Global business cultural analysis of China provides important information that investors and businesses need to understand to undertake successful business ventures. The analysis of communication, religion, ethics, values, attitudes, manners, customers, social structure, organizations, education, Hofstede’s cultural dimensions, SWOT analysis, and foreign direct investment provides a comprehensive business cultural analysis of China.
The findings revealed that China is a high-context culture in communication and the Chinese popular religion, Confucianism, Taoism, and Buddhism are major religions that influence values, attitudes, manners, and customs of Chinese. Moreover, the findings reveal that family and occupational classes form the social structure of the Chinese community and social organizations such as the All-China Federation of Trade Unions, the All-China Women’s Federation, the All-China Youth Federation, and the Chinese People’s Association have marked influence on the establishment of businesses.
In the aspect of education, the findings indicate that literacy level is lower than that of the United States, but the current educational institutions offer a promising future. Hofstede’s cultural dimensions show that China has the same level of masculinity, but power distance index and long-term orientation are higher while individualism, uncertainty avoidance, and indulgence are lower than those of the US. SWOT analysis reveals that a large consumer population, cheap labor, one-party system, and increasing gross domestic product are strengths and FDI has been increasing exponentially in the past five years.
Globalization has made the world a global village where manufacturers and consumers meet and perform business tractions. Although technology is standard across the world, culture varies from one region, locality, nation, or country to another. Culture puts barriers that restrict organizations, investors, and entrepreneurs from venturing in global arenas, which have different cultures from their host countries or native regions (Guang & Trotter, 2012).
Essentially, culture is a critical element that determines globalization and international business by influencing communication, social interaction, marketing, management strategies, advertising, e-commerce, consumer behavior, and other business operations (Ogbuigwe, 2013).
The existence of regional, national, and global culture implies that organizations, investors, and entrepreneurs have to develop strategies for overcoming cultural barriers and undertake their businesses effectively. The global business cultural analysis provides a lens through which organizations, investors, and entrepreneurs view global markets and customize their products, services, and processes to suit the cultural expectations of consumers. Therefore, the understanding of culture through cultural analysis is essential for it improves cultural competence, boosts business performance, and prevents wastage of resources.
As a case study, global business cultural analysis of China is essential because it promotes understanding and allows the design of effective business strategies to optimize cultural dimensions and overcome cultural barriers to the effective performance of business transactions. China is the main player in international trade because it is the leading economic powerhouse in Asia owing to innovations and a large consumer market. For the last decade, gross domestic product, working-age population, and per capita income have been increasing gradually and have positioned China in the international markets (Golley & Wei, 2015).
In this view, China is not only the producer of international products but also a great consumer of international products. The leading international companies such as Alibaba, Huawei, Lenovo, Samsung, Kingsoft, Joyoung, Xiaomi, and Neusoft have ventured into the Chinese market and seized sizeable market share. Therefore, the global business cultural analysis aims to enhance understanding of Chinese culture and the development of business strategies to improve the performance of multinationals in and out of China.
Globalization compels multinational organizations to venture into global arenas, become competitive, and gain considerable market share for their products. However, before venturing into global markets, multinational organizations out to comply or overcome many factors. Usually, organizations have to consider exchange rates, inflation rates, regulations, politics, language, technology, environmental pollution, market demand, and culture of the target consumers.
Banutu-Gomez (2014) argues that culture is an important factor that requires consideration in the global markets for differences in cultures act as barriers to entry and successful penetration into target markets.
In this view, organizations without cultural competence are bound to fail in the international business for they cannot cope with cross-cultural challenges and barriers. A case in point is that of McDonald’s advert, which created an uproar in Chinese markets for it depicted a Chinese man as a beggar of discount, yet it is culturally disgraceful as per the Chinese culture. McDonald exhibited cultural incompetence, which hurt its marketing strategies and competitiveness in the Chinese markets. Therefore, organizations must gain cultural competence in various global markets for them to survive, gain competitiveness, penetrate diverse global markets, and access a considerable market share.
- What are the major elements and dimensions of culture in China?
- How are these elements and dimensions integrated by the Chinese conducting business in China?
- How do both of the above items compare with the US culture and business?
- What are the implications for US businesses wishing to conduct business in China?
The conceptual framework illustrates cultural dimensions and major elements of international business contribute to Chinese culture. Figure 1 below shows that communication, organizations, religion, ethics, values and attributes, Hofstede’s dimensions, manners and customers, education, foreign direct investment (FDI), SWOT analysis, and social structure contribute to Chinese culture which in turn influences international business.
