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Mar 16

China: Business Goldmine or Cultural Minefield?

Cross Cultural Training, Culture, Culture training for Business & Management, Culture training for Human Resources No Comments »

Ever since details of Marco Polo’s adventures in Medieval China began to reach Western shores, China’s image grew in the imagination of early Europeans as a land of riches and opportunities awaiting whoever was courageous enough to make the long journey there.

Now, in the twentieth century, things are not too different. Since the communist regime in China opened the country’s borders to trade, Western companies have gone to great lengths to establish business ties there.

Results, however, have been mixed, and what was often idealised as a goldmine revealed itself to be a cultural minefield. While there are of course a number of cases where Western businesses have performed successfully in China,  there are others where organisations have encountered many challenges doing business in China, ranging from logistical to linguistic or cultural.

Game dice China i China: Business Goldmine or Cultural Minefield?

© istockphoto.com/Tigress

 

When China first opened its economy to international trade and business in the 1980s, much of the debate in the West centred on the most effective way of gaining a stronghold in what was a new and unknown market. The majority of international companies doing business in China opted for Joint Ventures (JVs) with Chinese counterparts which ended in mixed results.

The different experiences of Western companies doing business in China shows success and failure factors vary greatly, from purely technical reasons such as low quality and uncompetitive products, to serious cultural misunderstandings as to how to work with Chinese colleagues and potential Chinese partners.

Maytag’s case in particular is one example of Western-style management gone wrong. Once the third largest manufacturer of large home appliances in the US and a company that prided itself on the use of modern management methods, Maytag entered the Chinese market through a JV with the Rongshida Group.

This had developed from a small, collectively owned enterprise and had a corporate ethic of ‘harmonious business’, so when Maytag decided to launch a restructuring programme in the face of increasing competition by other Western companies, the relationship between the JV partners eventually collapsed leading Maytag to eventually withdraw from China.

However dynamic and increasingly modern, China remains a heavily traditional society where relations – whether in business or in everyday life – are heavily dependant on a system of ‘face’ and ‘guanxi’, a term which can be translated as “relationships” or “connection”. A principle that binds friends and associates in relationships promoting trust and cooperation, ‘guanxi’ commits a friend to do what he can for another friend when called upon and violating this implies a loss of face and reputation.

Despite the many challenges of doing business in China, many companies have discovered ways of not only dealing with Chinese cultural differences but harnessing them to create very successful business ventures and opportunities in China. One of the most effective is to pre-empt any issues related to business practices and customs by providing international staff and management with cross cultural training programmes such as Communicaid’s Doing Business in China.

Maytag Case Study Source: China & World Economy (67-79, Vol. 12, No. 5, 2004)

© Communicaid Group Ltd. 2010

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Mar 15

Challenges of Doing Business in the US

Cross Cultural Training, Cultural training for Relocation, Culture, Culture training for Business & Management, Culture training for Human Resources, Culture training for the Public sector 1 Comment »
Statue of Liberty 3 Nikada i Challenges of Doing Business in the US

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The United States of America is founded on a fundamental belief in equality and national and regional identity. Today, the US population represents a multicultural mosaic of cultural and racial heritage. With its division into 50 independent and culturally diverse states, the US combines regional differences into one strong society united by tight national bonds.

America’s influence on business culture across the globe is undeniable, but understanding the local culture and habits is just as important when doing business in the US as in any other country. American culture is unique and may be challenging for any organisation doing business in the US that is unfamiliar with its variety. The following are some of the key challenges of doing business in the US.

Multiculturalism
Every organisation planning to establish their business in the US needs to be aware of the country’s cultural diversity. Immigrants from around the world brought their own values and beliefs to the US, creating a unique American culture. Today, according to the US Census there are more than 100 million people who belong to an ethnic group creating an even stronger multicultural influence. This phenomenon may be very difficult to understand for anyone coming from a homogenous culture. Multiculturalism is also visible in the office environment where people represent different values and beliefs.

