et al. , (2001), “Organisational Behaviour”? Pearson Education Australia Pty. Ltd. , 3rd eds. Surridge M. , & Gillespie A, (2004) “AS Business Studies”, Hodder Arnold Publisher, 2nd eds. http://www. justtheplanet. com/business-travel/business-life/2007/issue-1_may-07/business-life_business-in-china_dtk. php (11 September 2009) Trompenaars, F. & Woolliams, P. (2004), “Marketing Across Cultures”, Capstone Publishing Ltd, Chichester, England ~~~~~ THE END ~~~~~

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