Cultural differences

I

Table of Contents

I Table of Contents II List of Figures List of Abbreviations III

1. Introduction 1

2. Problem Definition 2

3. Objectives and Metholodgy 2

4. The cultural development of the People’s Republic 3 of China 4.1 An Historical Overview 3

4.2 The Religions and Morals in China 4 4.2.1 Confucianism 4 4.2.2 Taoism 5 4.2.3 Buddhism 5

4.3 Communication and its context 6

4.4 The social behaviour pattern in China -6 The Guanxi-Concept

5. Introduction into the cultural theory models 7

5.1 The five dimension model of Hofstede 7

5.2 The value guide lines of Trompenaars 10

6. Case - Transrapid 13

6.1 The history of the Transrapid 13 6.2 The Transrapid in China 14

7. Conclusion, critical comments and outlook 15

8. Table of references 17

II

  List of Figures  

  Figure 1 : China’s GDP between 1952 and  

  Figure 2 : The Chinese dimension model of Hofstede  

  Figure 3 : The German dimension model of Hofstede  

  Figure 4 : The Latin American dimension model of Hofstede  

  Figure 5 : The Asian dimension model of Hofstede  

  Figure 6 : The European dimension model of Hofstede  

  Figure 7 : The Arab dimension model of Hofstede  

III

List of Abbreviations

Cf. Confer to CNY Chinese Yuan engl. english EUR Euro(s) GDP gross domestic product IDV Individualism km/h kilometers per hour km kilometers LTO Long Term Orientation MAS Masculinism PDI Power Distance Index UAI Uncertainty Avoidance Index USD US Dollar vs. versus

- 1 - 1.Introduction

There is hardly another nation in the world which has changed its picture within the past two or three decades like the People’s Republic of China. The former communist regime of Mao Zedong has opened itself to the world since the end of the Cultural Revolution in 1976. This change is most apparent from the economic point of view and also from a social perspective. From 1976 on, foreign investors were allowed to enter the country to present their know-how as well as to bring in liquidity. As a consequence, there are constantly more goods manufactured in China for the global market. 1

The progress of the economic trend clearly shows the increase of China’s influence on the world market. In the year 2005, China achieved a gross domestic product of CYN 18,232 billion (about EUR 18,060 billion) with a population of almost 1.3 billion people. This is an income per capita of CYN 14,025 (about EUR 1,390). In the year 2000, the income per capita amount was only CYN 7,812 (about EUR 774). This shows an increase of approximately 55 per cent only within five years. ² The

figure on next page shows the growth of China’s GDP within the past 50 years.

Today Germany has a population of about 82 million people. ³ In the year 2005,

Germany’s GDP was located at around EUR 2,244 billion. These figures account a German’s per capita income of about EUR 27,365. Clearly, the level of the German income per capita is in absolute much higher. But the increase of Germany’s GDP compared to the year before only stands at 0.9 per cent. 4

Previously, Germany’s companies reacted to the fast growth in China. In the year 1972, Germany obtained goods at an amount of EUR 175 million. In the year 2004, the value reached EUR 40 billion, which is an increase of 227 times. Since the year 2002, China attained the position of the second leading non-European export partner for Germany. 5

¹ Cf.: Vermeer, M., (2002), china.de, p.38.

² Cf.: http://www.auswaertigesamt.de/diplo/de/Laenderinformationen/China/ WirtschaftsdatenblattChina.pdf

³ Cf.: http://www.destatis.de/download/d/bevoe/bevoe_nach_bundeslaendern04.pdf

⁴ Cf.: http://www.destatis.de/presse/deutsch/pk/2006/bip2005i.pdf

⁵ Cf.: http://www.auswaertiges-amt.de/diplo/de/Laenderinformationen/China/Bilateral.html

Figure 1: China’s GDP between 1952 and 2003

2. Problem Definition

But, besides all of the positive trends that were mentioned in the introduction, huge communication problems between the Chinese and the Germans occur regularly. The background of these problems are mainly based on the cultural differences between Western and Eastern countries. These bilateral differences have been existing for several centuries and they still do exist in the today’s world of globalization. 6

3. Objectives and Metholodgy

The objective of this case study is to discuss the cultural differences and their impact on business relations between German and Chinese business men. First of all, the development of Chinas culture will be constituted. Later on, this development will be analyzed by the models of Hofstede and Trompenaars who are both famous Dutch researcher of cross-cultural differences. Then the recent contract between the city of Shanghai and Transrapid International will be discussed.

⁶ Cf.: Chen, M., (2004), Geschäfte machen mit Chinesen, p.145.