England - China
For managers conducting cross-border activity between England and China, there are a number of factors that should be considered. The differences between English and Chinese business culture are striking, and it is important to understand the nature of those differences and how they can affect business relations between the two countries. There are also significant differences in the economies of each country and again it is valuable for managers to understand these differences and how they may affect the business dealings between English companies and Chinese ones.
This report will analyze the differences between England and China from a number of perspectives. The first component of the report will focus on the macro-level environmental differences between the two, using the PESTLE framework as the basis of the analysis. The second component of the report will focus on the business culture of the two nations, including Geert Hofstede's cultural dimensions, Trompenaars cultural dimensions and the use of other cultural frameworks where additional light can be shed. The paper will conclude with a recap of the main differences between the two business cultures and some recommendations for English managers as to how best to approach cross-border activity between England and China. It should be noted that while the focus of the report will be on English managers, many of the statistics and coverage of these issues is focused on the United Kingdom. Likewise, "China" will refer to the People's Republic of China, excluding Taiwan, Macao and Hong Kong; the term "Chinese" will therefore focus on the PRC, primarily the Han majority.
PESTLE
In general, England's political climate is favourable to business. The nation has an open democracy and generally subscribes to liberalist political theory emphasizing personal and economic freedom as a mechanism to economic growth. U.S.-based think tank The Heritage Foundation (2011) compiles an economic freedom index, and the UK ranks 16th in the world, between the Netherlands and Finland. The UK is a member of the World Trade Organization, the European Union and many other multinational organizations that promote the reduction of trade barriers (CIA World Factbook, 2011). Despite being amenable to trade at the macro-level, the current UK political leadership has taken on policies that serve to reduce business confidence and harm the UK economy (Wood & Wachman, 2011). Given that political leaders seem intent of blaming the soft economy on situations like inflation that have only occurred recently after their spending cuts, a reversal of course to a more intelligent solution seems unlikely. The British political landscape is therefore currently poor for business.
The UK has the world's 9th-largest economy with GDP of $2.189 trillion in 2010. This is worth a GDP per capita of $35,100, which ranks 36th in the world (CIA World Factbook, 2011). The current estimates for GDP growth are 1.6% for 2010, following two years of economic decline. Government estimates for 2011 growth are now considered to be wildly optimistic (Wood & Wachman, 2011). The UK does not count China among its main export partners, but China is a significant import partner, accounting for 8.88% of imports to the UK, the third-highest figure for any country (CIA World Factbook, 2011).
The social environment is generally favourable in the UK. British citizens are in favour of trade in general, and have no significant objections to trade with China. In the difficult economic times low cost goods, in which China specializes, increase in appeal so the social environment is especially favourable at present for imports from China. The world's current technological environment is characterized by a rapid pace of change. The UK is one of the world's technology leaders, while China specializes in low-cost production of older technologies. China's technological capabilities are increasing, however, and it is beginning to narrow the comparative advantage gap with Western nations (LiveScience, 2007). The UK has relatively stringent environmental laws and these can create opportunity with respect to developing new technologies but can also discourage business development. The legal environment in the UK is characterized by strong rule of law, strong intellectual property protections and sophisticated dispute resolution mechanisms.
China's political environment is substantially different from that of the United Kingdom. China is a totalitarian state with Communist roots. Personal freedoms in China are minimal and the government maintains strict control over access to information (Vascellaro & Chao, 2010). China ranks 135th on the economic freedom report, between Mauritania and Cameroon (Heritage Foundation, 2011). This reflects the heavy hand of the government in almost...
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