The effect of globalization has introduced new frontiers for businesses to venture outside their host countries and engage in international trade. This has prompted the need for studying outside markets, labor laws and availability, accessibility to raw materials, and business environments for different countries to be analyzed more intricately before venturing in these countries. It has become essential for companies engaging in international trade and business ventures to change their business cultures and ideologies to suit the needs of the target market and labor relations for the country they seek to enter (Kennerly and Neely 225). For instance, before IKEA furniture entered the US market, they began operations in Canada that shares almost similar cultures and economic trends as the US. Therefore, during their final entry into the US market, they were well aware of the needs of the American customers and changed their products, business model, and marketing strategies to suit the US market. In this context, the entry of our company into the Chinese market is a new venture that requires an understanding of this different economic, social, cultural, political, and technologically diverse market. This report will venture into an analysis of the strategies that our business can utilize when dealing with the Chinese market, employees, clients, business contacts, and customers. Further, it will look at ways the company can align itself with the Chinese culture and generate the necessary revenues and sales to make the company profitable.
Our company is an electronics distribution company that deals with appliances such as TVs, microwaves, fridges, among others. The Chinese market offers an interesting avenue to expand our business not only due to its large population, but also due to the Chinese people’s love for technological gadgets. For instance, during the launch of the iPhone 6, china recorded 4.7 million sales within the first week, which represented the second largest sales globally after the United States. Therefore, our electronics company that specializes in different products should be able to provide this thirsty market with products that appeal to their needs.
The Chinese Business Culture
This country offers a different business culture as compared to the western culture, which is due to the influence of their traditional customs and beliefs. Therefore, one should always be prepared to encounter a diverse and dynamic business environment in China, and it is vital that one adheres to China’s business etiquette to achieve business networking and labor relations. One of the prime values that should adhere to is the strict adherence to punctuality by the Chinese people. Lateness in the Chinese business environment is considered as an insult and a lack of commitment to the deal, and could have adverse results that could end business relations. In the Chinese business culture, majority of the contacts being created are mainly through recommendations from associates and other close people. These recommendations are essential for business networking and often have positive outcomes for managing and operating successful business. In this context, it is vital that one adheres and understands some of the Chinese customs and cultures to attract personal and business relations. For instance, the Chinese prefer eating before making any business deals, where they invite a host to a restaurant and engage in conversations that may veer away from business. This is in line with the culture of making close personal relationships, and one should ensure they engage in these activities since the result would be beneficial to both parties.
Another vital cultural factor that one should adhere to is the respect and acknowledgement for rank and position such as chairperson, director, manager, minister, among others. This is vital since this acknowledgement of rank is representative in all areas of engagement with the Chinese people. For instance, in a meeting, people sit in accordance of seniority. Further, when giving a gift, which is a popular Chinese culture, it is vital to ensure that gifts are given according to seniority. A contravention of this important strategy would be considered as an insult and can have adverse effects. The Chinese are also perceptive business negotiators who are known to take advantage of people with lesser skills in this endeavor. Their savvy nature has been christened by westerners as requiring a poker face and heightened sense of patience and communication skills. Finally, unlike the west where during conflicts, people seek legal counsel, the Chinese prefer outside mediation and arbitration when resolving conflicts. This is due to the traditional beliefs of a weak judicial system and has resorted to people-oriented resolution of issues using third party subsidiaries.
The Chinese also use indirect methods of communication, rather than being direct. This is the reason for the use of personal relationship creation before engaging in business (Antos 54). This indirect form of communication regarding business dealings is aimed at understanding the person, prior to agreeing to do business with them. For instance, as earlier stated, such core values as respecting seniority are observed rather than demanded, and a neglect of this respect can be a sign of strained relation in future. Further, the Chinese prefer a ‘we’ rather than the ‘I’ than is present when doing business in the western culture. This is reminiscent with the Chinese need to create business and personal relationship. However, with the advancement of technology, there is an erosion of some of these norms as it becomes easier to deal directly with contacts and clients. This means that engaging in personal relationship creations and support for different customs is slowly being eroded, and being replaced with a western form of business culture.
