China Business

China Its Cultural and Managerial Style

The fast economic development of China has attracted the attention of the international business community, creating a surge in foreign direct investments and international trade. Negotiating new business and trade agreements as well as establishing business subsidiaries and joint ventures, the number of foreign business people in China is increasing rapidly. The areas of managerial interface between foreign business representatives and Chinese nationals are expanding fast and an emerging academic literature is beginning to examine cross-cultural management issues in China. China, no doubt is certainly the fastest growing and "exciting" market to be working in right now, and probably one of the most difficult for expatriates to survive in. After many years of being closed off from the world, China has opened up with a vengeance, and is therefore growing too quickly, too soon. It's experiencing all the problems accompanying a new economic power emerging in an environment where centuries of development are trying to blend in all at once.

The New China

Westerners have been trying to get rich in China for over 150 years. However, few of them have actually been successful enough to penetrate the "market of one billion". With the "sweeping economic reform in the People's Republic, and the merging of Hong Kong, Taiwan and China into a financial and manufacturing "powerhouse" called Greater China, an increasing number of firms from the west now reap profits there, including H.J Heinz, McCall's, Bausch & Lomb, and scores of others." (www.ptvchina.com) In fact, it was also possible that the amount of Avon Products projected sales in China at $1.5 billion in 1991, and it hit an annual profit of approximately $1 billion per year. In this case, we see that any businessperson is therefore willing to prepare and persevere on profit in the China Triangle (This includes Hong Kong, Taiwan and China).

The term "Greater China" was termed by former Communist Party Secretary, Zhao Ziyang, as reunified China that included Hong Kong, In 1997, Hong Kong and Mainland China were then united again. Taiwan will most likely still remain politically independent from the Mainland, even in the near future. However, the three China's are uniting commercially, and "the entrepreneurial synergy generated by that unity fuels economic growth that is now unsurpassed in the world." (www.ptvchina.com) Guangdong Province in South China, for example, has kept an astonishing 12.5 percent annual economic growth rate since 1985. The political and commercial divisions between the three China's are rapidly disappearing. The border between China and Hong Kong has started to slowly to remove itself; people on either side are starting to come together.

Economic Conditions in Mainland China

China is increasing at a steady speed as it continues to sustain rapid economic growth. China's average annual GNP growth rate of 10 percent during Deng Xiaoping's (famous Chinese Government) reform program starting in 1978 "outstripped" almost every other country in the world. In 1993, China 's GNP grew by 10 percent, industrial output was up 18 percent, and foreign trade had risen by 20 percent. In Shanghai and Guangdong Province in 1993, the GNP grew by 22 percent and 18 percent in foreign trade. China's growth is affected by a number of sources, including the fast output of thousands of small and medium sized "village" enterprises formed as small groups, but are actually private companies which partner up with local entrepreneurs and other bigger enterprises. Another growth is the result of imported technology, which has given many Chinese firms a chance to produce foreign exchange through exports. Lastly, foreign investment has generated growth also in China. In 1993, the Chinese government approved an estimated 80,000 foreign-invested projects, with an estimated total of approximately $105 billion in value. This is equal to the approved foreign investment over the past 13 years, since China started to open up to the Western market.

Cultural Style

Culture of each country is different from the next, there are certain objectives that favor or follow in everything that they do. In China their cultural behavior is much different from normal business industries. Most North American business people think of building "business relationship" in hints rather than as a straightforward task, in which any cultural differences can be easily overcome through "eye-to-eye" talk, informality or by having a few drinks together. In Greater China however, the meaning of the word "relationship" is much deeper.

The past government of ancient China depended upon a system of client-patron relationships to maintain stability throughout the many provinces of the country. The term for client-patron relationships was a called "kan-ch'ing". In the past and even today, in the village level, to possess good "kan-ch'ing" was to have a sense of well being, a feeling of being at ease, in a relationship, for example, with the landlord. Those who had good kan-ch'ing would try to help each other rather than compete. For example, the landlord was dependent on the kindliness of the tenant if he was to receive his rent. The tenant normally would pay his landlord, however, if he could not pay the entire amount he would open up negotiations with the landlord. If for some reason there had been a drought, a flood, heavy rain, or insect problems, the landlord's liability to the tenant demanded that the rent be postponed as a must for the tenant to survive. If the landlord possessed good kan-ch'ing he would not press his/her tenant for rent, and the tenant would repay him in his more plentiful years. Therefore we see that relationships and good kan-ch'ing remain vital in China's business cultures today.

The Chinese like to maintain their business relationships through mutual exchange of gifts, favors, and promotions. "Guanxi" relationships are among Chinese business people where ever they are located, this can be described as "ingratiating personal relationships" that presume multiple obligations on the particular people". (Jones, Stephanie 77)

These relationships can arise from the city which one's parents were born, the university one attended, or even a direct family tie. Guanxi is the main reason why managerial positions in China are filled with family members, friends, and co-workers rather than those who are just well qualified.

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