What Are the Major Elements and Dimensions of Culture in China?
Chinese have a tricky and subtle way of communication for they have a high-context culture and prefer non-verbal communication. Moreover, the Chinese are sensitive in their conversations and actions because their upbringing teaches them to avoid offending other people. In their conversations, Chinese keenly observe and interpret non-verbal cues such as facial expressions, gestures, and voice tone while communicating with people (Li, Canziani, & Hsieh, 2016). While listening to people talking to them, the Chinese exhibit little or no non-verbal cues to indicate their attentiveness to communication. Moreover, Chinese culture perceives eye contact as disrespectful during communication, and thus, they avoid eye contact while communicating with people.
Alphabets and dialects
When compared to English and other languages that use alphabets, the Chinese language uses unique alphabets. The Chinese alphabets comprise characters that symbolize concepts, whole words, and ideas. Although the written alphabets are the same, the spoken language differs according to dialects. According to Tan (2012), there are two main Chinese dialects, namely, Mandarin and Cantonese. Chinese in the Northern part of China speak Mandarin dialect while those in the southern part speak Cantonese dialect. Communication between two Chinese with different dialects is difficult because pronunciation and tone change the meanings of Chinese words. For the Chinese to communicate effectively, they ought to share language as well as dialects.
The major religions
The Chinese popular religion, Confucianism, Taoism, and Buddhism are three major forms of religion, which define and contribute to the formation of Chinese culture. However, the Chinese government recognizes the Chinese popular religion, Confucianism, Taoism, Buddhism, Islam, Catholicism, and Protestantism as established religions in China (Lu & Gao, 2016). The growth and advancement of these religions have made significant contributions to Chinese culture.
The Chinese popular religion is the most common form of religion because it has no institutional or canonical scriptures stipulating religious practices. The Chinese popular religion has its basis on Chinese mythology focusing on social solidarity, family, clan, lineage, and kinship systems embedded in communities, states, and the entire country. Confucianism is the oldest religion of China that focuses on the teachings of Confucius, a notable Chinese philosopher, who shaped the history of China.
Taoism is a traditional religion
Taoism is a common religion in China that stipulates philosophical principles that people should follow to live in harmonious life. It has contributed immensely to Chinese culture for it has scripture, which Chinese read and follow with a view of complying with religious requirements. Taoism is a powerful religion because it influences the culture of Chinese in China and regions where they reside (Lu & Gao, 2016). Moreover, Taoism has influenced the culture of people in Asian countries such as Hong Kong, Mongolia, Taiwan, Korea, and Malaysia. Taoism teaches religious values of simplicity, naturalness, spontaneity, humility, moderation, and compassion.
Buddhism and other religions
Buddhism is another dominant religion that has shaped the growth and development of Chinese culture for centuries. Essentially, Buddhism emerges from the teachings of Buddha Siddhartha Gautama, and it comprises morals, values, traditions, and rituals. Dominant religions such as Taoism and Confucianism have adopted and embraced teachings of Buddhism and incorporated in their religious teachings. Lu and Gao (2016) state that Taoism and Buddhism have intricate links since the translators of Buddhism’s scriptures used Taoist vocabulary. Vegetarianism, monasticism, and prohibition of alcohol drinking are the most important cultural values of Chinese culture adopted from Buddhism.
Chinese draw their ethical values from dominant religions such as the Chinese popular religion, Confucianism, Taoism, and Buddhism. The teachings of these religions have shaped Chinese culture and consequently influenced the development of ethics. Chinese ethics revolve around the way of life, family, work, politics, governance, humanitarianism, social life, and power. According to Berger and Herstein (2014), the Chinese have a social system named guanxi that regulates and determines the emergence and sustenance of ethics and activities.
Guanxi stems from Confucian culture and has grown and become an invaluable network that strengthens business relationships via social networks and interactions. Berger and Herstein (2014) explain that guanxi plays a central role in the growth and development of businesses because it allows organizations to obtain information on government policy and market trends, reduce transactional costs, and promote the certainty of businesses.
