Introduction
Due to the growing influence of the global economic forces, emerging markets, and globalisation, business is increasingly taking place across cultural boundaries. However, the execution of marketing activities in different cultures is not an easy task. Building sustainable and fruitful business engagements between trading partners who belong to diverse cultures is a problem that calls for strategic and focused solutions. Culture is regarded as the heart of all business engagements including agreements, leadership styles of organisations in the different countries, managing programs, intellectual property, quality issues, product development, human resource strategies, and client relationships among other vital activities. There exists a tough challenge for the Western organisations operating in China that leads to unsuccessful performance. As a result, there have been several recommendations put forward to aid cross-cultural businesses. This paper examines the impact of culture on international business relationships, particularly the transactions between Australian and China firms, with a view of highlighting various recommendations to overcome the existing cultural differences.
Concept of Cross-Border Culture
Culture can be defined as the people’s way of life (Buckley et al. 2014). The way people live in a given society is prescribed by a particular code of attitudes, norms, and values among other factors that bind them (Buckley et al. 2014). Culture defines how people establish relationships and perceptions of the world and activities around them. It has different layers including artefacts, norms, and basic assumptions (Awang & Roach-Duncan 2010). When people from different cultural backgrounds converge, challenges unravel since culture is very dynamic. What is perceived as right in one group can be wrong for another group. Due to the increasing cross-border relationships that shape the contemporary world, the understanding of human behaviour is paramount to the realisation of successful businesses (Collins, Sun, & Li 2012). Researchers have continued to show that the significance of understanding different cultures is paramount to shaping human behaviour that determines the establishment of business engagements and ability to sustain them for long-term mutual benefits between any two trading partners. International business relationships comprise numerous negotiations on issues concerning the management of workforce, recruitment, payment, and rewarding of employees (Collins, Sun, & Li 2012). Countries have different ways of executing such managerial duties as defined by their cultural backgrounds. In the event that the two countries do not establish universally defined procedures and principles of doing business, the chances of unsuccessful performance looms.
Effects of Culture on the International Business between Australia and China
Culture determines the Level of Trust in Business Negotiations
The increasing pace of globalisation has caused unprecedented emergence of the international commercial engagements (Rivers 2013). Transparency and trust are two important prerequisites for any business relationships whether in local or international business. The Australian multinationals (MNCs) operating in China can fail to materialise if a feeling of mistrust prevails between the businesspersons from the two countries. Cultural disparities can influence the level of trust between the trading partners (Damanpour et al. 2012). Trust is critical for the success of international business teams as it fosters cooperation whilst reducing the unproductive tension between the stakeholders (Awang & Roach-Duncan 2010). International business relationships bring alien norms and perceptions, peculiar behaviours, and incompatible beliefs and assumptions in some cases. When such factors are poorly socialised and understood, they can prevent the successful establishment of business engagements. Various researchers affirm that the Australian organisational managers seeking collaborations with their counterparts in China have not achieved a breakthrough. The increasing interdependency in the contemporary world has forced researchers to pay more attention to human relationships. Trust has been viewed as an omnipotent and a mute component embedded in human exchange relationships that influence the negotiation efforts in business. Game theorists posit that culture plays a vital role in determining the level of trust in cross-cultural transactions (Rivers 2013). The ability of the Australian managers to build trust among the Chinese staff determines the success or failure of the organisations in China.
Leadership Differences
Leadership is guided by cultural attributes and values (Buckley et al. 2014). In fact, leadership has been shown to have significant levels of cultural difference between the West and China. Leadership theoretical perspectives describe the Western leadership as individualistic where followers have the responsibility to obey rules. On the other hand, the Chinese leaders are perceived as collectivist where altruistic motivation to obey rules is stressed. While the Australian leadership values democracy and openness, tolerance is not regarded in China as leaders exercise absolute autonomy over their subordinates. In this regard, for MNCs operating in China, managing the Chinese staff can be tricky if the leadership differences cannot be harmonised (Rabl et al. 2014). For the international relationship to be fruitfully established between the two countries that have different cultural backgrounds, the Australian managers need to learn and understand Chinese culture. Decision-making processes with participants who do not understand each other are plainly impossible. It has been shown that the Australian managerial techniques transferred to China have failed to work (Buckley et al. 2014). Exercising the Western leadership principles on the Chinese staff cannot work due to the lack of a common ground for understanding each other’s culture.
