Last Updated 25 May 2020

American and Chinese Business Cultures

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The American and Chinese business cultures have vast differences that interfere with the way business is carried out. The business people in the two regions have certain practices and values that are considered as norm. The differences in the two business cultures have led to some viable and successful business ventures to be turned down due to a misunderstandings or conflicts that were experienced based on the business cultural differences. There are various similarities found between the two business cultures and one similarity is the strict adherence to schedules and time management.

The two business cultures value their time and they ensure that it is spent wisely. Failure to manage time in both cultures is seen as an insulting gesture and a sign of disrespect. Moreover, another similarity is the art of appreciation that is highly regarded and the respect given to the senior business men in meetings when they are being addressed. There are several outstanding differences that clearly exist between the two business cultures and they influence the manner in which business is carried out in these countries.

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For instance in the Chinese business culture, businesses are owned and managed within the family regardless of their qualifications and experience. Information regarding the performance of the businesses is treated as confidential and when they need funds for their businesses they search for it from their friends and family or within the private sector. Americans on the other hand, seek funds from both the private and public sectors to finance their business. They also reveal all the information about their companies making it public for the public to scrutinize and analyze it.

In addition, their businesses are run by qualified professionals. 1. 0 Introduction Culture is a complex way of living that is developed by many people all over the world. It is passed on from one generation to the next over the years for it to be maintained. It is worth noting that culture is entails the values and norms followed by a group of people in a society and it describes the way those people should behave and treat each other as they live together harmoniously (Bucknall, 2000). It equally defines the nature of the people in that society and how they relate to the rest of the world.

The culture of a particular people characterizes how they can relate to another group with a culture that is quite different. The more the differences that exist between the two cultures the more difficult it is for the two societies to live together and interact. On the same note, the chances of misunderstandings increase when two cultures differ greatly in their values, norms and other characteristics. Additionally, conflicts also increase exponentially when the two societies have not had any interactions among them (Gertmenian, n. d).

The American and the Chinese business cultures are a good example of cultures that are different and that continually interact with many challenges and misunderstandings facing them. Business people who have been trying to venture into the two economies have been faced with several challenges. Some of these business people have gone into business ventures with little or no information about the cultural differences between the two business cultures (Chen, 2003). Their business ideas and ventures have failed despite their capabilities and promise of success and profitability.

The reasons that have been cited for the failure of such profitable ventures are the lack of understanding of the differences in the culture between the Americans and the Chinese. Business opportunities continue to increase in the Chinese region and this is attracting a lot of Americans to take up these opportunities. This business people need to understand the different aspects that lie between the two cultures and the business etiquette that is required from them once they are in China.

It bears noting that the Chinese community also needs to understand the American culture with regard to the business practices in order to minimize the chances of misunderstandings and disagreements. Knowledge of the two different cultures is very important to the success of the business. In light of this view this paper will objectively discuss four similarities and four differences between the American and Chinese business cultures. 2. 0 Similarities between the American and the Chinese Business Culture The American and Chinese business culture though depicted in two different countries, share some similarities in the way they operate.

These similarities are shared through their strategies and focus that they both have in carrying out business successfully. The similarities that they share are independent and are not influenced by the behavior or culture of the each other. These similarities are however grounded in the way their other cultural practices that they have developed and maintained over the years. a) Business Meetings This is one of the similar features in the sense that the two business cultures hold business meetings to discuss business relationships between the companies.

The business meetings may take the form of lunches or dinners or they may sometimes be carried out in the offices. The meetings are usually arranged in advance and they sometimes require some form of literature that is forwarded to each of the invited guests (Kwintessential, n. d). The meetings are usually arranged on normal working days to avoid inconveniencing the different parties attending and the dress code is usually implied by different factors but in most cases it is formal. The right relationship is first made in both cultures to allow for the development of the business deal.

It is worth mentioning that in both cultures business meetings usually involve the shaking of hands when they are being introduced to each other and it shows that they are in agreement. The shaking of hands is taken to be a sign of respect between the two parties. Business cards are exchanged during the meeting either at the start or end of the meeting. It is viewed as a polite gesture in both cultures to take a minute and view the business card before putting it away. When business is being carried out between the two cultures it is important that the business cards are made bi-lingual to ensure that the recipients are able to read them.

