American and Chinese business cultures

American and Chinese Business Cultures

Though there is no universally accepted definition, culture denotes a set of values, beliefs, traditions, practices, attitudes, and behaviors shared by a given group of people (Rodrigues, 2009). Culture defines a people's way of life -- how they do things, communicate, behave, relate with one another, and so forth. Culture theory, especially Geert Hofstede's cultural dimensions theory, illustrates that cultures tend to vary from country to country or region to region (Hofstede, 2001). These differences imply that norms, behaviors, attitudes, and other elements of culture differ across countries or regions. For instance, the culture of Americans tends to differ from that of the Chinese, Africans, or Arabs.

Culture permeates every aspect of society -- from organization and social relationships to communication and business. Business is especially influenced by culture. Culture affects how organizations are structured and managed, how employers relate with employees, how decisions are made, how authority is exerted, how negotiations are done, and so on (Luthans & Doh, 2012). This means that it is common for business cultures to vary across countries or regions. Two countries that exhibit remarkably different business cultures are the US and China. According to Hofstede's model, the two countries have different national cultures: the US is an individualistic society and China is a collectivist society (Hofstede, 2001). This explains the difference in business cultures between the two countries. In this paper, a comparison of the American business culture and the Chinese business culture is made. The paper specifically contrasts the two countries' business cultures, assumptions and characteristics, as well as negotiation styles and techniques.

Business Culture

The theoretical framework underpinning this paper is Hofstede's cultural dimensions model. It is important to describe this model before proceeding further. According to Hofstede, national cultures are characterized by six major dimensions: power distance, individualism versus collectivism, uncertainty avoidance, masculinity versus femininity, long-term orientation versus short-term orientation, and indulgence versus restraint (Hofstede, 2001). These dimensions define how societies view group identity, authority, ambiguity, success, time, and human desires. Full description of these dimensions is beyond the scope of this paper. The paper mainly dwells on the dimension of individualism versus collectivism to explain business culture differences between the US and China.

Individualism versus collectivism defines the extent to which members of a society identify with groups (Hofstede, 2001). Accordingly, an individualistic society is a society in which members value self and the immediate family. In such a society, emphasis is placed on individual happiness and autonomy. On the contrary, a collectivist society values interdependence -- members emphasize group belonging and strong relationships with the extended family. Based on the individualism versus collectivism dimension, the US is a highly individualistic society (scores 91 on individualism), while China is a highly collectivist society (scores 20 on individualism) (Geert-hofstede.com, n.d.). These different scores on individualism explain the outstandingly different business cultures between the two countries

American Business Culture

As members of an individualistic society, Americans place relatively little value on relationships (Cook, 2012). Nonetheless, this does not necessarily mean Americans are opposed to strong relationships. It means that in business transactions, Americans prioritize the transaction at hand as well as speed and efficiency. It is quite uncommon for Americans to focus on personal matters or relationships during business transactions or meetings (Rodrigues, 2009). Americans will generally be less concerned about such matters. In fact, Americans will often interpret questions about personal matters as being disrespectful or intrusion of privacy. For Americans, one's personal life and professional life are distinct entities, which should not mix (Luthans & Doh, 2012). Colleagues may often participate in office parties and other events that bring them together to know one another better. Nevertheless, individuals may not necessarily want to socialize with one another beyond such gatherings.

Since Americans value individuality more than interpersonal relationships, they will often communicate in an explicit manner (Cook, 2012). For Americans, it is normal to openly show disagreement or frustration. Indeed, it is common for people to yell at each other during meetings. When a person is in disagreement, they will directly express their thoughts, with little or no concern about interpersonal relationships. This makes Americans quite different from the Chinese in terms of expression of thoughts or emotions. The Chinese are likely to be offended by or to view as unprofessional Americans' aggressive style of communication.

How Americans express their thoughts often does not depend on who the thoughts are being expressed to. Irrespective of one's age, position, or authority, it is normal for subordinates or younger people to openly disagree with their seniors or even yell at them (Luthans & Doh, 2012). At the workplace, for instance, an employee can question the decisions or instructions of their supervisor or manager. In collectivist cultures, such behavior is generally viewed as disrespectful as hierarchy and authority usually determine how people relate with one another (Hofstede, 2001). For Americans, however, equality is important, and hence authority is not really about age, position, or social status.

