Business Comparison Of China And USA

Business Comparison Of china And USAThis essay critically analyses the differences and similarities amid the United States of America and the Republic of chinaw ar. Firstly, this essay identifies the important theories of intercultural communication by applying Hofstedes intercultural framework. Secondly, the Chinese and United States negotiators style will be discussed followed by an explanaition about how to manage negotiation in two countries. Thirdly, the similarities and differences between china and the United States will be comp atomic number 18d.Negotiating with the Chinese is an important topic in international melodic line and cross-cultural heed since china is playing an increasingly active billet in doing line of merchandise with the western countries negotiating with Chinese is also becoming increasingly important for international business successes in concomitant, since after China joined WTO in December 2001. (Zhu et al., 2007 354)The aim of this study is to compare the Chinese and United States Ameri rump negotiation styles on the general cultural differences to help to overprotect a better understanding when doing business in China or the United States. Chaney and Martin (2004) as cited in Zhu et al. (2007 355) define cross-cultural negotiation as confabulation or discussions of common and conflicting interests between approximatelyones of different cultural backgrounds who work to reach an agreement of mutual benefit. International managers can profit from studying similarities and differences in negotiating behaviours to recognize what precisely is happening during the negotiating serve up (see Appendix A). However, managers first need to understand their own negotiation styles, to understand the similarities and differences in intercultural communications (Deresky, 2000).2. Intercultural communication and their master(prenominal) theoriesIn 1959 the phrase intercultural communication was firstly used by the cross-cultural researcher Edward T. Hall as he divides refinings into two types, high-context culture and low-context culture (Aneas and smoothn, 2009 Hall, 1976). Further in 1980 the management researcher Geert Hofstede analysed data from more than 100,000 IBM employees and developed his Cultural Dimensions Model. His theory is based on the assumption of four dimensions Power length Index (PDI), Individualism versus Collectivism (IDV), Masculinity versus Femininity (MAS) and Uncertainty Avoidance Index (UAI) (Powell, 2006). The fifth dimension Long-Term Orientation versus Short-Term Orientation (LTO) was determine by Geert Hofstede and Michael H. Bond in 1988 (Fang, 2003). Finally, Fons Trompenaars and Charles Hampden-Turner developed a model of seven dimensions of culture to help explain intercultural differences. These dimensions are called Universalism versus Particularism, Individualism versus Communitarianism, Specific versus Diffuse cultures, emotional versus Neutral cultures, Achievem ent versus Ascription, Sequential versus Synchronic cultures and Internal versus External control (Trompenaars and Hampden-Turner, 1998).3. Hofstedes intercultural frameworkIn this study the focus is on Hofstedes well-established management theory. Figure 1 displays the intercultural framework of Hofstede. According to Hofstede and his model it is of high significance to consider the high cultural differences between Chinese and American tribe to be successful in doing business crosswise borders.Figure 1 The 5D Model of professor Geert HofstedeSource Adapted from Itim International (n.d.). Geert Hofstede Cultural Dimensions online. Available at universal resource locatorhttp//www.geerthofstede.com/hofstede_dimensions.php?culture1=18culture2=95compare Accessed 20 January 2010.The Power Distance Index (PDI) stands for the hierarchy of strength within a society and its general acceptance amongst the countrys people. Chinas ranking is close to 80 which is a very high level compared t o United States ranking with 40. The level of inequality of power and wealth is high but, according to Hofstede, accepted by the Chinese society. Thus, that the level of power distance is very high in China, the boss is in the authority and in the position to decide over everything. American culture however allows more equal power and rate for every rank in a business, which means for our business that our Chinese employees will in all probability need to be educated to make decisions on their own.Regarding Individualism versus Collectivism (IDV) China ranks noticeably low in individualism (20) compared to the United States (91). Consequently, the Chinese culture is strongly collectivist being integrated into a group is crucial and society values loyalty as well as strong dealinghips to both friends and family. The high ranking of the United States means that the society is very individualistic. More precisely the integration into