In the past few decades, there has been a rapid growth of a global market. Organizations all over the world became multinational institutions and displayed an impressive success due to that change. Chinese companies follow this trend, although their achievement on a global scale could not be viewed as sufficient comparing to competitors from South Korea, India, and Taiwan (Dietz, Orr, & Xing, 2008). There is a range of administrative and cultural issues that create obstacles to establishing a more confident global presence, but those problems could be addressed and eventually overcome.
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The first issue relates to an inability to make sensible and effective capital investment decisions. Many of Chinese companies are limited to the market within the country; their knowledge of other business arenas is scarce and often outdated. When entering the market globally, a company needs a steady flow of relevant information forefront and human and technical resources to analyze that information. An efficient investment strategy should foster a perfect balance between an advantage of being the first and adequate risk mitigation. Seizing an opportunity before counterparts facilitates a quick market penetration and contributes to establishing brand awareness more easily, whereas being careful allows collecting more operational information and decreasing possible risks (Christiansen, 2014). Whatever the choice might be, any strategy depends on the most recent and most relevant data. Therefore, Chinese companies that are willing to become multinationals need to create a research department targeting these objectives exclusively.
Lack of Resources
Consequently, the second issue arises from the dearth of forceful human resources at any organizational level. Chinese culture’s foundation includes Confucian ideology, which discourages aggressiveness and promotes politeness and respectfulness in peoples’ behavior (Chhokar, Brodbeck, & House, 2013). Such qualities correspond to prevailing collectivism and social-centered cultural attitudes, but they are usually ineffective in fast-paced international business processes. This contradiction gains even more weight when speaking about company management and leadership styles in general. The administrative style and behavior of people in key positions are critical for the company operation. In the recent years, there has been a shift toward a more balanced approach between conservatism and assertiveness in Chinese leaders’ demeanor, but the degree of change might not be sufficient to succeed in competition with more confident contenders from other countries (Chhokar et al., 2013). Besides, when aggressiveness is reinforced by knowledge, it may serve as a considerable advantage.
Moreover, Chinese conservatism plays an important role not only in business processes. According to Redding (2013), “the most significant thing to be understood about China today is that it still displays most of the elements of a pre-modern form of society” (p. 231). Therefore, it is still largely patrimonial, and such an attribute profoundly influences all the interactions with individuals from other countries and creates unnecessary difficulties in understanding their motivation and strategy.
A similar effect could be found in other sociocultural areas. In particular, English is commonly used throughout the world as a universal language. However, Chinese employees engaged in business overseas often have troubles in communicating in English. For example, a study that investigated over 400 emails written in English by employees of an international Chinese company revealed a specific language pattern with serious mistakes, such as articles and verb tense markers absence and incorrect sentence punctuation (Wang & Wei, 2016). Such a deficiency in interacting with business contractors and partners may lead to critical misunderstanding and possible financial losses.
These issues could be managed in two ways: an extensive talent acquisition overseas and cross-cultural training for Chinese executives. It appears to be reasonable to pursue both of these objectives at the same time. Hopefully, such an adjustment would create a beneficial environment for resolving the third major problem – the improvement of Chinese products’ image. According to Heding, Knudtzen, and Bjerre (2016), culture plays a significant role in brand development. Therefore, to create a successful international brand, it is necessary to understand the culture of the target population, which, in this case, possesses unified global features. Merging various cultures into one organization and bringing as much diversity into the creative process as possible can result in the development of a product recognized and welcomed all over the world.
Overall, to explore multinational opportunities, Chinese companies need a completely revised approach. The transformation should start from the structure of a business model itself, addressing the demand for expanded research and ongoing trend analysis. This preparatory work, in its turn, requires a group of professionals already experienced in multicultural brands and products. In case of acquisitions and mergers abroad, that central team should consist of people proficient in risk evaluation and investment management, who are also able to develop comprehensive M&A guidelines.
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Therefore, from the human resource perspective, an organization has to be constructed around this core of knowledgeable advisers. People are the driving force of a company; to unleash that force, the patrimonial approach should be changed to more liberal and liberating methods. Creating a diverse team able to take the initiative and make innovative decisions would be the way to overcome cultural weaknesses and the ultimate key to international success.
Chhokar, J. S., Brodbeck, F. C., & House R. J. (2013). Culture and leadership across the world: The GLOBE book of in-depth studies of 25 societies. London, UK: Routledge.
Christiansen, B. (2014). Handbook of research on global business opportunities. Hershey, PA: IGI Global.
Dietz, M. C., Orr, G., & Xing, J. (2008). How Chinese companies can succeed abroad. The McKinsey Quarterly, 1-9.
Heding, T., Knudtzen, C. F., & Bjerre, M. (2016). Brand management: Research, theory and practice (2nd ed.). London, UK: Routledge.
Redding, G. (2013). The spirit of Chinese capitalism. New York, NY: Walter de Gruyter.
Wang, W., & Wei, L. (2016). Chinese English in as lingua franca in global business setting: A case study of ongoing emails of a foreign company in China. SHS Web of Conferences, 25(01013), 1-6. Web.