Presentation: Henry Chinazor Mmeje - Intercultural/International Management
1. Intercultural/International Management
Topic: Effects of Cultural Dimensions in
Business Transactions - An Investigation
of Chinese Investment in Nigeria
Presenter: Henry Mmeje
Summer 2021
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2. Introduction
Means of World’s Business Connection:
Internationalization,
Globalization and
Technology Advancement
Companies involved in negotiations with
other culturally diverse organizations is an
understanding of the characteristics of the
cultural orientation of those they engage
which is mostly via
Intercultural Management
International Management
Through all these, companies continue to
negotiate across cultures despite different
cultural
orientations.
Culture
"the collective programming of the mind which
distinguishes the members of one group or category of
people from another (Geert Hofstede, 1991).“
Scholars cultural diversity research and different
perspectives:
Styles,
Leadership,
Organizations,
Negotiations, and
Dimensions
Need for Intercultural Research
Provide concept and Terminology about culture
Helps to be aware, measure and acknowledge
different value systems
Helps to understand practise found in human culture
Understand the similarities and differences among
human cultures – (Grove 2005)
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3. Geert Hoftstede 5 dimensions of culture
after his interview with IBM staff from 53
countries
Power-distance;
Collectivism vs. Individualism;
Femininity vs. Masculinity;
Uncertainty avoidance and
Long-vs. Short-term orientation.
(Tallin University, 2014).
The GLOBE project usefulness
Investigated how cultural values are related to
Organizational practices,
Conceptions of leadership,
The economic competitiveness of societies,
The human condition of its members
(Tallin University, 2014).
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9 basic cultural dimensions from the Globe project
Power distance
Institutional collectivism
In-group collectivism.
Gender Biasness
Assertiveness
Future orientation
Performance orientation
Human orientation
Future orientation.
(Kreitner & Kinicki, 2013).
The GLOBE project (Global Leadership
and Organizational Behavior
Effectiveness).
A study of 62 countries involving 172
researchers,
with over 17,00 participating manager.
Took more than 11 years to complete.
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Considering Nigeria from most studies conducted
high on individualism and low on collectivism: still open to
further studies
multicultural country comprising over 200 ethnic cultures
Population of over 208M: can’t be seen as monoculture
entity.
African countries have a multiplicity of ethnicity
Different cultural backgrounds and orientation
Business Investment negotiation between a Chinese
company and two Nigerian organizations
1. Imo State Investment Company (ISIC) - SE Nig
2. Ogun State Property Development Company (OPIC) - SW Nig.
3. Xinguang Group of Guangdong (XGG), China
Aim/ Budget
Development of a Free Trade Zone in Nigeria
Under the trade and investment portfolio of the Company
A project value of about $1 billion.
Places with highest degree of individualism
Israel,
Romania,
Nigeria,
Canada, and
the United States
Places with highest degree of Collectivism
Mexico,
Japan
Brazil,
China,
France
India, Egypt, Nepal Etc
A worldwide survey of 30,000 managers by
Trompenaars and Hampden- Turner (Kreitner & Kinicki,
2013).
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The Igbo Culture vs. Chinese Culture
Igbo: Individualistic: ‘’I’’ and ‘’Me’’ cultures
Chinese: Collectivistic: "we" and "us" cultures
The Nigerian and Chinese Disagreement over the Imo Guangdong Free Trade Zone project
Shortly after project commencement, dispute arouse between ISIC (20% stake) and the Guandong group.
The group decided to abandon the project due to:
Cultural differences in decision makings
Issue of brokerage
Security challenges (militancy and kidnapping)
Court Case
ISIC accused the group of breach of contract/termination of agreement
An order restraining the group from investing/promoting similar projects in Nig.
Sum of N700M for damages for breach of contract
National Cultural Backgrounds of the Partners
- Nigerians are all Individualistic: Is this a wrong impression?
- Population of over 210M people with 3 major ethnic groups
- Igbos(East), Yoruba (West), Hausa (North)
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Key Business characters of the Igboman (Easterners)
Good business negotiator
Have deep knowledge of local and international trade
Understands investment strategies
Very much Individualistic
Short term financial gain oriented
Note: Some other ethnic groups shares culture similarities with the Chinese such as collectivism, Long
term orientation, power distance and uncertainty avoidance.
Individualism vs. Collectivism
Igbo culture is an individualistic one: self achievement, individual wealth, individual education
attainment
Chinese are collectivistic: children grow up in groups, loyalty and equality prevails, team spirit in
Chinese company, organization needs harmony and accord.
The ISIC CEO insisted on being paid brokerage fee to fast-track the negotiations, the Chinese
negotiator needs to show his home office a successful business closing and always have the
general interest of the company at heart.