Chinese Business Laws
One of the pertinent laws that would be an impediment to our business is the vague laws on copyright infringement in China. Current trends indicate that China is the largest producer and exporter of counterfeit goods globally, and accounts for at least 8% of their economic trades. This presents a challenge for goods distributers and manufacturers since these counterfeit products are sold at cheaper prices and have poor quality, which may serve to reduce a product’s brand equity (Djankov, Rafael la Porta, Andrei and Florence 18). For instance, international copyright laws protect product creators and inventors from unlawful copying of its system, structure, size, taste, among others. However, in China, their copyright laws are vague and manufacturers have taken advantage of this by producing goods, en masse since they are legally protected. For instance, a brand such as Adidas can have its shoes produced resembling the exact product, but all that has to be changed is the name to something like Adibas, or Nike to Nice, among others. Therefore, our electronics business will be greatly affected by the numerous counterfeits present with names that almost resemble the original brand. The poor quality of these products can also be detrimental in creating a brand loyalty. However, these copyright laws vagueness are meant to support the local Chinese industry to ensure that it is competitive and not overshadowed with products from the West. In retrospect, these laws are crafted to ensure that local Chinese businesspersons can learn the manufacturing and business trade to compete in a global trade environment (Golley & Song 58). Considering the large number of counterfeit goods being exported from China, it can be deduced that these vague copyright laws are mere strategy for the country improve its balance of trade, support local industries, and enhance foreign exchange of its currency.
Figure 1: seizure of counterfeit goods worldwide
The employment laws in china are strict to ensure fairness in employment. Every organization has to provide an employee contract within the first month of employment. Ignoring this rule, results in the employer doubling the wages of the employee until the contract has been drawn. Further, fines can be leveled on the organization depending on the number and period that the employee(s) has/have worked in the organization. The contracts include such information as duration of employment, type of work, working hours, rest, and leave times, wages and social insurance, health benefits, health and safety standards and protection, and other applicable laws and regulations. Another contentious legal issue that could affect business relations and operation is issuance of gifts. These gifts include both direct and indirect payments to persons or organizations in foreign countries. Exceptions are only for circumstances such as acquiring permits, doling out governmental papers, and getting services that are in relation to payment of local and normal amenities like water, electricity, mails, among others. In the Chinese culture, issuance of gifts is common and is considered as a means of creating bonds personally and in business. However, US laws inhibit a company operating internationally from issuance of gifts to gain monetary or business value or clients. This is considered as criminal in the US, which could act as an impediment to conducting business in China.
The Chinese business culture is unique, as is reminiscent of any country with a strong influence of traditional customs and beliefs. Therefore, every business has to structure their approach to clients, employees, customers, and business contacts with caution to ensure that their objectives and goals are achievable. Majorly, the Chinese have a strong reliance to communication as one of the key attribute in business etiquette as a means for learning and understanding their new business contact. This involves the formation of close personal relationships prior to doing business that involves their host having to learn to respect and practice some of the Chinese body languages, communication patterns, and personal relations (Antos210). In retrospect, their laws also employ a sense of commonality and openness. Laws such as copyright protection are vague and meant to allow fair competition of Chinese and international products. Employment laws are structured in a manner that seems to ensure that labor rights are upheld as a means to quash international outcries of poor Chinese human rights support. Therefore, penetration into the Chinese market would be marred with issues that are mainly related to cultural influences and it is vital that the business learns these cultural orientations and practices prior to the commencement of dealings with their Chinese counterparts.
Antos, Gerd. Handbook of interpersonal communication. The Hague, The Netherlands: Mouton De Gruyter. 2011. Print.
Djankov, Simeon, Rafael la Porta, Florence, Lopez-de-Salines and Andrei, Shleifer. The Regulation of Entry. The quarterly journal of economics. CXVII .1(2002): 1-37.
Kennerly, Mike. and Neely, Andy. Measuring performance in a changing business environment, International Journal of Operations & Production Management, 23. 2 (2003): 213-229.
Golley, Jane, & Song, Ligang. Rising China: Global challenges and opportunities. Canberra: ANU E Press. 2011. Print.