However, since guanxi is a personal asset, it has negative impacts on businesses because it hampers effective marketing, promotes corruption, and encourages employees to blackmail organizations. China is grappling with ethical issues such as corruption, tax evasion, and corruption. These ethical issues emanate from the government’s reluctance to tackle vices that permeate local and international arenas. As Western economies have prioritized good governance and business ethics, the Eastern economies including China have neglected them, resulting in rampant cases of corruption, tax evasion, and fraud.
Values and Attitudes
Chinese values and attitudes
Chinese have positive values that are attractive to foreigners, which are benevolence, harmony, wisdom, honesty, righteousness, and courtesy. The value of benevolence is apparent in the way the Chinese have embraced core values of Confucianism in their families, friendships, and communities for they believe that unity is an essential element in society (Chan & Snape, 2013). The value of harmony is evident among Chinese for they live balanced and coordinated lives as exhibited by their way of doing businesses, comply with laws, act in a standard way, and advocate for a harmonious society. Wisdom is another value that enables the Chinese to differentiate between right and wrong actions.
Honesty is a value that promotes integrity, credibility, and trustworthiness among Chinese. Righteousness is another value that Chinese cherishes as the core value of Confucian. According to Chan and Snape (2013), righteousness makes people humane and gentle for it creates a peaceful society where people champions the interests of the community and society. Courtesy is an important value that stresses the essence of prudence and modesty in complying with laws and rites in society. Regarding attitudes, the Chinese have unfavorable attitudes towards strangers for they have negative perceptions that portray them as lesser beings than themselves (Ramsay & Pang, 2015). In this view, it requires foreigners to have charisma while interacting and engaging them in business transactions.
Manners and Customs
Chinese have unique manners and customs that people should understand to engage effectively with them. In the aspect of greetings, the Chinese prefer formalizing their salutations. Chinese address each other by their titles and surnames for they consider salutations not only formal but also respectful. In a meeting or a social gathering, the Chinese recognize elders by addressing them first followed by other people (Cline, 2015). During greetings, Chinese bow their heads while greeting people and always consider handshake as a respectful way of greeting foreigners. While giving gifts, one should neither offer flowers nor wrap gifts in black, white, and blue wrappers. In dining, learn how to use chopsticks, let the host eat first, eat served food to satisfaction, and do no empty the serving tray.
Chinese manners and customers require people to make appointments in an advanced period of one to two months. Chinese prefer the use of intermediaries in a formal introduction of a company before the actual meeting. Early arrival at the meetings is an important virtue of Chinese for they consider it respectively and solemn way of engaging in business (Cline, 2015). Chinese requires a presentation of the agenda before meeting so that they can familiarize with the contents and make clarifications if necessary. In meetings, the Chinese culture requires guests to wait for directions regarding where to sit and when to start presentations.
During a negotiation, senior people should lead to negations and comply with the requirements of the negotiating process. Confrontational and high-pressure approaches during negotiation are not appropriate for Chinese consider them intimidating and informal way of engaging in business (Jin, You, & Kang, 2013). Negotiators should expect that the negotiating process occurs hierarchically, and thus, they should not expect conclusive decisions.
Familial social structure
The social structure of the Chinese comprises nuclear family, extended family, society, community, and the nation. Confucius taught Chinese to create and nurture five types of relationships in their families and community. These relationships are father-son, husband-wife, older sibling-younger sibling, friend-friend, and ruler-structure relationships (Hu, Lonne, & Burton, 2014).
In these types of relationships, the Confucius emphasized that people should comply with ‘the golden rule’ of relationships requiring them to do to others what they prefer to be done to them. In the extended families, a filial relationship is a core form of social relations because children have a moral and social responsibility of taking care of their parents. As the Chinese population is aging, about 12% of the population is above years old and are dependent on about 71% of the population who comprise the working age-group.
Occupational social structure
During the reign of the Qing Dynasty, the government categorized Chinese into four classes namely, peasants, artisans, landowners, and merchants. Artisans and merchants formed the minor category while peasants and landowners formed the main category. Government officials belong to the first class followed by peasants at the second class, artisans at the third class, and merchants in the fourth class (Zelin, 2013).
Working in a government is a privilege of the first-class Chinese while peasants are the second class Chinese who perform agricultural activities of keeping livestock and farming crops. Artisans make tools and process agricultural products such as silk, which they import to other countries. Merchants belong to the lowest class of Chinese who did not have the privilege of owning land, purchasing houses, and growing crops on their farms.
