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Comparative Studies of Business Culture Between China and Western Countries

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Preface What do you want to get from the course?

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What can you get from it? Objective: Through the introduction of cultural differences from business perspective, this course aims to help students to understand different cultural signals, challenges and opportunities in business. As a result, the students will be capable of analyzing business cultures in different countries and areas, so to avoid improper behaviors in business environment. Main Contents: This course consists of 2 major parts: understanding basic cultural differences and cultural types; cross-cultural communication. This course will be conducted in the following aspects: basic cultural types, the impact of culture, the globalization of business, non-verbal communication, cross-cultural meeting, cross-cultural negotiations, corporate culture, cross-cultural marketing and cross-cultural consultants, etc.

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Learning approach: case study, group discussion, group work, and multi- media methods, etc. Learning result: a course paper (2,000 words) a group presentation (15min.)

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Understanding Cultural Differences in Globalization A world in globalization a world market economic and cultural penetration technical possibility political change after 1990

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Defining Culture Culture is the way of life of a group of people (Foster, 1962) Culture is that complete whole which includes knowledge, beliefs, art, law, morals, customs and any capabilities and habits acquired as a member of a society (Tylor, 1977) the collective programming of the mind which distinguishes the members of one human group from another . The interactive aggregate of common characteristics that influences a groups response to its environment (Hofstede, 1980)

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A more formal definition: Culture is a set of learned core values, beliefs, standards, knowledge, morals, laws, and behaviors shared by individuals and societies that determines how an individual acts, feels, and views oneself and others. (from Mitchell, C. (2000) The Short course in International Trade Series: International Business Culture, Shanghai: Shanghai Foreign Language Education press)

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Functions of culture Enables us to communicate with others through a language that we have learned and that we share in common Makes it possible to anticipate how others in our society are likely to respond to our actions Gives us standards for distinguishing what is right or wrong, beautiful and ugly, reasonable and unreasonable etc. The knowledge and skill necessary for meeting sustenance needs Enables us to identify with other people

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National Culture 3 aspects It is shared by all or almost all members of some social group Older members try to pass it on to younger members It shapes behaviour and structures ones perception of the world National culture explained more of the differences in employees than did professional role, age, gender or race (Hofstede, 1980)

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Does culture matter? A case study of Euro Disney

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Japan vs. U.S. France vs. U.S. The company, it seems, failed to do its cultural homework on everything from French business negotiating styles to employee flexibility and dress habits to consumer spending patterns and eating preferences.

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Mistakes of the company Sense and sensibility land of farmers or land of Mickey? negotiate with whom? French way or American way? The devil is in the details sit-down breakfasts or continental? graze or set lunchtime? family friendly or wine?

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Hospitality headaches souvenirs? month-long vacation or one nights stay? Culture caution: It should be noted that for all of Disneys faults the French government was more than happy to have them set up shop. The government also bears some responsibility for not making Disneys transition smoother. The French have claimed for centuries that Americans have no culture but nowadays, it seems, they believe Americans have too much and need to export some.

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Cultural Components Language Religion Religion Conflicting Attitudes Conflicting Attitudes Manners and Customs Education Humor Social Organizations The Arts

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Do cultures evolve ?

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Religion and Islamic Banking A society based on social justice, equity, and moderation A religious philosophy (the Koran) actually dictates the terms of business relationship Profit-sharing principles so as not to break the Islamic prohibition on riba, or usury Risks should be shared between the financier and the entrepreneur. Predetermined interest or predetermined profit-sharing ratio?

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Conflicting attitudes Young or old? Culture caution: This example illustrates how a lack of understanding on both sides can cause confusion. The Chinese must also understand that Western culture is based in meritocracy and that young executives in the West are given far more responsibility.

