The Impact of Cultural Differences Between the US and China on Global Business

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Table of Contents

Introduction
Cultural differences between the US and China
Treatment of the four marketing P’s: Product, Price, Promotion and Place
References

Introduction

In the recent past China’s economy has grown at unprecedented rate making it an attractive country for foreign investment. In this context, Yim (n.d) notes that “…the current and potential growth of the Chinese economy means that US and European organizations increasingly want to work with Chinese partner organizations” (p.1). It is significant to note that China is the “…second largest trading partner of the US, after Canada” (Fang n.d, p.1)

There are several reasons making US businesses expansion into China. China is often seen as a source of cheap labour for both skilled and unskilled labour. This great advantage resonates well with most US firms keen on cutting costs to make competitive products for a global market. Another major advantage is the knowledge base of the Chinese technical personnel that is at par with that of the US. However, despite the great potential of the US-China business relations there are challenges occasioned by cultural differences.

Cultural differences between the US and China

There are several cultural differences between the US and China. These cultural differences include the respect for hierarchy, the attitude to work and the concept of self among other differences.

China and US practice different cultural practices in respect to hierarchy within a business and social life set up. China thrives in a culture where people are expected to know their role and place within a social set up. This extends to the social relations between workers within a business environment. On the other hand, Americans are less conscious of hierarchies in a social set up and tend to be more informal in work places compared to their Chinese counterparts.

Most of the Chinese perceptions on social hierarchy are derived from Confucianism, a philosophical view of life developed by Confucius. One major cultural difference occurring due to the Confucianism is the treatment of women. The philosophical attitude of Confucianism is that women should defer to their male counterparts.

This contrasts sharply with the American society’s perception towards women which encourages independence and equality. Due to the differing attitude towards women, most American companies are extremely careful when sending women leaders to negotiate business with Chinese or to work in senior positions in China.

The attitudes towards work differ in a radical way between the Americans and the Chinese. The Chinese place a premium to maintaining relationship as opposed to accomplishing a given social or business objective. In this context, the Chinese would rather forgo achieving a business objective if the achievement of the same is likely to destroy critical relationships between the involved personnel.

In contrast, Americans place a premium in achieving the given business objective without overly caring on the impact of the same on the social relationship between the involved personnel. This is cemented by phrases such as “It is nothing personal” and “It is just business”.

Closely related to the attitude towards work is the concept of self as practised between the Americans and the Chinese. The Chinese value team work and achievements in contrast to individual promotion and sense of achievement. In this context, Chinese companies do value team spirit and individual excellence is not overly encouraged. On the other hand, Americans thrive on individual ambitions and excellence which is not only encouraged but also celebrated.

Treatment of the four marketing P’s: Product, Price, Promotion and Place

There are differences between the Americans and the Chinese in the context of the four marketing P’s that is product, price, promotion and place.

Product

The Americans place a premium on intellectual property and are keen on protecting their innovation and technology. Americans do value quality goods and are more conscious to the standards of the goods they produce and purchase. In contrast to the American philosophy towards products, Chinese are more concerned with quantity as compared to quality. Their products are often meant for the mass markets and as such tend to be of lower quality but cheaper prices.

The goods are often geared to solving immediate needs as opposed to long term utilization. More often than not their items are imitation of established brands from other countries. Indeed China’s products have been synonymous with low quality but cheap price that is ideal for developing economies. Sometimes the Chinese are prone to infringing on intellectual rights.

Price

The differences in attitudes to pricing of goods between the Americans and Chinese can best be described using their consumption habits. Due to the importance of the social relationship in a close knit society, Chinese are prone to spending more on the goods meant to be given out as gifts. Ackerman & Tellis (2001) captures the Chinese attitude towards goods in the following manner:

In a collectivist culture such as China, the symbolic meanings of public goods are more important than in an individualist culture. Social recognition is more important when social relations are stronger (Schutte, 1998). Social norms of reciprocity in gift giving in China also contribute to the importance of the symbolic meaning of public consumption goods. Status goods and high prices symbolize the importance of the relationship to the giver. (Ackerman & Tellis 2001, p.63)

Due to the above attitude towards public consumption goods, prices of the goods used as gifts are likely to be highly priced in China as compared to the US. However, in private consumption Chinese are more price conscious and more selective than their American counterparts. The Chinese are likely to take longer shopping as they examine different brands of a given item before finally making their choice. In this context, goods meant for day to day use are significantly cheaper in China as compared to the US.

Promotion

Business promotion is often linked to advertising either through print or audio visual media amongst other methods. In contrast to the Americans, Chinese are relatively more reserved and emotionally modest. In the context of business promotion, Americans employ more direct and engaging business promotion techniques especially though audio visual advertising.

These business promotion techniques are likely to promote personal gratification and happiness. On the other hand, Chinese are likely to frown on an outward and direct display of emotions in the process of business promotion.

Place

The US and the Chinese businesses often have different attitudes in relations to places in which they conduct business. The Americans value personal space and some standard minimum working conditions for their workers. Some of these standard minimum working conditions would include ensuring that workers are housed in reasonable working conditions with proper ventilation and escape routes. In this sense, American businesses are likely to be more spacious and airily.

In a contrast, Chinese are into production of goods meant for mass markets which are cheap and often of poor quality. In order to make cheap products, Chinese companies increasingly need to cut on costs and hire cheap labour. In this regard, the cheap labour may be contained in small working places with minimum emergency exits and ventilations. In this context, US companies are likely to occupy larger areas for a similar workforce as compared to the Chinese companies.

The clash of American and Chinese on ethical issues

The Chinese and the Americans clash on various issues that may touch on personal preferences and social norms. However, there are instances in which the two clash on ethical issues that sometimes affect the working business relationship. Two of the ethical issues in which the two countries clash on include protection of intellectual rights and human rights conditions.

The Americans value democracy and human rights form core part of their business ethics. These human rights extend to business norms and laws such as lack of discriminations on any grounds and extension of humane working conditions for their employees.

In contrast, the Chinese have relatively little regard for democracy and human rights. In this sense Chinese firms are more often than not accused of having workers in deplorable conditions in their factories. China has also been accused of doing business with failed governments with poor human rights record.

The issue of intellectual protection is another area of great cultural clash between the Americans and the Chinese. The Americans are very particular on protecting their innovation and technical know how. However, the Chinese are prone to making imitation of other people’s innovation and in the process making less quality products than the original.

In this context, China is renowned for producing substandard goods often infringing of intellectual copyrights. In this context, there has often between lawsuits between some Chinese companies and their American counterparts in relation to copyright infringement especially on cell phone industry.

References

Ackerman, D &Tellis, G. (n.d). Can culture affect prices? A cross-cultural study of Shopping and retail prices. Web.

Fang, G (n.d). U.S./China Differences and Their Impacts on Business Behaviours. Web.

Yim, K. (n.d). Bridging US-China cross-cultural differences using internet and groupware technologies. Web.

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