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Enter the Dragon: Global Strategy of entering into the Chinese Market

By Jeremy Broadaway

Taking into account the cultural considerations that are necessary to be successful within a foreign market such as China, corporations should be familiar with what it will take to mesh within the business community and move its product. There are a few main focal points that will allow a corporation to do this. Using an approach of go global act local will be the basic concept for every practice the business chooses to implement. The best rubric for success in determining how the Chinese operate culturally is Geert Hofstedes Cultural Dimension Theory model of ranking different cultures by things like power distance, masculinity vs. femininity, individualism, etc. Using this rubric and having an open mind in determining how to handle business issues through the eyes of the Chinese will allow for growth within the community.

Research by Newman & Nollen indicated that organization performance is better in the companies where there is congruency between national culture and human resources practice. At the business unit level where conscious efforts are made to adopt human resource policies that are in conformity with the values and prescriptions of a country, the performance of such a business unit in terms of return on assets and return on sales is better, which may reflect in bigger and better bonuses for employees(Dartey-Baah, 2013). Expatriate employees working locally in China have to take into account that certain cultural values are drastically different than those of the United States. Some of these differences are explained in the following paragraphs. Power distance is the degree to which a cultures people are (should be) separated by power, authority, and prestige (Shi, X., Wang,

J., 2011). According to Hofstedes model, China has a power distance of 80 (Shi X., Wang, J.); meaning that the Chinese believe that inequalities are acceptable. Performance is often based on behavior rather than results (Dartey-Baah, 2013). Power abuse is very prevalent in China and people will tend to submit to authority and abide by social ranking and not strive to go above their respective rank. Loyalty and obedience is a cultural normal. As compared to China the United States is at a level 40 (Shi, X., Wang, J.) on Hofstedes power distance model; this would imply that the two counties are basically polar opposites when it comes to equality within corporate society. At a level 40, authority is not as revered. In order for an effective globalization to take place across an organization, expatriate employees of an organization working in China must submit to the social norms of submitting to authority and avoiding confrontation at all costs Individualism is the degree of interdependence a particular society maintains among its members. According to Hofstedes model pertaining to individualism, China ranks at a 20; which is to say that they are very collectivistic (Shi, X., Wang, J.). People tend to act in the interest of the group over themselves. This has a profound impact on hiring and promotions with respect to family, friends, etc. getting preferential treatment. With individualism, the United States ranks 91 (Shi, X., Wang, J.). This number means that people look after themselves and immediate family only. Employees are expected to be self-

reliant and show initiative. Within Chinese business relationships, human resources pertaining to expatriate employees should focus on group-based training and may respond better to groupbased feedback to mesh with the Chinese norms of helping the fellow man (Dartey-Baah, 2013). When it comes to masculinity vs. femininity within the scale, China and the US rank fairly close to one another. This concept on Hofstedes model shows how competitive or content a society is. Constantly wanting to be the best, achievement, and standing out pertains to masculinity, whereas being content where one is on the social ladder and caring for others more is femininity. Masculinity refers to the distribution of roles between the genders. Cultures that show assertiveness are labeled masculine and the more modest, caring cultures are deemed feminine. (Shi, X., Wang, J.). At ratings of 66 and 62, China and the US can both be referred to as masculine societies; although not overwhelmingly so (Shi, X., Wang, J.). They are both more driven to success. People will sacrifice relationships to work. Status is seen as very important within both of these countries. Job title is often more important than actual job duties. This is a tough one to balance with individualism. A higher sense of masculinity makes sense within the US where success is individually based, but in China there is a balance of lower individualism, yet higher masculinity. Uncertainty avoidance is a societys tolerance for uncertainty and ambiguity. It represents how cultures feel about unstructured situations. China, being at a level 32 of uncertainty

avoidance is not very concerned of change or ambiguity (Shi, X., Wang, J.). Like China, the US can be described as uncertainty accepting at a level 46. This implies that businesses within both countries are willing to try new things and are more tolerant of ideas of others. This similarity of culture should be taken advantage of by human resources. Long term orientation as it pertains to a business society means whether or not there is an inherent focus on the long-term future. In this, China and the US can be interpreted by Hofstedes model to be extremely different. The US, at a 29 on the scale, is very short-term oriented. Businesses and employees alike want fast results. Its very much a what have you done for me lately society. However, China could not be more different. It ranks at a 118, obviously meaning that the Chinese are very long-term oriented. This affects most if not all business decisions. For global firms, universal core values need to be established and taken into account to bridge cultural differences (Yeung, Xin, Pfoertsch, Liu, 2011). Human Resources should employ staff that have experience and knowledge of local customs and resources and take all of the differences in Hofstedes cultural dimensions into account when setting up policies. The type of strategy the corporation chooses to use will either make or break them when it comes to expanding globally into China. We must understand in which ways China is different than we are in the United States in order to communicate and sell successfully to their people.