Individualism
The concept of individualism is highly significant in American culture. Individual initiative and personal achievement are emphasised and valued. This sense of independence and self-reliance also extends to the workplace where business is frequently carried out autonomously. Consequently, an individual’s position in US society is determined by their own achievements rather than status or age. This may be a challenge for organisations doing business in the US who are accustomed to more hierarchical and collectivist behaviour.

Low Context Culture
The US has a low context culture, defined by the tendency to communicate explicitly. American society is task-centred and the primary purpose of communication is to exchange information, facts and opinions. In the US, conflict is dealt with directly and openly and Americans will not hesitate to say “no” or criticise others in public. This direct style of speech may be interpreted by foreign visitors as rude and may cause embarrassment to those who are unaccustomed to such explicit communication. However, it is important to remember that this bears no relation to personal feelings in an American business context.

Egalitarianism
An important element of American culture is the concept of equality. Despite the many differences within American society, there is a collective understanding of the notion of equality. Americans believe in having equal rights, equal social obligations and equal opportunities based on the concept of individual merit. Consequently, there is a general lack of deference in the US to people of greater wealth, age, higher social status or authority. This is evident in the way in which titles are seldom used in business environments and how Americans call each other by their first names almost immediately. People coming from more hierarchical backgrounds may find it difficult to get used to this lack of formality and visible division of power in the American business environment.

Understanding American multiculturalism, independence and individualism is key to doing business in the US effectively. This can be achieved by following a cultural training program designed specifically for the USA. Attending Communicaid’s Doing Business in the US cross awareness training program will help individuals and organisations to maximise the benefits of their investments in this individualist and self-sufficient country.

© Communicaid Group Ltd. 2010

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Mar 11

Benefits of Doing Business in the Middle East

Cross Cultural Training, Cultural training for Relocation, Culture, Culture training for Business & Management, Culture training for Human Resources, Culture training for the Public sector 1 Comment »

The Middle East is an enormous geographical and cultural region stretching from the Mediterranean coast of North Africa to the Afghani border with Pakistan. The region is home to many races and religions including Jews, Muslims, Christians, Druze and Baha’i.

A varied history of dominance and subservience has created a diversity of opinions, attitudes, traditions and cultural norms. Politically too, the Middle East boasts modern and free democracies and also endures theocratic autocracies.

For the past three decades the Middle East has been at the centre of global interaction, be it global conflict or global trade. Doing business in the Middle East can offer a number of key benefits, including the following.

 

Map of Middle East Juanmonino i 412x300 Benefits of Doing Business in the Middle East

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Rapidly Modernising Markets
Recent years have seen a trend towards the modernisation of markets across the Middle East in a bid to attract and keep foreign investment. The idea of economic diversification has also begun to spread as many of the oil producing nations become aware that revenue from oil will not last forever. Diversification has come in the form of tourism, telecommunications and I.T solutions which have all increased foreign investment potential for anyone doing business in the Middle East.

An Abundance of Natural Resources
As would be expected with a region spanning the area that is occupied by the Middle East, there is an abundance of natural resources, creating a profitable environment for industrial and economic growth. In fact, according to the BBC 62.5% of the petroleum produced globally comes out of the Middle East.

A Crossroads for International Trade
For millennia, the Middle East has been at the centre of global international trade. Whether the ancient ‘Silk Road’ or 21st century oil trade, the Middle East has always boasted first-class port facilities and today can also claim to have some of best trade facilities in the world.

An Educated Workforce
An educated workforce is a successful workforce. This is a concept that rings very true across the Middle East. Education is highly valued. In many of the countries in the region, the work force comprises people educated up to and beyond university level.

The Middle East is a vast, complex mix of cultures. Any organisation doing business in the Middle East should gain an understanding of the differences which exist. A Communicaid cross cultural training programme such as Doing Business in the Middle East will give your organisation an introduction to the complexities and challenges of doing business in the Middle East and strategies to maximise your chances of success.

© Communicaid Group Ltd. 2010

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Mar 10

Challenges of Doing Business in China

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Chinese businessman 4 hfng i1 300x199 Challenges of Doing Business in China

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China’s booming economy, one of the largest in the world, is a magnet for foreign business investment. According to the China National Tourist Office (CNTO), China is a multi-racial country with over 56 ethnic groups. In the long course of its development, all the nationalities have joined in the effort to create the great culture that China represents.