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Basic Cultural Types Geert Hofsted and other researchers study

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Hofstedes five dimensions of culture 1. IndividualismIDV 2. Power distance indexPDI 3. MasculinityMAS 4. Uncertainty avoidance indexUAI 5. Long-term orientationLTO (Guidham 1999)

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Individualism versus Collectivism Individualism (IDV) focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships. A High Individualism ranking indicates that individuality and individual rights are paramount within the society. Individuals in these societies may tend to form a larger number of looser relationships. A Low Individualism ranking typifies societies of a more collectivist nature with close ties between individuals. These cultures reinforce extended families and collectives where everyone takes responsibility for fellow members of their group.

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Sino-American Comparison USA A society with a individualistic attitude and relatively loose bonds with others CHINA A society with strong relationships where everyone takes responsibility for fellow members of their group Source: ITIM 2003

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Power Distance Power Distance Index (PDI) focuses on the degree of equality, or inequality, between people in the country's society. A High Power Distance ranking indicates that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. A Low Power Distance ranking indicates the society de- emphasizes the differences between citizen's power and wealth. In these societies equality and opportunity for everyone is stressed.

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Sino-American Comparison USA a greater equality between societal levels, including government, organizations, and even within families. CHINA A high level of inequality of power and wealth within the society. This condition is not necessarily forced upon the population, but rather accepted by the society as their cultural heritage. Source: ITIM 2003

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Masculinity versus Femininity Masculinity (MAS) focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power. A High Masculinity ranking indicates the country experiences a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination. A Low Masculinity ranking indicates the country has a low level of differentiation and discrimination between genders. In these cultures, females are treated equally to males in all aspects of the society.

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Societies with supposedly masculine values appreciate aggressiveness and assertiveness while respecting the goal of material acquisition. The more feminine cultures value interpersonal relationships, put quality of life before material acquisition and actively express concern for the less fortunate. A government that promotes a comprehensive social welfare system represents a highly feminine society that demonstrates concern for the downtrodden. As governments move away from higher taxes and welfare systems it could be said that they are exhibiting a more masculine approach to social responsibilities.

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Sino-American Comparison USA the country experiences a higher degree of gender differentiation of roles. The male dominates a significant portion of the society and power structure. This situation generates a female population that becomes more assertive and competitive, with women shifting toward the male role model and away from their female role. CHINA

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Uncertainty Avoidance UAI focuses on the level of tolerance for uncertainty and ambiguity within the society - i.e. unstructured situations. A High Uncertainty Avoidance ranking indicates the country has a low tolerance for uncertainty and ambiguity. This creates a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. A Low Uncertainty Avoidance ranking indicates the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. This is reflected in a society that is less rule-oriented, more readily accepts change, and takes more and greater risks.

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Sino-American Comparison CHINA & USA a society that has fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts, and beliefs. JAPAN a trade-off of individual freedom and mobility in exchange for a guarantee of lifetime employment

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Long Term Orientation LTO focuses on the degree the society embraces, or does not embrace, long-term devotion to traditional, forward thinking values. High Long-Term Orientation ranking indicates the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of today's hard work. However, business may take longer to develop in this society, particularly for an "outsider". A Low Long-Term Orientation ranking indicates the country does not reinforce the concept of long-term, traditional orientation. In this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change.

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Sino-American Comparison USA This low LTO ranking is indicative of the societies' belief in meeting its obligations and tends to reflect an appreciation for cultural traditions. Greater flexibility and the freedom to react quickly to new opportunities CHINA a society's time perspective and an attitude of persevering; that is, overcoming obstacles with time, if not with will and strength.