Further, as Americans value self and explicitness, bragging may be common. It is acceptable for people to talk about their success and accomplishments (Rodrigues, 2009). Some cultures may consider this self-promotion as pride or lack of humility. They may see it as a weakness as opposed to a virtue. Americans, however, strongly believe that individuals can openly celebrate, showcase, or show off their personal achievements. Doing so creates a sense of personal gratification, which is important for Americans.

Another aspect of business culture relates to gifts. In the US, one may treat a potential client to a dinner with the aim of discussing business matters. Nonetheless, gifts within the context of business are not valued much (Rodrigues, 2009). If one decides to have dinner with a prospective client or business partner, discussions during the dinner would mainly center on business. In other words, the dinner in itself would not be a goal. Rather, it would be a means to achieve a much bigger goal -- business.

The degree of individualism also affects responsibility and accountability within the workplace. Being a highly individualistic society, the US places emphasis on individual accountability (Althen, 2003). This means that tasks are delegated to specific individuals, and that those individuals have responsibility for performing the tasks as expected. In other words, accountability in the US is often established or monitored at the individual level. Specifying who is accountable for what is arguably advantageous as disciplinary action can easily be taken in the event the delegated task is not performed as required.

Chinese Business Culture

Whereas Americans value individuality and autonomy, the Chinese value relationships. They value relationships in not only social, but also business circles (Yui-tim, 2001). Indeed, it common for the Chinese to ask questions about personal matters during business transactions. For Americans, this is quite strange or annoying as they tend to be concerned about the transaction at hand. The Chinese value relationships during business transactions because they will often want to better know who they are dealing with. The Chinese view this as trust building (Alon, 2003). They tend to be more comfortable doing business with someone they can trust. Therefore, for the Chinese, asking about personal matters is usually an indication of interest, not necessarily disrespect or impoliteness.

Owing to the innate need or drive to build strong interpersonal relationships, the Chinese tend to communicate and behave in a certain manner during business transactions. While Americans communicate explicitly, the Chinese usually communicate in a somewhat indirect or implicit manner (Alon, 2003). For instance, during a business meeting the Chinese may prefer to show disagreement or frustration by remaining silent rather than saying "No" straightforwardly. Additionally, saying "Yes" may not necessarily mean agreement with an idea or opinion. However, Americans will directly say "No" when they are in disagreement or "Yes" when in agreement. For the Chinese, saving face or remaining calm during business transactions is important. They believe that expressing thoughts in a certain manner may ruin relationships, hence strive to maintain positive emotions.

The Chinese way of expressing thoughts is particularly dependent on whom the thoughts are being expressed to. While Americans are not authority-oriented, Chinese place emphasis on authority (Alon, 2003). This means that a manager would feel disrespected if their instructions or authority was directly challenged by their junior. If in disagreement or disappointed, a subordinate or any person with less authority is culturally expected not to show the disappointment or disagreement openly (Hofstede, 2001). This is crucial for fostering a healthy relationship between superiors and subordinates at the workplace. An American is likely to find the expectation to not question authority from a superior difficult. Broadly speaking, Americans value collaborative decision making and it is common to observe managers and employees engaging in heated debates prior to reaching consensus.

The Chinese maintain collective happiness further by fostering humility. While Americans are likely to brag about their personal accomplishments, the Chinese are likely to not talk about them (Yui-tim, 2001). For the Chinese, humility is a virtue, and self-promotion is likely to be frowned upon or viewed as humiliating. This means that the Chinese are likely to portray modesty during business transactions. They will want to work with a client or business partner who is meeker than one who glorifies themselves.

In China, gift giving is more valued than in the US. It is common for business people to entertain or gift clients or business partners (Alon, 2003). While Americans may not view gifts and entertainment as goals in themselves, the Chinese place immense value on gifts and entertainments. In fact, giving small tokens is a prevalent practice in the Chinese business context. For the Chinese, gifts and entertainments may be offered even without business discussions. For instance, a Chinese business person may invite a potential client or business partner to a dinner, but the invitee may not be compelled to discuss business matters if they do not want to. The Chinese view such gestures as symbols of care and respect, which are important values in the Chinese business culture.

