Cultural Differences and Their Impacts on Business | Free Essay Example

Cultural Differences and Their Impacts on Business

Words: 1176
Topic: Business & Economics
Updated:

Culture plays a critical role in ensuring the successful completion of business transactions. Understanding people’s ways of life in any market is the first step towards winning their hearts. The American business culture differs significantly from those of other major business partners, such as China, Africa, and Britain. This article analyzes the differences between Chinese and American cultures with an aim of establishing the ways in which they affect business transactions.

The two countries are major business partners, with China coming in the second place globally. However, culture is the greatest impediment towards successful business between the two countries. The United States had never succeeded in doing business with China because of culture, but there was a breakthrough in 1999 when a Chinese firm Haier set up a manufacturing plant in South Carolina. In 2005, Lenovo, a Chinese firm based in Beijing, entered into agreement with IBM to take over its shares.

In 2006, another first food company referred to as Ningbo Lehui Machinery opened a food producing company in New Jersey. Currently, a number of Chinese firms are investing heavily in the American market while Americans have also invaded the Chinese economy, which is known for its stable customer base. Therefore, there is need to understand the major differences between the cultures of the two countries and the effects they have on businesses.

Chinese shareholders consider contracts very important because they provide avenues that facilitate creation of contracts, but Americans employ them to prevent others from intruding into their space. The Chinese put much value on the memoranda of understanding believing that they are formal documents signifying a strong relationship.

Americans view such documents as goodwill hence they are simply ceremonial. A Chinese company rarely obeys a binding contract because they are used to memoranda. This has always raised issues concerning honesty among business executives from the two countries, which affect the performance of companies in the United States.

One of the cultural aspects that are highly contestable between the two cultures is hierarchy. The Chinese apply the teachings of traditional religion of Confucianism established several centuries ago. In this regard, religion is considered to be one of the cultural aspects that affect business in the United States because Chinese executives fail to honor business transactions that are inconsistent to their religious teachings.

For instance, business managers believe that each person has a proper position in society whereby morality is a valued aspect. This means that business organizations as well as top executives should have high standards of morality (Zhao 78). Regarding social relationships, people should interact without considering race, social ranking, and ethnicity implying that justice and sincerity should prevail over other aspects.

In any Chinese company, hierarchy is very important and workers should respect the positions and the roles of each other. In one of the cases showing the influence of culture on the development of Chinese-owned business in the US, the Chinese firm refused to seize the opportunity to expand its business operations because the chief executive was not present to pose for photographs (Zhao 113). This shows that culture has a powerful influence on the business as far as Chinese managers are concerned.

The American managers were surprised because his assistant should have filled the gap. Ownership of businesses is usually concentrated in the hands of few individuals who are expected to make decisions. Unfortunately, junior officers are supposed to represent the organization in major conferences and discussions. The senior management is likely to overrule any decision made, which is an obstacle to business operations in the country.

Chinese companies operating in the United States are forced to adjust the culture apart from setting up powerful business networks and hiring competent workers. The senior managers should be ready to be addressed by their first names because hierarchy is no longer a valued business practice in the US.

Another difference between the cultures of the two countries pertains to gender equality and the positions of women in the business world. Americans are never comfortable hiring Chinese women for the higher positions because men will overlook them in the negotiating tables. Confucius teachings instruct women to obey their husbands implying that female managers are unlikely to make independent decisions.

The Chinese constitution protects the rights and freedoms of women, something that has helped a good number of them who are in the management positions. However, the native Chinese still hold the traditional view that women are naturally naive, inferior, and less intelligent. Best performing American firms operating in China are also reluctant to hire women into senior managerial positions because it will affect their businesses.

Viewing of women as being inferior to men changed after the Communist takeover in China, as the constitution allowed them to participate fully in economic matters. A woman was permitted to take a course of her choice at the university and take up any profession, including serving the company as a lawyer. In the United States, women have been successful in pushing for their rights, as the government has been forced to institute stricter laws to protect them.

However, the case of China is different because of the strong belief in religious teachings. A number of Chinese owned companies in the US do not employ women into senior positions, something that affects their performance because it is interpreted to mean gender discrimination (Penny 17). It is noted in this part that cultural views on gender is a problem to the development of business in the country.

Culturally, the Chinese believe in collectivist approach where the welfare of the group is important as opposed to the interests of an individual. The group plays a major role in the Chinese community because it is responsible for individual wellbeing. In the business world, the individual employee has to be loyal to the group because it awards him or her status and social position.

Many Chinese employees in the United States would jump into the opportunity to work for the best company with claims that it helps in developing talent. This has led to job-hopping, which is a break from the socialist value of devotion. In the United States, Chinese companies struggle to do business because they have to be wary of the strict laws related to copyright and patents. In China, the community is entitled to share information, knowledge, and technology freely.

The collective mindset of many Chinese executives operating in the country and other places with strict laws makes it difficult for them to conceptualize the regulations leading to serious fines through litigation. Whenever a Chinese is engaged in a business debate or discussion with an American, he or she is likely to read the emotions giving them a chance to adjust the views.

The Chinese culture values emotional privacy, but is less concerned with personal space and physical privacy. The ability of a Chinese to keep off from emotional response makes it difficult for their companies to operate in the United States. Additionally, an American faces several challenges working in China where people are trained to read emotional responses.

Works Cited

Penny, Carte, and Chris Fox. Bridging the Culture Gap: A Practical Guide to International Business Communication. New York: Kogan Page Publishers, 2008. Print.

Zhao, Zhou. “Chinese students’ Knowledge and Thinking about America and China, Social Studies 99.1 (2008): 13–22. Print.