The Significance of Cultural Differences for Foreign Companies in China and How to Overcome Them

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Introduction:
My essay is about significance of cultural differences for international companies which want to set up a business in China. To do a clearly demonstration, I break it down into 3 parts: First is an example that the culture differences affect international companies in China; Second is the significance of these cultural differences; Third is how the companies would overcome them. For the first part, there will be examples of international companies which set up a business in China. As we know, since China joined the WTO in 2001, many foreign companies were attracted by China’s huge market and lower labour cost. But some of them experienced hard times when they came into Chinese market. The unfamiliar of the cultural difference is a very important factor. From their experience, we can have a direct impression of how the culture differences would trouble for foreign companies in China. Second part is very important. As I choose China as the country. I will try to show some Chinese features, which are the Chinese cultural difference from others. I will to analysis why the cultural differences are significance and what effects they will cause. Real evidence will be given to support my idea. The third part is most critical, because it is not enough for us just know about the problems. We should find out ways to solve them. I will from four parts to demonstration, and try to cover the ways which can both improve the ability of foreign companies to deal with cultural difference in China as possible as I can.

Example that the culture differences affect international companies in China: Looking back at past, we can find that China has been the first place of absorbing international capital in all developing countries for nearly 18 years. Since China joined the WTO in 2001, many international companies had been attracted by China’s huge market, lower labour cost, preferable government policies for foreign investors. But in fact, we can easily find some of them had come across a hard Why KFC had a better development than McDonalds? The reason is KFC was more careful to deal with culture difference in China. Before the year 2004, the McDonalds focus their customer group on children, and then parents and young people. Meanwhile, KFC focus on young people, then children and parents. We cannot say McDonalds strategy was wrong, because it brought great successful for it in USA. But it is not suitable in China. A survey made by China Chain Operation Association (CCFA) showed that no matter in the ratio of customers number or the ratio of money consume, the young people account for more than 60%. After 2005, McDonalds push-off its new series called “I just like it”, and changed their strategy to young people, the situation came better. This is an example of difference of the market positioning caused by the culture difference. [3] The McDonalds’ failure was not only because of this. It also ignored that people in different culture background may have different tastes. The GADLING website (2005) [4] showed that before 2005, while KFC began to create some news kinds of foods which were fit for Chinese people’s tastes, such as the Traditional Peking Chicken Loaf, Tomato and Egg Soup, the McDonalds still insisted on its western taste hamburger. In this period, the McDonalds had to cut half price to attract customers. And there was a thing which had a very bad influence about McDonalds. The Sina website [5] has some details about it. In June, 2005, McDonalds pushed a new advertisement. One scene of this advertisement is a man kneels down to beg the McDonalds lengthen the promotion period. This advertisement caused a very bad effect. Because in China, kneel down is very important and serious thing. Chinese people think kneel down to others is a sign of lost dignity. In some countries, people may regard it just as a funny advertisement. But in China, this kind of advertisement should be avoided. This is the difference of...
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