ISSUES IN INTERNATIONAL BUSINESS: A CASE STUDY ON THE PEOPLE’S REPUBLIC OF CHINA
ISSUES IN INTERNATIONAL BUSINESS: A CASE STUDY ON THE PEOPLE’S REPUBLIC OF CHINA
Introduction
In international business, the organizations also need to consider cultural and social values at individual levels in the present competitive business environment (Mandják et al., 2016; Weinzimmer & Esken, 2016). In this context, China is evidently one of the topmost cradles of civilizations in the world to take into account for a case study. The history of this East Asian nation is really astounding. The People’s Republic of China has developed to become one of the top world powers today, named among the G5 + 1. Of course, one would expect such a great feat owing to the country’s population. Needless to say, China is the most populated nation in the world today, with a population of over 1.3 billion (O’Brien, 2016; Schiavenza, 2013). Its population coupled with its cultural values and strong business culture has placed the People’s Republic of China among the top business locations in the world. China has an amazing culture, and a lot of businesses have their root in Mainland China. Hong Kong, a subset of China which derives its virtues and growth from Mainland China, has been a great business destination in the world as well. This explains the reason why one can find a number of Fortune 500 companies both in Mainland China and Hong Kong. This report takes a look at the issues in international business relation in China, comparing this top notch country to Singapore, also known as one of the most lucrative business destinations in the world.
Rationale for China
Would China be categorized as an emerging market? What importance is the Chinese market to the world economy? China, together with Brazil, Russia, and India, is categorized as the four largest emerging and developing economies in the world. O’Brien (2016) argued that China is in fact the only emerging market that matters. The growth of Chinese economy poses a serious threat to some of the topnotch economies of the world such as the USA. However, Zhu (2013) claims that China cannot be considered an emerging threat. He argues that with respect to China's relations with the United States, Beijing does not have any intention of challenging America's supremacy but rather prefers to consider itself as a developing country with major challenges to address. Moreover, China is also a popular destination for studies. People from different parts of the world are used to go China for study. The Chinese government places immense priority on education. The priority placed on education is shown in the number of strategies developed by the government to revitalize the country based on science and education. China's high population, coupled with a number of other factors places immense pressure on studies to excel.
Cultural Analysis of China
China and India are homes of one-third of the world’s population. China’s population is roughly 1.35 billion which is equivalent to about 20 percent of the world’s population (Schiavenza, 2013). As a matter of fact, there are as many people living in the People’s Republic of China as there is combined populace in North and South America as well as Western Europe, Australia, and New Zealand.
Ethnicities and Cultures in China
As one would expect for the most populated country in the world, China has numerous ethnicities and cultures. According to Travel China Guide (2016), China is composed of 56 ethnic groups. Han Chinese is the majority ethnic group, accounting for 91.59% of the overall Chinese populace while the other ethnic groups (55 in number) account for the remaining 8.41%. In other words, the Han Chinese has a population of about 1.1594 billion and people belonging to this ethnic group mainly live in the lower and middle reaches of the Yangtze River, Yellow River, and the Pearl River as well as in the Northern Plain Region. This is obviously the largest ethnic group in the world. The ethnic minority groups in China include the Achang, Bai, Blang, Bonan, Bouyei, Chaoxian, Hani, Hezhen, Hui, , Kazak, Kirgiz, Lahu, Mongol, Mulam, Qiang, Russ, Salar, She, Tu, Tujia, Uygur, Uzbek, Zang and so forth. These 55 ethnicities are mainly concentrated around Southwest China, Northwest China, and Northeast China.
The culture of the Chinese people is highly dependent on their ethnicities. Thus, China can be considered a multi-ethnic and multi-cultural state. An exhaustive consideration of Chinese culture would require a study solely dedicated to it. The culture relates to the arts, sculpture, paintings, myths & legends, clothing & ornaments, festivals & customs, cuisines, Chinese Kungfu, traditional trades, literary works, literary genres, heritage, music & dance, greetings, language and so forth. Some of the most spectacular of these features include the Zhongyuan Festival, August 15, The Dragon Boat Festival, March 3 Festival, Traditional Chinese Weddings, Hanfu, Adult Ceremony, Qingming Festival, Dragon Culture in China, Four Divine Creatures in Ancient China and the Art of Chinese Paper Cutting. To consider the culture in details, it is necessary to take a look at some unique elements of the cultures such as religion, language, food, arts and customs as well as celebrations.
Communism has grown to become a tolerant religion in China, though it is apparently atheism. China has five official religions which include Buddhism, Taoism, Islamism, Catholicism, and Protestantism. Chinese law supports the freedom of worship, however, religions other than the aforementioned five are considered illegal by the people. Confucianism and some other traditional religions can also be found in China (Zimmermann, 2015). On the contrary, Singapore has four main religions including Buddhism, Islamism, Hinduism, and Christianity. However, some other religions such as Sikhism, Judaism, Zoroastrianism, Baha'l, Jainism and so forth are also practiced (Guruswamy, n.d.).