groups does not play such a big role as it does i n China.Furthermore, we have to consider that in the index of Masculinity (MAS) China arrives at a rank of 66 which could be interpreted as a rather masculine society. Chinese people do not show their feelings and try to be calm in every situation. However, between China and the United States (62) is no big difference. This points out that both countries values assertiveness, success, power and competition.The Uncertainty Avoidance Index (UAI) shows that the Chinese are rather judge brand-new uncertain situations than avoiding them (rank 30), so they seem to be more tolerant to different opinions however, it is not a country that embraces risky situations, it rather accepts them. People in uncertainty- accepting countries usually do not express their feelings. The United States ranks higher (46), which means compared to China the American culture is not open to new situations. People present act influenced by their emotions and tend to be more nervous.Regarding Long-Term Orientat ion (LTO) it is manifest that Chinese culture is much more committed loyalty to and respect for traditional business strategies than the United States (29). This shows the highest ranking factor worldwide in long-term avoidance (118). Chinese people never want to lose daring and are short-term oriented. The United States, on contrast, is a long-term planning country in which thrift, perseverance and persistence are valued to plow with. For instance, to deal with economic changes or with adaptation to new situations.4. Chinese treatersThe Chinese business culture is especially affected by the term guanxi and the notion of saving face. In a culture, which is focused on familys, it is important who you know. Chinese people get things done through relationships with family, friends and contacts (Gesteland, 1999). Tung and Worm (2001 521) argues that guanxi refers to relationships among people and that they are dyadic, personal relations between people who can make demands on each ot her (see Figure 2). Further, guanxiwang is the social lucre in the Chinese business culture and for them it is essential to avoid upsetting anyone in the network because it can lead to destabilizing the web of connections (Chee and West, 2007 57). A key component of guanxi is the notion of saving face. A Chinese persons reputation and social position are based on it. Loosing their face involves reduced social resources, wealth and connections (Ma, 2006).Figure 2 Dyadic relationship in guanxi networkSource Adapted from Tung, R. L. and Worm, V. (2001). Network capitalism the role of human resources in penetrating the China market. International Journal of Human imaging Management. Vol. 12, No. 4, pp. 517-534.5. Managing Negotiation with the ChineseTo manage negotiation with the people from different cultures it is important to keep in mind that the individuals involved in the negotiation are of different cultures and that there is likely to be some misinterpretations because of the ir chosen methods of communication ( speak to et al., 2001 351). There are several reasons for the cultural differences. Most of the Chinese business persons are obsessive about price details, because of the fact that China has a traditional agrarian culture. The Communism system and Confucianism, the traditional Chinese way of thinking, affects the negotiation process recognizable through their respect for hierarchical relationships, preservation of face, and group harmony (Chee and West, 2007 pp.97-98). Tung and Worm (2001) as cited in Davison and Ou (2008 290) suggestNegotiation outcomes depend on the degree of mutual understanding achieved by the transacting partners the quality of the guanxi developed during negotiations may actually be more important than either the price or the reaping quality eventual price or product quality may vary subject to the guanxi.If a person, who is doing business in China, is already in a guanxi network, this business person has to intensify th is relationship. If a business person is not involved in a guanxi network, then it is important getting into a network and getting in touch with influential Chinese business persons (Holt and Chang, 2009). Furthermore, when negotiating in China, business persons have to be prepared to discuss all issues at the homogeneous time and in an apparently disorganised order (Deresky, 2000).6. United States NegotiatorsThe United States business culture is focused on deals with foreign or unknown people and especially affected by notions prestige, honor, status, dignity and authority (Yabuuchi, 2004 264). Gesteland (1999 272) suggests thatan American negotiators degree of expressiveness in communication is likely to be strongly influenced by his or her particular ethnic background.For United States business people it is important to be issue-related, objective and time-conscious. However, Zhu et al. (2007 