Global Business Culture Analysis: (China)

Global Business Culture Analysis: (China)

Consumer buying behavior plays the most important element in the marketing of a product, and if the marketing is in a specific country only, or if the business is coming in from another country, the behaviors, dimensions, and cultures of that country have to be considered. This is largely due to the fact that the buying behavior of consumers, in general, is not as deeply concerned with price, distribution, or any other factor. Instead, there are many various and separate influences when it comes to the buying behavior of the consumer, and because so many issues can affect whether a consumer buys a product or not, this behavior is considered to be the most important issue for businesses to look at. Businesses that do well are very aware of the idea of the importance of consumer behavior, no matter what country they are in. If a business has taken the time to learn about the market in China the business has a much better chance to succeed.

Businesses that do not take the time to learn about their consumers often fail because they do not know how to handle what their consumers need and want, and that is especially true if a different culture is involved. Instead, they take what they have done in other countries and they bring it to a new place, but they do not stop to take into account that consumers in one country are different from consumers in another country. Businesses that pay attention to this are fortunate enough to be aware of it early on, and they follow good marketing strategies and learn about who they will be selling to and what kinds of problems they are up against. This is often the biggest reason for success in a mostly new and somewhat resistant market.

Major Elements and Dimensions of Culture in China

Size and Competition

There are millions of individuals in China, but the country is good at finding ways to deal with overcrowding and it is also good at dealing with all of the issues that its citizens face. China is one of the oldest civilizations, as well, dating back some 550,000 years (Peterson, 2002). Most of the individuals there speak Chinese, but many also learn English and other languages as well, especially if they are going to be involved in the business world. It was ruled by dynasties for thousands of years and still has a strict ruling system today, although it is now officially a republic (Peterson, 2002). Because China is such a vast and varied country, there are all types of geographical features and climates there, and the demographics of the individuals encompass all age ranges and skill levels. The fact that China has so much space and so many different types of individuals -- but yet remains largely unified by government, religion, and values -- gives business that move into China or open branches there a unique opportunity for growth and development of their businesses and on an individualal level.

China is very competitive in the international market, but it is only relatively recently in history that China has begun more trade with other nations and therefore has become somewhat of a competitive power. However, since the United States has been involved in international trade for many years longer than China it is largely assumed that the United States is the stronger power. This is broadly true, but China does have some specialized interests in various countries which make it relatively strong when it comes to international trade. Even in the United States there are many items that are made in China and imported. Some of these are made by United States businesses that have moved their various operations to China for cheaper labor and less expense. Other items come from Chinese businesses or businesses in other countries that have also moved much of their labor facilities to China.

Wages and Economy

Much of this has to do with the fact that a lot of China is rather oppressed and the wages that are paid over there are often much less than are paid in larger Western countries (Mansfield, & Bronson, 1997). This does not mean that China is weak when it comes to trade agreements. China often does not fare as well as some of the larger countries that have been dealing with international trade for a longer period of time, but it does relatively well in the fact that so many of the products that are made there are exported to various other countries for sale (Mansfield, & Bronson, 1997). In general, the United States imports more goods from other countries than it exports to countries around the world (Mansfield, & Bronson, 1997). In other words, there are more labels in the United States bearing the marks of being made in China or other countries than there are labels in other countries on products which have been made in the United States. That means that China is a good place for investment.

The economy of China, for example, would not collapse if the country was not able to export anything to the United States, because there are many other countries that it can export goods to. The economy of the United States would not collapse if it was no longer able to import anything from China, but the economy would be injured severely because so much comes from China to the United States for retailers and others to sell and make a profit. International trade is a very complex issue that is difficult to understand because there are many various agreements between the different countries and there are many subtleties that come into play where trade is concerned (Mansfield, & Bronson, 1997).

Government

As most everyone knows, the United States is a democratic country, and democratic governments tend to run things somewhat differently than other countries (Gowa, 1994). China is more of an autocratic country, and much of how well the political party in that country does depends on how happy the consumers in that country are and how well the economy is doing at that point in time (Gowa, 1994). This is largely true of the United States as well, but since the whole governmental system is set up differently, there are many differences in the importance placed on international trade and the economy (Gowa, 1994).