China has seven major languages, and each of these languages has their various variations. Mandarin is the most spoken dialect in China and by far the most spoken language in the world ("Most Popular Languages in the World", n.d.). Mandarin is spoken by 71.5% of the population which corresponds to up to 965 million people. Wu spoken by 8.5% is the next most spoken language in China, followed by Yue, also known as Cantonese, spoken by 5 percent of the population. Moreover, Xiang, Min, Hakka, and Gan is spoken by 4.8%, 4.1%, 3.7% and 2.4% of the populace, respectively. There is no such thing persists as the Chinese Language because the dialects are very different from each other. Rather Chinese is a family of languages. However, the official national language of China is Pŭtōnghuà which is a type of Mandarin (Zimmermann, 2015). On the other hand, Singapore has four official languages namely, Malay, English, Mandarin and Tamil (The Economist, 2011).
Chinese cuisines are marked by the various ethnicities and geographical diversities. The Cantonese and the Szechuan are among the main styles of Chinese cooking which respectively features stir-fried dishes and peanuts, sesame paste and ginger. Furthermore, rice is an important food in China. In China, the word for rice is fan which means "meal." This is because of its importance to the Chinese people. Some other important foods in China include scallions, cabbage and bean sprouts (Zimmermann, 2015). The local dishes in Singapore include varieties of noodle dishes, Singapore chicken rice, fried carrot cake, fish head curry, Rojak, Roti Prata and so forth.
Art in China is greatly influenced by the mystical history and rich spiritual heritage of the people. The spiritual figure of Buddhism is represented in many sculptures and paintings. Furthermore, Chinese calligraphy which is based on symbols encompasses enriched cultural heritage of the people. Music is also a form of arts that can be used to describe the Chinese people. Some of the musical instruments that generally characterize the Chinese people include the flute-like xun and the guqin. Martial arts mostly practiced in the east have its root in China and also China is the origin of the famous Kung fu. In the Ming and Qing dynasties especially, Ancient Chinese are proficient writers and of course this is well obvious in the country’s rich liturgical history (Zimmermann, 2015).
Chinese festivities are some of the most important events in the country. One of the largest festivals in China is the Spring Festival which marks the beginning of the Lunar New Year that occurs between mid-January and mid-February. The festivity denotes a time carved out by the Chinese people to honor their ancestors. In order to welcome the New Year, during the Festival the Chinese eat rice congee and mustard green to cleanse the body. Some other notable events are the birthday of Confucius, Guanyin the goddess of mercy, Mazu the goddess of the sea that is also known as Tianhou. These events attract a lot of pilgrims to China (Zimmermann, 2015). Some of the festivals and events practiced in China are also practiced in Singapore. The Chinese Spring Festival is also celebrated in some parts of Singapore. Some of the major religious occasions in Singapore include the Lunar New Year, Hari Raya Haji, Hari Raya Puasa, Vesak Day, Deepavali and Christmas (Guruswamy, n.d.).
Business Culture
Gift Giving
For any business to excel in China, the facilitators must learn this important Chinese custom. It is imperative to know who to offer the gift and who should offer the gift. Gifts should not be too expensive, but they should represent some values to the Chinese. Moreover, the Chinese are very fond of some colors such as gold, blue and dark red and therefore it makes sense if these colors are used in the gifting. The gifts should be offered at the end of a meeting, and Chinese expect visitors to offer gifts after any such meeting. The gift should also be offered with both hands, and it is normal for the receiver to refuse the gift at first, but the giver is expected to persist. Gifts should not be wrapped in white or black colors because these colors are associated with funerals (Government of Canada, 2015). It is also important not to give anything in the set of four because the letter 4 rhymes with death in China.
On the contrary, in Singapore, small business-related gifts such as a pen with the company logo would be sufficient. Gifts are usually wrapped and received with both hands. Just like China, gifts that connote severance or cutting such as scissors are not appropriate because they represent conflicts. Just like China, it is important not to give anything in the set of 4 and also avoid giving a clock as these represent death (Denmark in Singapore, n.d.).
Dining
Business is often conducted while dining. It is important to know Chinese business customs when dining. These customs determine when to begin eating, how to keep pace, refusing to eat, drinking, toasting and so forth. It is imperative to wait until you are invited before you start eating. Moreover, it is acceptable to refuse to eat but it may be more polite to accept the food offered to you, but one should ensure that he does not eat up everything because it shows that he wants more. Chinese usually offer strong distilled alcohol known as baiju or maotai for toast. It is important to ensure that you do not drink from the toasting glass except during a toast. It is also acceptable for visitors to refuse the drinks offered. Knowing all the dining etiquettes such as paying the bill, conversation and so forth will pay you great dividend as it will make your business acceptable to Chinese (Government of Canada, 2015).