As for accountability, the Chinese often place emphasis on group accountability (Alon, 2003). Dissimilar to Americans, the Chinese tend to establish responsibility not at the individual level, but at the team level. This means that individuals are judged as part of a group as opposed to individuals. The Chinese's insistence on group accountability is informed by their collectivist nature -- they value group harmony and happiness more than individual happiness.

Assumptions and Characteristics

Every culture has its own unique assumptions and characteristics. These are the norms, values, beliefs, and lifestyles practiced or adhered to unconsciously by a group of people (Hofstede, 2001). Cultural assumptions and characteristics relate to different aspects of the society such as gender roles, religion, age, authority, social status, social relationships, human nature, and color. In a collectivist society, for instance, it is expected that juniors should always respect their seniors no matter what. What this means is that juniors show respect to their seniors even without thinking about it -- respect for authority is not questionable. This is because respect for authority or seniority is a deeply ingrained value in a collectivist culture. In such a culture, not following the instructions of seniors is assumed to be disrespectful. These assumptions and characteristics have significant implications for business.

American Assumptions and Characteristics

One of the most important things for Americans is individualism. From an early age, individuals are taught to be independent and responsible for their own life (Althen, 2003). This attribute can be seen in how Americans treat their children, relate with those around them, and even behave at the workplace. It is assumed that individuals should make their own decisions without interference and be accountable for those decisions. In addition, individuals are brought up with the understanding that they exist not to serve their family or country, but to follow their own destiny. Assumptions about individualism explain why it is common for teenagers in the US to move out of their parents' home after high school graduation. Furthermore, as Americans are driven by autonomy, they are generally achievement-oriented or competition-oriented. Indeed, successful individuals are viewed as heroes. From politics to sports and business, Americans have a strong admiration for individuals who have stood out from the crowd or made unprecedented achievements. This explains why it is common for employers to recognize, praise, or rewards individuals who perform outstanding work.

In the US, recognition is not really driven by age, social status, position, or wealth. Instead, it is driven by individual achievements (Althen, 2003). It is informed by an individual's proven ability to overcome odds. For instance, an individual who is perceived to be the best lover may be seen as a more admirable hero than a manager without any record of accomplishments. Likewise, the best salesperson may receive greater recognition than an executive with no achievement record. In essence, Americans value what an individual has achieved as opposed to their age, position, or authority.

Since Americans value individuality and autonomy, they assume everyone else worldwide views individuality and autonomy the same way. For instance, an American would find it strange that a young adult is extremely concerned about the views of parents, adherence to traditions, or making other people happy at the expense of individual happiness (Althen, 2003). Americans would view such a person as weak, excessively dependent, and indecisive. They assume that everyone must liberate themselves from situations they perceive to hinder freedom and autonomy. At the workplace, Americans assume that individuals should be able to stay away from or reject situations that undermine their independence or happiness. This is why employees or subordinates are likely to report or even take legal action against an employer or supervisor that subjects them to undesired situations such as discrimination and harassment.

At the core of America's individualism is the belief that all people are equal (Cook, 2012). In spite of the existence of historically fierce interracial relationships, Americans fundamentally believe that all individuals have equal value. This is why the opinions of individuals are generally treated equally irrespective of their status or position. A CEO is likely to respect the opinion of a junior employee the same way he would respect the opinion of another executive. America's perceptions about equality further explain why addressing individuals using their titles is not common (Hofstede, 2001). At the workplace, for instance, juniors can address their superiors by their first name as opposed to formal or authoritative titles such as "Sir" or "Boss." For individuals from collectivist cultures, this may be viewed as disrespectful.

Chinese Assumptions and Characteristics

In China, cultural assumptions and characteristics are strongly influenced by the country's religious beliefs (Confucianism) (Yui-tim, 2001). One of the important values of Confucianism is collective happiness. It is assumed that collective happiness supersedes individual happiness. From an early age, individuals are taught to value their family, country, or other groupings that exist within the society (Hofstede, 2001). This explains why children in China are expected to take care of their parents at old age. As the Chinese value group happiness, there is usually less emphasis on individual achievements, success, or competition. Unlike in the US, individuals with outstanding accomplishments are not given much attention as doing so may often be viewed as self-centeredness. This means that team or group achievements at the workplace are more likely to be celebrated than individual achievements. For an American employee, this may reduce morale and motivation as individuals expect to be recognized for their accomplishments.

