Chinese business culture

Table of Contents

List of graphics

List of tables

List of abbreviations

1. Introduction

2. China overview
2.1. General Facts
2.2. Geography and History
2.3. Economy

3. Chinese Culture
3.1. Hofstede’s cultural dimensions
3.2. Hall’s cultural model
3.3. Confucianism, Taoism and Buddhism

4. Chinese Business Culture
4.1. Western vs. Chinese Business Practices
4.2. Guanxi
4.3. Conversations
4.4. Chinese Names
4.5. Business meals
4.6. Others

5. Conclusion

Bibliography

List of graphics

Graphic 1: Process of studying Business Culture

Graphic 2: Map China

Graphic 3: Map EU

Graphic 4: Hofestede’s cultural dimensions – China

Graphic 5: Hofestede’s cultural dimensions – European countries

List of tables

Table 1: General Facts

Table 2: Economic Facts

Table 3: High- and low-context cultures

Table 4: Western vs. Chinese Business Practices

Table 5: Western vs. Chinese Networking

List of abbreviations

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1. Introduction

This paper is the final paper for the course Chinese History and Culture. China has become a global business power and therefore it is important for Western people to know about China and the way they do business. This paper is written preliminarily for Western people who want to know how to do business with Chinese. The paper puts much emphasis on comparing the different cultures. Therefore it is also interesting for Chinese who want to know more about the differences between their and Western culture. A mutual understanding of the different cultures can help to reduce misunderstandings and communicate more effectively. First of all, it is important to give a brief overview of the country. To get a better understanding of the information, China will be compared with the European Union (EU). Chapter 3 will give an overview of Chinese culture in general using Hofstede’s and Hall’s approach to describe culture. It is important to understand Chinese culture in general to understand Chinese business culture. Then chapter 4 deals with some important aspects of Chinese Business culture. Besides that learning the Chinese language can be a complementary part of getting a better understanding of Chinese business culture and Chinese culture in general. This paper does not deal with studying the Chinese language. If the business language in your special case is not English, it is advised to use an interpreter unless you speak Chinese fluently. However, just knowing the basics of the Chinese language can impress your business partner and shows the seriousness of your business relation. Graphic 1 summarizes the process of studying Business culture:

Graphic 1: Process of studying Business Culture

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Source: Own graphic

Finally, this paper ends with a conclusion in chapter 5.

2. China overview

This chapter gives an overview of the most important statistics about EU and China, which are relevant for business.

2.1. General Facts

First of all, let’s take a look at some statistics to compare the two countries. China has with its 9.5 billions sq km more than double the size of the EU and with 1.3 billion people almost three times more inhabitants than EU. The average Chinese inhabitant is much younger than in the EU and despite of the one-child policy China is growing more rapid than EU.

The average European citizen lives six years longer than the average Chinese one. Especially with the life expectancy of women there are huge differences. The two most important politicians in China are President Hu Jintao and Prime Minister Wen Jiabao, while the most important EU-politician is Jose Durao Barroso, the head of the EU commission.

Table 1: General Facts

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Source: Own table using data from CIA Worldfact Book (2006)

2.2. Geography and History

China is an Eastern Asia country, bordering to several countries. The People’s Republic of China was founded on 1 October 1949. After the reforms of Deng Xiaoping, commencing in the year 1978, China opened to the world and has become an important power in the global world. As this paper does not deal with Chinese history in more detail, it is recommended to inform yourself about Chinese history, when you want to do business in China.

Graphic 2: Map China

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Source: CIA Worldfact Book (2006)

The European Union is located in Europe, consisting of 25 independent countries. This means that the EU is no country; it is a federation of independent countries.

However, the EU is much more than just a free-trade association such as ASEAN, NAFTA or Mercosur. It has some characteristics of independent nations such as its own flag, anthem and currency. In addition, the member countries gave some legislation power to the EU. About 70 per cent of all laws in Germany are based on decisions of the European Union. The EU was founded after World War II in 1951 and grew from six to now 25 member states.

The EU consists of the following countries:

Austria, Belgium, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and United Kingdom.

In addition, Bulgaria and Romania will join the EU in 2007 and Croatia, Macedonia and Turkey have the status of a candidate country.

Graphic 3: Map EU

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Source: CIA Worldfact Book (2006)

2.3. Economy

This section deals with some economic statistics. China’s GDP at purchasing power parity is about 8.9 trillion Dollars, while EU’s GDP is about 12.2 trillion Dollars. However, China is growing faster than the EU, 10% compared with about 2% in EU. Comparing the GDP per capita, Europeans can buy four times more than Chinese. There are also huge differences in the economic sectors. While in China the industry sector is really big, the European service sector contributes to about 70% of the GDP. This is an important factor because it shows that Chinese and European economy is focusing on different areas. While EU focuses on services, China is focusing on manufacturing.

The inflation rate is quite low in both countries at about 2%. China has a lot more workers in the labour force, and the unemployment rates in the EU and Chinese cities are almost the same. However, in rural Chinese areas unemployment is estimated to be very high.

Table 2: Economic Facts

illustration not visible in this excerpt

Source: Own table using data from CIA Worldfact Book (2006)

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