Cross-Cultural Management

MANAGEMENT INSIGHTS IN CHINA

Agenda
Introduction Methodology Facts & History Cultural Analysis

1. Culture 2. Business 3. Social Interactions 4. Young vs. Old 5. Emic insights Conclusion & Recommended Readings

Introducing China
Russel Peters: Chinese vs. Indian

Your opinion!
What associations come to mind when you think of China?

Methodology
Interviews:

Prof. Dr. Barbara Krug Special field of research: Chinese Economy Dr. Mark Greeven Coordinator of MSc. Chinese Economy & Business Mr. Tuhong Tran Financial Assistant of China Southern Airlines Mr. Ziqian Mao Executive Sales Representative China Southern Airlines Surveys Academic Articles

Facts
Total size: 9,596,961 square kilometers 4th largest country in

the world Population: 1,336,718,015 #1 worldwide Capital: Beijing Religion: Officially atheist, however most people are Taoists & Buddhists, small percentages of Christians & Muslims Language: Official language is Mandarin, but there are many dialects Government Type: Communist state (since 1949) Economy: 2010 GDP of 9.872 trillion with a growth rate of 10.3% #3 and #8 in the world, respectively

Chinas Income Disparity

History
Prehistory: One of the earliest centers of human civilization
Ancient&Imperial history: different kingdoms and dynasties

until 1911 (Qing Dynasty) Modern: 1912-1949 Republic of China 1949-present Peoples Republic of China, Mao Zedong (CPC), Socialist State, a Democratic Dictatorship

Framework

Culturalspecific behavior

Culture

Cultural Framework
Collectivism (Conformity) High Uncertainty Avoidance (Prudance, Conservative) Large Power Distance (Hierarchy, Authority) Unity of Masculinity & Feminity (Ying&Yang,

Moderation) Long term orientation (Continuity) Being primarly good, past oriented, harmony with nature (fatalism), importance of human relationships (core values, paternalism)

Cultural Specific Behavior

Greetings
with a handshake and a slight bow call the person by its first name

accept business card with two hands, as a sign of respect

Proxemics
touching is viewed as uncommon keep minimal eye contact; this can be interpreted as hostile, aggressive or

intrusive

Kinesics
uncommon to show emotions wearing a green hat signifies that their wife or sister is a prostitute

Punctuality
punctuality is important and early arrival is appreciated

Motivation

Teamwork

Leadership style

Business

Organizational design

Motivation
Extrinsic motivation: Monetary reward: important motivator for younger Chinese employees Non-monetary rewards: emphasis on combination of social and work life (e.g. Dinners, New Years invitations, Living Quarters)

Intrinsic motivation: Pride: importance of saving face Family: important value for the Chinese

Teamwork
Not common in domestic Chinese businesses, therefore

efficiency problems can arise in MNEs

due to social grouping dynamics

Rooted in the Confucian values Social hierarchy Upward deference to leaders However, collectivistic values, relationship building and

harmony could facilitate team work

Leadership style
Ancient style
Commanding the employees Decision making power

Parent- child relationship

Task-Focused and Intellectual leadership styles

Organizational Design
State intervention: the Communist Party
Especially in state owned enterprises (SOE) Less in private owned enterprises: more influence of Western style: empowerment

Majority of the firms

Top down approach Importance of hierarchical order Non-democratic Tightly controlled: strict rules and compliance No empowerment

Social Interactions

Social Interactions
Based on a patriarchal model
Results in loyalty and filial piety

High- context culture

Importance of family and other close relationships Indirect communication

Relationships are harder to build but are more meaningful Polychronic approach of time in personal life

Social Interactions cont.

Guanxi as a relationship model Confidence of society in a persons integrity and reputation Fear of loosing face

Influence of State Predominance of collectivistic values Strong influence on education

Young vs. Old

The Generation Gap

The younger generation of Chinese managers show more

individualistic tendencies due to exposure to new economic/social forces Think highly of themselves and strive for money and recognition Shift from an egalitarian to a goal-achievement value system Crossvergence of Western and Chinese attitudes Engage in job-hopping in search of fast promotions and new skills no loyalty, high turnover Solution: Create a working environment that enables establishment of long-term relationships (emphasize emotional investment)

Business examples:

1. Acer

2. China Southern Airline

Emic Insights

1. Acer - Stan Shih

Chairman emeritus of the Acer Group

Founded the company in 1976, he helped his company

grow from a small start-up to a billion-dollar brand despite disadvantageous conditions Main concept: believes in the goodness of every human being (Theory Y) Tried to integrate the strengths of both Western and Eastern management approaches
Eastern Values of Seniority and mentor-mentee relationship Western values of decentralization and empowerment

Acer cont.
His trust approach allows him to invest in his employees

and thus enable them to fully realize their capabilities Retention is achieved by creating a business family and emphasizing on a shared mission
Corporate clan culture instead of bureaucracy as the instrument of corporate governance

Failure not a shame, but an opportunity to learn Leading by example: fully retired and determined his

successor by achievement, not ascription, which is not a common Eastern approach

2. China Southern Airlines

Differences between locals and Chinese employees Division of Employees Perspectives on Career Possibilities Impressions on Reward Systems Hierarchical levels Centralization Inflexibility to Change

Recommended readings

Cross-cultural training and expatriate adjustment in

China: Western joint venture managers (Selmer, 2005) Doing Business in China: A Framework for CrossCultural Understanding (Osland, 2007)