Culture is very vital in exploring the identity of any business. China has been undergoing rapid political, economic, and social changes since the 20th Century. Today’s Chinese business culture is greatly influenced by national circumstances, cultural heritage and international exchange and exposure. Thanks to China’s opening their market, the Chinese business has increasingly integrated into the international trade arena that has been for a long time dominated by the West. Its transition to playing the game by the rules of the global stage has not only influenced the influx of foreign direct investment but also facilitated the adaptation of cutting-edge technological and management know-how and the return of the overseas talent.
Business Culture in China vs. the U.S.
1. The focus on relationships
When you look at the business culture in China versus the U.S., there’s a long list of differences. For instance business in China is always between people and not the organizations, they put emphasis on relationships and let deals grow out of established relationships. On the other hand, Americans understand the importance of interpersonal relationships, but they don’t view it as a prerequisite when dealing with new businesses. People in the West are cultured in such a way that the transaction is more important and creating relationship comes later on, maybe after the third or fourth deal.
2. Reliance on moral influence over legal practice
Must admit that the Chinese legal systems are currently more sophisticated and institutionalized, however, most people still depend on the public denouncement of unethical behavior so as to protect themselves. When you delve into the legal business culture in China verses the U.S., you will realize how the Americas follows a structured legal system, and there is always a company’s sharply dressed lawyer who gives legal advice during business negotiations. The same cannot be said about the Chinese people, who are mostly reliant on connections and deals are sealed with a handshake, oral commitment or a nod of the head. Because Chinese society is untrusting, they would prefer to do business with people they know and not strangers.
3. Respect for hierarchy and expectation of reciprocity
Among the key features of Confucianism’s interpersonal relationships is interdependence, reciprocity and hierarchy and they are largely honored in China. In the U.S., a hierarchy is a non-issue and people are free in the workplace and freely interact without putting so much importance on the titles. On the other hand, the hierarchy is greatly respected in China, and they are depicted in their way of greetings where you start with the senior-most going down, the way decisions are made and who speaks in a meeting.
Then there is the concept of collectiveness and not individualism in China while Americans focus on individualism. Finally, the aspect of reciprocity which is rooted in the culture of guanxi or relationships built in a business society and you expect favors from them. This is based on such profound mutual trust and when favors are extended they expect reciprocity something the U.S. doesn’t resonate with and would easily regard it as a bribe.
The face-saving concept on the business culture in China versus the U.S. happens to be arguably the hardest. It is usually frowned upon in Chinese culture to show public disapproval, intentional or non-intentional criticism, impugning on character or jeopardizing prestige. In China, saving face is analogous to public standing and prestige, and that must be maintained at all cost. On the other hand, Americans thrive on constructive criticism during discussions and public presentations, something that doesn’t augur well with their Chinese counterparts.
5. Trust and ethics
While the Westerners believe that their ethical norms are universal, China’s perception of ethics is exclusively conditional. If someone lies in the U.S., it will categorically be stated as evil, but in China, they will look at the motives and in what context did they lie. Then there is trust issue where the Chinese people are the most untrustworthy people and building trust can be time -consuming but once achieved you can smoothly do business.
Reform of Chinese business culture- adoption of international best practices
So much has changed since China’s open door policy, and it has increasingly integrated into the international politics and world economics and slowly relaxed its ideological and social controls. The China of today is full of commercial pop cultures, Western lifestyles, technology and values which have significantly influenced the Chinese mentality and behavior as well as perpetuated materialism. When you look at the business culture in China verses the U.S. today, you’ll realize some borrowed aspects of the Western culture which undoubtedly left a footprint in the Chinese business culture.
1. Efficiency-oriented control
The PRC has worked on the decentralization policy which places the local government in charge of the foreign sector and domestic economy. This has been instrumental in according to the enterprises a bigger market and much flexibility in operating and managing their businesses. Thus, much-controlled competition among different regions and rapid economic growth with less bureaucracy.
2. Materialistic world view
The Chinese of today are less ideology-oriented and more capitalist-oriented. The Chinese have legitimized the fact of getting rich by all means hence the private sector is booming with an increasing number of medium-sized and small-sized enterprises. In the U.S., what passes as the standard business ethics is serving the people’ slogan but in China, they are influenced by the money-seeking mentality which is reflected in their result-driven, more pragmatic approach to business negotiations. If pushed too hard though it will make others perceive them as having their own “code of ethics’.
3. Awareness of international business rules and cultural differences
At the end of 2001, China was admitted at the WTO; the Chinese businesses then made a major adjustment so as to garner the competitive advantage following the international trade norms and rules. The Chinese business standards today have been greatly influenced by the Western concepts and assumed the mainstream ideologies. Attendance of the Chinese to Western universities and frequent travel abroad has exposed them to cultural diversity and international practices.
More and more Chinese business people are effectively communicating in English and embracing the arms-length style of doing things professionally. The dress code is no longer, the strict dark colored Mao suits and men are now sharply dressing in business suits while women have embraced the Western style of dressing which has more variety and modest cuts. The Chinese people are always embracing the incorporation of informal dressing but in a formal way at the work place.
Technocrats in China who thrive in economic performance are now placing much more importance on the product’s success, financing, technology and so many other non-personal factors. Hence the cultural and personal factors are slowly becoming non-issues. Most companies, especially the tech companies such as Google and more in Shenzhen, are welcoming the idea of having open cultures since people will freely share their thoughts and information will be universally acceptable.
As we compare the business culture in China verses the U.S., we realize just how much the Western concepts have had an impact on the Chinese business culture. The Chinese business culture is dynamically evolving; thus it can be misleading to term it static since so much as changed in the last three decades. The current Chinese business culture is analogous to a superficial Western framework erected on deep-rooted Confucian values. It is becoming more pragmatic but at the expense of moral principles. The future of Chinese business culture is quite promising, yet uncertain.