Assessment of cultural environment and business practice implications

¶ … culture of a country is likely to affect an individual's business practices including the distribution of its products within the country and outside, the production process and configuration of a product, and other business operations that contribute to the business growth and output. Cultures determine the different ways in which people behave and mostly in business.

'Knowing about the cultural circumstance of your country or foreign country where you wish to transact your business, can either help you prevent making mistakes that will affect your business.' (Hill, 2004) To do this, the paper chooses to focus it's analyzes on China's culture as the country of target and its implications to the business operations.

China has truly emerged as a country with great business opportunities and with a huge potential for economic growth. With an improved international relations, a robust economy, and increased foreign investment doing business in China is quite becoming lucrative. 'The business markets are therefore preferred for many organizations/markets but it is not easy to penetrate especially due to the culture factor.' (Cateora, 2007). The differences in cultures between countries form the barriers in transacting business, while the similarities foster the ties. Failure to handle culture issue in China has seen great repercussions to the running of businesses in China.

Relationships and networks in China are extremely important and must be maintained at any cost. This means for a business to succeed than a lot of relationships must be established through networking with the right people. 'Relationship translates to connections which once established need to be nurtured.' (Charles & Trompenaars, 2003) The businesses are built on trust and human relationships rather than a legal system. So for one to have a wider market distribution, then one must be willing to make relationship than it is important to adhere to the laws of the country. Laws sort of come second to the relationships built.

If you have established a good network and great relationship then you can override the law. This is not the case especially with the Western countries and one has to put in mind this cultural difference when establishing a business in China. In fact as a result of this different outlook on putting more focus on relationships than on the law, doing business with other people from other countries who value the law over the human relationships can be quite a tricky business. It is due to such differences in cultures between or among countries that makes legal enforcement in the international arena difficult and harboring business transactions. This is why mediations are often used in international business dealings. This is relevant because the culture underlies the law.

Chinese culture has for long been described by some as 'alien' and their behavior being referred to as 'alien behavior'. This outlook from other quarters is likely to have an effect on the businesses in China because as people from outside have confessed that they do not understand them i.e. Chinese and the Chinese have also confessed of not understanding the foreigners. This is detrimental to a business running because it takes to two tango. The resultant of this existing phenomenon is reduced trading with other countries. 'Is it therefore not obvious why little investments are made out of China investment?' (Hill & McKaig 2008) Regardless of the entry foreign businesses are likely to be affected and make little success in selling their products to China and for a business in China it means not exploiting foreign markets. So, if you have a business in China, distribution to external markets outside the country are likely not to do well due this culture phenomenon.

The major difficult for businesses in china as a result of culture is the fail of China to quantify the cultural cost. As a result the cultural cost can be the figure written down on the project as it is commonly done in China. Hill & McKaig (2006) argues that cultural differences can be the cost of your project or the profits of your project, and the costs can be large. This failure of handling cultural differences has resulted in the failure of many businesses in China. As a result of such misunderstanding or fail to quantify he cultural costs many business are hurt as they operate with others.

Chinese business contacts are usually referral where you meet someone as a result of being recommended by someone one else. Therefore the best prices and recommendations for a product comes from a strong recommendation. This means you do not make the decision yourself but the person referring you gets to do this. However with the advancement of technology availing internet, and trade fairs, catalogues, brochures you can approach the Chinese company directly through a call or email. Alternatively any one wishing to invest in China, the best option is to approach an investment committee or a business advisory so that may guide you on the best location based on your industry, raw materials and man power needs.

Chinese business relationship at the end of the day becomes a social relationship after a while. This is unlike in the West where businesses relationships are purely business relationships remain professional and sometime aloof, even after a long time. 'In China, the more you share about your personal life, including things such as family hobbies, political views, aspirations, he closer the closer you are in your business relationship. Sometime a lot of time is passed discussing personal matters yet the other party is still thinking about your personal life so that he can make the decision.' (Yergin, 2002)

Seniority is also very important in China especially if you are dealing with the government or its bodies. If you do not practice this form of culture then you will not attract potential customers who would like the deserved respect. It is proper to address the other party by his designation, for instance Chairman so and so or director so and so etc. It is also the same when giving name cards or brochures it is always right to start with the most senior person before moving down the line. It is also proper that you are stretching out with both hands. Remember to face the card you are giving out in a manner such that the receiving party gets it facing him directly. This is important for business growth so that one is not interpreted different as lacking mannerism.