In today’s economy China has become a big player. If you look at many of the products in your house, most of them probably say made in China. With China being a partner to a lot of US businesses we have to be sensitive to the culture and traditions in China. To put this simple China has a different way of doing business than we do and in order to become successful when expanding into China we need to understand and accommodate those differences. While there are many cross-cultural differences between the US and China I will look at three of them. Three of those cross-cultural differences you need to understand and accommodate before you expand into China are ethnic culture, priorities, and decision making.
The ethnic culture of China varies greatly from that of the US. Chinese people are more focused on relationships and group work while Americans are more individuals. Chinese tend to be more courteous and create personal relationships with their co-workers. Americans tend to be more direct and put business above personal relationships. Because of these differences, Americans tend to put conflicts behind them quicker for the betterment of the business and Chinese tend to take things more personally and it takes them longer to put conflicts in the past. Chinese also respect people based on age and wisdom whereas Americans tend to respect success and achievement. When expanding into China you need to address the ethnic culture in order to build a strong team and work force. You cannot be as direct and commanding as you are in the USA.
The ethnic culture also influences the next difference which is priorities. While the majority of Americans put business as a top priority the Chinese priorities are more mixed or blended together. The Chinese priorities are individual, nation, and business at the top. This goes back to the strong community culture that is present in China. Business is not necessarily more important to them then their own needs and relationships. Also they are proud of their country so they are more likely to put the country above the business. This difference also goes back to the ethnic culture since they put more emphasis on wisdom than they do on success. As Americans we are the opposite we link success with wisdom.
The last cross-cultural difference is decision making. When expanding into China we need to realize that we will not get the quick response in regards to making decisions. The reason behind this is they favor a group decision making model with the top person validating the group’s decision. The reason for group making decisions is that they value credibility and group decisions stop people from losing credibility if the decision fails. Americans favor authority and therefore can make quick decisions since they do not always feel obligated to make decisions as a group. Americans favor authority because we view business as a competition and a win means success. Since Americans favor authority this can be mistaken in China as being a bully and the Chinese look down on bullies. While dealing with the Chinese we need to be sensitive to these differences in ethnic culture, priorities, and decision making to build relationships and create an effective workplace. We need to realize that because they are not as outspoken and aggressive as we are that they still make good decisions and are not inferior or weak.
The 4Ps that companies value are also very different in China. Products, price, promotion, and place all need to be modified to fit the Chinese culture. The Chinese do not value the same products that Americans do. Cars are a great example of this. Americans value big cars, trucks and SUVs. The cars that are most popular in China are the smaller economical cars. Since the differences exists you need to change your product to fit the market. If I was to go to China and only sell SUVs and Trucks my company would not do as well as a company that sold economical vehicles. Beyond what the Chinese value you need to modify the products you do sell to meet Chinese regulations. You would have to change the speedometer to reflect the metric system. The owner’s manual would need to be in Chinese instead of English. Diesel vehicles would need to be built without the DEF system since DEF is not readily available in China. As these examples show products need to be modified for the needs and styles of the Chinese culture.
Pricing also needs to be adjusted when selling products in China. The medium income in China is not as high as it is in America. Because of this the Chinese cannot afford to spend the same amount on products as Americans do. Lower pricing would be required in order to be successful in the Chinese market. Along with base prices you would also need to consider any taxes or tariffs that would be imposed by the Chinese government. Another thing to consider is how Chinese look at products and prices. Americans have come to accept products as disposable. In China people look at products as a social status. They would be more willing to spend the extra money on quality products that can be displayed than products that are used when no one will see them. The Chinese often associate price with quality. If something costs more it must be a better product and can be displayed proudly.
Promotion is another P that is different in China then it is in America. Promotion is marketing and exposing the people to your product. In America it is easy to promote a product. We get most of our exposure to products by watching TV or surfing the internet. In China TV and the internet are highly regulated so getting advertisements to the consumer is a little bit more difficult. The way products are displayed need to be fitted to the culture as well. As explained earlier Chinese prefer and value groups. If you could put a social twist on a product the Chinese would be more likely to buy it. The company needs to interact with the public as well since the Chinese develop and maintain deep relationships. Americans want to learn about the product and make a decision but the Chinese want to build the relationship and buy the product. This difference also spills into the place P.
The place p is the distribution channels that exists in China, or how we distribute products. It is simpler in American than it is in China. This is in fact because Americans do not value the face to face interaction like the Chinese do. Americans look for the easiest and fastest delivery possible. Often times this is done remotely by a delivery service. The system of roads, rail, and air that is in place in the United States makes it easy and fast to transport products from the distributor to the consumer. The internet has become a popular way to do business in the US because the ability to research, order, and ship the product is fast and easy. People in China on the other hand value the face to face interaction. Personal delivery or pickup is the preferred method to transfer products. This allows the buyer to form a personal relationship with the seller. This is a labor intensive and expensive way to do business, but it is necessary to create the personal bond that Chinese culture values. The infrastructure of China also makes it more difficult to ship products as it is not as advanced in the out laying regions.
One of the biggest ethical issues of doing business in China is bribery. In the US there are numerous regulations and policies against bribery but in China bribery and corruption are common in the business world. This becomes an issue since we look down on bribery and corruption. Bribery in China can come in many forms. It can be as simple as a lavish dinner or as obvious as kickbacks. Moral issues have stopped many US corporations from allowing its employees from receiving gifts or dinners from suppliers or customers. This is an issue when dealing with the Chinese since it can cause hard feelings between people if a bribe or kickback is turned down. For the Chinese this is just business as usual. It goes back to the Chinese culture being group oriented. They are more focused on the relationship and harmony of the business than they are on the productivity. Another ethical issue is speaking out against the authorities. In China it is against the law to speak out against the authorities; it is considered insubordination. This is a big difference from the United States where we are encouraged to voice our opinion. In fact, companies use lobbyists in order to voice the opinion of companies and get regulations changed or passed. Companies cannot do this in China and would face jail time. The company expanding its operations would have to realize they cannot speak out against the authorities and adjust the policies for that region accordingly. Another issue with not being able to speak out is that employees would not speak out against other violations such as discrimination and labor issues. This could cause problems not only in the Chinese market but also in the American market since we value equality in the work place. Such a violation could cost the company product sales along with legal fees trying to defend itself.
So doing business in China would force a company to change its overseas operations in many ways. You have to be sensitive to the culture, ethics, values, laws, and morals of the host country. It is especially hard when the values in a country like China differ so much from the values of America.