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Structure Origin and application of Chinese and American business culture China: Confucianism Buddhism Taoism America:Protestant ethic Liberty & Democracy Overcome conflicts

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Origin and Application of Chinese Business Culture Confucianism ---Doctrine of the mean Neither conservative nor aggressive ---Hierarchy & Order Interest of collectivity is higher than that of individual (Fang 1999) Long-term Orientation, Collectivism, High Power Distance

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Origin and Application of Chinese Business Culture Buddhism Samara The eternal cycle of birth, suffering, death and rebirth Fang 1999 Long-term orientation

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Origin and Application of Chinese Business Culture Taoism Yin & Yang Reversion of love & hatred, good & bad, fortune & misfortune Fang 1999 Long-term orientation

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Characteristics of Chinese Culture Collectivism High Power Distance Long-term Orientation

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Origin and Application of American Business Culture Protestant Ethic Pilgrim Fathers If one works hard, he or she will succeed. Weber 1958

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Origin and Application of American Business Culture Liberty & Democracy John Locke (1632-1704) Two Treatises of Government We hold these truths to be self-evident, that all men are created equal --- Declaration of Independence

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Characteristics of American Culture Individualism Masculinity Short-term orientation

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Overcome Conflicts Communicate Understand Respect Learn Corporate

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Fang, T (1999) Chinese Business Negotiating Style, London: SAGE Publications Ltd. Guidham, M (1999) Communicating Across Cultures, New York: PALGRAVE History of USA http://www.usahistory.info/New- England/Pilgrims.html (accessed 15 th November 2003)http://www.usahistory.info/New- England/Pilgrims.html ITIM http://www.geert-hofstede.com/ (accessed 15 th November 2003)http://www.geert-hofstede.com/ Max Weber, The Protestant Ethic and the Spirit of Capitalism, New York: Scribner's Press, 1958, Accessed via American Studies at University of Virginia http://www2.pfeiffer.edu/~lridener/DSS/Weber/PECAP.HTML http://www2.pfeiffer.edu/~lridener/DSS/Weber/PECAP.HTML References

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Trompenaarss Alternative Dimensions

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Hofstede Study (IBM) is a general way to look at differences between cultures. But: Assumption of one-to-one relationship between culture and nation-state. Research may be culturally bound. Respondents worked within a single company. Work is beginning to look dated (1967-1973). Missing countries Estimates values Ignores differences within clusters

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Culture Map for Uncertainty Avoidance and Masculinity- Femininity

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Culture Map for Power Distance and Uncertainty Orientation

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Trompenaarss Alternative Dimensions Focus on values and relationships Survey of 15,000 managers Over 10-year period From 28 countries Bipolar cultural dimensions

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Outer-directedInner-directed Sense of control over ones destiny Outer-directed will accommodate behavior to situation Inner-directed willing to change and pursue own goals

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Trompenaars Research Trompenaars dimensions of culture: l Universalism v Particularism l Individualism v Collectivism l Neutral v Emotional / Affective l Specific v Diffuse l Achievement v Ascription l Attitudes to Time l Attitudes to the Environment

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UniversalismParticularism Extent of belief in defined set of rules Universalism Performance-based considerations Particularism Relationship- or situation-based considerations

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Universalism Universalistic cultures focus more on rules than relationships, have a preference for legal contracts, and believe there is only one truth. In universalistic cultures a deal is a deal. Trust is based on honoring your word or contract. Fairness is treating all people the same.

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Particularism Particularistic cultures focus more on relationships, change legal contracts easily and believe in several perspectives on reality. Particularists evolve their relationships to suit the situations.

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U.S. Austria Germany Switzerland Sweden Honk Kong China Indonesia Former Soviet Union Venezuela Universalism Particularism UniversalismParticularism (contd)

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IndividualismCommunitarianism Dependant extent of peoples achievement Individualism Frequent use of I Communitarianism Frequent use of We

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Individualism Individualism is defined as societies where people ideally achieve alone, use "I" frequently and take vacations singly or in pairs.

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Communitarianism Communitarian societies, on the other hand, use "we" more often, achieve better in groups, and vacation in organized groups. In individualistic cultures, decisions can be made quickly by representatives at negotiations, while in collective cultures, the representatives must defer to the organization.

