A Culture Briefing of the Chinese Business Environment - Research Paper Example

Running Head: International Business Management A Culture Briefing of the Chinese Business Environment Introduction China had progressed from being an impoverished country to becoming one of the world’s economic superpowers. China’s economic expansion has been remarkable in the 1980s and especially dramatic in the recent decade with a general rate of almost 10 percent, establishing China as the world’s fastest developing economy (Cooke, 2005). By the 1990s, China had become one of the biggest recipients of global foreign direct investment and there were almost hundreds of thousands of joint ventures and/or foreign funded contracts worth billions of dollars (Selmer, 1998). In 1953, China adopted the Soviet industrial paradigm, imitating a product economy paradigm, by implementing a consolidated command structure of macro-management and initiating a Five-Year Plan (Cooke, 2005). A Soviet system of top-down management was initially instituted at the enterprise level. Soviet specialists transferred into China, launching a large number of industrial factories and educating the Chinese how to manage them (Lam, 2000). Decision-making powers were given to managers, the ‘one director management system’ (Selmer, 1998, 175), establishing the groundwork for present management styles and practices. Yet, this foreign mechanism depended on technically educated director of which China was lacking during the time and the Soviet paradigm was incapacitated by reforms in the 1950s and 1960s, when plan managers were made accountable for executing plans of the party committees (Selmer, 1998). This structure was then dislocated by the Cultural Revolution, damaging the reputation of directors while the authority to command was granted to the delegates of revolutionary workers supported by dogmatically dedicated part committees (Lam, 2000). Thus, there existed a party system in each venture functioning independently from the directorial system and there were no explicitly established rules of power distribution between party representatives and managers, usually leading to managers attempting to be secretaries and venture directors of the local party group (Lam, 2000). A grand reform initiative was launched after 1978, starting from the rural areas and then progressing to the metropolises (Alon, 2003). The prevalent development since then has been a slow drop in range and content of state planning regulation and the customary bias against the function of the market has slowly transformed and the market system has underwent massive development (Alon, 2003). In essence, the Chinese economy since 1978 has transitioned from a product economy paradigm to a market economy paradigm (Cooke, 2005). The path of development obtained from this brief historic look is apparent. In spite of current growing difficulties and crises in different segments of the economy of China, a sustained intensified marketization potential appears highly possible (Lam, 2000). As in majority of contemporary market economies, financial and political control will be the primary vehicles for government consolidation of the economy (Alon, 2003). Nowadays, setting up new trade and business contracts as well as negotiating joint ventures and subsidiaries, the population of foreign business individuals is growing remarkably, enlarging the domains of managerial boundary between Chinese nations and foreign business employees and/or representatives (Selmer, 1998). This essay thus will aim to present a culture briefing of China for business people who plan to lead a new venture in the country. The Cultural Value Systems of China A number of scholars, most notably Hofstede (1980), studied core power relationships and networks in the workplace between managers and employees. In his study, different countries were categorized as cases of high power distance in so far as less powerful individuals recognize the norm of disproportionately distributed power (Selmer, 1998, 176); accepting that their bosses are accurate in their managerial decisions anchored entirely in that boss’s authority. On the contrary, the rule for employees in low power distance organizations is to ascribe accurate decisions to managerial or leadership capabilities, rather than to authority (Selmer, 1998). The power distance factor measured traits of authoritarian managerial approach within social systems, though is not intended to subjectively classify all individuals within any given social system (Alon, 2003). Although China was not categorized in that research, Chinese nationals were classified as being on the scale’s high end whereas the US was ranked low (Cooke, 2005). Hence, a business individual from the US has to become aware that there is a powerful hierarchical system in China (Cooke, 2005). In order to become successful in China’s business environment one has to rely largely upon on eagerness to recognize authority in a more absolute way than s/he is possibly familiar with. The second primary cultural domain, individualism, is possibly the most studied of the cultural variables of Hofstede. High individualism normally positively correlates with low power distance, and collectivism or low individualism with high power distance (Lam, 2000). Although the culture of China is highly collectivist by tradition and commonly adopts high power distance managerial approaches, there is an emerging large-scale entrepreneurial development in business (Lam, 2000). The business individual from the US will immediately learn that autonomy is received in the more recent co-culture, while simultaneously managers are respected for their knowledge. The power distance attribute is dominant within family relationships in China as well (Alon, 2003). The family is extended and structured; a number of generations usually cohabit in paternalistic way (Alon, 2003). The importance of this is that the family power distance variable is also noticeable within many large-scale firms. Numerous of the more recent industries in China are largely managed by entrepreneurs (Cooke, 2005). Although foreign investors are usually appreciated, Chinese families keep hold of administrative power and members of the family sit in top management positions (Lam, 2000). In order to become successful in the Chinese business environment one has to balance his/her autonomy within the vastly collectivist nature of Chinese family arrangement and business. The third cultural factor determines masculinity (Selmer, 1998). As defined by Hofstede (1980), “the predominant socialization pattern [in high masculine cultures] is for men to be more assertive and for women to be more nurturing. In addition, there is a relationship between the perceived goals of the organization and the career possibilities for men and women” (p. 261). High masculinity includes components of boldness and power, whereas low masculinity structures give importance to nurturing, quality of life, and people. China, as well as the US, was categorized in the middle scale between low and high masculinity (Selmer, 1998). The Chinese contend with risk by collectivist norms and practices through a secured and strong system of interpersonal relationships (Lam, 2000). One evident communication trait of Chinese managers is that they are not apt to deal with business issues openly as they