The differences in business systems in Asia and the West Essay
The differences in business systems in Asia and the West
When researching the differences in business systems between Asia and the West it is very difficult to find any material that does not attribute many of these disparities to cultural influences (Davidson, 1987; Ferguson, 1993 and Blackman, 1997). This is due to the fact that it is generally believed that intercultural awareness does contribute to successfully doing business in another culture. However, establishing how and where culture affects business systems is by no means an easy question to answer and many western businesses are in fact currently trying to answer this question in order to successfully integrate into the Chinese marketplace (Dayton, 2006 and Journal of Intercultural Learning, 2006). Therefore, in this essay I will analyse exactly what role culture has in explaining the distinctions between business systems in the West and China and argue that in many cases these discrepancies are incorrectly attributed to cultural reasons when in fact these variations can be explained by using far more obvious economic causes.
Harris (2006) notes the eagerness of business journalists to attribute the differences in Western and Asian business systems to cultural factors by stating: the airport newsstand best-sellers and glossy news weeklies are packed with admonishments to ‘preserve face’ and build relationships and local Chinese writers have jumped on the bandwagon, poking fun at the clueless westerners blundering towards failure in China because they don’t understand the local culture. Graham and Lam (2003) concur stating that Western and Chinese approaches to business often appear incompatible. Graham and Lam (2003) also believe that these differences in business systems and attitudes stem from deep cultural origins and in order for western business to successfully interact with their Chinese counterparts they must understand the cause of these differences is in fact their cultural differences.
However, Maidment (2006) argues that western Multi-National Companies (MNCs) are succeeding in China because they place little value on the role of culture when conducting business in China, but rather focus solely on business issues when conducting business. Maidment (2006) states that MNCs succeed because they hire the best local talent, pay the highest salaries, and invest the most. They have no culture, no beliefs, and no predispositions. They are machines. It does seem that too many western businesses are too concerned with recognising cultural differences in China, which often provide no explanation to the difference in business systems. Instead they should just focus on implementing successful business strategies in China, rather than becoming fixated on cultural differences (Harris, 2006 and Dayton, 2006).
Recognising that China has a different culture to that of western countries is not a universal explanation to explain the differences in business systems (Baird et al, 1990). In fact, Maidment (2006) argues that traditional Chinese culture is changing so fast that no one understands it. It is therefore debatable whether or not culture plays any part in the difference in business systems, this is due to the fact that the current generation of Chinese professionals has very little in common with the previous one (Maidment, 2006). One could therefore argue that analysing cultural differences to explain the business ones carries very little weight in China (Asian Business Law, 2006).
However, Maidment (2006), Harris (2006) and Dayton (2006) all concede that knowing Chinese history and culture is a benefit to conducting business in China but also state that cultural knowledge should not be solely relied upon in order to understand these differences. Given the rapid changes that are occurring in both the Chinese marketplace and Western economies it would seem that understanding the economic forces of the here and now would provide far greater insight into understanding the differences between China and the West, rather than mulling over traditional cultural influences.
In contrast the Journal of Intercultural Learning (2006) when contrasting Chinese and Western businesses argues that culture shapes our values, attitudes and our behaviour. It affects the way we communicate with each other, the way we expect to lead and to follow, the way we negotiate, the way we buy and sell, and the way we work together in teams. Nevertheless such a broad statement provides little insight into which specific aspects of culture affects business systems in both Asia and the West. In order to better understand this, a contextual background is needed rather that just providing stereotypical cultural tips, such as those that are regularly found in many business magazines. Anyone who thinks reading a few books on Chinese culture gives them the measure of the individual Chinese person with whom they are dealing is mistaken (Maidment, 2006).
When examining the current differences in business systems between the West and China, differences in educational systems and levels in different localities, the rate of change, the intricacy of different systems in different locations, geographical factors and the widening gap in economic development between Chinas rich and poor provinces all affect business developments to a greater extent than any cultural factors would (Harris, 2006, Dayton, 2006, Ferguson, 1993 and Maidment, 2006).
Burton and Scott (2008) do not however share such reservations when glorifying the role of culture in explaining the differences in business systems. Burton and Scott (2008) argue that the Chinese have been conducting business for thousands of years, and their system of business ethics has been shaped by the culture in which it developed — as was the business system in the West. At the centre of these differences is the fact that Chinese culture is far more relational than Western culture, and this difference is especially pronounced in business culture (Burton and Scott, 2008). Indeed, Miles (1999) also recognizes the stark differences in business relationships between the West and China and maintains that this is at the heart of potential differences between the two systems.
The type of relationship and networking structure that is referred to by Burton and Scott (2008) and that is such a crucial part of conducting business in China is of course, guanxi. Despite the various definitions relating to guanxi, there appears to be a common consensus that guanxi has its own cultural base and meaning in Chinese culture (Lee, 2006 and Yang, 1994). In order for guanxi to be established between two or more people there needs to be a cultural base and many candidates for guanxi bases are unique to the Chinese culture (Chen, 2004: 308). Therefore, while social networking is important when conducting business in any country throughout the world, the type of networking referred to as guanxi appears to be exclusively Chinese as it can not be separated from the intricacies of Chinese culture. In fact, Burton and Scott (2008) argue that because of Chinese culture, guanxi defines not only relationships but also how business is done in China. Given these circumstances and the importance that many scholars place on the role of guanxi in explaining the difference in business systems between the West and China, it would appear that culture is the dominant factor to explain these discrepancies (Backman, 2001 and Chen, 2004).
