Culture, Society and Business
The principles of business transactions are based on cultural values. To define culture we must first know where culture comes from. Culture comes from a mutual interaction between individuals, groups, subcultures and societies. Values, ideas and ideology are passed down from one generation to the next. Gradually over time they adapt to change and outside influences.
A more sociological technical definition of culture is as follows: “the total, generally organized way of life, including values, norms, institutions, and artifacts, that is passed on from generation to generation by learning alone”. Thus culture includes tangible and non-tangible things where are passed down through the years.
Chinese culture heavily influences their business attitudes, norms and behavior. An in depth understanding of Chinese culture will allow an individual to fully understand the background and behavioral motivation of Chinese business people. In American we tend to compartmentalize our cultural values and behavior according to the social situation. In China they tend to universalize their behavior across different social situations. That means that friendships, business transactions and conversations will tend to follow the same basic patterns.
Chinese people are very proud of their culture. This is shown in their communication, attitudes and behavior. If one lives in China there will be a familiar mantra heard. This nationalistic propaganda mantra is pounded into their heads by the Communist government. In essence” China is the oldest, most distinguished, most amazingly complex and superior culture in the history of the world.” History, art, science, literature, politics, society all comes from China. This is almost a monotheistic approach to culture: there is only one true culture and it is Chinese.
This ethnocentric attitude is constantly displayed in every facet of life. Business transactions especially must play by the rules of Chinese culture. International organizations and multinational companies have learned to combine different cultural values to their advantage. In China you either adhere to their way or they don’t do business. Of course at the beginning everything is optimistically bright but this will eventually fade because the Chinese will only play by their own rules and seek their own benefit and profit.
Another mantra constantly used is “this is China. You are in China now. This is how it’s done.” When a mainland Chinese person is asked such questions as ‘why there is such terrible pollution control, rampant government corruption, growing epidemics of social problems they will indignantly ignore the facts of the situation and fire back insults and facts about the problem of the speakers country. This never brings to light the actual issues and will always point out the faults in other societies and cultures.
When asked about why product quality can’t be improved the situation will be ignored and excuses will be provided. Excuses include “China is a developing country”, “China has the biggest population in the world, there are too many people,” “You are ignorant because you are not Chinese and therefore cannot comprehend the problem.”
Basis of Cultural Differences
At a very fundamental level, the basis of cultural differences lies in geography. Each culture develops both independent and interdependent of different cultures. This leads to a constant comparing and contrasting of opposing or complementary values. This can either lead to reconciliation and cooperation or conflict.
There are different factors that influence the culture and thus the values. These factors include tradition/history, physical environment, and neighboring cultures. Values can be defined as an idea or belief. Ideas and beliefs native to a unique culture develop through the advancement of the culture. Different cultures place different value emphasis on everyday things and ideas.
American values began in ancient Mediterranean countries, develop throughout Europe and subsequently found their way to America. Chinese values have been influenced by contact with surrounding countries but their basic values can be traced 5,000 years back to the beginning of their civilization.
Americans especially associate their own values with ancient Greece, such as political ideology. One reason this came about was through the abstract comparison of Greek democracy (demagoguery and mobocracy), beginning through archeological excavations in the 19th century, with modern American democracy (representational democracy).
China on the other hand doesn’t compare itself to a distant foreign country but only themselves. They are the standard by which the world is judged. There are thousands of years of difference between China and America. On the outside there will be obvious similarities and slight differences but the deeper once digs the more one will find a unique values at the core of Chinese culture and society.
If you understand and respect these values you will be welcomed and successful but if you don’t understand or even dare to disagree then you are an enemy of the state.
Impact of Culture on International Business
Even though culture is one of the most highly influential factors in business but it is often the least regarded. Culture is often misunderstood as art, food, media and other such topics which are best reserved for a dinner conversation. This kind of culture is the external representations of culture. There are many deeper values which are at the core of a society.
Almost every business person I met in Asia had amazing technical training, an excellent education, good communication skills and was very profession. They didn’t care less about “pointless culture” because of their strong business training. I always felt it was interesting because I knew so much about Chinese culture but had little business experience while they had a lot of business experience but no cultural knowledge about America.
The only American culture the average Chinese person (and businessperson) knows is either out of date: black and white movies, a few classical English novels and cheesy 60’s songs or disturbingly modern almost futuristic vision of America: a highly developed, crime ridden Imperialistic country in the middle of taking over the world through economic and military invasion. Both of these examples are extremes and there is little middle ground.
There will be many misperceptions and misunderstandings because neither American nor Chinese business people understand each other. The majority of businesspeople I worked with in China lacked social skills, cross cultural understanding and the confidence to engage foreigners even in polite conversation.
In a business situation the Chinese will be very friendly but over conservative because they are unsure of how to act and afraid to make a mistake. Publicly making an error is social death for a Chinese individual. This means a loss of face and dignity. Many Westerns are openly friendly and confident in their social approach. They establish comfortable relationships quickly and get right down to business. Chinese on the other hand take a long time to get to know each other.
Part of this is due to a historical tradition of thousands of years of civil unrest, bloody regime changes, war and constant conflict. China has a history of 5,000 years which is basically a repeating cycle of temporary peaceful development and violent political conflict and government restructuring.
America has one of the longest unchanged political histories in the world. While America does have domestic problems with crime and international problems with terrorism there are few threats to the actual restructuring of the government.
On the outside Chinese are friendly, loyal and kind yet on the inside whether or not they actually decide to be this way depends on the relationship and the future potential therein. If a Chinese person establishes a relationship with a foreign enterprise will it have long term benefits? Will it endanger their financial health, which will directly influence their family, friends and social network?
So when Chinese businesspeople began a business relationship they are amiably conservative. As things go along they will either become more involved with the relationship as their trust and satisfaction grows or they will become more worried and concerned about the future and gradually break off the relationship.
Many relationships in social life and business all begin the same way: they reach a middle point, a breaking ground but the foreigner doesn’t understand how to invest in trust and relationship integrity, so everything naturally falls apart. It is very important to understand where the Chinese are coming from, be empathetic with their unique needs/wants and work on gaining their trust.
The key to doing good business was said by Sun Zi in the Art of War: “If you know the enemy and know yourself, you need not fear the result of a hundred battles.” This is one of the most famously useful quotes in the Art of War. One must fully understand the cultural background of your “enemy” or business associates and competitors in order to be financially successful. The Chinese will fully understand the market and business partners before going into a long term relationship.
In North East China there is a simply way they establish trust between each other. Most all of the real business transactions take place in bars, discos, KTV clubs and tea houses where all the business people go after hours to relax, enjoy themselves and establish relationships. When I would go to these places of entertainment I would often sit back and watch what was going on. One of my best friends was an area manager for many of the local bars. He would explain how the people were meeting and “testing the waters”. One important way is the background check. In China people always boast and brag about their accomplishments, work and connections. This is to be expected. However, businesspeople always do underground background checks to verify the information. With foreign companies there is no direct way to verify this information. The foreigner is out of the social/relationship matrix which Chinese culture depends on. This can creates a sense of uneasiness and unfamiliarity; therefore the Chinese will be extra cautious and slow to make any decisions.