Bi-cultural Consultant is your key to the red gate
By Mona Chung
Chinese market is a uniquely challenging market to Western businesses. The difference is its uniqueness which majority of the organisations have been struggling with. Research has proven that cultural difference is the main barrier to success in China. Where companies are caught by surprise is the large gap between the two cultures. Standard training simply does not cut it.
Understanding culture is an important issue for Australian businesses in China, because of the pervasive impact that it has on business operations and success. Culture can be defined “as the collective programming of the mind which distinguishes the members of one human group from another…. Culture, in this sense, includes values; and “systems of values” are a core element of culture (Hofstede, 1984, p 21).
Culture as One of the Most Important Elements
Cultural difference is a major issue for Australian businesses doing business with Chinese. The issue takes everybody by surprise.
China is a complex market, much more than the Australian market due to its history, and the impact of its political, legal and economic systems. Coming from the perspective of Australian businesses, the cultural differences between the two countries are vast that the Chinese culture is referred to as an ‘alien culture’ (Chung & Smith 2007) by Australian expatriates. Many of its fundamental structures are very different and without the understanding of these differences, companies are only going to “stumble in the dark”, not knowing how business is conducted. Cultural issues should be the biggest controlling factors of all. The cultural understandings of the way to do business are the most dominant issue because they are inherent within any business relationship.
Gradually organisation start to recognise that there is not nearly enough attention placed on cultural issues as there should be. In an Australian business context, you will find a lot of Australian trading companies and others who might think they understand a bit of the language, but they don’t really go out of their way to understand some of the deeper issues. These are the better performers.
The result of not addressing the cultural issue means some fail badly and some find it hard to make an inroad into the market place. For example, one company who attempted opening a pizza shop in Shanghai failed because they did not understand the cultural preferences of Chinese consumers and their taste preferences, in addition to also choosing the wrong location and food hall for their business. The firm ended up losing approximately A$2 million from 14 private investors in Victoria. Prior research, a better understanding of Chinese consumers, and a more thought out decision in terms of location would have prevented this failure.
In contrast a manufacturing firm investigated decided to engage a cultural consultant, to try to improve their business practice. This decision ensured that they were able to continue their pursuit of the Chinese market, and the consultant in this situation was able to act as an interface. In response to the cultural consultant’s advice, they are now pursuing a joint venture in Shanghai. According to the firm, they would have withdrawn from China by now had they not engaged the consultant.
The role that cultural difference plays is huge. Without the understanding of the culture, many things are misinterpreted. This does not stop just at the level of language. In the marketing field this is especially prominent. Advertisements created by Western advertising firms do not convey the message that companies set to communicate because Westerner can only look at things from their eyes. The way they think and the way business is conducted are just simply not what are seen in the eyes of the Chinese. To change these are simply not easy because its different cultures which determine the method of people’s thinking process and their decision-making.
This suggests companies that take an ethnocentric view to their operations in China are likely to struggle. Ethnocentricity may blur people’s view about the ways in which people, act and behave, and unless people can put themselves into the shoes of their Chinese counterparts, they may not quite understand why people act and behave in the ways they do.
Although sometimes cultural differences may seem to be a minor issue, none the less, companies need to deal with it, or adapt their business conduct, for example, Australians and other Western business people are quite comfortable with using emails as a business tool especially when dealing with people overseas. Chinese don’t always favour this method particularly Chinese officials sometimes prefer to fax. Emails aren’t responded to as immediately as they are here.
This is the first part of ” Bi-cultural Consultant is your key to the red gate”. Next week we will publish the second part.
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January 6th, 2009 at 5:14 pm
Mona, this is a very refreshing and astute post. For any foreign business or individual with an interest in breaking into the Chinese marketplace, it is almost imperative that they gain a working knowledge of Mandarin and live in the country for at least a year- outside of the expatriate community. Cultural differences are immense and, as you pointed out from the mistakes made by foreign advertisers, these gaps can only truly be addressed by some type of sincere immersion. I look forward to reading the second installment!
