Introduction
Entering new markets is a challenging process for many multinational companies. Much attention should be paid to specific cultural environments typical of a target country to develop effective partnerships and selling procedures (Jobber 537-538). The purpose of this report is to discuss how such culture-related concepts as Guanxi, the avoidance of loss of face, and self-reference criteria can influence the process of selling in China.
Synopsis
Multinational companies are interested in entering the Chinese market, but they can potentially face a range of challenges. Firstly, there is a wide gap between different social classes in the country, and the situation of an overall social unease is observed. Corruption is also typical of business relations in the Chinese context. Secondly, bureaucracy and the level of governmental involvement in business activities are high, influencing companies’ operations in the country. Thirdly, China is characterized by a high level of diversity of its population, used dialects, climate zones, as well as the social and economic status of citizens.
Also, business relations in the country develop according to cultural norms and principles that are unfamiliar to Westerners, but these particular aspects should be taken into account. Thus, business dealings are usually regulated according to the principles of developing Guanxi networks as a system of personal contacts used by the Chinese for promoting their business (Jobber 542-543). Furthermore, Chinese people usually avoid the loss of face, and they spend much time collecting data regarding the issues to discuss when developing business relations.
Analysis
Implications of Guanxi Networks for Doing Business in China
The success of doing business and selling in China depends on the development of wide Guanxi networks that represent personal connections allowing an individual to resolve business issues and organize deals. Therefore, those Chinese business persons who have wider Guanxi networks have more opportunities to succeed in the market because of receiving support from their Guanxi (Jobber 542-543; Wang and Hsung 22). To organize effective Guanxi networks, Chinese people are expected to exchange gifts and favors to promote and support their specific relationships.
As a result, if a foreign company wants to enter the Chinese market, there is a risk that it will be not as successful as its local competitors because of the lack of Guanxi networks. It is a prolonged and complex process to develop Guanxi, and before selling in China, the managers of a certain company need to build strong relationships with partners and other stakeholders in the country in the form of Guanxi (Wang and Hsung 34).
Thus, multinational corporations need to develop Guanxi at different levels, including the governmental, industry, and market ones to make sure they will receive the support of the local community and succeed in resolving legal and economic issues.
The Avoidance of Loss of Face
When focusing on selling in China, it is also important to emphasize the significance of the “face” concept in this culture. Chinese people always avoid losing face that means for them to avoid any conflicting situations, critique, showing their weaknesses, and being embarrassed (Jobber 542-543). As a result, doing business in China, it is necessary to understand what actions can potentially lead to losing face, and these actions or words need to be avoided. For example, conducting meetings with Chinese partners, it is necessary not to interrupt them, ask provocative questions, aggressively negotiate, and cause them to feel lacking some knowledge or skills.
When the Chinese lose face in public, it means affecting their dignity and reputation. Therefore, it will be impossible for an international company to develop business relationships with a leader who lost face because of a manager’s wrong actions. Also, there is a risk that the person whose reputation was affected can negatively influence other dealings of this international company through Guanxi networks (Ambler et al. 28-31).
Furthermore, this concept is closely related to the idea of hierarchy in the Chinese culture, and any individual is expected to avoid causing the loss of face in a person who is respected and takes the higher position according to his or her rank.
The Concept of Self-Reference Criteria
Self-reference criteria are visions typical of some people when they assume that the representatives of other cultures have the same cultural values as these people do. As a result, it is assumed that some images, messages, concepts, or ideas will be perceived equally by representatives of different cultures, and these perceptions will be similar to the ideas shared by people who assume this fact (Ambler et al. 46-48).
The problem is that the representatives of various cultures perceive and view situations and phenomena differently, but marketers can ignore this aspect while selling products in diverse environments. Therefore, there are also risks of the failure when the target audience does not perceive the promoted products as it was assumed by marketers who belong to other cultural backgrounds.
In the case of China, it is important to remember that this culture significantly differs from the Western ones in terms of communication, hierarchy, and the nature of business relations. If marketers plan to sell in China and do not focus on studying the specifics of this country’s culture, they can potentially lose because of misunderstanding the idea of Guanxi or ignoring the role of keeping face for the Chinese (Jobber 542-543).
Furthermore, it is rather difficult for Westerners to understand the specifics of hierarchical relations in Chinese society, referring to the concept of respect. If marketing campaigns of multinational companies selling in China do not address the specifics of the local culture, there will not be high sales because the Chinese need to trust the brand and understand that their values are respected.
Closing Comments and Recommendations
Selling in China can be associated with certain barriers for Western companies if they do not pay attention to the cultural context of the country. The reason is that the culture of China is unique, and Chinese people follow particular concepts and ideas that are unfamiliar to Westerners, including Guanxi and the avoidance of losing face. Therefore, to succeed in the market of China, it is necessary to demonstrate respect for their cultural traditions that significantly influence business relations in the country.
It is recommended for multinational companies to concentrate on building Guanxi networks with the help of joint venture partners in China. Besides, it is recommended to study the concept of keeping face related to the Chinese culture and conduct negotiations referring to rules that help to maintain the dignity of a Chinese partner. Furthermore, marketing campaigns should be developed concerning the specifics of the Chinese culture. In this case, it is important to accentuate the family values and respect for the elders, for example.
Works Cited
Ambler, Tim, et al. Doing Business in China. Routledge, 2016.
Jobber, David. Principles and Practice of Marketing. 6th ed., McGraw-Hill UK, 2009.
Wang, Jenn-Hwan, and Ray-May Hsung, editors. Rethinking Social Capital and Entrepreneurship in Greater China: Is Guanxi Still Important? Routledge, 2016.