Cultural Difference

Chapter 11 Cultural Characteristics and Effective Business in China
Maria Fernanda Pargana Ilhéu
ISEG/UTL, PORTUGAL

Abstract For firms in the international market the cultural characteristics of host country societies, where their managers are going to deal and work, must be learned, absorbed and adopted. A person’s perception of market needs is framed by his or her own cultural experience. More than factual knowledge of Chinese culture the interpretative knowledge is very important and difficult, since it comes from a matrix of philosophic, religion and political explanations which are completely different of the western one. Chinese “guanxi”, emphasizes personal trust building, the use of social bonds in dealing with partners, competitors and clients in general good personal networks, is a critical success factor for business performance in China. For instance in technology transfer and equipment sales, special financial help, and barter emerged as more important factors in building customer relationships. Chinese culture emphasizes diffused relationships; as a result the Chinese tend not to separate business from interpersonal relationships. Although Chinese pattern of buying is each time more focused in buying the very best, the latest technology and the most well known brand, maintaining an effective “guanxi” relation with decision makers helps to enhance business performance.

1 The Importance of Cultural Environment in International Business
Socio-cultural values are a major aspect of firm’s environment (Begley and Tan, 2001). Societies have collective cognitive styles, which affect perception, behavior, thinking patterns and business practices which characterize their national cultures. National culture, that has become an important concept, in international business literature Roath et al., (2002) refers to deeply set of values, that are common to the members of a nation and constitutes a system of shared norms, values and priorities, a code of

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