January 7th, 2009 at 12:31 am
Dear Aimee,
Thanks,
yes, living in China for a year outside the expatriate community would be a very good solution for expatriates, except, organisations will not cover the costs. From shareholders’ perspective, this can be a very expensive solution. Bi-cultural consultants/staff are the solution to this major problem. That is coming next week.
Kind regards,
Mona
January 7th, 2009 at 4:02 am
Good article. I would agree that many mistakes made by foreign businesses in China are due to inappropriate cultural assumptions. I think the key to success entering the China market goes back to the old saying, “Think globally, act locally”. Foreign companies and investors need to have people on the ground making decisions same as with any country but is more important in China due to the vast differences in culture and business environment.
Cheers,
James
January 7th, 2009 at 11:51 am
Dear James,
You are right about the vast differences. One of my recent researches revealed that the gap is large and it has caught many companies by surprises. This is really no surprise to me as I have been a consultant for a while in this field and been urging companies to do their homework. It is a pity to see after such a long time (China’s open door policy has been in place for 30 years this year) companies are repeating the same mistakes and wasting shareholders’ resources.
kind regards,
Mona
January 7th, 2009 at 7:48 pm
Very good post. Cultural differences have led to more business gaffes in my experience in China than almost any other single factor. I have been bringing US and European business executives to China since 1984, and most of my work has been involved with training them before they even leave their home countries…and even then, the training goes out the window as soon as they touch down in Beijing, or Shanghai, or anywhere else in China. In my experience, the Americans have been the most difficult; the Europeans, due to the fact that they live on a continent which contains so many different cultures and languages already, are easier to acclimate. In addition, there are so many misconceptions about doing business in China, mostly based on well-meaning but ill-advised focus on the ancient Chinese philosophers like Lao Ze. (This moved me to write a book on the subject – The Mao of Business – which has just come out in a Chinese translation in Beijing.) Keep up the good work!
January 8th, 2009 at 1:08 am
[...] Chung contributed a very smart piece on one of my favorite blogs, China Success Stories, regarding cultural difference and the impact it [...]
January 9th, 2009 at 1:21 am
Dear Peter,
I too made the observation that Europeans are easier than the Americans and Australians. The differences between the Americans and the Australians are:
the Americans think they are the best (in some areas, this is true) and the Australians think they can do anything with help.
The European-American observation is also confirmed by past research if there is any comfort to you.
Your book on The Mao of Business sounds interesting. Further details on where to get a cope to read?
Kind regards,
Mona
January 9th, 2009 at 1:22 am
Aimee, thanks, most interesting to read your blog.
January 9th, 2009 at 8:02 am
Addressing the culture difference is such important part of localization – the key to have local success, as James commented “Think globally, act locally” – in my wording – Global Mind? Local Reach! through professional localization.
Regards,
Ryan Zhao
Golden View Localization
January 9th, 2009 at 9:07 pm
Hi Mona,
Thanks for your reply. Mao of Business is available through amazon.com and barnes and noble, in English, and the Chinese version is only available in China at the moment, through their online “amazon-type” sites as well as in bookstores.
Cheers,
Peter Levenda
January 9th, 2009 at 10:19 pm
Mona,
Great post. Here in the US, it is amazing how many Americans get lost in the custom/culture clash of China. You are right that the work of Hofstede and others should be studied closely before attempting to enter the Chinese and other international markets. This understanding is a great start for customs and communication, but just as important for a product market entry, this knowledge can also be leveraged and provide effective product positioning guidance for the Chinese market.
Again, great post and I look forward to Part 2. Thanks!
Rodney
January 11th, 2009 at 4:25 pm
Dr Chung, I agree with most of what you say in your article and your premise is sound.
I have a different view on some aspects.
The supposition, “Chinese market is a uniquely challenging market to Western businesses” is suggestive that one can view the Chinese market as a single market. I can say from my experience of living and working in China, this is for the most part false. One cannot think of Shanghai as the same as GuangZhou or BeiJing or HangZhou. Albeit they are all T1 cities. I think a pizza business that lost $2A cannot be solely put down to cultural mis-understanding. There would be other critical mis-management issues at work. A typical startup of a 200sq m F&B biz in Shanghai would cost in the ball park of 2m RMB for yr1, so to lose anywhere from 4.5 to 6 times that amount would suggest some other mechanism at work and poor corporate governance.