Refreshments are also offered during the business meetings. In the Chinese culture green tea is usually offered in most of the meeting though some of the international companies also offer coffee as refreshment. In the American culture refreshments usually consist mostly of coffee or tea. During the meeting exclusive sitting arrangements in both cultures are made and each person who attends the meetings has to sit at a precise position allocated to them. There is usually a host in the meetings who ensures that the meeting goes on smoothly and that the guests are well hosted (CBBC, n.

d). b) Managing Time In both business cultures time is of the essence case in point. Among the Chinese business meetings start on time and they take the scheduled time needed to ensure that the purpose of the meeting is achieved. Time is not wasted during the meetings and they remain focused to the agenda of the meeting. Punctuality is emphasizes and considered to be very important in both cultures and the attendants are actually encouraged to arrive early. Besides, in the Chinese business community arriving late to any business meeting is seen as an insult to the other members.

When the meeting is a Chinese banquet, the guests are advised to arrive at least 15 minutes before the banquet starts (Chinese Business Culture, n. d). The Americans on the other hand usually work with tight schedules and they equally value their time. They do not take it kindly when the guests who are supposed to be in the meeting arrive late. It is a common practice to be asked to wait after arriving early for a meeting in the American culture as the host finishes preparing for the meeting. In both cultures business meeting are carried out within normal working hours that are between 8 am and 5pm (“Chinese Business Culture,” n.

d) and is mostly for the meetings carried out within the offices. Other meetings that take place in the evenings like the dinner meetings are not extended late into the night. c) Protocol In both cultures the seniority levels are strictly followed. The most senior person is introduced first and is usually referred to by their surnames and their positions such as Mr. or Director (CBBC, n. d). This is usually very important and is regarded as a sign of respect for them. Their position may be given when they are being introduced and each person in the meeting is expected to address them according to their titles and position.

Protocol is also expected to be maintained in the seating arrangements with the senior person given the front seat. The host normally takes the seat that is placed in the middle of the table and faces the door. The most senior person in the meeting seats on the left side of the host at the middle seat. The rest of people in the meeting get their seating positions according to their status in a descending manner. Seniority in the Chinese business culture is very important especially when the meeting involves state or government officials. When the introductions are being made the senior person is introduced first then the rest follow.

When business cards or gifts are being offered, it is polite in both cultures to offer the senior person in the meeting first (Saxon, 2007). In the American culture the same is expected of the government and state officials. They need to be addressed according to their title and their positions. They also get introduced first in the meetings and accorded the respect that they deserve. d) Appreciation Both cultures have a way of appreciating the other parties especially after a successful business deal. The appreciation method normally takes place at the end of the meeting when the deal has been finalized.

In the Chinese business culture the business people take a lot of time and effort in appreciating their business partners and their clients as a way of supporting and developing their business relationships. They normally give them gifts as a sign of appreciation for the business, celebrating the success of a business deal, a way to encourage future business and to strengthen the relationship between them (Thompson, 2007). In the Chinese business culture the business people may decide to ask the other business people what they would like as a gift. The giving of gifts is usually carried out with a certain intended purpose.

When it is given in the absence of a good reason it is usually construed differently. The recipient of the gift in most cases is expected to reciprocate since the gift is seen as a debt. The choice of the gift is usually considered wisely and cash is never accepted as a gift in the Chinese culture (CBBC, n. d). In the American business culture appreciation is a common practice within companies doing business together. The art of giving gifts is however restricted by some of the business companies. Most of these businesses normally prefer giving a note that is gracious and which is very appropriate and acceptable among the companies.

For the companies that offer gifts, the gift is given in such a way that it does not appear to be a bribe to the receiving company. In most companies an invitation to a meal is the most common method used among business people. 3. 0 Differences between the American and the Chinese Business Culture There are vast differences that exist between the American and Chinese business cultures that continually affect the way business is carried out. Both countries have had different backgrounds that have led to these differences.