Because of this, China is more concerned about the economy and how happy the citizens are than the United States is (Gowa, 1994). This may sound harsh but it is important to consider that the United States must change presidents every eight years, and often changes presidents every four years. This means that if the economy is not doing overly well under one president he will likely be voted out of office and a change will be offered. This is something that the United States citizens have come to expect and it is not something that causes particular difficulties for most individuals. However, China has an autocratic form of government and therefore the individual who is in political power in China is more interested in the economy and the happiness of the citizens because political unrest and upheaval in a country such as China would be more common and more severe than it would be in the United States (Gowa, 1994).

In China it is not as simple as voting someone out and voting someone else in every four years (Gowa, 1994). The policies that are dealt with when it comes to international trade often directly relate to how happy consumers are and what type of state the economy is in, and the leader in China takes a specific interest in international trade issues (Gowa, 1994). Where the composition of trade is concerned, the United States imports much more from China than China imports from the United States (Krugman, 1997). Both are very competitive and their trade is relatively well-balanced, but this balance only comes from the fact that the United States and China appear to be on relatively good terms with each other when it comes to international trade agreements and economic issues (Krugman, 1997).

Trading Advantages and Cultural Values

China appears to have some advantages over the United States when it comes to trading with other Asian countries, as well (Deardorff, 1998). Even though China and Japan do not share the same culture they do share similarities when it comes to cultural beliefs and ideas (Deardorff, 1998). These similarities account for the ability that China has to trade with Japan quite easily where the United States must work harder to perform the same task (Deardorff, 1998). Another area that is vital for investment in China, though, is the understanding of cultural values.

The cultural values that the Chinese individuals have, especially that of the fraternal respect that is seen among siblings, comes largely from the religious beliefs that the Chinese individuals hold and the way that they are schooled (Elam, Lowell, & Gallup, 1991). Many of them are either Buddhist or Taoist, and both of these religions teach respect very seriously. In order to understand the idea of respect amongst siblings in the way that the Chinese individuals see it, it becomes necessary to also understand some of the Taoist and Buddhist traditions and beliefs. These are not always seen as being very significant, largely because many individuals in the west do not understand Taoism and/or Buddhism, and therefore it gets largely ignored. However, it is also important to understand the importance of schooling and how this affects the way that the Chinese individuals think when it comes to the respect that they show to their siblings (Bogdan & Biklen, 1992).

Integration of the Elements by Locals

Religion and Business in China

Buddhism is the religion that is generally seen in the Chinese culture. Buddhists seek an elimination of suffering. The Buddha teaches that, in order to reach enlightenment, one must shun all material things, including ties with relatives and friends, and be aware that the senses human beings possess are deceptive. Being alone, in both body and mind, is the only way to reach enlightenment (Empey, 1993). There is a strict and very prescribed path that has to be followed. Despite this, however, the respect that the Buddhist individuals have for others is still very strong, and the way that they shun material issues stops them from being greedy, envious, covetous, or having other 'traits' that would be seen as undesirable in many individuals. Since this is the case, they are still very able to show a great deal of fraternal respect toward their brothers.

One of the reasons that the Chinese culture places such importance on the religions that they have and the ideas that those religions convey is that they feel it gives them virtue. Virtue is seen as the strength and ability of something (Hallinger & Murphy, 1987). For example, the virtue of a rock might be its strength. Each and every thing has a virtue, including individuals. A individual's virtue might be his moral goodness and rightness, but it can also be something that he is very good at that is beneficial to both themselves and others (Hilliard, 1992).

Fraternal Respect in the Business Culture

The fraternal respect that siblings show to one another is also considered to be a virtue, and one of the most important ones in that particular culture, which is why it is discussed and cultivated from such an early age. It is taught both at home and at school, as many studies and informational writings have shown that what is taught to students at school is very important (Elam, Lowell, & Gallup, 1992).

The balance of trade is very complex for all countries and even though it appears as though the United States is the strongest country in the international market, China is doing very well and increasing its strength rapidly. Much of the trading it does with Japan has a lot to do with this, but China also exports so much to the United States and other Western countries that these Western countries would have a hard time without all of the export goods and services that comes from China. In this way, it almost appears as though China is the strongest country, or at least stronger than the United States when it comes to the exportation of goods. Because of its economic strength and the values that individuals of that culture hold, China is a good place to open a branch of virtually any business.

Comparison with U.S. Culture and Businesses

In the last several years, China has emerged as one of the largest and fastest growing economies in the world (Cateora & Graham, 2002). China is turning its challenges into strong opportunities for foreign businesses to invest in their country. Investing further in China can provide a very positive contribution to any Business, and therefore this investment opportunity should be more closely explored. However, before this is done, the business must more thoroughly understand what the industry in China is currently like and how it is changing.