I agree that the role of cultural understanding and appreciation is important for any company with a view to market entry. It’s an important aspect that must be covered off in their market entry plan. No matter, if one is a European, or US or Austrlaian firm. The basic fact that a different language is spoken would suggest there is different perspectives at work which in most cases would not be considered if it was a similar market entry project in their home territory.
Your suggestion of fax and email communication probably is more to do with 1) Fax has traditionally been seen to have ‘legal’ teeth whereas the law on traceability of emails is still vague in most 1st world countries, and 2) most Chinese govt official probably don’t know how to use emails – similar to most western CEO’s up till a few years ago. The same was true in most Australian businesses as recent as the mid-1990s. My point is, it is probably more technology related than cultural.
Lastly, I think Hofstede’s 1984 research on cultural relativism outcomes are little skewed as he conducted his research on IBM employees from various nations which would suggest it was not a representative sample of the population in those nations.
At the end of the day, I think you hit the nail on the head in saying “unless people can put themselves into the shoes of their Chinese counterparts, they may not quite understand why people act and behave in the ways they do” – this is the golden rule of thumb of ‘doing unto others as you would they onto you’. I think if any business treats the consumer as God and works their butt off with that premise in mind and think from the consumer’s perspective when marketing their PSO, then any ‘cultural’ issues will be covered off in their plan.
January 11th, 2009 at 10:31 pm
I just returned to the US from working as CEO for a business that was a joint adventure between a man from Hong Kong, one from Mainland China and one from America. All had different perpectives. I was raise in the south and found that many of the customs in China were similar in nature. The concept of “saving face” is very strong in the southern US as it is in China.
I did not find it difficult, there were many people who were kind, sincere and honest with me and then there were others who were not. I find that behavior the same in the US. The higher your position the more people tell you what they think you want to hear.
The business failed due to many reasons – one of which was the Mainland owner put all his friends to work without the skills needed for the business and the Hong Kong owner could not say “no” due to “friendship” – which cost them the business.
I have returned to the states but miss many things about China especially the people.
January 12th, 2009 at 1:51 pm
Dear Frank,
No, you mis-interparated my sentence. In fact if you read one of my articles from last year, you will find that I explained how China is not one market. I also explained how companies have been making the mistakes to treat China as one market. Over the years, working as a consultant, I have seen too many companies making that exact mistaking thinking of China as one market. What’s worse, they went into many Chinese cities at once and failed one after another.
I don’t like seeing valuable resources being wasted.
So I will keep writing till people get the message.
kind regards, Mona
January 12th, 2009 at 1:57 pm
Susan, thanks for sharing your experience. in the second half of this article, I made mention of my newly published book: “Shanghaied: Why Foster’s Could not survive China”.
I introduced a new theory in this book which is published for the first time. It is referred to as cultural capability theory. Based on research, I concluded that individuals have difference cultual capacity.
The book is published by heidelberg press. (www.heidelbergpress.com.au)
kind regards, Mona
January 13th, 2009 at 3:28 pm
End of the day, finding right people to conduct biz in China would be the key to success. In the same token, the company has to power these ground troops regardless of westerners or expats with true authority. Artificial or verbal support/pretending of China en-route just cannot cut it assuming a true intention to be success in China exists.
BTW, most of expats these days have been “alienated” and westernized therefore they may only serve well during initial communication period.
January 13th, 2009 at 3:46 pm
George,
Companies are relactant to invest the right amount on expats, often due to so-called shareholder pressure (often wondered why there is no pressure when CEOs give themselves a pay raise.). The the poor expats are left to deal with the ‘aliens’ through their own device. It has to be a lose-lose situation for everyone.
January 14th, 2009 at 2:37 am
I think there are a lot of generalizations above.