Chinese have social organizations dictating how people group and interact in the community. China has over 2000 social organizations out of which over 200 receive financial support from the government. Among the 200 social organizations, the All-China Federation of Trade Unions, the All-China Women’s Federation, and the All-China Youth Federation are three key social organizations that have considerable and extensive social influence and receive a lot of political support.
Yu-shek, Ngok, and Huang (2012) state that the All-China Federation of Trade Unions was instituted in 1925 and is the leading social organization with over 100 million members from local trade unions and industrial unions organizations.
The All-China Women’s Federation was established in 1949 as the social organization of women with the vision and mission to emancipate women from patriarchal chains, advocate for women’s rights, and empower them in socio-economic development (Angeloff, Lieber, & Jayaram, 2012). The All-China Youth Federation was established in 1949, and it is a broad social organization comprising the Communist Youth League and other social organizations that advocate for the issues of the youth.
Another important social organization is one of the Chinese People’s Association for Friendship with Foreign Countries, which was established in 1954. According to Guo and Dalli (2012), such organizations aim to promote the relationship and friendship of Chinese and foreigners with a view of promoting trade relationships. Other notable and relevant organizations for international business are China Council for the Promotion of International Trade, Chinese People’s, and Western Returned Scholars Association. These social organizations play a significant role in international relationships and trade because they provide social institutions through which international organizations can use in creating their business networks and links.
The education system of China
The Chinese government provides education to its citizens through the Ministry of Education, which provides guidelines as well as funds required to implement stipulated the education system. In line with the universal trend of education, the Chinese education system offers a compulsory education for nine years to Chinese children. The nine years comprise six years and three years of primary education and junior secondary education respectively. The education system also offers three years of senior secondary where students complete their secondary education and proceed to technical schools, colleges, and universities.
The society considers a high school graduate as an educated individual with the ability to undertake businesses and earn a living. The Chinese government has constructed technical schools and universities, which have the capacity of enrolling over 20 million undergraduates. The analysis of the education system reveals that Chinese at par in education development with other developed nations.
Hofstede’s Cultural Dimensions
The six cultural dimensions
These cultural dimensions are power distance index, uncertainty avoidance index, individualism, indulgence, masculinity, and orientation. In the dimension power distance index, China is at position 80 across the world, which means that there is a significant difference in power between superiors and juniors among the Chinese communities (Bishop, Hoang, Boone, & Steinberg, 2016).
The dimension of uncertainty avoidance index shows that the Chinese are ready to face uncertainties because they bend the rules to suit circumstances and make rules to avoid ambiguous instances. In the dimension of individualism, Chinese rank lowest in individualism for they are collectivistic society as evidenced by social groups they form to leverage their interests. In the dimension of indulgence, the Chinese exhibit restraint for their beliefs requires them to avoid alcohol and pleasure.
Chinese score average on masculinity because it is a patriarchal society where men dominate businesses and government jobs. According to Diaz et al. (2016), the Chinese rank very high in long-term orientation, which means that they persevere and persist in their pursuit of enduring objectives and achievements. Long-term orientation is evident in the way the Chinese take a long time to negotiate, gain trust, and build relationships.
Strengths and opportunities
SWOT analysis reveals that China offers lucrative business opportunities for international businesses. The chief strength of China is the greatest population of over 1.3 billion, which provides an extensive market for international businesses to exploit (Li, Li, Wu, & Xiong, 2012).
Like the strength, China has cheap labor that organizations can obtain and enhance their profitability. The one-party system is the strength of performing business in China because it streamlines structure the government and promotes quick decision-making and rapid resolution of economic matters. Increasing economic growth as evidenced by gross domestic product, income per capita, and FDI comprise an economic strength that attracts and retains investors. The opportunities for growth are the improvement of education, technological advancement, the growth of infrastructure, and the increasing consumer market.
Weaknesses and threats
The weakness of China is that it does not offer effective protection to intellectual property. Other weaknesses are high illiteracy levels, low economic status, high inflation rates, and the high cost of energy. The threats that China experiences in the global markets are increasing competition from the US, India, and Japan, global economic crises, increasing inflation rates, and protectionist measures.
Foreign Direct Investment (FDI)
FDI and factors influencing it
The analysis of FDI shows that China is among the leading countries across the world with high inflows and outflows of investments. Owing to the globalization forces and increased global trade, investors have been eying China as one of the favorable countries for investment. According to Chen et al. (2016), China ranks third as the biggest recipient of FDI and the project shows that it will overtake the United Kingdom and rank second after the US.