Therein however lies the problem in establishing exactly what role culture plays in explaining the difference in business systems between the West and China. While Backman (2001), Chen (2004), Burton and Scott (2008), Yang (1994) and Lee (2006) all argue that guanxi is inextricably linked to Chinese culture and that culture is the root of the differences in business systems between the West and China, Dayton (2006), Harris (2006) and Maidment (2006) contend that these universal business tips such as guanxi and preserving face are in fact not cultural specific.
This is best summarized by Harris (2006) who states there is just hardwork and guanxi, which is good networking, a pretty universal essential to doing business anywhere. Good networking therefore is an interpersonal skill that needs to be used to cross many cultural divides, not just those between the West and Asia. Simply defining the different ways that Chinese businessmen interact as guanxi and attributing this to culture is far too simple, as there are many other factors rather than just culture that are the source of these differences in business systems.
Furthermore, Maidment (2006) argues that understanding Chinese culture is is a lot like learning chess. The basic rules are easily memorized; responding to every situation that can arise is very, very difficult. Given the speed that the Chinese economy is moving at, businesses are often searching for answers to explain the differences in business systems and are increasingly falling back on the broad generalization that it can be explained because China simply has a different culture.
The truth of the matter however is that these so called predetermined cultural differences that are so often spouted by western business magazines have huge variations in many Asian countries, particularly China where business and cultural philosophies vary greatly among the rich and poor provinces, the educated and the uneducated and the young and old business generations (Harris, 2006, Maidment, 2006 and Dayton, 2006). Understanding Chinese history and culture is beneficial for understanding Chinas business system, however because circumstances in China change so quickly, staying abreast of China’s current situation is far more important than knowing its past (Maidment, 2006). There is no doubting that culture does play a role in determining the differences between the business systems of the West and Asia, but all too often these cultural influences are over-exaggerated, and current regional and international economic influences more often than not dictate the differences between Asia and the West.
Asian Business Law. (2006) “Do The Top Ten Cultural Tips For Doing Business In China Really Help? (Online) http://asiabizlaw.blogspot.com/2006/04/do-top-ten-cultural-tips-for-doing.html Accessed [30th April 2008].
Backman, Michael (2001). Asian Eclipse: Exposing the Dark Side of Business in Asia.
Singapore: John Wiley and Sons Inc.
Baird, I.S., Lyles, M.A. and Wharton, R. (1990). Attitudinal differences between American and Chinese managers regarding joint venture management. Management International Review, Volume 30.
Blackman, Carolyn (1997). Negotiating China: case studies and strategies. St. Leonards, NSW: Allen and Unwin.
Burton, F and Scott, S. (2008). China: Guanxi and Corporate Security (Online) http://www.stratfor.com/weekly/china_guanxi_and_corporate_security [Accessed 3rd May 2008].
Chen, Xiao-Ping (2004). On the intricacies of Chinese Guanxi: A process model ofGuanxi development. (Online) http://www.iacmr.org/XP_APJM_2004_3.pdf [Accessed29th April 2008].
Daniels, Jack (2007) China is a great place to do business – if you know the rules (Online) http://www.chinasuccessstories.com/2007/08/28/tips-for-doing-business-in-china [Accessed 30th April 2008].
Davidson, W.H. (1987). Creating and managing joint ventures in China. California Management Review, Volume 29.
Dayton, David. (2006) Culture Wars China Law Blog (Online) http://www.chinalawblog.com/2006/05/chinese_culture_wars_truce_dec.html [Accessed 27th April 2008].
Ferguson, T. C. (1993). Joint ventures in China: when West meets East and encounters the great wall of differing management thought. Journal of Management Inquiry, Volume 2.
Graham, John and Lam, Mark. (2003) Negotiating in China Harvard Business Review, Vol 81, No. 10, October, 2003.
Harris, Dan. (2006) To Succeed in China Know the Now China Law Blog (Online) http://www.chinalawblog.com/2006/04/to_succeed_in_china_know_the_n.html [Accessed 27th April 2008].
Journal of Intercultural Learning. (2006) Cultural Knowledge is a Plus to Business Success (Online) http://www.interculturallearning.net/2006/05/21/cultural-knowledge-is-a-plus-to-business-success [Accessed 26th April 2008].
Lee, Joseph (2006) The Importance Of Guanxi (Relationship) When Doing Business InChina (Online) http://EzineArticles.com/?expert=Joseph_Lee [Accessed 29th April2008].
Maidment, Paul. (2006) The Real Deal on China Forbes Magazine (Online) http://www.forbes.com/columnists/2006/04/20/china-yuan-hu_cx_pm_0420notes.html [Accessed 29th April 2008].
Miles, Michael (1999) Power and Relationship: Two Elements of the Chinese/Western Divide (Online) http://www.lib.unb.ca/Texts/JCIM/bin/get.cgi?director y=vol3_1/&filename=miles.htm [Accessed 2nd May 2008].
Yang, M. M. (1994). Gifts, Favors And Banquets: The Art Of Social Relationship inChina Ithaca, NY: Cornell University Press.