The Difference in American and Chinese Culture Management - Essay Example

Introduction This essay discusses the difference in American and Chinese culture with taking into account a business deal between an American automotive electronics manufacturer Electrowide Inc and a Chinese manufacturer Motosuzhou. The discussion unfolds the hardships, hindrances, misunderstandings and difficulties faced by the Electrowide Inc representative team in China for closing a joint venture deal between the two companies for producing and distributing vehicles mainly in China. Chinese have a high context culture, which is that they are found to be more socially oriented, to be more confrontation-avoiding, and to have more trouble dealing with new situations (Hall & Hall, 1990). USA on the other hand lies on the opposite end of the spectrum being a low context culture. Typically in a high context culture like that of China while applying Hofstede’s cultural dimensions is it can be drawn that Chinese have high power distance that is there is high inequality amongst people which can easily be observed in their conduct and behavior as the rich, higher in rank and the older in age are perceived as more powerful and authoritative members of the society for example, like at Motosuzhou most Chinese organizations have a beauraucratic organization structure with decision making, control and managing power lying in the hands of the top management. As compared to US based firms who as per their cultural values have a lower power distance with a respect for equality allowing room for autonomy at lower levels of management as in the case of Electrowide, Inc. Secondly, individualism in Chinese culture is very low as compared to the US culture. Chinese have a highly collective society where people act in the interests of the group. Thirdly, Chinese culture dominates the role of men in their society making China a masculine society where men are preferred over women in the workforce and are given more benefits, offered higher salaries and favored over women. As the case study mentions men hold a higher proportion of the Chinese workforce as compared to women, “An overview of the labor force reveals that males account for slightly more than half of the workforce and occupy the great majority of leadership positions. Though traditional Chinese society is male-centered… (Stanbury) Furthermore, the instances where Tom and his male counterpart were more socially accepted at the casual get togethers and meetings with the Motosuzhou team where Barb was mostly side lined in discussions and conversations despite her fluent Chinese language skills. While on the contrary, in the US both men and women are given equal opportunities with no or very minimal gender biasness. Women are a huge part of social gatherings and conduct meetings, discussions and conversations with men at ease. Fourthly, uncertainty avoidance is observed to be low in most high context cultures and the same holds true for China, Chinese are also risk averse people. For instance, the dealings of Ai Hwa and Motosuzhou’s prolonged delay in discussing the joint venture (JV) details provides an example of Chinese being inherently ambiguous about their dealings. Furthermore, the incident before the article “Motosuzhou/Electrowide, Inc.: Guanxi in Jeopardy,” being published in the newspaper in the case study shows the extent of ambiguous dealings in China where the US officials (Tom and his counterparts) left Ai Hwa’s building confused. Culturally, uncertainty avoidance is high in the US where people like to keep things, clear, concise, timely and planned ahead of time. Lastly, long term orientation in China is high where people plan and prepare, aim and strategize in advance for the years to come. On the contrary, the US has low long term orientation which can be one of the reasons for more organization becoming ‘learning organizations’ and the trick behind the fast pace of innovation in the US markets. From the points discussed above it can be determined how the two cultures, that of the US and China are the varied and lie on two different ends of a spectrum. Chinese rely on networking, gunaxi and personal contacts to do business, they do not discuss matters clearly in a concise and clear manner and rather talk between the lines – confronting directly is not their style, Chinese take longer to make decisions, find it necessary to build personal relationships and get a background check before getting into a business deal like that of a joint venture with a foreign firm. Chinese have a rigid, dominating culture prefer keeping their own ways and prefer communicating in their own language. Chinese are less flexible in nature and not willing to allow out flow of profits from their country. All of these being the traits and the defining properties of Motosuzhou which were hard to understand by Electrowide Inc.’s representatives who born and bred in American culture found Chinese culture frustrating, uneasy to complying with and on top of all confusing. Tom and his team were unable to blend in with the strong Chinese culture and convince or better yet understand Ai Hwa and his team’s dealings which lead to difficulties in the negotiations between the two organizations for entering into a joint venture. Strategic Complementarity can be defined as the situation when two parties in this case Electrowide Inc. and Motosuzhou worked together as mutually agreeing with each other’s’ strategies and reinforced each other rather than being skeptical about each other motives and having trust issues. In addition, instead of complying with each other’s plans and objectives and finding a midway or a solution through debate and discussions the matter was discussed by either parties with the third parties in case of Motosuzhou with the Minister of Finance and Electrowide Inc. with the American law firm. Compatible Operating Policies - being unable to comply on the operations and handling of the joint venture could not come to terms as Electrowide Inc. wanted Motosuzhou to take care of the joint venture operations with a 51% ownership and control residing with Electrowide Inc. on the other hand Motosuzhou wanted a more balanced and equal representation by Electrowide Inc. Communication – as repeatedly described in the case study on various instances there was a huge communication gap between both the parties. The major reason being the cultural differences, lack of knowledge and expertise