Introduction
Company A is a US based engine product manufacturing company. The new product developed by the company is ensuring extended life for engines of heavy duty automobiles. In the introduction stage, company wants to develop appropriate marketing strategy for the product. It occupies 5000 employees and planning to expand within the next four years by doubling its size.
Country Selection
The market analysis revealed that China occupies a favorable market environment for automobile engines. Automobile industries are highly developed in China due to the economic development in the country. There exists huge growth potential for the automobile product in China. It had commenced open door policy in 1978 for attracting foreign investment. Foreign direct investment is highly attracted by the government with suitable policies for ensuring economic prosperity. Foreign investors have high opportunity in China. Chinese government attitude towards automobile industry if very supportive and they take policies for attracting investment in auto industries. Adequate policies are framed by the government for motivating growth of the industry. (China considers to save policies to save auto market, 2008).
Cross cultural issues
China is considered as the world’s largest market. Its population and geography factors are characterized by vast and diversity. The diversified market creates problem in business management in many ways. The selection of a single unified production and marketing strategy is not adequate in a diversified business environment. There requires mutual understanding between investors and the native community to establish better business relation. Communication is the main constraint in such mutual understandings.
Cultural differences between the parties involved in business relation always creates challenging business environment.
“In the Chinese business world, contacts are everything. The personal relationships that develop between individuals—termed guanxi (gwan-chee)—pave the way for business success.” (Doty, 2007).
Major cross cultural issues in China
China’s business environment is highly influenced by the culture, tradition and its value system. There involves diversified community groups in China. Differentiating features between them are cultural values, tradition and custom. Communicating language is also different among each region. Geographical discriminations are also high in China. Each region has its own traditions and organizational features. Establishing of good business relationship between these different groups is a crucial challenge for the foreign businesses. For identifying the needs and desires of different customer groups, good interpersonal relationships between people in society is necessary. Chinese community gives high value to the personal relationship. They always prefer internal compromise rather than enabling externally imposed decisions. Chinese culture is based on the concept of harmony and through the personal relationship they try to implement harmony in the society. There exists strong centralized political power in China. Thus the cultural values are influenced by the attitude of the government. Cross-cultural communication in China is highly supported by the native peoples. Chinese people are very supportive towards foreigners for learning the culture, history and social values of the country. Family oriented business relations are the main feature of Businesses in China. Most of the business combination is based on trust between different parties and business contract have limited influence in Chinese Industry. Thus for establishing business relationship with native firms better personal understanding and trust is necessary. Their business culture is relationship oriented and it is very hierarchical in nature. (Cross cultural communication: China, n.d).
The legal system in China is different from USA in terms of culture, traditions and adopted value system. “China is a blend of growing modernization and ancient culture; a comprehension of legal system and its application in reality should be based on Chinese social and cultural background.” (Lin & Stoianoff, n.d).
How cross cultural issue impact the approach of Company A
Company A is planning to enter in the Chinese market by establishing business combination with well-functioning native business firms. It is due to the fact that in order to overcome cultural barriers of China co-operative joint ventures with local firms are highly helpful. Thus most of the foreign enterprises are adopting the strategy of business combinations. The business combination with local firm necessitates business communication between managers of different country firms. The cultural and social values are differentiating with different countries. Thus there will arise conflicting business opinion and review between the managers of two firms. Mutual understanding between them also not developed due to the communication gap.
Cross cultural communication barriers always exist in transnational business relation. As such the business operation s of Company A in China will also highly affected by cross cultural communication issues. The social and business cultures of America and China are entirely different. Social values and business ethics existing in the two countries are also not similar. This will bring about challenges in the launching the business successfully.
Cross cultural communication affects the marketing strategies in the country
Examples for explanation
Marketing strategies of firms are depends on the customer behavior in the market. Social and cultural value has influence on consumer behavior. For identifying the needs and preference of consumers, firms have to communicate with different customer group. The cross-cultural communication barriers in the society will affect better understanding of the consumer behavior and preference. Without accurate customer knowledge, an effective marketing strategy cannot be formulated by the business firm. There are significant differences existing between USA and China in term of consumer behavior. Thus the ongoing marketing strategy adopted by the company in USA is not suitable for the Chinese market.
“Certain personal perspectives or characteristics considered familiar and commonly accepted in the United States may be quite uncommon, unacceptable, or even repressed in China.” (Bot, 2008).
Government of China has control over the media in the country and press freedom is limited. Thus information exchange in Chinese society is reduced. It creates an isolated society. Whereas in case of America, press freedom is allowed to a large extend and thus information exchange becomes so smooth in the society. People are aware of events across the country. Communication skills of Chinese community are not well developed as compared to America. (Hagen, n.d).
Due to these factors, marketing strategy followed by the company in USA is not suitable for the Chinese market.
Evaluate the impact of cross-cultural ethical differences in marketing strategies between the United States and the Eastern Asian country you identified in part A as Company A enters the Eastern Asian market
In China’s business ethics, trust is considered as the first and most important factor of success. Thus developing of Trust in business relation is important for its long term existence in China. It can be sated as in China; relationship is leading to business contracts. Whereas in USA the business relations are mainly based on agreement between parties and no personal relationship is necessary for business contract. The degree of interpersonal pressure in Chinese culture is significantly higher than American culture. (Doty, 2007).
Managerial approach towards business is differential in between China and USA. Conflicting opinion of managers are mainly arises in various fields such as business control, personal management, adoption of technology, localization of content etc. Understanding of Chinese negotiations related to the business field is a major issue in business. For establishing business relations in joint venture, mutual understanding of cultural differences is essential. Otherwise it will lead to confliction between the managers. Good relationship with local government has to be established for creating political credibility with them. It is essential for success of the business. Chinese community is characterized by harmony culture. Legal actions are not preferred by them for solving problems. A non litigious nature is shown by the community. Personal relations are firstly considered than legal obligations by Chinese community. In China, joint business is treated as business relation and not business contract. Chinese society is process oriented. Business contract with Chinese firms must be based on cultural understanding as it influences the business in large extend. While adopting marketing strategy in the Chinese market, Company A has to undertake a trust based tactic. In order to ensure long term existence along with quality better customer relation is necessary in the Chinese market.
Conclusion
Today’s global business world necessitates better cross cultural communication.The cultural difference between China and America has to consider before planning the project. For overcoming the communication barriers between the countries cultural mangers can be appointed. This will ensure better cross cultural communication in the business. Creation of better interpersonal relation with the local managers is must for success of any business. China’s business strategy is related to interpersonal contacts.
Thus Company has to create better customer and business relations for ensuring long term existence with profitable growth.
References
- Bot, Wiki. (2008). Diversity and cross cultural issues in China.
- China considers to save policies to save auto market. (2008). Northeast Network.
- Cross cultural communication: China. (n.d.).
- Doty, Richard. (2007). Chinese professor studies integrity, ethics in cross cultural business relationships. Communication and Marketing. Web.
- Hagen, Stephen. (n.d.). Cross cultural challenges to British Business. Kwintessential: Cross Cultural Solutions.
- Lin, Ying., & Stoianoff, Natalie. (n.d.). Foreign investment in China: The cross cultural dilemma. Macquarie Business Law Journal.