Cheap labor, a stable economic environment, high gross domestic products, and extensive market are some of the factors that contribute to increasing FDI. Financial data show that China registered $133 billion and $183 billion FDI in 2015 and 2016 respectively. Despite promising FDI, protectionist regulations, poor protection of intellectual property, and corruption are factors that hinder foreign investments in China.
How Are These Elements and Dimensions Integrated by Chinese Conducting Business in China?
Application of communication in business
To conduct a successful business in China, local Chinese investors must understand the communication behaviors of local consumers. Local businesspersons in China often observe their conversation patterns to ensure that they do not contradict with the communication behavior of the local consumers, who often prefer non-verbal communication. When communicating with non-verbal cues, local Chinese entrepreneurs ensure that a lot of attention is placed on the use of eyes and hands. Eyes are considered important in the expression of an emotional conversation in China. Emotional expression is very significant in most of the Chinese business transactions as they portray business commitment and certain agreements.
The role of religion in business
The local investors in China often observe the main aspects of religion, which affiliate with business activities. Confucianism, Taoism, and Buddhism are highly regarded in business practices. The religious practices of Buddhism and Confucianism require individuals to promote harmony and silence, as silence prevents people from arousing problems. Therefore, in the actual business context, local Chinese investors have learned to avoid excess business arguments. Just as Confucianism and Taoism propose, Chinese businesspersons are always keen to observe the six core values while doing business transactions. These core values include interpersonal relationships, respect for seniority, moral cultivation, promotion of harmony, family orientation, face concept, and avoidance of conflict.
Application of ethics
Dominant religions, Confucianism, Taoism, and Buddhism, are important in determining how the local entrepreneurs apply ethics in their businesses. In China, two important words, trust, and honesty define ethics in business transactions. In China, guanxi, the social system has been a predominant ethical platform that determines business interactions among the Chinese. The guanxi concept, as known in China, refers to a trust-based relationship based on personalized reciprocal relationships. Chinese investors use the guanxi idea to engage in business transactions that are based on personal mutual trust (Chen, Chen, & Huang, 2013). The guanxi is important in price negotiation, bargaining, and setting business agreements.
Values and Attitudes
Chinese values and attitudes
Values and attitudes are very important to Chinese investors. Chinese draw their business values from Confucius’s ethics. Confucius’s values include obedience, honor, respect, and harmonious relationships. While conducting their businesses, local Chinese investors have used these concepts to ensure that employees observe obedience, honor, and respect to the existing leadership (Ntongho, 2016). More often, employees of organizations are accustomed to respecting the leaders, honoring customers and other workers, and respecting the philosophies and traditions of the workplaces. Values such as collectivism have been used by the business owners to promote cooperation, employee cohesion, and harmony at workplaces.
Manners and Customs
Local business operations
Chinese have complex business manners and customs, simply because of an intersection between the Buddhist, Confucius, and Taoism ethics. However, local Chinese investors are very keen on the principles of manners and customs, and how they apply to their daily business operations. For instance, while undertaking their business negotiations, local Chinese businesspersons apply polite language, kind words, and attractive gestures in their business meetings, business negotiations, and business transactions. Also, handshakes are common, but limited to certain moral standards and one has to stay calm, collected, and controlled while engaging in business negotiations.
Utilization of social structure
Chinese exploit the social structure of families in their business by creating and customizing products to diverse family members. A Chinese family comprises the nuclear family and extended families. Since the Chinese population is aging, children have a noble role in taking care of their parents. In this view, businesses encourage children to purchase products to their aging parents as presents and provide adequate care.
Moreover, the Chinese exploit occupational social structure marketing their products to specific customers. Based on the occupational social structure, businesses target landowners and government officials for they belong to the first class, and thus, they have a higher purchasing power than peasants and merchants. Given that peasants are farmers, businesses target them as customers of agricultural inputs and sellers of agricultural produce. Chinese merchants are important in business for they aid in the distribution of products through retail and wholesale distribution centers.
Comparison of social organizations
While China has great social organizations representing the interests of all people, women, and youth, the US has disparate social organizations, which vary from one state to another. Every state in the US has social organizations that champion for different interests of social groups. As a collectivistic society, the Chinese have formed the All-China Federation of Trade Unions, the All-China Women’s Federation, and the All-China Youth Federation to represent all Chinese, women, and youth respectively (Ntongho, 2016).