The simplest way to do this is to exploit the capabilities that are first developed at home. If a business started their company in the United States, which is their home, in order to expand into China we must take what we already know has worked in our country and go from there. Corporations need to understand the types of commercials really attract the attention of the Chinese people and country and get many commercials on the air to get the word out and about of their company name. Obviously, China is a very large country and very overpopulated. The word of the company should be able to get out much quicker to many of the countrys people rather than if we were to try to globally expand into a smaller country. There is no doubt we will be successful just by the means of how many people live in China compared to the United States. The product chosen for this assignment is chocolate. There are many, many people in this world who enjoy nothing more than a quality chocolate bar. The Chinese chocolate market totals about $943 million a year (Shen, 2008). This equals to be 1.1 percent of the worlds total. While this may not seem to be much, we need to look at the type of chocolate that the Chinese enjoy the most, which is mostly chocolate with mangoes, peanuts and strawberries. We have to be sure we focus on what the Chinese want, not just what we are used to. People are more drawn to products that they become emotionally attached to. In our advertisements and commercials, we must try to understand what hits home with them. A big

aim for the business is to focus on the younger generation people of China. The younger generations are tomorrows loyal leaders. Younger people are much more easily influenced by commercials and advertisements. Chocolate may also be easy to make it look good to the younger crowd. Most kids love chocolate. In conclusion, any business entering the Chinese must understand that in order to be successful they must understand and relate to customers. They must know what our chocolate company stands for and what we have to offer that the other chocolate companies do not. The Chinese are concerned about their family, safety and appearance. If we can incorporate these aspects into the advertising, we should be in good standings among the other chocolate companies they have in China. We should also consider going and talking to the people of China in order to hear directly from the source what they want when it comes to their chocolate. This would help the business get ahead of some of the other competition they have. A multi-domestic strategy would be most effective for this business to use while expanding into China. We want to achieve the maximum local responsiveness and we must do so by customizing our product offering and our marketing strategy to match the different conditions that we will come into contact with in China.

References: Dartey-Baah, K. (March 14, 2013). The Cultural Approach to the Management of the International Human Resource: An Analysis of Hofstedes Cultural Dimensions. International Journal of Business Administration, Vol. 4 Issue 2, p. 39-45. doi:10.5430/ijba.v4n2p39. Retrieved from MTSU library. Lessard, D., Lucea, R., & Vives, L. (Oct. 25, 2012). Building Your Companys Capabilities Through Global Expansion. MITSloan. Retrieved from http://sloanreview.mit.edu/article/building-your-companys-capabilities-through-globalexpansion/ Rein, S. (Sep. 25, 2007). The Key to Successful Branding in China. BusinessWeek. Retrieved from www.businessweek.com/stories/2007-09-25/the-key-to-successful-branding-inchinabusinessweek-business-news-stock-market-and-financial-advice Shen, S. (July 3, 2008). Chocolate makers try to satisfy a picky Chinese palate. The New York Times. Retrieved from www.nytimes.com/2008/07/03/business/worldbusiness/03ihtchoco.1.14202940.html?_r=0 Shi, X. & Wang, J. (Feb. 28,2011). Cultural Distance between China and US across GLOBE model and Hofstede Model. International Business and Management, Vol. e, No. 1, p. 1117. Retrieved from MTSU library Yeung, A., Xin, K., Pfoertsch, W., Liu, S. (April, 2011). The Globalization of Chinese Companies: Strategies for Conquering International Markets. John Wiley & Sons (Asia) Pte Ltd 2 Clementi Loop, #02-01, Singapore 12.9809. Retrieved from http://site.ebrary.com.ezproxy.mtsu.edu/lib/mtsu/docDetail.action?docID=10484631#?