A. Cross-Cultural Differences Company X is considering expanding its business to China. However, prior to moving into a new and foreign market, Company X must understand the various cross cultural differences that are relevant to properly conducting business in China. By being more sensitive to and understanding the cross-cultural differences, Company X’s transition into the new market should be less challenging and improve its chances of acceptance. Language, work ethic and material culture are three cultural differences that should, first, be understood prior to pursuing opportunities in China.
Language is a barrier that will greatly influence the ability of Company X to conduct business in China. Included in this category is spoken, written and body language. If not adequately addressed, spoken language barriers will result in miscommunication, the inability to collaborate, and inability to deliver appropriate customer service. Specific to China is that there are 1000’s of dialects and it is common for residents of China from various parts of the country to even have difficulty understanding their fellow countryman’s local dialects. However, the spoken language barrier can be overcome by adopting the use of an interpreter to to assist in verbal communication and establishing appropriate relationships (Ball et al, 2009).
By leveraging local experts who are fluent in Mandarin or Cantonese, depending on where business is to be condu’cted, will likely result in a competitive advantage for Company X. it’s important to have a interpreter who also understands Company X’s industry. Furthermore, it’s important to avoid the use of idioms and jargon specific to the organization. When engaged in a conversation, it is important avoid using the word “no.” Instead, an acceptable response to a question might be, “we will take the idea into consideration and get back to you about the item.” In the U.S., its common to respond with and acceptable to respond with the word “no” when appropriate. However, it could impair business relations when not approached properly.
Next, it is imperative to accurately translate written communications in a form that is understandable and appropriate for the specific foreign audience, in this case China, and to ensure meanings are not lost. This might include translating technical manuals, catalogs and advertising ideas into Mandarin or Cantonese. In translating documentation, it will be critical; to select words in the from the chosen language that have the same meaning as the English words (Ziganag & Fan, 2004). Employing qualified translators who can accurately convert English text to the required language will allow Company X to overcome the written language challenges
It’s important to understand and be aware of body language while conducting business in China (Ball et al, 2009). . For example, when entering a room, the host will usually direct a guest to sit. Otherwise, it would be considered rude to sit prior to being directed by the host. In the the U.S. This may not be seen as an issue. However, it is one of the cultural differences to be aware of. Another example is with personal space. In the U.S., for example, it’s common to maintain an arms lengths distance from others. Approaching closer is considered inappropriate and can make some feel uncomfortable. In China, on the other hand, it is common for others to be in what Americans might consider their “personal space.“ No offense is meant by the action. This is just another cultural challenge to be aware of as Company X pursues business in China.
Work Ethic and business relationships are further cross cultural differences that need to be carefully approached. In the Chinese business culture, personal relationships directly influence work ethic and business relationships. According to one expert, “China is a relational-oriented country in which people place great importance on personal relationship. Chinese managers may initially focus more effort on building social and interpersonal relations before entering into business or contractual relationship” (Ziganag & Fan, 2004). For example, employee loyalty can be described and improved by reciprocating favors. Developing business relationships are expected to take more time in the Chinese culture as opposed to how they are developed in the united States. In the U.S., businesses and clients typically meet in a formal setting and focus on the business requirements and solutions whereas, in China, first, second and even third meetings might be in informal settings where business is not expected to even be discussed.
The legal system is another issue to be considered when doing business in China because it is still viewed as being in a developing stage. Contracts, for example, are highly influenced by this difference. In the Chinese culture, contracts describe how relationships will be developed whereas in the United States, the contract is a binding agreement that spells out the specific terms, conditions and expectations from each party involved. As Company X pursues the possibility of expanding business to China, it must understand that the Chinese business culture does not place as much emphasis on the binding force of a written contract.
B. Compare U.S. business practices to practices in your proposed country for each of the following: Product, Price, Promotion and Place The marketing mix should be taken into consideration as Company X considers expansion int the China market. It is important to recognize that strategies that are effective in the United States will not necessarily be effective in China. Therefore, the components of the marketing mix (products, price, promotion and place) strategies might require adjustments to become attractive to the Chinese market.