Given that the Americans live in an individualistic society, they tend not to form social groups that advocate for their interests. Moreover, while China has international social organizations such as the Chinese People’s Association for Friendship with Foreign Countries, which it uses in promoting trade relationships between Chinese and foreigners, American does not have such social organizations.
Integration of education
Chinese have integrated the education system into their businesses for they recruit workers depending on their educational levels. The compulsory education offer to children up to junior secondary levels has significant benefits for it has increased literacy levels of its citizens and promoted their engagement in local business activities. Chinese society considers high school graduates as an essential labor force because they have adequate education to perform business (Ntongho, 2016).
Colleges and vocational institutions equip Chinese with special skills necessary for driving innovations in various aspects of businesses. China has immense opportunities in innovation and technological advancements, and thus, local businesses aim to tap technical skills from graduates. As the government has established universities and colleges, its graduates offer cheap advanced knowledge and skills.
Hofstede’s Cultural Dimensions
Local application of Hofstede’s cultural dimensions
Since China has a high power distance index, businesses customize products according to social levels of the target consumers, such as peasants, merchants, artisans, and government officials. Chinese make or bend the rules to avoid ambiguous circumstances for they have a high level of uncertainty avoidance index (Bishop et al., 2016). Chinese apply their collectivistic attribute in businesses for they have established trade unions and business organizations that advocate for their interests.
In their businesses, Chinese businesses do not focus on products of pleasure such as alcohol and drugs because their level of indulgence is low. In the recruitment of employees, Chinese businesses prefer male employees owing to their masculinity tendency in cultural dimensions. In their businesses, Chinese take due diligence in business negotiations and take a long time to arrive at final decisions for their cultural dimension is a long-term orientation.
Optimizing strengths and opportunities
Since the population of China is about 1.3 billion, the Chinese exploit the local market by manufacturing quality and affordable products that meet the diverse needs of the locals. Since China has cheap labor, the Chinese do recruit locals and optimize their human resources to boost the profitability of businesses (Li et al., 2012). The regime of a one-party system is advantageous to locals because it increases the ease of doing businesses for they are insignificant hurdles in registering and running a business. The locals also utilize the economic strength of China to increase their sales because increases in the domestic product, income per capita, and FDI boost the purchasing power of Chinese. Regarding opportunities, local businesses recruit an increasing number of high school graduates as cheap labor, utilize technological and infrastructural development, and increase production to meet the increasing demand for products.
Foreign Direct Investment
FDI in local businesses
The local Chinese investors are very cautious about the behaviors of foreign investors. The Chinese investors are always aware that they can offset foreign competition through their complicated local etiquette, their unclear decision-making processes, and their reliance on interpersonal relations. In a fair deal, the Chinese often rely on the Confucius ethics that support personal mutual trust, which is the founding idea of all business negotiations (Ntongho, 2016). The idea of mutual trust has made local Chinese investors very competitive in negotiating terms of contract manufacturing, business partnerships, as well as in export and import affairs.
How Do Both of the above Items Compare with the US Culture and Business?
Communication similarities and differences
Whereas the Chinese entrepreneurs prefer non-verbal communication in which the use of cues is most emphasized, Americans mostly prefer verbal and written communication mostly in American English. When verbal communication is used in China, the low tone is preferred, and the use of strong negative statements is considered very impolite. Handshakes are common in China, but the use of a short handshake is more preferred than the use of a firm handshake. A firm handshake in China may be perceived immoral, while in the US, it is considered as a sign of confidence and composure.
Religious similarities and differences
The US comprises an amalgamation of religious traditions in business. For the Chinese, religious intersection with business is grounded on the philosophies of Confucianism, Taoism, and Buddhism in which harmony is observed to be an essential element in business negotiations. However, the situation in the US is a bit different as most of the American business entrepreneurs believe in the separation between religion and business practices. Americans believe that business negotiations should be rooted in natural law, where inalienable rights apply. Moreover, Americans believe in life, liberty, and the pursuit of happiness as the main religious concepts that associate with business.
Chinese and American
As a social system, guanxi is the dominant business principle that determines the nature and strength of business interactions. With the social system stemming from Confucius’s ethics, investors apply it in creating and nurturing trust-based relationships. Chen et al. (2013) refer to guanxi as personalized reciprocal relationships based on the golden rule fairly treating each other. On the contrary, American investors are different, and in their business ethics, they prefer professional relationships based on rules and regulations. While Americans can do businesses with anyone based on specified terms and conditions, the Chinese tend to follow guanxi.
