East meets West: Understanding Cultural Differences when Doing Business in China

Dr. Eugene Chang

Email: ecyc02@yahoo.com April p 20th 2011

Dr Eugene Chang Dr.

Work Experience Senior Consultant Consultant, Beijing China-Britain Business Council, London, China Business Adviser ABB (China) Ltd Ltd, Beijing, Beijing Business Development Manager Sulzer Ltd, Beijing, Shanghai, and HKG, Chief Representative, Representative Asian Institute of Technology, Energy Technology Division, Bangkok, Research Associate Asia-Pacific Asia Pacific UN Small Hydro Centre Centre, Hangzhou, Hangzhou China China, Assistant Director Education Oxford University, UK, MA (Physics) Aston University, UK, Ph.D (Total Technology)

Agenda
1. Introduction 2. Cultural differences 3. Communicating effectively 4. Effective interaction with your business partners

Module 1 Introduction
Doing Business in a multicultural world Wh t skills What kill are needed? d d?

Module 1

Success requires. requires

1. 2. 3. 4 4. 5. 6. Clear vision and direction Positive attitude Ability to inspire staff and partners to deliver Interpersonal and communication skills Commercial and business acumen Sensitivity to cultural differences

Module 1

Sensitivity to Cultural Differences

understanding cultural differences communication applying cultural competence/intelligence to avoid conflict and promote harmony in doing business do you have these problems?
Your local partner never questions or directly challenges principals Your Y local l l partner t says yes ok kb but t actually t ll means no You cant understand importance of relationship building (guanxi) or face Your partner never replies to your email or doesnt give straight answer Your partner requests changes to a binding contract

Module 2 Cultural differences and different perspectives

Module 2 Different Perspectives

Module 2 Different perspectives

What is your perception of China? What is your perception of Chinese peoples behaviour?

Module 2 Different perspectives

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Module 2 Stereotypes yp

The e Yellow e o Terror e o in All Its ts G Glory o y 1899 899

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Module 2

Cultural differences - Chinese traditions

Long history asset and burden Confucian, Taoist and Buddhist mix R Respect tf for elders ld Strong family ties large extended families Women to respect father, father husband and son Emphasis on hard work, study, tolerance (ren) Pictographic language Middle Kingdom zhong guo

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Module 2

Middle Kingdom - Chinese View

Ricci 1602

13

Module 2 Economic and social differences

Population p Bln 1.34 Rural population Mln 720 GDP per Capita $4,400 GDP Growth Innovations 10%

0.06 15 $33,000 1.7%

Module 2

West - v - East business behaviour

West East

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Impatient Individualistic Egalitarian Small meetings F Focus on transaction i Linear, step-by-step Contract is binding Limited after hours work Focused on bottom line Not very sensitive to face

Patient Group-oriented Hierarchical Large meetings Networking, relationships Holistic Contract is the beginning not end of the negotiation Bonding through dinners, etc Focused on employment, technology Acutely sensitive to face

Module 2

Tips for Successful Negotiations

Patience, patience and patience Build up trust, integrity and credibility Id tif key Identify k decision-makers d i i k Dont be surprised by cultural differences Show the other side respect Prepare thoroughly for the meeting

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Module 2

Business Culture

B? B?

Meetings
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Module 2

Business Culture

Meetings
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Module 2

Business Culture

Meetings
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Module 2

Food Culture

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Module 2

Food Culture

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Module 2

Business Culture - Banquets

Banquets Toasts

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Module 2

Business Culture - Banquets

Banquets q BB Seating

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Module 2

Business Culture - Drinking

Banquets Toasts

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Module 2

Business Culture - Drinking

52% 52%

Banquets Toasts

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Module 2

Business Culture

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Module 2

Business Culture

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Module 2

Clash of -isms isms

Insead Quarterly

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Module 2

Clash of cultures

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Module 2

G Group Wedding W ddi Traditional T diti l Dress D

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Module 2

Group wedding - western dress

China Daily 2006

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Module 2

Cultural gap narrowing?

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Module 2

Cultural differences are everywhere - learn to adapt!

...without damaging what's there already

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Module 2

A fine balancing act

......finding the Middle Way

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Module 3 Communicating g effectively y

35

Module 3

People people everywhere

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Module 3

.........and and yet more people

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Module 3

Cultural Differences

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Module 3

Watch and listen listen....

..........You Y have h two ears, two eyes and d one mouth h and d so you should use them in those proportions.

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Module 3

Learn to listen better

try to see things from the speaker's point of view listen as a receiver not a critic, try to understand not to change show active responses - verbal (rephrasing) (rephrasing), non non-verbal verbal (eye contact) summarise to focus on issues, interpret situation objectively, especially if using interpreter ask probing questions in a supportive way - how, what,why,where,who, could, would - and encourage the speaker to 'open up' don't butt in, accept moments of silence

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Module 3

Tool shop

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Module 3

Different Perspectives

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Module 3

Different Perspectives

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Module 4 Effective Interaction with your Business P t Partners

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Module 4

Knowledge is Power
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you g y will also suffer a defeat. If you know neither the enemy nor yourself, you will lose in every battle. battle
Sun Zi Art of War

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Module 4

Know yourself and know the other parties

be aware of b f your own cultural lt l background b k d (baggage) (b ) learn about new culture you are in adapt good communication find out what motivates your partners/colleagues continuous learning process show respect

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Module 4

Show Respect
Show respect, even to the quiet, modest people Do not lose temper Give face, including to friends and family Give projects to stretch employee/team Hands-on, role model, mentoring Show p patience, , care and concern

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Module 4

Different attitudes to authority/managing people

Prof Hofstede study - 5 dimensions Power distance index PDI Individualism IDV Masculinity MAS U Uncertainty i avoidance id VAI Long term-v-short term orientation

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Module 4

Po er Distance Index Power Inde PDI

one concept, power distance, measures how power is distributed - how lower-level members of organizations and institutions expect, accept and follow the authority and power that their upper-level p pp leaders hold low PDI (low inequality) - flat management structure, lower level members take part in decision-making, call superiors by first name name, informal style high power distance (high inequality) - tall, centralised management structure, large proportion of supervisory staff, respect (fear of) for authority

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Module 4

Po er Distance Index Power Inde PDI

world average 55 points/country Malaysia highest (100) (100), Israel lowest (13) China...... ............80 J Japan..... ............54 India........ ............77 Europe....... ........... 30 +/Australia.... ........... 36 "Let Let the emperor be an emperor, the minister a minister, the father a father and the son a son" "All men are born equal"

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Module 4

Individualism IDV
'I' -v- 'We' individual -v- family/group personal goals - v- common good high IDV in the West where individualism is encouraged low IDV in Asia where conformity/harmony is emphasised Germany........ y .......67 Indonesia....... .......14

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Module 4

Adapting your behaviour

encourage constructive comments/opinion, emphasise differing views will not incur punishment get used to indirect answers or no answer at all, and the need to ask more and dig deeper listen hard! build up friendship, trust be aware of lower standards of work quality, ethics (honesty, confidentiality) and integrity be aware that family/personal matters may affect work don't misinterpet p humility y as incompetence p make an effort to be over-polite () and respectful, especially to those in power

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Summary and Conclusions

"We must think anew. We must develop not only a new mind-set but also a new skill-set and a new tool-set that flows from it. This is difficult to do; it throws everyone out of their comfort zones. But a new reality y has emerged, g ,a new economy, a new challenge." (Stephen Covey, author of 7 Habits)

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Your New Challenge - Cross Breed, Cross Culture: to change or to be changed?

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