The earth’s most populous and third largest country is often thought of as synonymous with ceremony, etiquette, ancient history and culture. International organisations will find a wealth of benefits to doing business in China however there are a few cultural challenges that must be taken into account to avoid misunderstandings, conflict and substantial direct and indirect costs to the organisation.

Cross-cultural training programmes for business and management such as Doing Business in China increase an organisation’s awareness and understanding of any potential cultural stumbling blocks to ensure that all involved create strategies for drawing benefits from these differences. The following are six of the key cultural concepts international organisations face when setting up or doing business in China.

Rules and Etiquette – Many aspects of Chinese society still strongly adhere to rules of etiquette. Elements of Chineses business etiquette code include rituals of gift giving and receiving (“songli”), accepted practices with regards to personal space and rules regarding dealing with older people or people in important positions. Various conventions also exist with regards to body language. For example, it is considered rude to point with just one finger and therefore Chinese people tend to indicate with an open hand.

Mianzi – When doing business in China, it is important to pay attention to the protection of “mianzi” or “face”. Face is entwined with personal pride and forms the basis of an individual’s social status and reputation. Damaging face through overt confrontation or criticism threatens the foundation of Chinese hierarchy and can be disastrous for business relationships in China.

Hierarchy – The strong influence of Confucianism is still evident in many Chinese attitudes and actions. The Confucian philosophy emphasises the importance of responsibility to one’s community, harmony and deference to authority. This is evident, for example, in China’s hierarchical system which tends to link respect, responsibility and authority to age, status and gender. When doing business in China, greet another person with a slight bow or a nod of the head and a firm handshake. Dress tends to be quite formal in the workplace, with men usually wearing a suit and tie and women in dress suits. When addressing other people, the last name should be used preceded by “Mr.,” “Mrs” or another relevant title.

Chinese businessman 4 hfng i1 300x199 Challenges of Doing Business in China

© istockphoto.com/hfng

Communication Style – Differences in ways of communicating can often be a source of misunderstanding. As a result, international organisations doing business in China are sometimes left confused and struggle to achieve their business objectives if they don’t possess the required information. Chinese have a preference for indirect, high context communication. In other words, Chinese people often imply and infer rather than verbalise directly. Chinese also place a high importance on the impact of body language, relationships, emotion and other non-verbal communication. Conflict is best dealt with in private and indirectly. Equally, it would be wise to note that smiling is not necessarily a sign of happiness but can also result from worry or embarrassment.

Guanxi – meaning “relationships” or “connection” is a fundamental aspect of Chinese culture. Guanxi translates to a principle that binds friends and associates in relationships, promoting trust and cooperation, committing a friend to do what he can for another friend when called upon. To violate guanzi is to risk losing face and reputation (or that of another’s) and honouring it has been the main way of accomplishing every day tasks in China for centuries.

Communism– China is governed by a communist party which pervades into many aspects of life, including the economy and religion. The country is officially atheist. Topics such as politics and religion are best avoided in conversation when doing business in China until you have become well acquainted with your colleagues.

Recognising the cultural differences which exist when doing business in China is only the first step. International organisations must also understand the reasons behind these cultural challenges of doing business in China to develop strategies for maximum effectiveness. A Doing Business in China cross cultural training programme will help you turn challenges into benefits and maximise the potential of doing business in China. Moreover, it will contribute towards the development of an interculturally competent workforce, a huge advantage in today’s fiercely competitive global world.

© Communicaid Group Ltd. 2010

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Mar 10

Does your culture distribute power equally? A cross cultural theory on Power Distance

Cross Cultural Training, Cultural training for Relocation, Culture, Culture training for Business & Management, Culture training for Human Resources, Culture training for the Public sector No Comments »

One of Geert Hofstede’s five cultural dimensions is power distance which looks at the degree of equality between people in a society.  According to Hofstede, the power distance index shows the extent to which people perceive inequality as normal in an organisation or institution.