Values and Attitudes
Similar values but different attitudes
Chinese and Americans share important values such as benevolence, harmony, wisdom, honesty, righteousness, and courtesy. As civilized societies, both China and the US advocate for values that promote humanity and encourage business growth. The shared values are very important for they have become the core values that Chinese and Americans advocate in their business transactions. However, the difference between Americans and Chinese is the attitudes they have towards foreigners. Chinese have negative attitudes towards foreigners and strangers while Americans have favorable attitudes towards foreigners and strangers (Ramsay & Pang, 2015). The difference explains why the US hosts people from diverse races and ethnicities than China.
Manners and Customs
Similarities and differences in manners and customs
Both Chinese and Americans formalize their salutations, addresses, and introductory meetings for they consider it respectful to recognize people formally. Moreover, both Chinese and Americans require their business partners to make appointments in time to allow them to prepare for meetings and anticipated engagements. However, the difference is that while the Chinese consider confrontational negotiation as informal and intimidating, Americans consider it a formal and persuasive way (Jin et al., 2013). Another difference is that Americans require presentation of agendas in the meeting while the Chinese require an advanced presentation.
Comparison of social structure
China and the US have a similar social structure family for it comprises the nuclear family and extended family. In this view, the nature of relationships that exist in both the Chinese family and the American family is the same. In contrast, the US and China differ in the type of social classes that people belong to. Chinese have social classes that classify Chinese according to their occupations, such as peasants, government officials, merchants, and artisans. In contrast, the social classes of the US classify people according to their economic classes, namely, the poor, the middle-class, and the rich.
Comparison of organizations
Chinese effectively utilize local organizations in their businesses. Local businesses in China are members of the All-China Federation of Trade Unions, which advocate for their interests as well as the interests of employees. As the Chinese recognize the interests of women, they established the All-China Women’s Federation, which is a powerful organization that women use in championing their interest in trade and economic circles. The All-China Youth Federation is a social organization that youth utilizes to voice and advocate for their interests in China. In shaping their influence in the international arena, the Chinese have international social organizations. Chinese use the Chinese People’s Association for Friendship with Foreign Countries in promoting trade relationships between Chinese and foreigners.
Educational similarities and differences
China and the US have some main differences in their education. The main difference in the education systems in that students go through the 6-3-3 education system to complete high school education while students in the US go through the K-12 education system to complete high school.
This implies that students in China and the US take the same period to complete high school education. While the Chinese government offers compulsory education up to 9 years of education, the American government offers compulsory education up to 12 years of education. Both the education systems of the US and China offer the same education in technical institutions, colleges, and universities. In this view, college and university graduates of Chinese and Americans have the same knowledge and skills, and thus, they can conduct business without significant restrictions.
Hofstede’s Cultural Dimensions
Similarities and differences
A comparison of Hofstede’s cultural dimensions of the US and China depicts some similarities and differences. In the dimension of masculinity, China and the US have similar ratings for they are patriarchal societies. In the difference in cultural dimensions, China has higher levels of power distance index and long-term orientation than the US. In contrast, the US has higher levels of individualism, uncertainty avoidance, and indulgence than the US. In essence, Americans are more capitalistic, risk-takers, and exhibit indulgence than Chinese.
Differences in the SWOT analysis
Whereas the strengths of China are large population, cheap labor, one-party system, and economic strength, the strengths of the US are the largest economy globally, high per capita income, high purchasing power, technological advancements, protection of intellectual property, low illiteracy level. While the weaknesses of China are fragile protection to intellectual property, high illiteracy levels, low economic status, high inflation rates, and the high cost of energy, the weaknesses of the US are wealth disparity, stringent regulations, high prices of energy, and weak credit markets (Kristin, 2014).
Moreover, the comparison of opportunities and threats shows notable differences. The opportunities of China are in the improvement of education, technological advancement, the growth of infrastructure, and exploitation of the consumer market while the ones of the US are streamlining regulations, reduce taxes, create friendly foreign policy, and embrace cultural diversity. Threats of China are the global competition, inflation rates, and protectionist measures whereas the US threats are hostile foreign policy, racism, stringent regulations, and slow economic growth.