of Electrowide Inc.’s representatives and Ai Hwa’s inability to converse effectively. Lack of proper communication and led to misleading impression and picture for both parties which resulted in creating hitches and misunderstandings standing in the way of the joint venture. Trust is major issue concerning Chinese business men and people in general who prefer closing business deals through guanxi. Therefore, taking over a month by Motosuzhou’s team in their efforts to connect and establish informal contact / relationship with the representatives of Electrowide Inc. to build trust in them caused frustration, suspicion and uncertainty in the minds of Electrowide Inc.’s representatives -Tom and his team leading them to take drastic measures like that of going to an American law firm to generate a legal document in case of future misunderstandings. There was a lack of trust at both the ends which made it hard for the joint venture to be agreed upon. Electrowide Inc.’s team consisted of two men Tom, Mark Poters and one woman Barb. All three were well qualified and had been working with the organization for a sometime now with Tom being the oldest, well experienced and a loyal employee heading the team. The members chosen for the team were all from different backgrounds and department allowing a representation of three distinct strategic units to evaluate the terms and conditions needed to be agreed upon with by Motosuzhou in accordance with companies own strategic plans and objectives. Tom was a senior and well experienced currently heading the resource management department as a manager who was in a better position to assess the value adding and generating benefits Electrowide Inc. can attain from getting into a joint venture with certain proposed conditions with by Motosuzhou. Barb on the other hand had the skill of conversational Chinese and was able to understand and communicate with ease in the native language of the company they were planning to have a joint venture project with. Being able to talk in Chinese without an interpreter was an asset for the team in mainland China while trying to close a deal as Barb was able to easily grasp and understand the conversations and discussions and help her counterparts by explaining them as an insider- interpreter; Porters 5 forces currently held the position of a business analyst at Electrowide Inc. and was up to date with the finances of the firm, he focused on excellence and was bent on providing good results no matter what. Even though the selected team seemed to be a perfect mix of talent and expertise to carry out the task of signing the deal for a joint venture and paving the door way to international expansion for Electrowide Inc. there were some drawbacks and incompetency in the team send by Electrowide Inc. Even though Tom was experienced and loyal to the company he lacked exposure and expertise of dealing in an international context especially a technical one like China. Chinese have a masculine culture and do not appreciate or find it comfortable to sign business deals with women therefore despite her affluent spoken Chinese skill Barb was unable to be affective member of the team furthermore; her recent divorce could be another reason for her clogged judgment of events at certain instances. Lastly, Poters had a type A personality with the tendency to work for achieving a big goal in in the process of doing so is likely to speed up work in order to achieve results as fast as possible (Radwan, 2012), this attitude was unfit to negotiate with Motosuzhou which was run principally by Chinese cultural standards and took its own good time to develop their trust and ties before carrying forward with the business deal. Given the current situation Tom could get hold of a local say someone from the American law firm who is in a better position to explain the dynamics of the situation to Tom and help him deal with the matter more tactfully in a more subtle and trustworthy manner with Ai Hwa. Secondly, Tom can re- approach Ai Hwa and clarify the misunderstanding and confusion caused between both parties and come up with a revised proposal for the joint venture developing strategic complementarity. Thirdly, Tom can agree upon compatible operating policies to gain the best of what is left possible. Before any future negotiations by Electrowide Inc. it is important for the management to first and foremost do a background check, research and develop an understanding of the cultural differences, norms and values of the international / foreign country before sending a team for negotiations. In addition, some preliminary discussions and exchange of information should be done about the project and the company before sending out a team. Conclusion Therefore, keeping into view the above mentioned and discussed scenario it can be deduced that when companies plan to expand their scope of operations internationally they should be well prepared for it by having an insight into the cultural and social values of the foreign country/ market. Furthermore, being prepared and having beforehand knowledge about the foreign country can not only save companies from getting into misunderstandings it can also aid in making the process of negotiations and dealings easier, effective and beneficial. References Donghoon Kim, Yigang Pan, Heung Soo Park (1991), ‘High-versus low-Context culture: A comparison of Chinese, Korean, and American cultures,’ Volume 15, Issue 6, pages 507–521, September 1998, Psychology and Marketing . Retrieved on 27th April 2012 from: (http://onlinelibrary.wiley.com/doi/10.1002/(SICI)1520-6793(199809)15:6%3C507::AID-MAR2%3E3.0.CO;2-A/references ) Hall, E. and M. Hall (1990), Understanding Cultural Differences, Yarmouth, ME: Intercultural Press Inc. Retrieved on 27th April 2012 from: (http://jcmc.indiana.edu/vol11/issue1/wuertz.html ) Stanbury. J, Guanxi . Jeopardy. International Business Studies, Case Study. Hofstede. G. What About China? Retrieved on 27th April 2012 from: (http://geert-hofstede.com/china.html) J. Bulow, J. Geanakoplos, and P. Klemperer (1985). 'Multimarket oligopoly: strategic substitutes and strategic complements'. Journal of Political Economy 93, pp. 488-511. Radwan, M. Farouk (2012). The Type A personality, Definition, Behavior & Characteristics. Web. Retrieved on 27th April 2012 from: http://www.2knowmyself.com/Type_A_personality_definition_characteristics_traits/what_is_a_type_a_personality_behaviour_stress Read More