In countries with a low power distance like Austria, Denmark or New Zealand, egalitarian attitudes are preferred and decisions are made cooperatively.  Conversely, in countries which have a high power distance such as Malaysia, Saudi Arabia or South Korea, a more formal and vertical hierarchy exists in most areas of society including business.  In Europe, power distance tends to be lower in Northern countries and higher in Southern and Eastern countries.

The table below shows some key differences between cultures with a high power distance and low power distance.

High Power Distance Low Power Distance
Inequality is accepted Inequality is minimised
Rigid, authoritative structure More flexible structure
Centralised decision-making Collective decision-making
Those in power have privileges All have equal rights
Respect for authority Respect for individuality

Cultural awareness training programmes such as Doing Business in Japan or Working Successfully Across Cultures look at the impact of power distance on business both in specific countries and on a global scale. A familiarity with this dimension will give you an improved understanding of decision-making processes as well as management styles around the world and how to adapt to them.

© Communicaid Group Ltd. 2010

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Mar 08

Challenges of Doing Business in Russia

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Russian Palace 5 numbeos i 200x300 Challenges of Doing Business in Russia

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A huge country richly endowed with natural resources, Russia continues to develop both politically and economically. Russia’s cultural identity has been influenced by a mixture of ethnicities and a diverse history.

The largest country in the world, with the ninth largest population, Russia has recently established a consumer economy which is increasing business and investor confidence in Russia’s economic prospects.

While there are some clear benefits to doing business in Russia, an understanding of Russian business and social culture is essential to an international company’s success.

Punctuality – Russia is a polychronic culture, in other words, people tend to be flexible in the organisation of their priorities and attitudes towards punctuality are relaxed. Polychronic cultures also often feel it is more efficient to do several things at once; therefore meetings may not follow a linear agenda and may be interrupted by phone calls or people coming in. As a foreigner, you are expected to be on time to all business appointments, however social events are more relaxed and being up to 30 minutes late is acceptable. Patience is highly valued in the Russian society, try not to be mad when a colleague arrives late and do not expect an apology, they may simply be testing your patience.

Collectivism – Historically a country rooted in agricultural communes, Russia has maintained a collectivist spirit that pervades many sectors of society. The Russian affinity for the group can be seen in every day life, for example, Russians will often choose to join strangers in a restaurant, recreation is commonly arranged in groups and advice can sometimes be given to you by a complete stranger. This sense of co-operation and togetherness must be considered when doing business in Russia, especially when communicating. For example, it is important to remember to address the group rather than the individual.

Hierarchy – Hierarchy is an important aspect of Russian business culture with status being linked to age and position. It is important to be aware of the fact that usually meetings are held with people of equal status. Decision making is commonly done by the most senior employees in the company. Showing respect for seniority is essential for maintaining strong business relationships when doing business in Russia.

Personal relationships – Relationships start out quite formal within Russia but maintaining trust and a good working relationship from the beginning is invaluable for future business. When meeting someone for the first time, it is wise to address them by their patronymic name. This name is based on the name of the person’s father with the suffix “ovich” (son of) for men and either “ovna” or “evna” (daughter of) for women. The Russian language also has two forms of the word “you” distinguishing between the formal “vy” used to denote respect and the more casual “ty” used between friends.

Communication style – Russians tend to have a high context communication style. A high context preference translates to placing emphasis on relationships, emotions and body language and expecting the listener to read between the lines. Differing communication styles can often pose one of the most significant challenges for businesses working cross-culturally. When doing business in Russia remember that Russians are patient and will expect the same patience from you.

Negotiating – In negotiating, Russians often take their time and will not rush to make a decision. Russians tend to avoid compromise, which they see as a weakness and expect to either win or lose a negotiation. Therefore, expect negotiations to be tough and occasionally theatrical. Do not be surprised if you witness the occasional loss of temper, people leaving the room and threats to call off the deal, this is all part of the process of driving a hard bargain.

Russian woman dmbaker i 300x199 Challenges of Doing Business in Russia

© istockphoto.com/dmbaker

Although recognising that cultural differences exist is an important first step when doing business in Russia, international organisations must also understand the reasons and implications of these differences in order to develop effective strategies for coping with these challenges.

