Cross-Cultural Challenges When Doing Business in China

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COPYRIGHT 2004 Singapore Institute of Management
Cross-cultural challenges when doing business in China.(Research Note)

Abstract

With the globalisation of world business, China has become an appealing 有吸引力的market for foreign investors. The problem of cross-cultural management arises as the cooperation between China and its culturally different Western partners continues to increase at an unprecedented无前例的 rate. This paper presents an understanding on the general cultural differences between America and China by applying the cultural dimensions of Hofstede and Bond. It also discusses the impact of these cultural differences on their management practice from five aspects: cooperative strategies, conflict management, decision-making, work-group characteristics, and motivation systems.

Key words: national culture; individualism/collectivism; cross-cultural management.

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The 21st century is an era of the globalization of world economy. Cross-national business is facing great challenges in cultural differences. In one survey entitled What is the biggest barrier in doing business in the world market, cultural differences ranked first in all eight items including "law, price competition, information, language, delivery, foreign currency, time differences, and cultural differences. Hofstadter (1993) believes that the spread of businesses onto the global stage brings the issue of national and regional differences to the fore 要面临的. "There is something in all countries called 'management', but its meaning differs to a larger or smaller extent from one country to another" (Hofstede, 1993).

It can also be observed that most of the failures faced by cross-national companies are caused by neglect of cultural differences. The globalisation of the world economy, on one hand, has created tremendous 巨大的 可怕的opportunities for global collaboration among different countries; on the other hand, however, it has also created a unique set of problems and issues relating to the effective management of partnerships with different cultures.

With the increasing importance of the China market in the world economy, many international companies rushed and planned to enter China to explore business opportunities. They enter the huge market by forming joint ventures or participating in mergers and acquisitions. This has spurred the need for cross-cultural research in China. It was reported that the great barriers caused by cultural differences like difficulty of communication, higher potential transaction costs, different objectives and means of cooperation and operating methods, have led to the failure of many Sino-foreign cooperation projects. The questions like "how to understand China" and "how to do business with Chinese people" have occupied the minds of international business people who are planning to enter China.

General Cultural Differences between the West and China

China, as the largest market and possibly the most appealing market in Asia, is entering into global collaboration with a wide range of foreign partners. As can be seen from Figure 1, apart from the foreign direct investments, FDI, from Asian countries, the second and the third largest investors are from North America and Europe. It seems necessary to investigate the cultural differences between China and its international business partners in North America and Europe.

[FIGURE 1 OMITTED]

To clarify the differences between China and the West, we will refer to Hofstede's four cultural dimensions and Bond's fifth dimension. Among researchers who have given a variety of definitions of culture, Hofstede is one of the first to adopt a pragmatic problem-solving approach in the field and relates culture to management. He defines culture as a kind of "collective programming of the mind, which distinguishes the members of one category of people from another" (Hofstede, 1980). He explained that culturally-based values systems comprised four...
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