Foreign Direct Investment
Comparison of FDI
As China and the US are among the leading economies of the world, their FDIs have increased rapidly in the recent past owing to globalization and increased bilateral trades. Nevertheless, the difference is that FDI of the US in China is higher than the FDI of China in the US. A comparison of openness to FDI shows that China has restrictive regulations and poor protection of intellectual property rights, which hinder investors. In contrast, competition and security issues are some factors that hinder China from investing in the US.
What Are the Implications for the US Businesses Wishing to Conduct Business in China?
Global business cultural analysis of China provides important information that the US Businesses or investors intending to conduct businesses in China need to consider to succeed in their businesses. Communication is an important cultural aspect that had marked influence on the way Chinese undertake their businesses. They should understand that China has a high-context culture, which requires the use of non-verbal cues, and then learn where and when to apply each of the two dialects, Mandarin and Cantonese, to communicate effectively.
Embrace Chinese religions
To conduct businesses in China, businesses need to understand how popular religions influence culture and consequently business operations. Essentially, investors should know that the Chinese popular religion, Confucianism, Taoism, and Buddhism are major religions that influence beliefs, norms, traditions, and ethics of Chinese, and thus, they should embrace and apply them in their businesses.
For people to undertake their businesses effectively in China, they ought to understand guanxi, which is a powerful social system that determines business relationships and the occurrence of vices such as nepotism, corruption, and fraud. As the Chinese derive guanxi from their ethical values of the major religions, understanding of Chinese religions and diverse aspects of guanxi is essential.
Values and Customs
Chinese have values that they cherish and advocate for in their businesses. In this case, foreign businesses from the US ought to understand that the Chinese share important values such as benevolence, harmony, wisdom, honesty, righteousness, and courtesy with them, and thus, they should capitalize on these values to be successful.
Chinese have established customs that they adhere to while undertaking their businesses and interacting with business partners. Social and business ethics of Chinese requires formalization of greetings, use of intermediaries in introductory meetings, a respectful making of appointments early, and gradual negotiating process due to long-term orientation.
Social Structure and Organization
Chinese have a social structure that classifies individuals according to their familial positions and occupational status. In this view, investors should understand that the social structure of Chinese comprises family and occupational classes, namely, merchants, artisans, peasants, landowners, and government officials, and thus, they should customize their products to suit these social classes.
China is famous for it has established social organizations that advocate for the interests of workers, youth, women, and foreigners amongst others. As a collectivistic society, China has established social organizations such as the All-China Federation of Trade Unions, the All-China Women’s Federation, the All-China Youth Federation, and the Chinese People’s Association for Friendship with Foreign Countries, which have a significant influence on trade relationships.
In education, the US business should understand that China offers the same quality of education like the US. However, the systems of education are different, and the level of literacy in China is lower than in the US.
Hofstede’s Cultural Dimensions
US businesses should understand that China is different in most cultural dimensions of Hofstede. Hofstede’s cultural dimensions show that China has higher levels of power distance index and a long-term orientation, but it has lower levels of individualism, uncertainty avoidance, and indulgence than the US.
Lucrative economic environment
Businesses from the US should understand that they are moving from a competitive economic environment and a lucrative economic environment. Hence, the US businesses should understand that a large consumer population, cheap labor, one-party system, and increasing gross domestic products are some of the strengths of China while of improvement of education, technological advancement, the growth of infrastructure, and exploitation of consumers are some of the opportunities.
Leading recipient of FDI
The US businesses should understand that China is among the leading countries in receiving FDI, and thus, they should develop effective investment strategies. Moreover, the US businesses should consider that restrictive regulations and poor protection of intellectual property rights are chief inhibiting factors of investments in China.
Global business cultural analysis of China reveals important information that investors and businesses need to understand and employ for them to be successful in China. Essentially, the culture of China is unique because its communication, ethics, values, attitudes, customs, and manners emanate from major religions, namely, the Chinese popular religion, Confucianism, Taoism, and Buddhism.
Social structure classifies people into occupational classes while local and international organizations advocate for the interest of all people, women, youth, and foreigners. The education system reveals that China is catching up with the global trends in education, technology, and trade. Hofstede’s cultural dimensions show that China has higher levels of power distance index and a long-term orientation, but it has lower levels of individualism, uncertainty avoidance, and indulgence than the US. Large consumer population, cheap labor, and increasing gross domestic product are some strengths of China. Although FDI is increasing exponentially, restrictive regulations, and poor protection of intellectual property rights are some of the factors that limit the inflows of FDI.
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