In Singapore, care must be taken to avoid entertaining a Malay associate, who would be a Muslim, on Fridays or during Ramadan. Hence, one should not conduct business with them during these periods. Care should be taken not to serve pork or alcohol. Just like China, the bill is usually paid by the host and the other party can reciprocate next time. Also, do not offer beef to an Indian because most Indians do not eat beef (Denmark in Singapore, n.d.). In general, it is important to know the culture, religion, and ethnicity of the associate in order not to stumble in the business custom or etiquette.
Conducting Meetings
Considerations Required by Foreign Companies to Operate Effectively in China
The Hofstede’s cultural dimensions describe the comprehensive study conducted by Professor Geert Hofstede which explained how values in the workplace are influenced by prevailing culture. Hofstede analyzed a large database of employee values scores collected by IBM between 1967 and 1973 which covers over 70 countries. In the study, Hofstede defined culture as the collective programming of the mind that distinguishes the members of one group or category of people from others ("Cultural Dimensions - Geert Hofstede", n.d.).
In the study, Hofstede identified four different levels of cultures which include symbols, heroes, and rituals values which encompass national culture and organizational culture or practices. Analyzing China with the dimension, the Long-term Orientation abbreviated as LTO is the highest ranking factor as it ranks 118. LTO is also the highest ranking factor in Hong Kong and in most other Asian countries. This dimension shows society time perspective and an attitude of preserving.
Another important dimension is the Individualism (IDV). Here China ranks lower than other Asian countries. China ranks 20 whereas the average ranking is 24. The low ranking can be understood by considering that China is a communist state that emphasizes Collectivism and not individualism. The Power Distance ranking of China is 80. This is high compared to some other Far East Asian Countries which averages 60. The world average is even lower at a value of 55. This shows the high level of inequality of power and wealth in the Chinese society. Interestingly, the Chinese accept this power and wealth imbalance as their cultural heritage. Some other rankings include the Masculinity/Femininity (MAS) in which China ranks 55 and the Uncertainty Avoidance (UAI) in which it ranks 40 (Williams 2012).
These rankings go a long way to describe Chinese culture in toto. They describe the distribution of wealth in the country, the attitude of persevering and ease of overcoming obstacles with time, the extent of communist rule in the country. The individualism ranking is low, and it indicates the extent of communist rule in the country. Obviously, Chinese easily form close and committed member groups which could be a nuclear family, extended family or extended relationship. Also, Chinese show profound loyalty to collectivist culture and evidently, everyone in the society takes responsibility of fellow members of the group. These characteristics affect and determine the business culture in the East Asian country. Evidently, it is important for businesses to consider these basic Hofstede cultural analyses of China to be able a good fit into the context and achieve the requisite business success.
Change in the Management Style to Adapt Working Culture
As pointed out earlier, Chinese business culture upholds humility and shuns attitude of pride. This could be different from the way some Singaporeans might approach businesses. It is important to imbibe the attitude of humility in communication and relationship with China. Furthermore, Chinese value relationship and places a lot of emphasis on it in a business or contract. As a manager, one needs to understand how important one’s relationship with his Chinese business partner is and build such a relationship. A strong relationship will imply a better business association and therefore growth in the respective business in China. Contrary to what is obtainable in western cultures, Chinese value giving of gifts and entertainments. Any manager who wants his business to succeed in China must learn and adapt to the culture of giving and receiving of gifts. It does not matter what your business culture is; effective cultural adaptation in China requires not only learning but also practicing Chinese business cultures and customs (Molinsky, 2013; Thompson, n.d.)
Conclusion
The People’s Republic of China has an amazing culture, and most of the cultural values are similar to Singaporean cultural values. China is a multi-ethnic and multi-cultural country as it has 56 ethnic groups with Han Chinese being the majority ethnic group while others are the ethnic minority groups. Visitors who intend to do business in China should learn these values especially the business customs such as gift giving, entertaining and conducting meetings. The Hofstede’s cultural dimensions of China describe the culture in toto. According to the Hofstede’s cultural dimensions, China ranks very high in Long-term Orientation (LTO) with a rank of 118. It ranks 20 in individualism (IDV), 80 in Power Distance ranking (PDI), 66 in Masculinity/Femininity (MAS) and 40 in Uncertainty Avoidance. It is important to take the culture into consideration before entering any binding contracts. This is because any relationship you are trying to build with the Chinese might be damaged if you do not understand these cultural dimensions. China’s business culture is a lot similar to Singapore’s although there are a few differences. This is because Singapore comprises Chinese and some other ethnicities such as Malays and so forth.
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