Since the reforms of 1979, the People`s Republic of China`s (PRC) economy has
experienced significant growth. There is no doubt that this economic expansion has
been a direct result of the opening up of Chinese companies to foreign investors. The
number of sino-foreign joint-ventures, which are by the way a privileged form of
investment granted by the Chinese government, has been increasing rapidly.
According to Chinese statistics, at the end of 1998, Chinese-foreign joint-ventures
represented approximately two thirds of about 300 000 foreign investment projects
that were approved by Chinese authorities. In fact, among the developing countries,
China is currently the one which attracts the most western investments. Joining the
World Trade Organization (WTO) in 2001, China pushed this development even
further and while other countries were fighting a recession at the same time, it was
able to sustain a growth of 7.8% regarding the Gross Domestic Product (GDP),
14.1% with respect to exports and 10.4% regarding imports.1
Consequently there is steady interest of foreign companies to form joint-ventures in
the People's Republic of China. But whereas in the 1980ies mostly the huge
corporations where entering this market, nowadays more and more midsized
companies, for instance from Germany, are forming joint-ventures too. From the
region “Mittelfranken” for example 320 businesses have developed ties with the
People’s Republic – a plus of 60% from 1996.2 Many foreign firms are considering
entering joint-ventures in China because this seems to offer the most attractive
method for gaining access to the huge potential of the labour pool and market of
China. Nonetheless, there are many warnings about the problems that have to be
faced in order to establish a joint-venture in China. Chief among these is the problem
of differing management styles between Foreign and Chinese partners.
Very little accurate information is available about Sino-Foreign joint-ventures.3 An
example is the wide disparity in the reports of the numbers of Sino-German jointventures.
[...]
1 http://www.ihk-nuenberg.de/ihk_primnav/wir_ueber_uns/kammergespraeche/canrong.jsp
2 http://www.ihk-nuenberg.de/ihk_primnav/wir_ueber_uns/kammergespraeche/canrong.jsp
3 Markterfolg in China; Physica Verlag; Michael Nippa; P. 6
Table of Contents
1. Introduction
2. Structure of the Chinese industry
2.1. Growth and Direct Investments
2.2. Qualification and Training
2.3. Definition IJV
3. Chinese Culture
3.1. Language
3.2. Religion
3.3. School of thought
3.4. Values
3.4.1. Communism and Socialism
3.4.2. Confucianism
3.4.3. Collectivism and Buddhism
3.4.4. Taoism
3.5. Legal Culture
3.5.1. Laws and contracts
3.5.1.1. Possibilities to cope with the current system
3.5.2. Socialist planned Economy
3.5.3. Democratic centralism
4. Intercultural problems during certain stages of the JV process
4.1. Partner Selection
4.1.1. Cultural Traits
4.1.2. Strategic Traits
4.1.2.1. Absorptive Capability
4.1.2.2. Market Power
4.1.2.3. Product Relatedness
4.1.2.4. Market Experience
4.1.3. Organizational Traits
4.1.3.1. Firm Size
4.1.3.2. International Business Experience
4.1.3.3. Previous Cooperative Experience
4.1.3.4. Organizational Skills
4.2. Negotiations
4.2.1. Personal Connections (Guanxi)
4.2.2. The Intermediary
4.2.3. Social Status
4.2.4. Interpersonal Harmony
4.2.5. Holistic Thinking
4.2.6. Thrift
4.2.7. "Face" or Social Capital
4.2.8. Patience, Endurance and Enduring Labour
5. Management Process
5.1. Control
5.1.2. Focus of control
5.1.3. Extent of control
5.1.4. Mechanisms of control
5.1.5. Input Control
5.1.6.. Process Control
5.1.7. Output Control
5.2. Decision Making
5.3. Planning and scheduling
5.4. Managerial Pragmatism
5.5. Trust
5.5.1. Definition of Trust
5.5.2. Effects of Trust
5.5.3. The significance of trust in China
5.5.3.1. Power Distance
5.5.3.2. Individualism
5.5.3.3. Masculinity
5.5.3.4. Uncertainty avoidance
5.5.3.5. Long – term versus short – term orientation
5.6. Communication
5.6.1. Attitudes
5.6.2. Social Organization
5.6.3. Thought Patterns
5.6.4. Language
5.6.5. Nonverbal Communication
5.6.6. Body language (kinesics)
5.6.7. Body distance (Proxemics) and haptics
5.6.8. Paralanguage
5.6.9. Time
5.6.10. Communication and its Consequences
5.7. Human Resource Management
5.7.1. Work attitude
5.7.1.1. Motivation
5.7.2. Quality and Care
5.7.3. Conflict Management
5.7.4. Lay Offs
6. Survey: Opinions and cultural values of Chinese students in Germany
6.1. Findings
6.2. Possible implementation strategies
6.2.1. Redesigning the Hierarchy, work organization and communication
6.2.2. Transforming the management
6.2.3. How to address motivation and quality
6.2.4. Improving intercultural competence
6.2.5. Developing a common understanding of the firm
Objectives & Core Themes
This thesis examines the cultural barriers and intercultural management challenges inherent in Sino-Western joint ventures. It specifically analyzes how traditional Chinese values, social structures, and management philosophies interact with Western business practices, aiming to provide strategies for effective collaboration.