Leaders including human resource managers executing their duties based on the Western leadership theories are not only unsuitable but also not understood by the local Chinese subordinates. The absence of understanding between the managers and juniors leads to failure of the organisations. In addition, the failure of managers to understand the new cultures that they experience in cross border businesses is the cause of the dwindling establishment of MNCs. Buckley et al. (2014) reveals that several factors such as the level of education, age, and experience with foreign cultures are the key failures overlooked when deploying managers to the foreign markets.
Frequent Change of Organisational Management Personnel in the Foreign Country
Cultural differences between Australia and China prolong the time taken by the managers to start posting positive performance (Fu & Kamenou 2011). If the required time is not given to the managers to start by learning the Chinese way of doing things, the organisational project in that country stands to fail. The Fosters Inc., an Australian organisation, gave its newly deployed managers in China a maximum of three years to exhibit positive performance. Various researchers have affirmed that for managers to begin posting improved performance in a foreign country, a period of at least three six years is specified. This time is consumed in learning the culture of the new business environment. According to Fu and Kamenou (2011), this period is too long given that the managers spend it unproductively.
Cultural differences cost organisations a fortune as the managers are paid to spend their time in the foreign country whilst no productive work is recorded. For this reason, many multinational companies opt to establish their ventures in familiar countries where the cultural gap is not too wide. If the managers are not given enough time to learn the environment and cultural attributes of the people in the foreign country, managing the business becomes inevitably impossible (Qin, Ramburuth, & Yue 2011). Expatriate managers also require adequate time to settle in their new jobs to develop sound frameworks for realising improved performance (Qin, Ramburuth, & Yue 2011). Sometimes, the organisations train the expatriate managers prior to their deployment, particularly in the Chinese emerging market. This cultural training is considered costly for organisations as it involves outsourcing trainers from the target foreign country.
When the managers are frequently changed, the Chinese staff can view the practice as a form of instability in the organisation. The local employees’ perception on the short tenure of the expatriate managers can be regarded as the insincerity of the Australian organisation in their country (Liu et al. 2014). This situation can in turn raise questions regarding the security of the jobs offered to them by the Australian company. It is undoubtedly true to correlate the perceived job insecurity with low employee morale and motivation. The state of events leads to poor productivity. In such scenarios, the organisation can collapse due to the Chinese employees’ protests concerning their insecure positions that they hold in the Australian MNC (Liu et al. 2014).
The Psychological Barriers to International Adjustment for Managers
Expatriate managers go through psychological challenges posed by the culture of the foreign country (Rabl et al. 2014). The psychological stress arises from culturally defined practices including language and food. Language is an aspect of culture that can alienate foreigners. For instance, the Australian expatriates express difficulties in establishing relationships in China due to the culture-specific attributes of the language spoken by the majority of Chinese people. The absence of a common language between Australia and China presents a tough challenge in communicating crucial managerial ideas to the subordinates (Rabl et al. 2014). The linguistic distance between any two trading partners in the international business lowers the organisational performance as giving directives to a majority of the Chinese staff who do not understand the Australian language leads to an incomplete communication process.
Finally yet importantly, the foodstuffs available in China are extremely different from the ones in Australia. The expatriates express some level of discomfort since they do not find satisfaction in the Chinese hotels and restaurants that primarily sell their home cuisines (Damanpour et al. 2012). Despite the attractive payments and excellent living conditions offered to the Australian expatriates, the lack of home food causes discomposure. Although many scholars overlook the psychological challenges posed by the Chinese culture to the foreign managers, they have a great influence on the MNCs. The managers’ level of motivation and morale determines the level of productivity and pace of production in the MNCs.
Conclusion
The ever-changing nature of the global business environment in the twenty first century has heightened the significance of the multicultural approach to entrepreneurship. The cross-border business engagements are not always smooth as the presence of a wide cultural gap amongst the involved countries presents a plethora of challenges to the realisation of organisational goals. Exploring the case of Australia and China, cultural diversity poses numerous obstacles to the business engagement that the two countries have established. The possibility of collapsing multinational companies operating in the emerging market is still high as many of them fail to materialise due to the lack of harmonisation efforts to coordinate the different cultures. Consequently, culture determines some important factors that in turn leverage the establishment of viable business relationships. Such factors include trust and negotiations that form the frameworks for most business transactions.
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