One background issue to discuss is the fact that the problem of how to help businesses succeed in various standardization and localization strategies when it comes to the Chinese market has been going on for many years. There are no easy answers to this issue and it is not something that can be solved quickly. However, there have been ideas created and tried in the past for not only these businesses, but also other types of businesses, as well as anyone else that is involved in business and needs to be aware of how this kind of issue plays out (Coughlan, et al., 2001). There are many different things that could be looked at when it comes to businesses and what kind of strategies they should employ when trying to establish a strong marketing mix. Issues that must be looked at include the product, the price, and advertising, and the market mix in general, as all are important and all affect each other in various ways.

Culture and the Global Marketplace

Trying to create a global market makes this especially significant, because globalization makes marketing much more difficult (Bass, 1993). Cultural issues play a large part in this, since the way that something is marketed in one country might not work well in another. Those who market in a global world often have to deal with issues like this, and they study cultural differences, rates of exchange, and other things in an effort to determine what kind of marketing strategy they want to use.

Marketing to some industries in China should not be that difficult, because those industries are growing. Still, however, it is important to understand that there are differences between the Chinese market and the market in other countries, and therefore businesses that want to market to Chinese industry must pay close attention to recent trends and important changes that could affect what they do.

The way that a business markets to a new area of the world is exceedingly important for both the business and the market, as marketing often determines the extent of the business's performance within a new area (Bass, 1993). Also important is a determination of why a business might want to market to a specific country, as there needs to be significant reasons for this type of move in order to ensure that the business will be profitable (Jain, 1990). Naturally, there are no guarantees for businesses where profit is concerned, but there are ways (such as surveying, determining target markets, and test marketing) to determine whether a move will be a good one for a business.

Product and Marketing

The product under consideration must be one that the individuals of the country both want and need, and the marketing of that product must be appropriate for the culture of that country to elicit the proper response from the market (Bass, 1993). An item that has poor marketing will sell poorly, regardless of its quality, and businesses that are considering making a move into another country must thoroughly address the target market. A business cannot make the assumption that it creates a quality product and therefore the target market individuals will insist that they have that product (Jain, 1990). The presentation of the item to the target market is equally important as the item's quality, and is an area that most businesses fail to concentrate on thoroughly enough to perform well in a new market.

If this marketing is not addressed properly, than the failure of the product is more likely, and this failure could be over some issue that is generally simple but becomes very important to people in the new market (Jones, 1991). For example, the translation of the business or product name into the target market country's language is very important, so as to ensure that it does not take on an inappropriate or offensive meaning in that country's language. Equally important is the packing of the product, as color has strong meaning in many parts of the world.

Marketing Example -- B&Q

For some businesses, the main marketing hurdle will be showing the Chinese individuals that they need the product. One good example of this is a company called B&Q, that deals with DIY (do-it-yourself) products and activities. The homes that are sold in China generally come as shells that need wiring, plumbing, and everything else (Balfour, 2006). Because they are designed that way and because labor is so cheap, most individuals just hire other people to do things for them, instead of doing them on their own (Balfour, 2006). However, B&Q is working to show individuals that doing things for themselves can be easy, fun, and rewarding (Balfour, 2006). Showing that it costs less is really not the way to market it because this is not an area where individuals are concerned. The Chinese consumer market sees DIY on a smaller scale, too, so B&Q had to look at ways that they could attract individuals.

They did much of that through small, free projects that kids could do in the stores, and that helped to bring parents in to look around (Balfour, 2006). Once parents see how much they can do on their own and how enjoyable the projects can be, they are much more likely to come back. That is good marketing, and it works for the country. B&Q also competes with other home improvement retailers in China because they work with suppliers and other businesses, and that keeps them involved in the market (Balfour, 2006). The other retailers do not do this, so they do not have the kind of strong market attachment that B&Q has, and that makes them more vulnerable and causes them to struggle in the market more so than B&Q (Balfour, 2006).

The way that services are marketed, though, is not the only thing to consider. The price of an item is also extremely important. Some countries will be willing to pay much more for a particular thing than another country would. That makes it important, then, to make sure that a country really wants and needs what will be sold in it and that the products are significant enough that the country will pay an acceptable price for them. In other words, when a product is brought to a country and marketed very well but prices too high for what individuals in that country will want to pay, that product will sell poorly (Cateora & Graham, 2002).