I appreciate your article Mona as it has some good insights but when I hear “cultural difference” cited as a reason for failure it makes me yawn. This is just an excuse for mis management and there will be a whole load of other reasons for the failure.
Many restaurants have been opened in Shanghai and closed again after a year that were in the right location and operated by experienced professionals who just got it wrong. So not really fair to narrow down our fellow Aussies for failing at their pizza place.(BTW I am a POM but live in China so could be considered an ExPOM!)
If you look at the profile of successful people in China they share similar traits like being creative, open minded, socially intelligent, high integrity and can demonstrate leadership regardless of nationality. With language ability then you are either a well educated person with Chinese origin (like Mona!)are 100% Chinese or are perhaps a foreign national who studied hard perhaps later in life.
I would agree that consultants can help things along but it does not always work and they cant be relied on to solve everything.
If you posess the character traits mentioned above, are able to form a cross cultural management team of qualified people then all your issues can be discussed around one table and you are well on the way to success. Look within and you will find the answer.
January 14th, 2009 at 4:29 pm
Mona: nice piece, but I tend to agree with David. Of course cultural differences are extremely important, and in many cases are the number one reason foreign ventures in China don’t work. But the solution, in my humble opinion, isn’t always to hire a cultural consultant. In some cases, sure. Instead, it’s to hire local Chinese experts who understand business and what it takes to be successful in the firm’s particular industry, and who have the core competencies that make a cultural consultant great – competencies that you outline above. They also need to understand the company’s culture – something that an outside consultant is not able to provide. The idea that you seem to be putting forth – that China is this big mysterious place that can only be understood by some outside consultant, is a bit self-serving. A great China team has these traits built into it’s own unique DNA.
January 14th, 2009 at 5:07 pm
To David-
I think you are right on target here- if a person demonstrates creativity, adaptability, social intelligence and integrity, it does not matter what their nationality is. I have known many expats in China who have found great success in business without the assistance of a cultural consultant. While consultants may be helpful in certain cases- particularly for larger companies that have not taken the time to “know” China, in cases of independent entrepreneurs, it may be best forging ahead solo while saving some cash and time in the process. One caveat: I still think that the language component is extremely important, unless a trustworthy translator is secured. Even showing an effort in Mandarin will gain incredible respect from PSB officials and Mainland business associates.
January 14th, 2009 at 11:32 pm
I am going to do a summary to cover several of the comments above.
1. the definition of culture, it is a very large concept. a common error however is when the word is mentioned, we think of the outer layer of culture (see Trompannair on the model of culture, or p.32 of an adapted model), the explicit culture such as artifacts and products. in my discussion and study, i am more interested in the inexplicit nature of culture, the way we do things according to our own culture which we never have to explain to people of our cultural group. this is foundamental to our behaviours. in cross-cultural business, the inability to understand these is the major impadiment. this also support the argument that culture is fundamental rather than putting one to sleep. Why is the Chinese government political policy making process different from Western countries? Why can Chinese people cope better than Western people when their policies are vague? Within the Chinese culture, people cope with anxiaty better than Western people. (this does confirm Hofestede’s theory.)
2. obviously, every individual have a set of skills. (this is a good reason for the argument of not only to look for techniqual skills, or marketing skills in expats) other skills must also be important to any positions. This is again the reason why expats positions are so different and demanding. they are really not positions for managers of normal skill sets. these positions are multi-dimentioned. this leads to my next point
3. when i suggested bi-cultural consultants, i made no mention of their nationalities. are you assuming such because of a certain mind set? for the first time published, in my book, p 172, i proposed Cultural Capability Theory. I argued that people have different capacity in adapting into a foreign culture and a set of different foreign cultures. Aimee, you are correct that some expats are very successful because they have stronger Cultural capability. at the same time, some of them adapt into the Chinese culture well and fail when they are posted to middle east.
In short, the arguement of cultural differences is sound because culture is such a broad concept.
kind regards,
Mona
October 6th, 2009 at 12:04 pm
Great post. Its amazing to see that there is becoming a link into the Chinese market for westerners, and that they can merge with one another.