A Doing Business in Russia cross cultural training programme will help organisations maximise the benefits and opportunities of doing business in Russia. Cross cultural training programmes also create a workforce with a high level of intercultural competence which is a huge asset to any organisation working in a competitive global environment.

© Communicaid Group Ltd. 2010

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Mar 08

Cross Cultural Training for International Mergers and Acquisitions

Cross Cultural Training, Culture, Culture training for Business & Management No Comments »

When different organisations merge into one, the success of the operation is not solely down to maximising market share, cost savings and efficiencies. Particularly in the case of international companies, the merging process brings together employees and staff from different cultures who may have very different expectations of how to work together.

The smooth integration of both companies is dependent on whether the organisations consider issues relating to national culture through cross cultural training programmes.

It is widely recognised that the management of organisational change and the smooth integration of corporate cultures is essential for any merger and acquisition. However, a fact many companies are not aware of is that approximately 60-80% of international mergers are unsuccessful because strategies to deal with and integrate cultural differences amongst employees were not in place.

iStock 000000579915Medium 300x200 Cross Cultural Training for International Mergers and Acquisitions

© istockphoto.com/ Mike Bentley

 

By integrating two different cultures, the M&A’s success depends upon creating a ‘third culture’, shared and embraced by all employees. Language, cultural values, attitudes and behaviours are issues that inherently affect the integration process, and the parties involved in the M&A need to address them.

Cross cultural training for mergers and acquisitions can help provide the necessary cultural understanding and sensitivity, contributing to the success of the merger or acquisition.

© Communicaid Group Ltd. 2010

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Mar 05

Benefits of Doing Business in India

Cross Cultural Training, Culture, Culture training for Business & Management, Culture training for Human Resources 1 Comment »

India is well endowed with mineral and agricultural resources and it has seen a significant increase in offshore outsourcing and manufacturing over the last couple of decades, which have helped India’s economy grow at a tremendous rate.

India’s Ministry of External Affairs reports that its higher disposable incomes, rising middle class, investment friendly policies and forward-thinking reforms all make India an extremely attractive place for foreign investors. There are several key benefits for doing business in India:

Engaged and career focused – On a social level, India is predominantly a collective society which places a huge emphasis on the group. However, in business culture individualism is becoming more common as employees are increasingly recognised, paid and promoted on an individual basis. Many Indians, especially those working in westernised offices or companies, are now turning their focus to their own career advancement and performance. Through training initiatives or certificate programmes Indians are constantly taking steps towards obtaining more knowledge and qualifications, which in turn helps international organisations doing business in India by providing a constant flow of highly engaged and career focused individuals.

Globe India i 200x300 Benefits of Doing Business in India

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High levels of English – The historical relationship between the UK and India means that Indians have a high level of English. Although the accent and vocabulary of Indian English is slightly different from that of British or American English, international organisations will benefit immensely from graduates’ ability to speak English fluently, as well as their command of the many local Indian languages. It is in fact estimated that there are 14 major and over 1000 minor languages and dialects spoken in India. The relatively few language barriers make doing business in India quite attractive for international organisations.

Large amount of experienced specialists – India has an extensive pool of experienced people from which they can recruit employees. There is a high value placed on education in Indian culture. Combined with India’s drive to become a successfully modernised and competitive country, this is helping to produce a population of candidates with good qualifications and specialised experience and knowledge.

Openness to new ideas and opportunities – Indians have a relatively high tolerance for ambiguity and uncertainty and can therefore be quite open to new ideas and opportunities. This entrepreneurial and creative spirit is evident in the recent influx of new businesses in India. International organisations doing business with Indians in urban centres such as Mumbai, Bangalore and Hyderabad will particularly benefit as many younger Indians are taking on more western habits and working preferences. As they increasingly adapt to keep pace with the demands and expectations of new dynamic industries, international organisations doing business in India will face fewer cultural challenges when pushing new business ideas and endeavours.