These differences are clearly established when it comes to the communication level between the two sides duet to the language barrier. Consequently, these differences have led to the failure of successful business ventures between the two countries and the loss of a lot of money. a) Relationships in Business This is a major difference because in the Chinese business community, a lot of emphasis is put on establishing and maintaining relationships. Moreover, the main objective put in most business meetings is the development of business relationships between the parties involved.

The relationship in the Chinese culture is seen to be more of cooperation other than just business relationships. For them to do any business, the parties involved need to be friends. They exchange gifts during meetings and host each other in various places to establish their relationships. Most of their business meetings are carried out during meals such as dinners or lunch as they talk about life in general. Such encounters are seen to strengthen their business relationships and develop trust among them (Chinese Business Culture, n. d). In America however the purpose of business meetings is to close a deal.

There is little or no emphasis in maintaining relationships. The American’s keep a certain attitude that business is business and hence there is no need for them to be friends or even remain friends after the business deal is closed. The business meetings are carried out in formal environments and are characterized by concepts and features that are focused on business. The talk in these business meetings also focuses on business and the deal that is supposed to be made with the party that is proposing the deal highlighting gains that the other party will acquire once they accept the deal (Saxon, 2007).

b) Availability of Information Another difference that exists between the Chinese and the Americans lays in the way they handle information about their business and the performance. It is considered rude and inappropriate among the Chinese for one to ask about the performance of another’s business. The Chinese only reveal this kind of information to their close friends and families and other people that are very close to them. The information is also not publicly available and they do not discuss the performance of their companies. They never volunteer their business information to other people (CBBC, n.

d). The business plan is also considered to be an inappropriate document and is not used in the Chinese business world. They do not make such documents since they are considered to portray distrust among them. They prefer to believe each other when doing business and not ask for documents or information that will show the performance of the company or business. Many of the Chinese business people have been known to enter into business opportunities that are worth millions when they know very little about the other company. They rely on trust and they sign these deals by a mere handshake (Thompson, 2007).

American business people on the other hand require a lot of detailed information about the companies that are involved in the business. They normally require a detailed company profile and other information that is essential in proving the performance of a company before they even start negotiating a business deal. This information may include the financial statements, the sales figures, marketing strategies and even business plans. For them to make decisions about any business opportunity they need to gather facts and data that will help them support the decisions that they make.

Their business information is also made publicly available as they produce quarterly and annual reports that are availed and openly discussed. c) Business Ownership According to the Chinese culture, the businesses are normally family owned and they practice a lot of nepotism. Also, the businesses are controlled and operated by the family members and this is the norm in the country. The business is inherited within the family members despite their qualifications and their job experience and as such it is one of the strongest cultural practices in the business world among the Chinese.

The businesses are usually carried out based on the family obligations rather than the pursuit of riches (Thompson, 2007). The owner of the business who is mostly the head of the family carefully makes decisions regarding the business and how it is operated. This individual hires new employees and executes changes that are needed. Besides, the individual in question selects the family member that will take over the critical role of running the business. Other family members and even some close family friends are given other top roles in the business.

This practice is usually carried out because of distrust and social status among the Chinese people. The practice tends to lead to them overlooking the qualifications that are needed for the top positions held. In America however the business is usually carried out from a totally different perspective. Nepotism in the American business environment is considered illegal and highly discouraged within the business environment. When one is suspected or found guilty of having practiced it by hiring or favoring a family member in the business rather than a qualified a stranger or an employee of the company, serious legal charges are made.

Further, one may end up in the middle of very serious legal charges that may lead to high compensations and legal damage fees arising from the act. Businesses tend to therefore hire employees in terms of merit and qualifications. Decisions are made by the management of the business rather than the family members. They tend to do what is right for the business rather than what might be appropriate for the family (Saxon, 2007). In the American business culture the purpose of the business is to make money rather than to provide for the company.

