In addressing his co-workers, the chairperson of Intel Company, Andrew Grove, once told them that the only way that a firm can advance in the long term is by integrating global thinking. In addition, he also asserted that it is possible to brainstorm ideas regarding a particular business venture locally and implement them internationally. Due to changes resulting from technological advancement, the business world is becoming more globalized as time progresses. Thus, the firm’s management teams are considering alternative survival strategies. One of the strategies that are being considered includes internationalization which entails venturing into the international market. Company A is gearing up to take the risk by venturing into the international market. In implementing this strategy, the firm’s management team needs to consider several factors.
This essay analyzes the cross-cultural challenges that the company will face in the international market. The paper also seeks to identify a country at hand and compare some of the cross-cultural challenges that the company faces in comparison to the United States, which is relatively similar to European countries about business. The paper will also analyze the issues identified to determine how they affect the market and the impact that will be created for a viable expansion of Company A to the East Asian territory.
Because the company produces engine components, there are some cultural issues that the company is bound to face as it expands its operations to the foreign market. With its success in Europe, it is easy to assume that its expansion to Eastern Asian Countries will be flawless considering that it has gotten itself through an expansion once. Nevertheless, the Asian culture in business is quite different from the one that the Americans adopted. For example, China possesses great value in terms of the market and is quite resourceful in terms of raw materials. The working force is large enough to provide the necessary manual labor and the engineering industry in China portrays a good ground for competition and investment. Nevertheless, some of these cultural differences between the western culture and Chinese culture have on many occasions proven to be a challenge for many companies. Some of these challenges are discussed below.
Cross-Cultural Issues: A Comparison
One of the greatest differences that the firm will experience is differences in ethnic culture. In China, culture is centered on building a relationship. Business is better for them with counterparts with who they are well familiar. In the US, individuals make up the culture. The better you are in business, the more your chances for success are. It does not matter who the business partner is. The firm’s biggest challenge, in this case, is how to build a system of friendly relations with the companies that it intends to partner with. By winning over their favor, it is easier to do business with them. China businesspersons are reclusive, especially with strangers. The company will therefore find it necessary to build friendly relations as soon as possible.
Another challenge, similar to the one above is the source of trust. The Chinese, unlike the Americans, rely a lot on oral trust. They are loyal to those they trust and will not want to lose this. Americans are“legal” oriented. The firm will not want to get into any wrangles with the authorities by breaching the agreements of a written contract. The challenge here remains the same as discussed (Jin & Mason, 2010, p.1).
In addition, the Chinese are not so much inclined to business communication methods compared to westerners. American speech is outspoken and tends to rely a lot on our communication skills. In addition, America’s culture is monochromic. This does not apply in China. The Chinese are considered to be more reserved, focusing more on the task at hand and less on the paperwork and how it is communicated across the table. In addition, their culture is polychromic.
People in authority usually have the last word in China while in America; a more democratic approach is taken even in the business industry. The style of negotiation in this area must therefore take a different turn upon investing in China.
Economically, China’s structure is more centralized. This means that the government is mostly involved in business activities of virtually the whole region. The country has a younger legal framework, which is influenced largely by humanitarian factors. Nevertheless, the rapid technological advancements in China are giving a great deal of change in the Chinese communist society (Oznuraycil, 2010, p.1).
Effect of Cross-cultural Communication on Market
In the company’s effort to gain access to the Chinese market, one of the strategies that it can consider is partnering with a company operating within the Chinese technology industry such as an engineering firm. China’s cross-cultural communication factors will require the firm to have an interpreter in conducting their negotiations. This will contribute to the partnership deal being effective. Formal communication is preferred to present our requests without any risk of flaws. Gifts, for example, are an excellent way of communicating goodwill and general mutual understanding between the two parties involved. No money should be involved in giving gifts. Instead, an item of beauty or prestige is preferred. The resultant effect is that the gift will serve as a debt owed to us. The Chinese, being loyalist people will always want to give something back in return and thus a good trading ground will have been created (Kwintessential, n.d, para. 6).
Shaky statements are a sign of weakness across the table and will not be preferred, while punctuality is a core factor in doing business. One is bound to create a good starting point such as starting in humility. Arrogance will never be a powerful tool as one communicates with the Chinese. Finally, one should realize that the Chinese are strong negotiators. Thus, strength in dealing with them is required.
Impact of the Cross-cultural practices
It is important to consider changing the marketing mix that the American people have adapted to in the process of venturing into the international market. Sensitivity is required in devising any market strategy and our approach on management should change from liberal to hierarchical. More formality is needed on the negotiation table while some of the strategies such as straightforward answers on facts that are clear should be attacked more clearly and meekly in order not to eliminate any form of opposition (Guang, 2009, p.1).
To be successful in China, the firm should respect the Chinese culture. In addition, a marketing mix that will cater to the Chinese customer effectively should be adopted. Through these strategies, it will be possible for the firm to attract potential business partners and customers. This arises from the fact that character and personality in China are vital in the success of the firm within this society.
- Guang, Robert. (2009). From Theory to Practice: Cross-cultural Implications for Marketer. Cross-Cultural Issues in the 21st century Marketing. Web.
- Jin, Zhouying & Mason, Robert, M. (2010). Societal, Institutional, and Value Differences between Chinese and Americans. Business International. Web.
- Kwintessential, (n.d). Building Relations. Doing Business in China.
- Oznuraycil. (2010). China Business Culture. Community Business Basics.