Unit 4 DB- 2SR

Response 1:

There are always cultural considerations to consider when a company decides to enter a foreign market place. It becomes a question of not if a misunderstanding between two different cultures will happen but when. This can include minor mishaps during meetings because of a language barrier to having to pay-off lower level officials to operate in a country with low ethical enforcements policies. As a foreign company looking to expand to China, we must acknowledge and try to understand the customs of doing business in China. This will help our team better minimize any common mishaps that can take place and give us a better opportunity to deal with a company whose ethical regulations may not be what we are used to back in the U.S. We will look into three cultural differences foreign companies will face when doing business with the Chinese, will this negatively impact our current strategy, and does this ultimately change our approach.

One cross cultural difference between our company, from America, and China that will be easily seen in day to day activities is what Davies refers to as “power distance.” Countries with a high power-distance recognize and respect hierarchy. In these societies, a person will consult with their superiors instead of making decisions. In a low power-distance, societies tend to believe that all people are equal and deserve equal rights and opportunities (Davies, 2016).

Contracts are seen differently in China than the U.S. In the U.S., contracts as viewed to be written in stone, meaning that the contractual agreement is protected and locks in the agreed obligations. While in China, they acknowledge that circumstances can and will change throughout the course of a contract, and as such these contract will need to evolve and be modified accordingly to benefit both parties (Woods, 2016). The Chinese focus more on relationship between partnering business, because they feel if the relationship is strong then contracts can be renegotiated to benefit both companies.

Davies refers to the elements of the language-context dichotomy, which was developed by Edward Hall, as an area for cultural consideration. Hall determined that there was low-context language and high-context language. The U.S. is considered a low-context language because we tend to try and cover every imaginable aspect when communicating and negotiating that can result in voluminous agreement documents (Davies, 2016). While China is a high-context language society where they omit information that they deem to be already known by the other party. The Chinese prefer brief agreement documents to that of the voluminous documents of western businesses (Davies, 2016).

The above cultural considerations listed will not negatively impact our current strategy but it will change our approach in the way we do business and most importantly build relationship with the Chinese. We already have a current handbook which outlines our current policies and procedures in the way we do business. For our overseas operations we will have to make a few adjustments and build upon our current handbook that acknowledge and work with the Chinese culture. We must understand their way of business and when “In Rome” do our best to respect their culture to build healthy and prosperous relationships in China.

Response 2:

As mentioned in MUSE, one of the key tools to overcome the contrasts between cultures is to keep communication open and to fully appreciate the other culture.  Find out what is important to the new group, how they communicate, and how they show their connection to those values. 

 Our business will need to adapt its products to meet the local needs of its new customer base. For instance, what is considered high end quality with a matching price tag in the US may be astronomical to only the upper class in China.  What is considered low priced and readily available to all in the US may be “Western Styled” and appeal to the middle class of China’s population.  Another issue found while expanding to China is the marketing scheme.  Our US market has been successful thanks to our online catalog but many may not have readily available access or only marketed through blogging and social media.  This will be another adaptation to fully take advantage of the move to China.  Our production in America has grown and manufacturers of our brand have grown.  Suppliers for raw materials are readily available as well.  We are fortunate that we have a supplier already stationed in China but its distribution capabilities are not fully known.  High import taxes and a questionable distribution infrastructure, due to undeveloped roads, dependency on public transportation, and a market already being used by competitors, will require careful planning and adapting to the needs and opportunities found in China.  In addition, the differences in values can be quite massive.  Gender equality and roles can become an issue where women may not be given the same rights as their male counterparts.  Not only will this affect decision making for the customer base but also about work safety for potential female employees. Marketing strategies would need to be altered based on the values of our Chinese customers.  What may be considered normal or mundane may be seen as an insult to others.  In the US, the individual is seen as more important as the whole but that cannot be taken for granted globally.  It is important we research and learn the delicate nuances of the places we plan to expand our business into. (Thompson, 2018)

 The current strategy focuses on high quality products with a high-end price tag.  We will need to make decisions about the future of the company.  Rather we hold ground and focus highly on the upper-class elite of China’s population or create a new brand that is focused on producing good quality products for the, comparatively, lower income households.  Our marketing scheme will need a revamp.  Currently, the US has a strong brand recognition and attributes our brand to high quality.  We cannot depend on this treatment in China.  The marketing team will need to research (based on the direction taken by leadership on the target customer base) how to effectively and cost effectively reach those customers.  Also, we will need a dependable strategy that can dependably bring in raw materials.  If we focus heavily on the production facilities of the textile industry we already have in play, we take the risk of confining our manufacturing facilities to those close to the textile production.  This also will limit customer access to those who can reach the textile company and, by extension, us.

 My approach would mirror the decisions of leadership, but, I would suggest a joint venture with a lower cost of goods, high quality, lower price tag model.  Our company name will not be affected, we can reach a larger demographic, and we can benefit from the wisdom and cultural experience of a company already based in China.