The businesses normally have a purpose that they follow and strive to achieve. They also have a purpose and a clear and organized chain of command within the business. The protocol has to be followed in the businesses especially when issues are being raised and during the decision making process. For example middle level managers are not allowed to question the authority at the top. They must follow protocol at all times and direct their issues to the other managers above them before they can get the issue to the top management. d) Future of the Business

Business in the Chinese culture is normally centered on the long term profitability and investments rather than the short term (Thompson, 2007). The business also strives to increase the family honor as status is an important element in the business environment in the culture. The family honor is measured according to the status that the family is given in the community. The higher the respect and status, the more the family honors. The family needs to have the ability to command respect and trust from the society. It is equally notable that the future of the business is usually focused on ensuring that the family honor is maintained.

Each transaction of the business is carefully considered and implemented in a way that invests into the future of the company. Relationships are also maintained and kept for the long term benefits. When acquiring finances to start the business or expand the business to facilitate its growth, the Chinese businesses normally search for funds among the family members. The businesses are largely financed by the family members. They also use family connections to acquire loans from their friends and sometimes use the family investments to act as collateral for these loans.

It is very rare for the Chinese businesses to look for methods of finances from the public sources. They restrict themselves to the private sources since they prefer the confidentiality that the method brings (Gertmenian, n. d). They also use these methods since they operate on a trust basis to carry out their business and this method does not require them to provide any documents regarding the performance of the business. When developing their businesses, the Chinese people use the family connections and their friends to make and increase the sales of their businesses.

They develop personal connections with all their customers and clients and to ensure that these relationships maintained even in the long run. To maintain these relationships they go to great lengths and incur huge expenses as they stay connected to the customers and the business people who are influential and who make huge decisions. They give tokens of appreciation for services that are offered to them and to their customers (Chen, 2003). It is not unusual for the large Chinese corporations to incur extensive costs in international travel when they have clients from overseas.

The American culture of carrying out business normally focuses on the profits that the business makes and achieving the targets and goals made. They take little concern on the relationships that are needed to ensure the future of the business. They rely on several methods to increase the profitability of the business and its future. A lot of marketing and advertising is carried out as they concentrate more on the monetary gains and having the most effective practices that will contribute to the goals of the company in the future.

They take sales and marketing activities seriously to boost the company’s performance in the short term and also in the long run. When seeking finances to expand their business or even start off the Americans are used to seeking public sources of finances and selling securities (Thompson, 2007). They prefer such methods as they are able to cater for the financial needs and targets. Most of the companies and corporations are usually publicly owned and therefore they provide their financial information to the public. They are also publicly scrutinized for every decision that they make.

4. 0 Conclusion It is true that the American and Chinese business cultures are different and they interfere with the business development. Most of the failure of the ventures in business in the region is attributable to the neglect by the multi-national companies to understand the cultural differences that exist between the two business environments. It is worth noting that there is need for these companies to understand these cultures to ensure that they are able to successfully develop business opportunities that are continually emerging. Word Count: 3400 Reference List

Bucknall, K. (2000). Chinese Business Etiquette and Culture. California: C&M Online Media, Inc. CBBC. (n. d). China Guide. Retrieved July 14, 2010, from China Britain Business Council: http://www. cbbc. org/china_guide/b_culture. html Chen, M. -J. (2003). Inside Chinese Business: A Guide for Managers Worldwide. Massachusetts: Harvard Business Press. Chinese Business Culture. (n. d). Retrieved July 14, 2010, from Los Angeles Chinese Learning Center: http://chinese-school. netfirms. com/business. html Gertmenian, L. W. (n. d). Cultural Insights on Doing Business in China .

Retrieved July 14, 2010, from Pepperdine University: http://gbr. pepperdine. edu/982/china. html Kwintessential. (n. d). Doing Business in China. Retrieved July 14, 2010, from Kwintessential: http://www. kwintessential. co. uk/etiquette/doing-business-china. html Saxon, M. (2007). An American's guide to doing business in China:. Massachusetts: Adams Media. Thompson, S. (2007, October 29). American Vs. Chinese Business Culture: In the Family. Retrieved July 14, 2010, from Associated Content: http://www. associatedcontent. com/article/421642/american_vs_chinese_business_culture. html

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