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United States Czech Republic Argentina Former Soviet Union Mexico France Indonesia Japan Thailand Singapore Individualism Communitarianism IndividualismCommunitarianism (contd)

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NeutralEmotional Extent to which emotions are expressed Neutral Reserved and composed Emotional Very expressive

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Affective (Emotional) Affective cultures readily express their thoughts and feelings. Expressing feelings relieves tension. Emotions flow easily. Touching and gestures are common. Statements are dramatic and fluent.

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Neutral Neutral cultures do not openly reveal thoughts and feelings, admire self- possessed behavior and frown on physical contact.

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Japan United Kingdom Singapore Austria Indonesia Brazil China Switzerland Netherlands Mexico Neutral Emotional NeutralEmotional (contd)

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SpecificDiffuse Extent to which various life roles kept separate Specific Compartmentalize roles Diffuse Mix personal, professional, and private roles

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Specific Specific cultures get to know people easily and maintain flexible relationships, yet specific cultures make acquaintances for specific or limited reasons.

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Diffuse Diffuse cultures on the other hand, keep their distance from unknown others. Individuals are slower to develop relationships, however, once an individual has been accepted in a diffuse culture that person is in all the way.

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Austria United Kingdom United States Switzerland France Singapore Hong Kong Spain China Venezuela Specific Diffuse SpecificDiffuse (contd)

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AchievementAscription Extent to which status depends on certain factors Achievement Status linked to goals obtained or performance Ascription Status linked to age, connections, class, or gender

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Austria United States Switzerland United Kingdom Sweden Singapore Former Soviet Union China Indonesia Venezuela Achievement Ascription AchievementAscription (contd)

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Trompenaars organisation types egalitarian hierarchical person task Project oriented culture Role oriented culture Person oriented culture Fulfilment oriented culture INCUBATOR GUIDED MISSILE FAMILYEIFFEL TOWER

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Implications of Culture on Management What people want from work Work centralityimportance of work in life Work goals differ Positive environment Autonomy Interesting work Good pay Match between self Job security and job

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Implications of Culture on Management (contd) Views about leadership Who becomes leaders Class vs. merit Role of leader Facilitate & motivate vs. direct & provide expertise Some convergence of views Particularly in MNCs

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Customs Etiquette and Protocol

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Is it important to understand the basics of etiquette and protocol?

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Proper etiquette? The elements that go into making a first impression? Manner of dress Professional appearance The color of your dress or tie Body language Handshake Posture Eye contact Where you put your hands How you accept a business card and how you present yours

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When in Rome do as the Romans do? Proper etiquette means maintaining your own values while respecting those of others. The real value in understanding etiquette and protocol is in the confidence it gives you and the impression it makes in colleagues.

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The Name Game Chinese Names two or three characters surname + given names WANG Tai Huaor Wang Tai Hua Chinese women always retain their family name even after marriage. In Hong Kong, women normally put their husbands surname first, then follow it with their own names. the Sino-Asian cultures (e.g., Singapore)

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The Name Game (contd) Japanese Names Traditionally, the family name came first. Today, the most common practice is to put the name in western order. Suffixes indicate honor and status. San: the most common (honorific) title in Japan, it is the Western equivalent of courtesy titles such as Mr., Mrs. Or Miss. Yamamoto san

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Sama (in written correspondence, including business letters) Dono (never uses in conversation anymore) Sensei (born before, address a teacher, instructor or mentor) Sensbu (superstar) Kun and Chan (address a friend of the same age or someone of equal or inferior status, used with first or given names)

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The Name Game (contd) Korean Names surname + given names two given names the use of personal or given names for address is usually restricted to members of the same family and close friends address a Korean colleague by his/her surname only married women do not take their husbands name

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The Name Game (contd) Russian Names address business title: Company Director Koslov to address a Russian by his or her first name is an insult same order as in the West Mikhail Sergievich Gorbachev Once Russians move beyond the initial formal stage of a relationship, they use the first name and patronymic as a less formal method of address.

