GROUP ASSIGNMENT

CASE 5: Selling in China Subject: Managing the Selling Interface Lecturer: Mr. Tham Yuen Hoi Members: 1- Tran Duy Khanh (leader) 2- Ho Nguyen Phuong Trinh 3- Zhu Haoran 4- Huang PeiZhi Assessment Criteria 1: What are the implications of Guanxi networks for selling in China? Guanxi is part of the fabric of Chinese society. Personal relationships are central to every aspect of Chinese society, including business. In the West, relationships grow out of deals. In China, deals grow out of relationships. The cultivation of guanxi is an integral part of doing business. In China, a network of multiple relationships is necessary because of Chinas constantly shifting political landscape, fragmented sources of authority, and the businesspersons resulting need to be an insider at all levels of this society. Furthermore, multiple relationships serve as coping mechanisms for the obligations arising from each individual relationship. Each of the relationships in a guanxi network has its own particular characteristics. Friends in China who help you in your business dealings are not like friends elsewhere. Western managers can relate the benefit sought with the bond created to achieve a given objective. But Westerners are generally unaware that in China social relationships may mean much more than what Westerners intend because they are so fundamental to the Chinese national character. To Westerners, relationships help the individual; to Chinese, they also define the individual. In China, if you are related to a senior official, you will be treated with more respect and accorded more face. In short, the status of the people with whom you have relationships helps define your status. Assessment Criteria 2: An important Chinese cultural issue is the avoidance of loss of face. Discuss its implications for selling in China. China's 1.3 billion consumers are at a crossroads. They are embracing new economic ideas and habits, and devouring goods that have long been unavailable, unaffordable or forbidden. At the same time, they are part of a culture and an economic system that remain quite different from those of developed countries. In this special report, experts from Wharton and Boston Consulting Group offer insights on how Chinese consumers are evolving as the market develops; what 1

companies need to know about navigating China's convoluted sales and distribution systems; and the advantages emerging Chinese companies have over Western competitors, even as these firms face their own difficulties in entering the global marketplace. Of all the idiosyncrasies of Chinese culture, the concept of Face is perhaps most difficult for Westerns to fully grasp. And because saving face is such a strong motivating force in China, its also one of the most important concepts in understanding the Chinese Mind. Face is an essential component of the Chinese national psyche. Having face means having a high status in the eyes of one's peers, and is a mark of personal dignity. The Chinese are acutely sensitive to gaining and maintaining face in all aspects of social and business life. Face is a prized commodity which can be given, lost, taken away or earned. Causing someone to lose face could ruin business prospects or even invite recrimination. The easiest way to cause someone to lose face is to insult an individual or criticise them in front of others. Westerners can unintentionally offend Chinese by making fun of them in a good-natured way. Another error can be to treat someone as a subordinate when their status in an organisation is high. Just as face can be lost, it can also be given by praising someone for good work before their colleagues. Giving face earns respect and loyalty, but praise should be used sparingly. Over-use suggests insincerity on the part of the giver. To avoid causing another to lose face, a Chinese person may feel uneasy about declining a simple dinner invitation without having an extraordinary reason to do so. This reluctance to say no often arises in the business context as well. For example, a Chinese businessman or government official may have trouble expressly rejecting a business proposal or term. Instead, they might say something like we need to think about that more or that will probably cost a lot of money. In this case, the Chinese person may in fact be trying to communicate no without making you feel embarrassed or ashamed that your proposal has been rejected. Westerners should be sensitive and responsive tonot frustrated bysuch subtle communication cues. Likewise, never outright say "no" to a request. Instead, use expressions such as its not convenient (bu fangbian) or Ill have to look into it (wo dei yanjiu yanjiu). This way, all parties can be satisfied with face being maintained. So, what are solutions for losing face in business in China? In my opinion, there is only one. That is AVOID THESE FACE-LOSING SITUATIONS: Openly criticizing, challenging, disagreeing with, or denying someone. Calling someone out on a lie. Not showing proper deference to elders or superiors. 2

Turning down an invitation with an outright no (instead, they usually say maybe, yes, maybe, well do our best, lets think/talk about it later, or I need to discuss it with so-and so first)

Being late on a flimsy excuse (demonstrates that you dont respect or take them seriously). Interrupting someone while they are talking. Being angry at someone mutual loss of face for both parties Revealing someones lack of ability or knowledge (such as being able to speak English).

Assessment Criteria 3: Explain the concept of self-reference criteria and its implications for selling in China. The so-called self-reference criterion which is SRC: Refers to the marketing staff as long as an encounter specific circumstances, to use his own value system to understand this situation as criteria and standards. American scholar James Lee proposed a set of methods to overcome the tendency SRC: First, in accordance with their cultural characteristics, customs and norms to identify business problems or objectives. The second step, in accordance with the characteristics of foreign culture, customs or regulations to determine the business problem or goal. The third step, the SRC in the question of isolation, the problem of how to use the SRC complicate. The fourth step, did not influence the SRC to redefine business problems, determine the most appropriate business standards. SRC- the unconcious reference to one's own culture values in comparison to other culture SRC-if we talk about in basic terms then SRC means to forget about self like if a company is going to some another country then the going company will have to take care about the culture etc of the host country and will have to forget about our culture like McDonalds when entered India they sold product aloo tikki burger inspite of their beef burger. An important factor in the success of global marketing is to adapt to the differences between the different market environment, it is a global marketer a conscious effort to predict domestic uncontrollable environment effects of the marketing mix, and adjust the marketing mix program that will minimize the impact. However, global marketing, people tend to unconsciously refer to the values of their own culture, experience and knowledge, as marketing or management decisions. This is the "self-

reference standard (Self-reference Criterion-SRC)", it prevents the true evaluation of the ability of foreign markets, resulting in a feeling of market demand block. This is by James Lee (James Lee) invented the Culture classic results. Its global marketing operations had a profound impact. Self-reference standard is such a concept, and if I like the use of a product, then everyone is pleased with this product; if the product sells well in Beijing, it must be in Los Angeles has a similar performance. Many Chinese businessmen know that in Chinese gifts, guests are like precious gifts; business people also thought that in New York, Cairo, Paris and other guests also like to send them expensive gifts. However, the reality is just the opposite, different cultures have their own business practices, if blindly to their own values on another culture, another market to take similar action, often resulting in partnership unfriendly, or loss of business. In summarising, it is clear that adverse effects of Self Reference Criterion can be prevented and turned into benefits by being aware of cultural differences and recognising the importance of those differences. Firms that entering into international market for the first time need to carry out in-depth marketing research into the concept of self reference criterion and its importance. They must follow procedure of marketing research step by step to get feasible and intelligent decisions in the international marketing.