- Analysis of the Chinese industry structure and economic environment.
- Deep exploration of Chinese cultural dimensions (Confucianism, Taoism, Buddhism, and values).
- Identification of intercultural problems at critical stages like partner selection and negotiation.
- Examination of management processes including control, decision-making, and Human Resource Management.
- Empirical survey of cultural values among Chinese students currently studying in Germany.
Excerpt from the Book
4.2.3. Social Status (Prestige)
Westerners frequently find it difficult to understand the formality of Chinese business people. American-style, "just call me Mary" casualness does not play well in a country where the Confucian values of obedience and deference to one's superiors remain strong. The formality goes much deeper, however- unfathomably so, to many Westerners. Here is an example of what could happen when a U.S. company neglected to pay attention to the importance of social status in Chinese culture. The company sent a relatively young and low-level sales representative to a high-level negotiation. The Chinese executive remarked, "Ah, you're about the same age as my son”. The reason for this behaviour was that the Chinese felt insulted by the Americans' failure to send an executive whose rank at least equalled his. This is due to the fact that the Chinese assume that the highest ranking officer has attained that position by establishing close personal relationships and trust with colleagues and others outside the company. In consequence they doubted the sincerity of the American company, and the deal died before it began. Therefore older more experienced people are more acceptable to the Chinese in cross-cultural negotiations and stand a much better chance to achieve the best outcomes. At some point, negotiations may also simply require a meeting of equals to stimulate more cooperation. However top level Chinese executives will not be prepared to bargain and will not be persuaded, since it is not fitting their position. Rather, they will evaluate the relationship during a show of sincerity by their Western counterparts. Therefore Western managers should anticipate extended preliminary visiting, in which the Chinese expect to learn more about them and their trustworthiness.
Summary of Chapters
1. Introduction: Provides an overview of the growth of Sino-foreign joint ventures and the resulting management challenges due to cultural disparities.
2. Structure of the Chinese industry: Explores the economic environment in China, classifying companies into private, collective, and state-owned entities.
3. Chinese Culture: Analyzes the cultural foundations of Chinese society, including language, religion, and key schools of thought like Confucianism.
4. Intercultural problems during certain stages of the JV process: Discusses the complexities of partner selection and the delicate process of negotiations, focusing on "guanxi" and "face".
5. Management Process: Investigates the application of management tools such as control, decision-making, and Human Resource Management within Sino-European ventures.
6. Survey: Opinions and cultural values of Chinese students in Germany: Presents empirical findings on the values and perceptions of Chinese students regarding international business and cultural adaptation.
Keywords
Sino-foreign joint ventures, China, intercultural management, Guanxi, Face, Confucianism, Human Resource Management, business negotiation, corporate culture, social status, organizational behavior, multinational companies, trust, socialist market, economic development.
Frequently Asked Questions
What is the primary focus of this work?
This thesis examines the fundamental cultural differences between China and Western nations and how these differences influence the success or failure of Sino-foreign joint ventures.
What are the central thematic fields addressed?
The work covers industrial structure, cultural values (specifically Confucianism, Taoism, and Buddhism), management processes (control, decision-making, HR), and negotiation tactics.
What is the core research goal?
The aim is to identify the sources of intercultural conflict and propose practical implementation strategies for European managers to bridge the gap and effectively manage ventures in China.
Which methodology is applied?
The study utilizes a combination of literature analysis regarding "best practices" in intercultural management and an empirical survey of 29 Chinese students residing in Germany.
What key aspects of the management process are discussed?
The study delves into how different approaches to decision-making, control mechanisms, planning/scheduling, and Human Resource Management (including recruitment and layoffs) cause tension in Sino-European partnerships.
Which keywords best characterize this work?
The core keywords include Sino-foreign joint ventures, intercultural management, Guanxi, Face, and trust, reflecting the primary cultural and structural pillars of the research.
How does the concept of "Face" (Lien/Mien-tzu) affect negotiations in China?
The concept of "Face" represents a person's reputation and social standing. In negotiations, failing to preserve a partner's face can lead to the immediate termination of the deal, as the Chinese view social harmony and reputation as essential to business credibility.
What role does the "intermediary" play in Chinese business?
Due to high levels of suspicion toward strangers, direct business approaches often fail. An intermediary, who is trusted by both parties, is essential to establish the initial connection and facilitate communication to bridge cultural and linguistic gaps.
- Arbeit zitieren
- Michael Amtmann (Autor:in), 2004, Intercultural Problems Within Joint Ventures In China, München, GRIN Verlag, https://www.grin.com/document/32675