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Long term vs. Short term Orientation
Chinese showed extreme patience during negotiation and sustained efforts
towards slow and steady result.
ISIC officials shows tendencies of seeking for quick result
Chinese still kept the doors open for negotiations even when the negotiation was broken down
Chinese invited a third party mediator The Nigeria Investment Promotion Commission (NIPC)
Invited the NIPC and ISIC officials to meet the XGG management
Chinese Intended to stay long in Nigeria and looked forward to long term while the ISIC officials
needed short term financial benefit
Power Distance
Chinese has more power distance than the Igbos.
Igbos teach their children equality, while Chinese teach their children obedience
Igbo child has to prove himself by his achievement
Chinese respect older relatives, Igbos treat parents and older ones as equals
In Igbo popularity is power, Chinese power is centralized
Igbos expects to be consulted, Chinese waits for instructions on what to do.
For an Igbo man, power is ability to influence, motivate and expertise, Chinese power is family
and tradition
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Uncertainty Avoidance
Chinese Negotiators shows lots of anxiety because closing the deal will mean to his boss that he was
successful, while failure to do so will mean he has failed his boss.
The ISIC officials didn’t attach any importance to the closing of the deal, they are interested in the short
term financial gains, hence had little or no stress or anxiety
Masculinity vs. Femininity
In this case, both groups showed masculinity. Chinese only used female interpreters, the Igbos utilized no
woman in the negotiating team
Challenges due to Cultural differences
The Igbo ISIC official’s failure to understand the basic Chinese power and it’s collectivistic characters
The Igbo ISIC officials were more of political appointees who wants to close the deal quickly and
successfully before their tenures expires and to earn some brokerage
Hence, didn’t care about the Chinese adaptability and need to close the deal with time
Propounding Solution - Meeting at NIPC
Nigeria Investment promotion Commission acted as a mediator in this case
Lots of meetings were held as from 2017
Both two parties were present and all issues addressed
NIPC encouraged them to resolve all issues peacefully and continue the project execution
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Meetings at Imo State Government house
Lawyers of the XGGAs were present
Chinese delegations were present
Nigeria Export Processing Zones Authority were
present
Imo state governor and State Council were present
Meeting ended in deadlock: All parties retreated to
their lodges
Chinese held a close door meeting with the
governor
Meeting at Guangzhou China
The governor was invited at the XGGA headquarters
Various meetings/negotiations took place
No agreement was reached: both parties maintained
their stands
Chinese maintained to continue new project in Ogun
state (SW)
pending when the Imo state issue is addressed.
Chinese tried to look for other investment opportunities
in Imo state rather than the Free trade Zone
Dispute at Owerri High Court, 2018
Attorney of the State obtained Injunctions to:
Restraining the Chinese from negotiating or signing similar agreement within Nigeria until the case is settled
Restraining the Chinese from establishing free trade zone in Ogun state
ISIC will write an undertaking to compensate the Chinese any damages it may suffer as a result of the injunction
The Chinese were Guangdong group was unsatisfied and filed for an appeal at the court.
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Main Takeaways
1. Need to know the cultural dimensions of other party before negotiation
2. Nigeria is Multicultural and not monocultural: Potential Investors should be aware
3. NIPC advised that for there to be a continuous inward investment inflow from China, there is a need
for both parties to resolve their issues
4. Need to understand and respect the Chinese culture
5. Guarantee of the security of the Chinese business men
6. Government assurance of the safety of the Chinese group’s investment
7. Resolution on the issue of brokerage
8. NIPC and ISIC agreed to visit China to show trust, friendliness and commitment to the project
9. ISIC lost $500M investment inflow as a result of the negotiation breakdown
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Sources Utilized
Hofstede, G. (1991). Cultures and organizations: Software of the mind. London: McGraw-Hill.
Grove , C. N. (2005). Professional Knowledge Center. Retrieved November 24, 2014, from Grovewell
LLC Website: http://www.grovewell.com/pub-GLOBE-dimensions.html
Kreitner, R., & Kinicki, A. (2013). Organisational Behavior (10th Edition ed.). New York: McGraw-
hill/Irwin.
Tallin University. (2014). Leadership Dimensions: Culture and Leadership. from Tallin University
Website: Geert Hofstede, a widely known Dutch researcher of culture, has defined culture as "the
collective programming of the mind which distinguishes the members of one group or category of
people from another.“ (1991, p.5).
SESAN KIM SOKOYA (1998). Hofstede’s Cultural Dimensions of Values and Personal Value
Orientation of Nigerian Managers: Implications for Management Practice. Department of
Management and Marketing, Middle Tennessee State University