A problem like this can happen regardless of the quality of the product or the quality of the marketing, and it really does not have much to do with consumers and their satisfaction with the offered product. B&Q is aware of this, and the business's profit margin in China is much lower than what it has in other areas. Customer satisfaction, however, is still more important than many of the other issues that could affect the marketing of a new product in a new country or area of the world (Cateora & Graham, 2002; McCalley, 1996).

The Marketing Mix

When it comes to the marketing mix, it must be included, but that does not mean that the quality of the product, the price, and the way that the product is marketed should be ignored, because all of these things tie in, in some way, with customer satisfaction. This marketing mix is vital when it comes to moving to other countries and creating a niche for a product there. Adaptations are often difficult because of the way that individuals do business in other countries. This does not mean that the individuals in other countries do not do business correctly, but only that the way that the business is conducted is different from the way that it is conducted in the 'home' country of the product. By learning how business is done in the country of interest and determining what kinds of things should be done to keep consumers happy, the chances of success are much higher (Cateora & Graham, 2002). This is one of the areas where B&Q has spent a lot of time so that it was clear when it moved into the Chinese market about what it needed to do in order to be successful from a marketing standpoint.

Implications for U.S. Businesses Conducting Operations in China

Moving Into a New Market

As some businesses discovered in the beginning, the problem for a business that wants to move into a new country's market is a serious one, but it is not one that cannot be overcome with perseverance. Through the proper use of marketing and a strong understanding of the issues mentioned previously, it is possible for almost any business to move into almost any market, if that business has the knowledge and the financial resources to make the move. Businesses that ignore areas of the marketing mix and the issues that must be addressed when making a move of this type, however, generally find that the product is a poor performer and they have difficulty in making a determination as to why this is the case (Pride & Ferrell, 2003).

Businesses that plan poorly and have trouble understanding exactly what they are doing when moving into a new market often find that the competition is very strong and their product's sales are very weak (Pride & Ferrell, 2003). When this occurs, the business spends much time attempting to determine where the problem is, and correcting the problem can take much longer than researching the market correctly in the first place, which would have avoided the problem. Another problem that arises from poor planning (and therefore poor marketing) is that a product gets introduced to a new market, does not perform well, and then never 'catches on,' regardless of the changes that the business makes to the price, promotion, packing, and other issues. A first impression is very important, and there is only one chance to make this first impression when introducing a product into a new market (Rolnicki, 1998).

From an industry or organizational perspective, the issue with the example company B&Q moving its products into China makes a great deal of sense. Right now, the DIY industry in that country is growing, and Chinese individuals are eager to try new things. With this being the case, it will be harder for B&Q to fail. This does not mean that they are guaranteed to do well, but only that their chances of doing well are higher because they considered their move into the Chinese market during a time that they would be able to have a higher chance of making money and performing.

Industry Implications -- Convention and Exhibition Growth

China has also seen much recent economic growth, and much of this has come from the convention and exhibition industry (Wu, et al., 2002). Chinese convention and exhibition has developed at breakneck speed. It not only brings considerable economic benefits but also drives and promotes a city's or a location's economic development from different aspects. Beijing, Shanghai, and Dalian's city governments all regard it as local economic development's new increase point.

Some professional exhibitions are placed on the plan of global industrial exhibitions, such as international car exhibitions, international communications exhibitions, Shanghai international furniture exhibitions, Zhuhai international aviation exhibitions, etc. Those exhibitions enhance the international credit of China and also drive Chinese economic development strongly (Wu, et al., 2002). The convention and exhibition industries need to have many places to hold these things. They have to have buildings, and those buildings have to be maintained, changed, and adjusted depending on which convention or exhibition comes through. Wood and other products are needed, and if the individuals who purchase them are interested in DIY it will cost them less and they will have the pride that comes with the design and creation of their own ideas.

Investing in China

There are both advantages and disadvantages to the idea of investing in China where products are concerned. These are important to address here, so that businesses that are either in the Chinese market already or considering moving into the Chinese market are able to do so in the best way possible. Without a clear understanding of investing in China, businesses are not aware of what they could gain and what they could lose with this type of investment. It is important to understand that there are always risks when a business moves into a new country and therefore a new market, no matter how healthy that market may appear when a study of it is conducted (Pride & Ferrell, 2003). For purposes of this particular discussion, the advantages and disadvantages of investing in China have been determined to be numerous, and therefore they will be indicated by bulleted lists here.