Often times, the total product must be modified to accommodate the needs and appeal of a specific market. This does not necessarily mean that the manufacturing or production process is modified. The total product consists of the brand, accessories, services, warranty, instructions, image and packaging (Ball et al, 2009). For example, if Company X decides to sell certain circuit boards in China, it might be more beneficial to modify the package and instructions that are written in English for the U.S. Market and translate into Mandarin or Cantonese for the Chinese market. Another example is in the frozen food industry. If Company X is distributing frozen meats, like chicken and beef, to grocery retailers in the U.S. and wants to expand into the Chinese market, the company might encounter infrastructure challenges because many rural and undeveloped areas of China may not be equipped with freezers. It’s more common to find fresh or live chickens in markets so Company X may want to consider modifying its product strategy from distributing frozen food in China to fresh distribution as an alternative.
Pricing also needs to be addressed because purchasing power in the foreign currency may differ from the U.S. dollar. Prices need to be adjusted to consider the cost of living in China. For example, if a widget in the U.S. is costs ten dollars, the price might be equivalent to forty dollars in local Chinese currency (Ball et al, 2009). Consumer wages are lower in much of China making purchasing a more expensive item out of reach for many potential consumers. Additional factors include price increases due to taxes and tariffs.
Promotion includes methods for effectively communicating a message, such as through advertising, to achieve a desired perception. Forms of advertising include radio, television, billboards, internet and brochures. The messaging delivered in the U.S. Market will likely differ form how the product is presented in China. In the U.S., advertisements for a particular product may focus on cost savings and product quality benefits, whereas in China, advertisements typically project how the product will improve ones quality of life. In the U.S., there are are variety of
Another important consideration is place or distribution. In other words, how will Company X get the product to customers in China? Place takes into consideration factors like distribution partners, geography, trade routes and climate (Ball et al, 2009). Distribution in the U.S. is highly developed an easy to access. By utilizing domestic shipping companies, product can be in the hands of a customer overnight or within hours, for that matter. If Company X leverages retail distributors like supermarkets, consumers can get their products even quicker. The United States has a highly developed infrastructure system of roads bridges and seaports that enable product to easily move to every city in the country.
On the other hand, there will be challenges to doing business in China. These includes regions of markets that are landlocked, where there is no seaport access with less developed roads resulting in slower movement of product. When conducting business in China, it is common practice to develop partnership with foreign distributors who are familiar with the regional and local cultures, industry and business climate. Most importantly, prior to launching business in China, it will require a series of meetings to get to know partners, their understanding of the markets and their success.
C. Ethical Issues It’s important to understand that certain common practices in one country may be prohibited and illegal in another country. Two distinct ethical issues that will influence proceeding with conducting business in China is the political environment and practice of gift giving. First, in the United States it is a common practice for large industries or businesses to engage in politics and attempt to influence laws through lobbying. Companies might even go as far as publicly criticizing the U.S. Governments position on a particular issue. This is legal and often commonplace in the United States. On the other hand, in China, it is unlawful for businesses to speak out against or criticize government policy so the business must be cautious to comply with policy and not voice dissent. Secondly, gift giving is no longer encouraged in the U.S., and furthermore, in some cases may be construed as bribery which is illegal. Some businesses even limit the value of gift that employees can accept from vendors.
Even in within the federal government, employees are prohibited from accepting meal offers from suppliers that exceeds twenty five dollars. An equity trader who offers an executive at a firm, a gift in the form of a large sum of money in return for specific “inside” information, would be considered bribery and is completely illegal in the United States. In China, however, it is common practice and expected to give gifts to potential business clients. The act is a welcomed practice that takes place at all levels of business. Obviously, there are limits that might cross into unlawful practices, specifically when offering high valued gifts to government officials.