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For foreign businesses who want to do business with China, it is imperative to have a keen understanding of the culture from a variety of angles. This article will consider the fundamental social and economic forces behind this Asian powerhouse and will focus on the fundamentals and scope of the culture in this region and how that affects doing business and the ramifications of the differences between Western and Chinese cultures.
For a business to be successful in China, it must first take the time to understand the fiber that threads hundreds of generations into a single weave. Chinese cultural history spans 5,000 years.
Like most cultures, the Chinese one has unique features of commonality that connect society. Some of the most dominant include the concept of collectivism (orientation toward the group) and the importance of saving face.
Realizing the significance of these components and adjusting to these concepts gives foreign businesses a unique advantage in business practice. Let us consider some of these features in detail.
Based on Dutch social psychologist Geert Hofstede’s research of cultural dimensions, China has the lowest individualism ranking of any Asian country. Unlike individualistic societies such as the United States, the UK and Australia, the term “we” is the predominate factor that is ingrained in the mindset of the masses from the outset.
Consequently, as a nation, the idea of groupthink takes on the dimension of a collectivist society. Collectivist cultures like China inherit perceptions that take on unique characteristics.
For instance, collectivists tend to listen to the tone of the conversation rather than rely on the message itself. Furthermore, collectivists believe that one’s behavior is primarily a factor that based on societal norms or positions rather than individual attributes or personality.
In addition, collectivist cultures emphasize the importance of maintaining loyalty to associated groups rather than to the concerns of self.
Another critical dimension of Chinese culture that is essential to understand when conducting business is the concept of saving face (mianzi 面子).
Face encompasses the intellectualization of credibility, respect, honor and reputation. Beginning in the early years of development, Chinese schoolchildren learn that mistakes are highly discouraged.
Eventually, this rigid unwavering mindset evolves into an extremely competitive attitude as students fiercely compete for highly sought admittance in top universities and institutions and prevails though the life of the individual, despite occupation, rank or social status.
Research indicates that face has a direct correlation to social standing. The higher the rank one has achieved, the greater the perceived loss of respect.
Another long-standing dimension is the concept of social standing. This orderly classification begins with those most respected in the social structure and extends outward toward communal interactions.
At the top are grandparents, parents, bosses and teachers. Second are those considered equal in status that include friends, siblings and colleagues. Finally, the least influential on the social status scale are public institutions such as corporations or public utilities.
Priorities, both business and personal, begin and end with relationships. The Chinese prefer to do business with those with whom they have established a trusted personal connection.
While Chinese are as results-oriented as their Western counterparts, their success is dependent via a network of established relationships constructed to guarantee good results.
In addition, unlike their extroverted and expressive counterparts, the Chinese personality tends to be conservative, introverted, agreeable, subtle and indirect.
This style of communication can often be frustrating to those from Western cultures, who tend to have a difficult time interpreting subtle social cues.
Cultural fundamentals of locals doing business
Guanxi (connection) plays a critical function in a collectivist society where roles are clearly delineated and each person’s contribution is important to the successful functioning of the society as a whole.
Guanxi is a heavily indoctrinated reciprocation of favors and intended to retain balance within a relationship. Similar to a financial obligation, the granted favor must be paid with a likewise favor to ensure equilibrium within the relationship is maintained.
Those within the society who fail to adhere to this time-honored social norm find themselves with loss of respect, confidence and influence within associated group affiliations.
On the upside, the practice of guanxi has the ability to deeply reinforce relationships and solidify personal long-term commitments. Guanxi, misused, turns into a form of social license to accept bribes, underhanded loans and commercial sweetheart deals.
This unfair advantage has detrimental effects in the business community and creates an atmosphere of distrust and disillusionment by those who try to operate from an ethical basis.
The concept of guanxi is an integral part of Chinese society and important for long-term partnerships to be successful. Guanxi is arguably the most important concept for foreign businesses to understand prior to conducting business, and can single-handedly make or break an otherwise productive relationship.
Chinese culture follows a regimented protocol in formal meetings. The title and rank of the individual merits an honorary position. Therefore, foreign businesspeople need to know in advance who to address first when entering a room as a show of respect.
Rarely are decisions made after one meeting, as considerations follow a distinct pattern of reviews over a given period. Approvals follow methodical consideration by a variety of executive levels.
Another important aspect of how the Chinese like to conduct business is the banquet. At the heart of these festivities is guanxi, as this particular setting of desirable location and quality food facilitates relaxed socialization in a comfortable setting.
Chinese etiquette places great emphasis on such details as seating arrangements, use of chopsticks, proper toasts, and the amount of food left over at the end of the meal.
Those foreign enterprises who take the time to fully acquaint themselves with, and observe, the cultural aspects of conducting business in China may very well find themselves in the driver’s seat.