Moreover, recognition in China is more likely to be driven by factors such as age, position, and social status as opposed to individual achievements (Yui-tim, 2001). This explains why the use of formal titles such as "Sir" and "Doctor" is common in China. Failure to use these titles when addressing individuals with the titles is often interpreted as being disrespectful (Hofstede, 2001). For instance, a manager may feel offended or disrespected if a junior employee addresses them by their first name as opposed to their official title.

China's instance on the recognition of position or authority can be explained by the assumption that individuals in a society are not equal (Hofstede, 2001). The Chinese believe that it is alright for power in the society to be unequally distributed. In other words, they believe that individuals do not have equal value -- those with positions or a higher social status tend to be viewed as having greater value than the rest of the society. These assumptions extend to the workplace as well as business situations.

Fundamental Skills and Techniques of Negotiation

Culture affects not only behavior and communication, but also negotiation style. Negotiating is essentially the process of reaching an agreement. Whether in business or politics, negotiation involves two or more parties discussing a given matter with the aim of arriving at a beneficial agreement for one or all of the parties. The objective of negotiation may be to resolve a conflict, gain individual or collective advantage, or to satisfy certain interests. Nonetheless, negotiation can be a difficult undertaking when the parties involved come from different cultural backgrounds (Rodrigues, 2009). As mentioned earlier, culture strongly influences how individuals communicate or express themselves. Accordingly, negotiation style tends to be informed by culture as communication and expression are central to negotiation. Cultural differences may create miscommunications or misunderstandings, making consensus a difficult end to achieve.

American Fundamental Skills/Techniques of Negotiation

Being individualistic, Americans' primary objective during negotiations is the subject matter of the negotiation. Generally, Americans are direct to the point. They have a reputation for being impatient and dislike wasting time on matters unrelated to the negotiation (Palich Carini & Livingstone, 2002). If an American executive is meeting Chinese executives to discuss a business deal or negotiate a partnership or an acquisition, the American executive would go straight to the objective of the meeting. The American executive would find anything outside the contract superfluous or even annoying. Cultures not accustomed to this style of negotiation may find it quite arrogant.

During a negotiation, Americans will explain a position as clearly and extensively as possible (Rodrigues, 2009). They will come to the table armed with facts, statistics, and precise explanations. In fact, Americans are often said to be obsessed with numbers. Numbers form the basis for decision making. Americans use numbers to ensure contract terms and the anticipated outcomes of the negotiation are plain to all parties in the negotiation. Clarity is particularly important for American negotiators. American negotiators are unlikely to sign a contract if the agreement does not unambiguously explain all the specifics of the agreement.

The straightforwardness of Americans during negotiations is further depicted by the preciseness of their conclusions. By the end of the negotiation, Americans will state clearly whether or not they would do business with the other party or parties (Palich Carini & Livingstone, 2002). They will make their demands clearly known and will often not demand anything beyond what is stipulated in the contract. As Americans are more concerned about the ends, the means may not matter. For instance, it would be unrealistic to expect American negotiators to remain calm during negotiations even when they do not agree with the proceedings. American negotiators are likely to express their disagreement or disappoint in an overt manner.

Chinese Fundamental Skills/Techniques of Negotiation

Compared to Americans, the Chinese have an identifiably different style of negotiation. In Chinese negotiations, the first objective is to create relationships (Graham & Lam, 2003). The Chinese will often not go straight to the business of the day without building rapport and trust. For the Chinese, relationships are perhaps more important than anything else. As they are strongly influenced by collectivist beliefs, the Chinese view relationships as an important ingredient of successful negotiations. The Chinese also love doing business with parties they have strong personal connections with as they find such parties more trustworthy.

The element of trust explains why negotiating with the Chinese may not be successful without an intermediary. In the US, people have a tendency of trusting others until they are given a reason not to (Graham & Lam, 2003). This is quite different in China, where all encounters with strangers tend to be treated with distrust and suspicion. As such, negotiations with the Chinese are likely to bear fruit if there is someone they can trust. Trust is so important that Westerners wishing to negotiate with the Chinese often have to find personal connections with the target individual or organization. The connections may emanate from family, school, previous business relationships, and so forth. For instance, an American executive wanting to meet a Chinese executive can contact a former classmate to arrange a meeting with their friend. As there is personal experience between the target executive and the friend, the negotiation is likely to be fruitful.