As globalization is taking over the world and companies are heavily outsourcing, understanding cultural differences is important for the business success. Most of American and European companies are out sourcing in Asia. This is due to the availability of cheap labor and a large market base with less competition. In the recent past, many companies are particularly targeting the people’s republic of China as their outsourcing destiny. It is therefore important to ask; what are the major cultural differences that such businesses are likely to face. Three of the major challenges are; communication styles, attitudes towards a conflict and the decision making styles.
Communication is fundamental in business because it is the medium that enables business parties to understand each other and work harmoniously. Failure to have appropriate communication channels or understanding might result into poor business performance. Communication styles are very different in China as compared to America. This is mostly on the language usage. Chinese people are quiet and reserved in a business setting. On the other hand, Americans tend to be outspoken and eloquent. This communication style may challenge the American company when they want to get valuable information such as concerns, feedbacks and other important business information. The Chinese people do not reject a proposal openly, their language use is polite and usually use the words ‘maybe’ or ‘we shall see’ when they do not conquer with an issue.
The difference in the attitudes towards a conflict is very different between the two countries. In the United States, conflicts are dealt with on a one to one basis. People deal with the conflicts together and meet to discuss the way forward on how to solve the problem at hand. In china and other eastern countries, solving conflicts openly is considered as embarrassing and demeaning. As a result therefore, conflicts are dealt with quietly. This cultural collusion will affect the business since in times of conflict, there is no room for confrontation no matter how true one is or the amount of true evidence they can provide. In china, direct confrontation is seen as shameful and is avoided at all costs.
Decision making is a crucial aspect in a business success. A common approach where people arrive at the same conclusion is the most practiced in the United States. However, in China and most Eastern countries like Japan, a consensus is the most favored. In negotiation, the American culture views it as a battle of wits where one can lose without hard feelings. However, in china, negotiations are seen as a form of confrontation that undermines agreement.
Launching a product or service in a foreign country require the company to use a standard marketing mix or its adaptation in order for the product to suit the country they are practicing their activities. It is therefore important to look at the 4Ps of marketing that is product, price, promotion and place with relation to the culture of the country. In this case we are addressing the people’s republic of China.
Basic marketing concept shows that an organization sales more if its products meet the determining factors that consumers look at. These factors include consumer culture, religion, buying habit and level of income. In outsourcing in China, the organization should consider these factors. Comparing the kind of product in America and China, it is noticeable that the American products are of higher quality and are expensive. The American culture by far encourages people to buy quality products despite their high prices. China on the other hand produces low quality products due to their consumer buying habit which they prefer cheap products due to their low income.
Promotion strategies have to take into account the language used, political climate, cultural attitude and religious practices. These factors have to be considered before creating an advertisement message. It is important to have adequate of the cultural interpretation of various things. For example the color red is a symbol of luck in china. The two countries strategic promotions compare in that they both use the media extensively. However, the extent of television coverage in the US is high than in china due to their economic situations. The poverty level is high in china than in the US.
An element of marketing matrix is the place which involves the distribution of the product or the service to the consumer at the right time and place. The distribution chains in America are mostly effective and efficient compared to china. Despite the state barriers in the United States, there are better than in china. This is due to the better storage, distribution store and transportation systems that are effective and therefore making the united state firm’s profitable. In china however, distribution is complicated by legal regulations and the distribution channels are not defined. This makes it difficult in for the products to reach the consumer at the right time.
The last P in the marketing mix is the price. Pricing of the product is influenced by various factors such as prices of competitors, production costs and the disposable income of the target market. In America, the prices are high compared to the Chinese market. This can be attributed to the high level of consumers, the quality of the products and the price of competitors as well as that of the close substitutes. China on the other hand has relatively low prices. The product quality is relatively low. For example when you compare the Apple mobile product and product from China, the Chinese quality is wanting. The cost of production is also low due to the availability of cheap labor. The consumer level of disposable income is low which makes the firms produce low price products.
As you venture into business in China, you have to observe their cultural values. The Chinese business culture is very different from the American. In china, giving of gifts in order to influence a decision making is considered right. However, in the United States, this practice is not encouraged and is called bribe. Therefore, it is important to understand and respect such culture and distinguish gifts from bribery in a Chinese context.
The second ethical issue is the emphasis on harmony. The Chinese believe that there should be harmony and they look at things in a long term perspective. They consider sudden and substantial change as disruptive. The emphasis on harmony is because first, the Chinese population is large and therefore conflict between close people is inevitable. The call for harmony reduces conflict and thus makes the Chinese community less chaotic. Secondly the dominant religions, Taoism and Buddhism emphasize on peace and nature. The two religions have a direct influence on the people’s behavior and thinking.