Dedicated employees – Indians have a strong work ethic and take pride in their jobs. They tend to work long hours in the hopes of showing their dedication and increasing their status in the company. Most Indians will work eight hour shifts six days a week. When working for organisations which require communication on a regular basis with people in countries such as the US or the UK, employees will willingly work shifts around the clock to compensate for the time difference. This group of highly dedicated employees, willing to work long shifts over unusual hours, is a huge benefit for international organisations doing business in India.

Business meeting track5 i 300x199 Benefits of Doing Business in India

© istockphoto.com/track5

All the above benefits are good reasons for global organisations to do business in India. Harnessing these benefits comes with the need to navigate the geographic, linguistic, religious and cultural diversity of Indian society. This requires a comprehensive understanding of Indian business and social culture on all levels.

International organisations employing people in India or working with Indians on a regular basis should therefore have a series of cross-cultural training programmes on Doing Business in India to ensure they develop the skills to successfully deal with the many cultural differences.

© Communicaid Group Ltd. 2010

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Mar 05

Cross Cultural Preferences: Individual or Group?

Cross Cultural Training, Cultural training for Relocation, Culture, Culture training for Business & Management, Culture training for Human Resources, Culture training for the Public sector No Comments »

Have you ever considered why in some cultures it’s best to praise a team for their efforts rather than an individual?  Or why connections and networks are more important when doing business than individual achievement?  Or in education, have you noticed that in some cultures children are encouraged to participate and show individual creativity while in others the expectation is for children to recite lessons as a group?  There are many differences like these that can often be explained by a predominant tendency in a culture to place more importance on individuals or groups.

This distinction is often referred to as individualism and collectivism, the degree to which a society reinforces individual or group achievement and interpersonal relationships.  This concept, one of Geert Hofstede’s five cultural dimensions, helps explain many cross-cultural attitudes, behaviours and communication styles.

Societies which emphasise collectivism are those where people’s main concern is their in-group or community rather than their individuality.  Extended families and networks where everyone takes responsibility for fellow members of their group are typical of collective cultures such as China, Mexico and Greece.

Individualism refers to describe societies that are characterised by the importance of individuality and individual rights. In individualistic cultures such as the US or Germany, the self and immediate family come first while social bonds tend to be loosely tied.

Below is a table which summarises the key differences between the cross-cultural preference for individual or group.

Collectivism Individualism
‘We’ conscious ‘I’ conscious
Group comes first Self and immediate family come first
Focus on tradition and precedent Focus on growth and progress
Collaborative Competitive
Success and position are ascribed Individual achievement earned and rewarded

Understanding whether a culture places more emphasis on the individual or the group will help you maximise doing business in that country. These concepts are covered on cross-cultural training programmes such as Communicating Effectively across Cultures as well as cross cultural training for business and management programmes such as Doing Business in India.

© Communicaid Group Ltd. 2010

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Mar 04

Cross Cultural Training for Business and Management

Cross Cultural Training, Culture, Culture training for Business & Management, Culture training for the Public sector No Comments »

Business relations are no longer limited by national borders. Individuals and organisations from different national cultures meet, compete and collaborate on a daily basis, making cross-cultural working and communication, whether virtual or face to face, an essential part of a company’s day to day business.

iStock 000007271257Medium 300x199 Cross Cultural Training for Business and Management

© istockphoto.com/ neustockimages

However technically prepared, employees’ performances may suffer when working across cultures without adequate cross cultural skills which enable them to not only recognise cultural differences in working preferences and communication styles, but to also be able to deal with them. Such intercultural skills can be developed by participating in a series of cross cultural training programmes for business and management.

Cross-cultural training programmes provide both a foundation of intercultural awareness and an understanding of the impact of stereotypes and generalisations on business interactions, a lack of which can cause serious misunderstanding and financial risk when working internationally. Intercultural training also provides strategies to manage intercultural conflict and build cross-cultural relationships with greater success.

As quoted in the book Riding the Waves of Culture, “Culture still seems like a luxury item to most managers, a dish on the side. In fact, culture pervades and radiates meanings into every aspect of the enterprise. Culture patterns the whole field of business relationships.”

Cross cultural training is an integral step to ensuring international organisations harness the benefits of doing business in an intercultural context and reduce their risk of financial loss.

© Communicaid Group Ltd. 2010

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