Doing business in China

As a culture has its traits, corporate culture has its elements. Deal and Kennedy (1988) summarize these as: business environment, values, heroes, rites and rituals, and the cultural network. An understanding of the Chinese Hallmarks, as values dictating behaviour, is essential to successful transference of corporate culture, whereas a lack of understanding is a significant barrier when doing business in China. These singularly Chinese values are not easily replaced by corporate intentions, which are subject to distrust and restricted by the perception of their having a short-term application.

Western corporate values, embraced by all international hotel companies in China, define success in concrete terms and establish acceptable standards of achievement from personnel within an organization. In China, however, individual success is not a major focus, performance appraisals are abhorred and staff motivation is based on security not achievement. Individual responsibilities are not readily accepted and the empowerment which most international hotels seek to pass to their operational staff, is positively shunned by the Chinese whose hallmark incorporates the collectivist approach to problem solving, thereby stifling swift individual action to alleviate a guest complaint.

Hospitality managers must also appreciate that service-oriented jobs are not highly regarded in the Chinese society. Service, in Chinese, is “fu wu”. The character, “fu”, also means submission. The communistic concept of “everyone being equal” has instilled a Chinese view that having to serve someone, especially a fellow Chinese, is to be reduced to servitude, which, ultimately, leads to a person in that position having no “face” – no pride and no respect from society. A common aspiration of all international hotel companies is the provision of service quality which will please guests and ensure repeat business, but against this background of perceived “loss of face”, it becomes difficult to engender a culture among operational staff, which can deliver the level of service required.

As discussed previously, the use of “guan xi” is the most favoured practice in China, whether in business or social life. Understanding and accepting this fact can often ensure success, whereas not recognizing the potential of the Chinese “guan xi” and not adapting operating systems to it, may court problems. The Chinese workforce, especially in the hotel industry, presents additional hurdles for companies operating in China by virtue of its fundamentally different working ethics, styles and attitudes. At China World Hotel, one workforce value most apparent is loyalty to the local management team. Should there be a contradiction in the instructions given by a Chinese and an expatriate manager, a Chinese employee would follow those given by the former, thereby undermining the authority of the corporate appointment.

The rites and rituals of an organization are the systematic and programmed routines of organizational day-to-day life and are heavily influenced by the organization’s “heroes”, whose behaviour will be viewed as exemplary, and emulated. In the Chinese context, non-conformity in the behaviour of an “outsider” to Chinese behaviour is often dismissed as “peculiar”, and sometimes ridiculed. Chinese employees at China World Hotel held strong opinions on the appropriate behaviour befitting individuals from each organizational level. For example, an expatriate front office manager assisting the concierge staff when manpower was short did not earn respect from the Chinese who viewed this as pretentious and a lack of authority on the manager’s part.

Corporate values personified by the Western (and likely HO-appointed) “Hero” were rejected. Any individual not from within the Chinese circle was classified by the Chinese as an “outsider”. The Chinese “them and us” mentality restricted identification with the words, actions and values of an individual from another culture and it was usual for the Chinese to identify their own heroes, embodying Chinese values. The “local heroes” identified at China World Hotel were the Deputy General Manager, the Personnel Director and the Union Chief – all individuals of considerable power and with absolute control of the Chinese employees in the organization.

Deal and Kennedy (1988), suggest that the primary (but informal) means of communication within an organization, and the carrier of corporate values and heroic mythology, is the cultural network, or “grapevine”. Since communication between Chinese and “outsiders” is guarded, non-Chinese management find it difficult to communicate with locals on the concept of corporate culture. Deal and Kennedy also indicate that “working the network effectively” is the only way to get things done or to understand what is really going on. Convincing the Chinese of the benefits of corporate culture, winning their support and, eventually gaining endorsement of the transference of a non-Chinese concept, is only achievable if both parties are communicating at the same level and in the same context.

The change process

Current literature (Hofstede, 1980, 1993; Kedia and Bhagat, 1988; Laurent, 1986; Schneider and de Meyer, 1991; Sutton, 1995) maintains that when national and organizational cultures come into conflict, the first is likely to override values in the second. It further suggests that in China cultural differences restrict the degree of transferability and the ability of management to operationalize certain management practices; and to achieve cultural change successfully it is important to understand the perceptions of the different groups within an organization.

Consequently it seems that the Chinese are disinclined to accept corporate cultures that do not reflect their own cultural norms. Therefore, it is proposed that the transference of corporate culture into Chinese society should be a change (adaptation) process. In coining the term “social navigation”, Parker and Lorenzini (1993) describe the process of culture formation and change. The International Institute for Management Development (1992) suggests that cultural perception occurs at different levels: sociological, historical, evidential and psychological (SHEP) (Parker and Lorenzini, 1993). Given that perceptions differ between cultures, SHEP differences between Chinese and “outsiders” will create a distance between corporate culture and the Chinese culture.

Sociological and historical distances result from distrust and non-acceptance by the Chinese, differences in communication styles, lack of understanding of the Chinese cultural evolution, and stereotyping and misinterpretation of the Chinese culture. Economic differences, in terms of salary-scale and lifestyle, between the Chinese and the expatriates/foreign investors compound the evident social segregation. These precipitate evidential and psychological distances between parties representing the two cultures, created by perceptions of the other’s behaviours and the assumptions made thereafter. The reluctance to give up a Chinese method for a more practical approach to accomplishing a task, for example, may be generalized as a Chinese characteristic of inflexibility. The different mentality and behaviour of a non-Chinese is “evidence” to the Chinese that the individual does not understand the Chinese and should be distrusted.

To realize the transference of corporate culture, these differences should first be reconciled. A balanced two-way exchange should, through time and understanding, diminish SHEP distances set by disparities in transference of corporate culture. The spiral in Figure 1 represents possible two-way communication between the two cultures. This transference can be likened to a marriage, where mutual understanding is required. This `”marriage” involves three stages – the discovery stage, the comprehension stage and the collaboration stage (see Figure 2).

As the distances are interlinked, a reduction in one distance should inevitably result in reductions in the others. Although it is impractical to suggest a critical path to reduce SHEP distances, as each combination of cultures presents a different scenario, it is reasonable to begin with the social and historical aspects of a national culture, which generally influence the cultural mindset (evidential influence and psychology).

In the discovery stage, interaction between the two cultural parties will be limited. Both parties will experience uncertainties in communication and restriction set by unfamiliarity. At this stage, questions on norms and practices should be asked with care, sensitivity and respect, and answers should be interpreted in the appropriate context, which should then be followed by better formed questions.

In the comprehension stage, each cultural party should begin to identify and understand similar and complementary areas within both cultures as awareness and the rationale behind the basic differences becomes apparent. In the collaboration stage, both parties should be able to redefine boundaries and create new areas in which the similar, complementary and mutually-beneficial qualities of both cultures can co-exist without sacrificing either party’s original goals or identity. However, because the cultures are essentially different, a minimum distance will always exist between the two cultures, representing unique unalterable elements within a culture, or attributes of a culture that are unacceptable but tolerated by the other party.