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The Name Game (contd) Spanish Names two surnames (one from father and one from mother) Julio Cortez Garcia Indian Names do not have family names, use the fathers initial first with their given name V. Naipal = Naipal, son of Vijay P. Samateer marries V. Naipal = Mrs. Samateer Naipal

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Face-to-Face Greetings The back-slapping Death-grip handshake Greeting bow The rules of social distance etiquette vary by culture. Africans Argentina Islam You should never offer your hand to a woman first.

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Business Card Etiquette Translate into local language Hand your card to the colleague with the printed face up (local language side up) Give to the highest-ranking individual or leader of the delegation first With two hands at two upper corner Read carefully when received A small pocket cardholder or case In Europe and North America your product, not your business card

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Business Card Etiquette (contd) In Japan the exchange of business cards is a meaningful ritual rather than a casual informality lay the card in front of you on the table In Korea have a glance and place it in the pocket In Islamic world use the right hand always

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Conversational Taboos Avoid politics, religion, race and negative history Toward less volatile subjects: sports, family, food and travel experiences Before you visit a new culture or country, it is wise to have some knowledge of its history.

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Social Drinking Protocol Social drinking is part of relationship building Alcohol helps to break down the strict social barrier between classes Host and guest to take turns filling each others cups If you disapprove of alcohol? One drink Subterfuge

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Social Drinking Protocol (contd) The best-known drinking culture is Russia Meal + vodka An open bottle must be consumed Impossible to avoid consuming booze The ability to consume great quantities of alcohol in short periods = manhood (Russia and South Korea) Formal toast (Russia and China)

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Global Dress Codes Keeping it simple A well-fitted dark suit (blue, gray or black) When in doubt, overdress for the occasion For women: skirts and dresses (power dressing) Color counts cultures attribute different characteristics to different colors

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Red sun or yellow sun? Red and white in China Green in Islam, Great Britain and Czech Republic

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Communicating Across Cultures

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The most immutable barrier in nature is between one mans thought and anothers. --------William James

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Doing Business Internationally means that you will come into increasing contact with individuals who speak different languages and live in different cultures. You Must Have Some Understanding Of thought patterns, values, societal norms and of how individuals from different cultures process information.

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High-Context versus Low-Context People from different cultures process and disseminate information differently. Low-context cultures are much more precise in their communication, providing mountains of detail, groping for the correct word or phrase to summarize an event. The United States, Britain, Germany and the Scandinavian countries

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In High-context cultures, communication tends to be imprecise and as much attention is paid to the person delivering the message as to the message itself. Most of Latin America, Asia, the Middle East and Africa

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Two Important Rules of Thumb Dont be overconfident. You should always assume there are differences in the way information is received and processed. Use uncomplicated descriptive language to explain your position. Using visual aids and being clear and concise in written materials can play an important role in ensuring better understanding.

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Responsibilities Regardless of the cultures that the speaker and the listener originate from, both have certain responsibilities to each other in cross-cultural situations to ensure a maximum of understanding and a minimum of potentially disastrous miscommunication.

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Telephone Etiquette The phone is often the first significant personal contact you have with an overseas colleague.

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Basic Rules of International Telephone Communication Know the time of the locale you are calling To be sensitive to the customs and ways of the person and culture you are calling Always try and use uncomplicated language Dont hurry the pace of your speech Be prepared with what you want to say

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Smile Concentrate when you listen and never interrupt someone on the other line When dealing with secretaries or message takers remind them to get a pencil and paper and to write the message down Be sure to ask them to repeat the message and the contact numbers you have given If a phone conversation start to turn sour

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Try and return calls in the same business day Video-conferencing Make sure the message and the body language are consistent in tone Voice mail and answering machines Be prepared with a clear, brief, and purposeful message Less than 30 seconds long Always give the time and day you call Give your name and number both at the beginning of the message and at the end Be positive and upbeat in your sign-off