357) argue that Americans tend to pay less attention to social ranking.7. Managing nego tiation in the United StatesThe United States culture is affected by their immigrant society and that is the reason for the cultural diversity. As mentioned above it is all but impossible to predict and prise specific the negotiating styles of the United States business people. The business people in the United States are time-conscious because of the fact that they dont waste their valuable time for the company. There exists no dedication to the company (Chua et al., 2009 Gesteland, 1999).8. Similarities and Differences between China and the United StatesAfter analyzing the negotiation style in China and the United States and its reasons, several similarities as well as differences can be pointed out. First of all, it is important to understand the effect negotiating perceptions have on the negotiating outcomes (see Figure 3).Figure 3 The relationship modelSource Adapted from Ma, Z. (2006). Negotiating into China the impact of individual perception on Chinese negotiation styles. International Journal of Emerging Markets. Vol. 1, No. 1, pp. 64-83.Both countries put emphasis on assertiveness, success, power and competition through their closely index of Masculinity in the intercultural framework of Hofstede. Further, look on Chinas and the United States concession behaviour both countries are doing their outcome to achieve their goal and get as much profits as possible (see Appendix A). According to Hofstede, differences between the two countries can be shown in their Long-Term Orientation. The United States (118) are long-term oriented and China (29) short-term oriented. This means that China is more committed to loyalty to and respect for traditional business strategies than the United States. Furthermore, one of the biggest differences is their decision-making behaviour (see Appendix A). United States business people are known as the fastest decision makers in the world whereas China doesnt rush to take a decision. Finally, both countries have a different pursue a different goal in the negotiation process. For the Chinese it is a kind of dialogue, more precisely an exchange of information. In the United States negotiation is associated with an outcome which could be a contract.9. ConclusionSummarising the findings and arguments shows that both countries should have an understanding of the traditions and culture. Woo et al. (2007 351) suggest that when negotiating with the Chinese it is imperative to be conscious of the structural collectivism of those involved in business negotiations. Especially the business people from the United States should be prepared for a long visit when doing business in China. The best way to be successful in China is to build guanxi, which is a time-consuming procedure but essential. The Chinese business people have their focus more and more on the content of the deals and the details of the prices. In comparison to the business negotiation in the United States soft wags should be avoided because for so me of them it reflects weakness (Gesteland, 1999).AppendixAppendix A Negotiation Procedures Business ProtocolChinese NegotiatorUnited States NegotiatorDress Codemen suit, white shirt,conservative tiewomen conservativesuit or dressvaries somewhataccording to muddle andtype of businessMeeting and Greeting+ soft handshake/ moderateeye contact bone-crushing handshake/overly direct gaze+ firm handshake/ directeye contact some believe softhandshake reflectsweaknessExchanging Business Cards+ exchange of name cards isdone exploitation both hands+ read the business card+ put the card away in aleather card/ place it onthe gameboard in front of you dont write on someonesname cardmay not initiate theexchange of businesscardsExchanging Giftsbe prepared with inhibit gifts/ presentgift with both hands+ expensive cognac/ itemstypical of your owncountry/ logo giftsis not a gift-givinggift-giving culture many feel uneasyif presented with anexpensive giftWinning and Dinning+ master the fine arts o feating with chopsticks+ toasting your counterpartsmany prefer to maintaina separation betweentheir captain andprivate lives Negotiating BehaviourChinese NegotiatorUnited States NegotiatorBargaining Rangeoften bargain vigorouslyexpect major concessionon price and termsexpect them to test youropening offer forflexibilityConcession Behaviourexpect pressure tacticsbe prepared for somehard bargainingPlays and Counter-Ploysgenerally mask negativeemotionsmay on occasion displayanger as a pressure tactica favourite bargainingtactic is time pressureanother is to ask forquotations on a slidingscale by quantityDecision-Making Behavioura long time-consumingprocessdecisions take timefastest decision makersin the worldSource Adapted from Gesteland, R. R. (1999). Cross-cultural business behavior marketing, negotiating and managing across cultures. 2nd ed. Copenhagen Handelshjskolens.