PROBLEMS AND CULTURAL DIFFERENCES THE ORGANISATION WILL FACE WHEN VENTURING INTO CHINA

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Businesses are becoming more multinational as countries begin to accelerate the ease of starting up international investment. Copying and pasting the corporate and national culture of another business or region will often end in a tragic failure as the world is complex. A feasibility analysis is being conducted as a key criterion for starting up a company in a new venue. This encourages entrepreneurs to appreciate the uniqueness of people’s identity and to take it into account in the corporate framework. “It is vital that the business show cultural humility in learning and adopting the individual aspects that will help the firm to acquire a competitive advantage. According to Hofstede, the organizational culture of a nationality can be measured using a six dimensional structure that illustrates equality, individualism, masculinity, uncertainty, long-term orientation and indulgence. China has grown economically in recent years and has managed to become an investment hub for venture capitalist. This paper will report the cultural differences in China that pose challenges for potential investors using a national comparison of Hofstede 6D model of organizational culture (Hofstede Insights, 2017).

Section 1: Power Distance

The power distance is defined by the distribution of power and the extent to which the subordinates have accepted the inequality. Unlike the United States, China is a high power distance society where leaders have more advantage over those below them. They assume status and privilege, and the followers would not dare to challenge or express displeasure for any decision made. The structural line between the management and staff is defined, and a disagreement with management is discouraged. Consideration for the input of subordinates in decision making by the top management of a firm is not mandatory since employees will accept whatever is required of them; irrespective of whether or not their interests have been represented. The leaders are not obligated to create a rapport with their followers to guide them through the achievements of the firm. Instead, a formal contract and sanctions are used to enforce the attainment of the organizational goals. In China, managers demand loyalty and respect, and no one can question them whenever they abuse their powers (Lin, Wang & Chen, 2013). However, the Confucianism principles make it possible for subordinates to ask for, and receive help from their superiors when need be. Therefore, as the company considers pursuing a joint venture in China, it will be necessary to switch the style of leadership to suit the high power distance culture. For instance, subordinates will always expect the administration to convey a firm presence and knowledge to earn respect. In addition, managers will need to build trust through their willingness to offer assistance whenever it is requested for.

Section 2: Individualism

Individualistic societies build on the importance of individual effort and welfare, whereas collectivism affiliates persons with groups. Notably, China believes in the last principle that requires people to forego their interests to pursue the goal of the team (Hofman & Newman, 2014). Employees in China do not enjoy autonomy like their counterparts in the United States since they are defined as part of the organization. However, it is easier for a manager to evaluate the performance of a group and establish a stable reward system. Loyalty to the firm is celebrated and ranked highly in China, for instance, one would never abandon a group project to attend to matters of personal importance. Each member of a cluster is assigned duties that will steer-head them collectively. Thus, everyone feels equally relevant to the achievement of group goals and cannot pull out because they realize that the group will consequently lose. Selfishness is discouraged as interconnectivity in relationships is upheld. The Chinese view collectivism as a melting pot of diversity towards achieving joint productivity. Therefore, as the firm considers this venture in China, there is need to alter management principles to fit into the culture of collectivism. The management should expect employees who oversee their individualism in pursuit of the firm’s expectations. Unlike Americans, the Chinese will submit to any needs of the firm irrespective of whether it infringes on their rights. For instance, workers may forego paternity leave to work and assist the organization achieves specific goals. The management should not misunderstand an employee who declines a promotion to complete a group project. In return, the Chinese expect loyalty from the firm.

Section 3: Masculinity

Masculine societies believe in breeding male traits including strength, assertiveness, and dominance; whereas feminine communities are more conventional in that, they are relationship-oriented and focus on being caring and supportive (Louie, 2012). Unlike the United States where individual choices are shaped by whether or not they like what they do, Chinese people are driven by the need to be successful. Notably, the latter disregard the need for leisure, rest, and family comfort to work and succeed. For instance, they would leave their spouses and children to seek better working conditions in distant towns and cities. Chinese do not mind working late into the night to provide their services when needed since excellence is prioritized. Contrary to employees in the United States who value family and relationships and would be sceptical about sacrificing them, workers in China go out of their way to work. Thus, the firm will have to develop a deeper understanding of this aspect in the people in China. In structuring the work schedule at the company, the management will need to design it in a way that the workforce will have a chance to exploit their masculinity culture. A structure for remunerating individuals interested in working extra time at the expense of their leisure time should be constituted. That will give workers a chance to excel and ensure that the company does not lose competitive employees.

Section 4: Uncertainty Avoidance

Uncertainty avoidance is defined by the approach taken by society to deal with the ambiguity of business situations. Some opt to set up formal rules to counter it, while others prefer build on informal structures and behaviors. China is a low uncertainty avoidance society, whose regulations are formulated to suit the situation. Having a masculine culture that believes in assertiveness, the people are self-driven by the desire to succeed. Therefore, their efforts do not result from the existence of rules and employees are not reluctant to ask for help from their leaders when necessary. Fundamentally, the entrepreneurial behaviors of firms are a demonstration of the low uncertainty avoidance. For instance, the fact that most businesses are small to medium size and are owned by families’ shows the comfort in ambiguity among the Chinese people.

