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Expansion of companies from their regional and national zones is a phenomenon that is rapidly picking up in recent times. The growth of companies from local and regional to multinational levels, has led to companies venturing into new market zones where there is potential for growth and an increased profit margin. The most important factor for such companies is inventing of effective, innovative, and ambitious research and marketing strategies that will help them compete with local and international rivals in their new markets. One of the best approaches used by companies in the Eastern Asian markets and particularly in China is partnering or merging with the local companies. As they do so, they are faced with a number of cross-cultural issues due to their different cultures.
Some of the cross-cultural issues that might affect a company mainly come from the American perception of Chinese companies or the Chinese society as a whole. Though China is a strong and rapidly growing economy, it is still viewed as developing and not developed. Most companies enter the market with there own ideas and expectations of companies in such economies and that can lead to barriers and difficulties in communication and integration of management and other fields of partnering. (Selmer, 2003, p. 19) notes that there is a belief that most companies who have little or no experience of China, bring in management styles that are very rigid and authoritarian, with arrogant officials who believe that there way of running business is automatically the best. They do consider whether their method is fit for the targeted Chinese market, they have no room for discussion with their Chinese counterparts and so there is no room for them to understand the Chinese market.
The other issue is the extent and amount of government regulation and control in China especially in wholesale and retail pricing. The Chinese economy is based on central planning and it is hard for businesses to control, change or make decisions on product marketing and pricing. It is clearly visible that the only place where the companies have the autonomy of planning and deciding is in product quality and output productivity (Selmer, 2003, p. 19).It is important to note that most companies in China are government run or have significant government influence within their structure, to easy for monitoring and economic manipulation.
The economic structure in China brings in another issue of corruption. The bureaucracy is more embedded in personal connections and corruption deals and most companies have to either get accustomed to that or leave altogether (Selmer, 2003, p. 20).. This is more prevalent due to the lack of freedom and liberalization of market forces, in business and organizations as it the case in the American free market economy. It is easier to pay a bribe rather than wait for a marketing license; these issues are culturally conditioned (Pitta, Fung & Isberg, 1999, p.241).
Another challenge mainly affecting cross-cultural communication is the management of staff with far too many of them lacking satisfactory skills and education, efficiency, motivation and they lack consciousness of quality. The staff might find it had to understand and get accustomed to modern computerized skills in finance, accounting among others. These workers could be appointed to positions or assigned tasks for which they have no qualification or experience (Selmer, 2003, p. 20).
Considering that joint ventures demand that partners in the company share roles and responsibilities with both having equal control and authority and all other matters related to running the joint venture companies, it is difficult to reward, penalize, or fire existing staff that were there before the venture or even effectively recruit and train new staff. The fear of failure and challenge from the new companies moving to China by most Chinese management makes them resist change in decision making and responsibilities thus leading in conservative and rigid ways.
Dealing with conflict resolution, group inconsistency and management in teams has its own effect on cross-cultural communication, team performance and the achievement of company goals and objectives. Unless the company strives to make sure that its workers at individual and group level learn the heterogeneity of cultures there might lead low levels of interaction, a weaker sense of belonging hence reducing the value for cooperation (Selmer, 2003, p. 36).Harmony and togetherness in China is a strong virtue as opposed to competition and ambition in the American culture where as long as it is legal, any attempt or contribution to a desirable end result is crucial and important whether it disrupts the patterns of existence or relations ( Pitta et al,1999, p.247).
The Chinese largely have a homogeneous culture and so individualism, privacy and uniqueness are less important (Pitta et al,1999, p.255).The societal structure and their ways of life have led to dependency and relationship with other human beings especially family, friends and community is most important. Societal laws and rules are highly esteemed and saving of ones face in society is very crucial. These issues are important to note if one is to succeed in penetrating and sustaining the market.
In the Chinese culture there is a lot of emphasis on courtesy and embarrassing or shaming other people is taken very seriously. Criticizing other people and ridiculing the deeds of others can even lead to revenge. This might be the reason why they do not open up, reveal how they feel easily. It takes keenness and insight when listening to them to understand what they are really driving to. There is importance of keen observation of facial, body and tone movements when paying attention to them. For example unlike in America where debate and confrontation are not taken seriously, Chinese people do not use explicit indications to express themselves and questioning directly is considered rude.
Chinese do not consider openness or being straight forward as an important aspect of business ventures especially when relationships are subtle. Affirming to an idea or comment might not mean agreement in Chinese culture, it might only be implying that the person was attentive when you were talking to them or that they understood what you were saying and they will go and think about it. Directly answers which depict negativity like ‘no’ can be substituted with fairer versions of first seeking permission or that something will take time, it might not be convenient or “we will see what we can do” (Pitta et al, 1999, p. 248).
Chinese strongly hold on to their social norms and values, people do not talk a lot and so they prefer objectivity rather than subjectivity in discussions. Banquets are used in Chinese negotiations to establish bonding and commonality on both sides when making deals.This is used as a platform for friendship and knowing the other partner informally before the formal introduction. This ensures that no party feels defeated, controlled or manipulated and a win-win situation is achieved. In the US however negotiations are open discussions about advantages and disadvantages. They deal with the rules, guidelines and alternatives. Mostly these negotiations are one sided with competitive aspects.
It is only until recently that the Chinese economy has given in to luxury spending extravagance, but the culture is generally one that values inner personal beauty and substance more than trends, style, admiration, desire and outward looks. When the focus of advertising is showing the satisfaction and building on fantasy and imagination and exaggeration as in the US market, it is less likely to achieve market attraction. Advertisements should instead focus on informing and educating on the product and focusing on the conservative values of society ( Pitta et al, 1999, p. 249).
Realizing and trying to understand the differences in culture between the Chinese and American societies could help to avoid conflicts problems and reduce the risk of failure. Experts can be employed to help understand favorable business practices and the market and social cultures of both sides so that there is harmony in the partnerships. There are intercultural and intra-cultural aspects in communication coordination and information sharing that need to be taken into account to achieve compatibility in teams groups and between. Another factor that can be used is to accommodate the values of the other party and they use information and education to introduce the other views of the other side.
Pitta, D.A., Fung, H., & Isberg, S. (1999) Ethical issues across cultures: Managing the differing perspectives of China and the USA. Journal of Consumer Marketing, 16(3), pp. 240-256.
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Selmer, J. (2003). International management in China: cross-cultural issues. London: Taylor & Francis.