Month: April 2016

China in the West

chinaHow is China faring in the west these days?  While there has been some stagnation and stock market drops, simultaneously there has been direct investment and acquisitions.  One recent example was the acquisition of Syngenta by ChemChina and KraussMaffei. In addition, for the last decade and a half, there have been large-scale investments into Africa from China.  Trade has actually reached $200bn per annum, making China Africa’s largest trading partner.

Academically this is also the case.  Earlier this year, a Dual Degree EMBA has been offered by the Cheung Kong Graduate School of Business and IMD Business School in Switzerland.  Featuring five different subjects, two are taught in Europe, two in China and the fifth in South Africa given that it is midway between East and West.

A Chinese company also recently purchased Ahava. Conglomerate Fosum spent $77 million on the firm, indicating that BDS is not at the forefront of their minds.

There is a lot to be said for the pursuance of Chinese-Euro relationships.  Daniël Ben-Ezra, Media Director of Spotz Media has been studying the phenomenon over the last few years.  What he found was that ultimately the corporate gap between Asia and Europe is not that huge.  He explains:

“If you compare the European way of doing business with that of the Chinese, the importance of networking in China is paramount. Moreover, decisions are invariably made at the top of the pyramid. There is a strong hierarchy. For example, it is a waste of time talking to assistants as they have little or no authority to make decisions. The Chinese are also very bureaucratic, they love the red tape of seals, multiple signatures and copies of forms.”

Ultimately the statistics speak for themselves. Trading has escalated hugely over the last few decades.  Just back in 1977 China held a mere 0.6 percent of international trade.  But by 2012 it had become the world’s largest trading nation.   Today, 124 countries view China as their “largest trading partner,” which is huge compared to the US number of 76.

Bridging the East West Cultural Gap in Business

ChinaA cultural gap between two nations trying to conduct business together can be most disconcerting and result in failure of trade and investment deals. Articles have been written about this and those working between the two cultures have tried to come up with possible ways of overcoming this.

Adam Roseman, CEO and co-founder of FansTang (a digital media firm that specializes in the increasing demand China has for localized global content), spoke about this concept in a YouTube interview. He actually views the situation positively noting that there is a potential for “greater collaboration” between the US and China “across all industries.”  On talking about new entrants to the market on either side, having been in this position himself, he points out the importance of gaining a deeper understanding of the challenges, such as how “China and the US are both tremendous economic powers [which] both operate very very differently from a cultural perspective.”

So what are these cultural differences?  According to an article in China Daily published last year, some of them can be categorized into six points as follows:

  1. Privacy (the Chinese are quite happy to discuss topics Americans consider private such as: age, salary, marital status etc.)
  2. Family (the Chinese have a lot of respect for elders and the young are cherished and nurtured; in the US, independence is a highly sought after commodity)
  3. Friendships (Chinese have much more committed friendships; hanging out or different types of friends is not really considered a friendship like is the case in America)
  4. Money (Chinese save, Americans spend)
  5. Education (Chinese push for education whereas Americans prioritize character trait development)
  6. Collectivism (China values community; America, the individual).

Given the above, it is important to learn about each others’ cultures and work with them, rather than against them.  Roseman noted that “every deal we do, every deal we’re a part of, is a challenge but at the end of the day it really is just experience. It comes down to what is achievable, what’s doable from a Chinese perspective, what’s achievable, what’s doable from an American perspective and trying to find ways to bridge those gaps.”

Roseman also believes that in this regard, China is making greater efforts to bridge the cultural gap.  He says that both cultures need to learn from each other “through time share together and through educational exchanges.”  Having worked with both, he sees that “China has been much better in this fashion than the US has historically in terms of Chinese students coming to study in the US. We have a number that work with us who have been able to learn both cultures as a result of that. But there’s not as many American students and American professionals who do this and that needs to change. And there are a number of initiatives that have been launched in that regard you know Hillary Clinton has the 100 000 strong initiative where they’re working very heavily on getting more and more American students to China but those educational and cultural exchanges need to happen much more than they are today for the market to progress as much as it can.”

With some work and effort – probably more so by the Americans at this point – the east-west cultural gap can be narrowed and more collaboration can result, leading to a facilitation in business deals between the US and China.