The Effect of Cultural Differences on the Ability to Trade

In this report I will be writing about the impact of cultural differences on international business’s performance in the foreign and international market. This means looking into the attitudes of the society and the people which populate this society, the infrastructure and day to day running of the Chinese country and the education system which is one of the most in depth education systems in the world, as these are the areas we have looked at in the presentation which was presented earlier.

The society I will be looking into is the same as the presentation, which is China as they have one of the more unusual cultures in the world.

Firstly the due to the fact that China is a communist country they’re education system is one of best run education systems in the world and along it being in a communist country of course its state run, this means that the first 9 years of school is mandatory for every Chinese citizen, once they have reached this stage children who have demonstrated ability can apply for a grant allowing them to push onto the next stage of education which in the western world would be labelled sixth form.

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However there is also private school are available for this stage of schooling which are for people who may not of necessarily reached the grades to move on with state funding however there parents are wealthy enough to afford this education and want them to go to university. The education system is seen as being one of the best in the world because it produces some of the most work ready citizens and even though it is only 9 years long compared to some educations systems, which are significantly longer they produce some of the best results for the highest educated students in the world within this time.

However this system would be incredibly difficult to bring to a different society this is because the way in which the people of China have been brought up to support and for the most part its all they know, were in the UK if people were told they could advance to the next level of education if they are rich or incredibly smart people would say this is grossly unfair and for the most part they would be correct. It also is commonly known that Chinas youth social culture is completely different to the social culture in a country such as the UK as people at the ages of 12-18 will tend to go a see there friends outside of school often however in China this far less common leading to a culture of more reserved less social people. This makes it harder for there business to grow and socialise with other business based in other countries, however for the most part this suit there governments business model as the idea behind communism is everything is done within the state and produce with state materials. They also are taught very specific rules of introduction such as always bowing if they were not to do this it would be considered rude and even though someone in western society may not know this they could burn bridges before they even start communication by requiring this of people. These sort of rules and ways of life could seriously affect Chinas growth into a international market. According to Chinas main forms of education curriculum also state that there is only exams as a measure of intelligence this is a huge disadvantage for them as because they are cutting out people who are necessarily good at the social side of communication and only rewarding those who are intelligent with there written skills.

Secondly the attitude of Chinese society is very different to one of a western culture and when you combine these two in a business sense with the right people leading each business it can work effectively this is because China conducts there business in a very talk active process were all decisions take time and they discuss them in great detail to come out with the best option for both parties, this fits hand in hand with the way there society runs. They is because for the most part there society has reserved humble people and therefore if you sent some in for a western society who is loud and looking to make as much money and offer nothing in return then this person wouldn’t do very well in a Chinese board room, however if you send someone in who is intelligent and talks when is necessary as well as making sure they are out to come with a fair deal then they will do very well. What could also be greatly beneficial to any deal a UK based business would want to do with the a Chinese business would be the fact that as a culture they have a very strong work ethic this is because on average they work between 2000 hours to 2250 hours a year this is compared to the 1500 hours which is done on average in the UK and this means that they are more likely to be able to get things done on time as well as making sure that they will enjoy there job more because they are putting more in and hopefully then will be seeing more results. However although this benefits the UK or other trade partner of the Chinese it could lead to some anger on the Chinese side as they could see the fact they work so much longer and harder that the other party is lazy and aren’t willing to pull there wait this could ruin a relationship before it even starts. This also is why a socially people who work in any sort of industry in China never leave before there manager does because it is seen as disrespectful as well as showing that they are lazy and aren’t willing to put in the work.

Thirdly and finally I will be speaking about Chinas infrastructure and to many people’s surprise even though the country has a huge GDP which is still increasing even though analysts are saying it will soon start to come down, they have areas in China which have very few roads along side as well as no access to electricity and therefore no phone or internet signal in this area and they are slowly expanding and modernising these areas so that the people there can get a decent education but also start selling the products they produce in these areas to a wider market as a lot of these areas produce huge amounts of rice which could be sold to other countries if they had the road network in place to support the transport of these goods. They are also trying to invest in making sure that they are lowering there carbon emissions because a lot of businesses are taking the environment into account when choosing there suppliers and therefore many of them are deciding to skip China as supplying there goods because they have such a huge amount pollution especially in Beijing which has some of the worst pollution in the world. This is one of the biggest reasons company decided not to trade with China because its only recently they have agreed to trying to improve there environmental imprint and this will make a huge difference for them as people will be more willing to get the products produce there.

In conclusion I have covered the three main reasons why there cultural differences will affect there ability to trade with the other countries of the world who have items to produce. However the one, which is the most major for China in the education system as western culture, is so different to there it definitely restricts the growth that can take place between the two countries.