are often discomfited conducting business with foreigners or total strangers (Alon, 2003). Casual issues are talked about until the personality of the stranger can be assessed. On the contrary, communicators of direct approach management in regions such as the UK or US are less apt to invest a considerable amount of time getting to know an individual first (Selmer, 1998); possibly not even caring or desiring to know the stranger (Lam, 2000). Western expatriates’ use of the direct communicative approach in China can be perceived as being offensive or too confident or impertinent by Chinese host, where relationships and mutual reliance are powerful attributes in relational structures (Cooke, 2005). This value of relationships in the Chinese culture originates from particular cultural sources in the Confucian tradition (Cooke, 2005). Confucianism is “a set of rules for successful living that emphasizes, among other things, a long-term versus a short-term lifestyle” (Selmer, 1998, 178). Confucian principle involves family collectivities, duties of relationships, modest living and righteous behavior toward others (Selmer, 1998). It is notable to emphasize that this lasting practice, as observed in China, has been related directly to economic progress (Alon, 2003). Advocates of this principle ascribe the economic progress of Asia to one cultural origin; origins furnishing situations for Asia’s competitive business successes after the Second World War (Cooke, 2005). The hypothesized relationship between economic progress and long-standing Confucian principles over the past several years was measured in a Long-Term Orientation Index (LTO) (Selmer, 1998). China is the highest among other Asian countries on the LTO index (p. 177). Although an interesting case can be shown in favor if LTO cultural principles as being imperative for economic progress, the belief that culture is the only determinant is one-dimensional (Alon, 2003); political, market and economic forces evidently affect GDP outcomes. For instance, the high GDP growth rate of China all over the 1980s and 1990s should be ascribed to their recently instituted open market policies rather than merely to aggressive cultural reforms in China during that period (Alon, 2003). Experiences of employees, managers, and or organizations in China should provide further quantitative and qualitative information with regard to long-term plans and the success of Western expatriates in China. A study was carried out by several researchers to help assess the success of international assignment. These researchers aim to carry out this study over a number of months and to evaluate the findings through ethnographic interviews with US business employees on long-term missions to China (Lam, 2000). Several of the preliminary interviews were carried out in Beijing in 1997 with successful large-scale US businesses in China (Lam, 2000). At present, assumptions can be made that success of a business in China is mainly determined by building enduring trust relationships. Although all the traits of the LTO are not directly linked to proficiency on global management communication, one feature of specific importance to lasting building of relationship in China is the Confucian domain of determination against fast results towards gradual results (Cooke, 2005). This trait has within it the means to building productive long-term business relationships in China (Lam, 2000). Although there is no direct English version of guanxi, or roughly ‘connections’ in English, the rich symbolic plot surrounding the notion can possible be enclosed within a concept called peopleizing (Selmer, 1998, 180): “a communication process that develops mutual relationships”. However, the description of the concept captures a lot more (Selmer, 1998): peopleizing is “a communication strategy that imparts priority to long-term relationship building over that of the completion of short-term functional tasks” (p. 180). Conclusions and Recommendations Potential business success in China will be awarded to individuals who develop competence in building long-term relationships. International business accomplishments will be determined largely by the communication approach of the management to long-term developing of relationship. This recommended communication technique is a complete deviation from current management tradition widespread in numerous international businesses in the US. While multitudes will oppose, claiming that communication and culture are not predictors of economic achievement, more managers are becoming knowledgeable of the significance of this element. Competence in communication, aside from managerial skills and quality of product mechanisms, is an integral element to achievement within China’s business environment. It is thus logical to assume that competence in global management communication will developed into a more enhanced academic subject; a venture engaging intellectuals within multiple disciplines. Scholars are endowed to explore, then further the communication knowledge that is needed by global management practice. New sets of knowledge are being discovered and new models are developing to address these needs. Definitely all studies should not be inspired by simplicity, though there is a potential to make significant functional contributions in this domain. A great deal of the effort that has been carried out thus far reveals Western understanding or limitedly oriented cross-cultural analysis. Basically, it is important for those who plan to work in China to always remember that Chinese normally practice an indirect form of communication. This can be wearisome to US business individuals, who favor the other approach. Even though there are several languages used in China, only two are used as main business languages: Cantonese and Mandarin (Cooke, 2005). And although it is always important to use the host country’s language, these are very complicated languages to learn or be proficient with. Thus, as a manifestation of respect, it is definitely appropriate if employees learn to be essentially social, but they should not be bothered about their proficiency unless they are planning a long-term assignment to China. Hence, an employee planning to work in China should attend some organized cross-cultural training first. These cross-cultural training courses are intended to train employees in understanding that Chinese culture is somewhat different from their own. What can employers to is motivate their employees to be foreigners with an understanding of how their conduct or actions will be perceived by the Chinese. And if these employees can change several things they could have desired to do without second thoughts, then they are certain to have a more productive venture with their Chinese counterparts. References Alon, I. (Ed.). (2003). Chinese Culture, Organizational Behavior and International Business Management. Westport, CT: Praeger. Cooke, F. L. (2005). HRM, Work and Employment in China. London: Routledge. Hofstede, G. (1980). Culture's Consequences: International Differences in Work-Related Values. Newbury Park, CA: Sage. Lam, M. (2000). Working with Chinese Expatriates in Business Negotiations: Portraits, Issues, and Applications. Westport, CT: Quorum Books. Selmer, J. (1998). International Management in China: Cross-Cultural Issues. London: Routledge. Read More