Notably, they use ambiguous and informal modes of communication in business (Men & Tsai, 2012). For instance, corporates in China sometimes prefer to act non-verbally as opposed to saying ‘yes’ to a business proposal (Okoro, 2012). That may bring confusion when one is not conversant with Chinese culture. However, for them, they are not worried about the possibility of losing the business deal. As the firm considers China for business, challenges may be encountered considering the culture is not very keen on avoiding uncertainty. Chinese preference of using informal behaviours in communication could be subject to misinterpretation. The practice of incorporating family members in running organizations could breed abuse of power and discourage accountability for actions taken.

Section 5: Long-term Orientation

That provides a measure of how a society uses past experiences to forge ahead and tackle current challenges. A low score characterizes a culture that is resistant to changes, whereas a high score encourages change and invests in innovation in preparation for the future. Notably, China scores high because of its dynamic culture that believes that the truth depends on the context of a particular time. Therefore, it has a high adaptability to changes which is favourable in business since the tastes and preferences of consumers are subject to change. Chinese people endure tough times and make considerable sacrifices to succeed. For instance, they disregard leisure time and family luxuries to work. They invest for the long term and believe in collective efforts the achievement of a common goal. Chinese workers would prefer to give up a job promotion than quit on a project before its completion. Thus, they are people who see the long-term good as opposed to short-term luxuries that come with temporary investments. Investment in China should incorporate the long-term aspect in the company to match with the nature of the people (Parnell, Lester, Long & Köseoglu, 2012). The firm needs to show its employees that it is in business for a long time and assure them of continuity. Goals set for the staff to achieve should last through an extended period as opposed to expecting instant results. Fundamentally, it is essential that the business factors in the unique capabilities and expectations of Chinese people in decision making and organizational structure.

Section 6: Indulgence

The ability of a population to control the extent of their impulses and desires defines them significantly. Indulgent communities are poor at it, whereas restraint societies have firm mechanisms for regulating their urges. China scores low in indulgence, making it restrained and predisposed to a pessimistic outlook on life. Notably, Chinese people do not prioritize leisure and family times. Their actions are limited by social norms that profoundly define them (Olajide, 2014). Therefore, an individual will not indulge in activities they desire because they respect societal perception more than personal interests. The hard work put by Chinese is not derived from things they are passionate about but is instead driven by the pressure not to disappoint a larger group of people. Innovative businesses thrive in China since they can sacrifice and invest their time to come up with a utility that will make life easier for people. On the contrary, investing in the entertainment and alcohol industry will not yield much profit in China because people do not indulge like they do in other regions.

Conclusion

It is critical that the firm puts this aspect in its consideration of the business opportunities to explore in China. Opening an entertainment joint will not be a wise investment unless the target market excludes the locals. Instead, restraint venture will perform better in China. China is highly power distant and supports the principles of collectivism as opposed to individualism. Chinese people are driven by masculine characteristics and are low on uncertainty avoidance. They believe in long-term orientations and avoid indulgence. Therefore, in considering investing in China, the uniqueness of their culture may pose a challenge for foreigners. However, adaptability can be a critical tool in excelling in the Chinese market.

References

Hofman, P.S. and Newman, A., 2014. The impact of perceived corporate social responsibility on organizational commitment and the moderating role of collectivism and masculinity: Evidence from China. The International Journal of Human Resource Management, 25(5), pp.631-652.

Hofstede Insights, 2017. Country Comparison; China. n.p.

Lin, W., Wang, L. and Chen, S., 2013. Abusive supervision and employee well‐being: The moderating effect of power distance orientation. Applied Psychology, 62(2), pp.308-329.

Louie, K., 2012. Popular culture and masculinity ideals in East Asia, with special reference to China. The Journal of Asian Studies, 71(4), pp.929-943.

Men, L.R. and Tsai, W.H.S., 2012. How companies cultivate relationships with publics on social network sites: Evidence from China and the United States. Public Relations Review, 38(5), pp.723-730.

Okoro, E., 2012. Cross-cultural etiquette and communication in global business: Toward a strategic framework for managing corporate expansion. International journal of business and management, 7(16), p.130.

Olajide, F.S., 2014. Cultural awareness, a form of risk management in international business: Case study of China. Business and Economic Research, 4(1), p.266.

Parnell, J.A., Lester, D.L., Long, Z. and Köseoglu, M.A., 2012. How environmental uncertainty affects the link between business strategy and performance in SMEs: Evidence from China, Turkey, and the USA. Management Decision, 50(4), pp.546-568.

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