Communicating through networks: Chinese business peoples views on engaging in business with foreign firms. To open a shop is easy; to keep it open is an art.--Chinese Proverb proverb, short statement ofwisdom or advice that has passed into general use. More homely than aphorisms, proverbsgenerally refer to common experience and are often expressed in metaphor, alliteration, or rhyme,e.g.IntroductionChina is a country in which the forces of globalization globalizationProcess by which the experience of everyday life, marked by the diffusion of commodities andideas, is becoming standardized around the world. Factors that have contributed to globalizationinclude increasingly sophisticated communications and transportation havealtered its economic fabric noticeably and have projected it into an eraof unprecedented growth and prosperity. With a growth rate ofapproximately 8% in the 2009-2010 fiscal year, China is amongst thefastest growing economies in Asia and forecasted to be the eighthfastest growing economy worldwide in 2010 (The 12 fastest growingeconomies, 2010). As a result of the globalization of production and ofmarkets, China is engaging in economic integration with the rest of theworld and its capacity to harness resources is positioning China topotentially become the worlds largest economy during this century.The growing Chinese economy has attracted foreign ventures from aroundthe globe to engage in business partnerships with Chinese firms. Thiscan be seen in the increasing tendency of foreign firms to move theiroffshore manufacturing activities into China, in order to capture theadvantages of its skilled workforce and the burgeoning Chinese market(Doh doh or doNounMusic (in tonic sol-fa) the first note of any ascending major scaleNoun 1. doh - the syllable naming the first (tonic) note of any major scale in solmizationdo, ut, 2005).Despite the enormous opportunities for business engagement inChina, many foreign ventures have experienced setbacks because they have
expanded their scales of operation in China without fully understandingthe Chinese business culture in the localities in which they areoperating. Lack of culture-based knowledge prevents them fromcommunicating effectively and efficiently with Chinese businesspartners. Some foreign companies have come to realize that Chinasmarket is one that they cannot afford to stay in, rather than one thatthey cannot afford to stay away from (Business infatuation, 1999). Thus,the challenge for foreign businesses is a good understanding of thesocial and cultural environment which is crucial to effectivecommunication between foreign businesses and their Chinese businesspartners. Such understanding sheds light on how foreign businesses canbe competitive and sustainable in the Chinese market. An understandingof Chinese business norms and practices will enable foreign ventures toeffectively communicate with Chinese partners and manage businessrelationships with them, minimize the liability of foreignness, andmaximize the sustainability of these relationships (Zhou, Barnes, &Lu, 2010). This is essential as substantial establishment costs areincurred in winning entry to markets, particularly markets that areculturally distant (Brewer, 2007). This paper reports a study on how varied social and culturalfactors influence Chinese business peoples communication withforeign firms and their decisions to engage in business partnershipswith Australian firms. Australia and China enjoy a long-terminternational trade relationship. China is now Australias largestsource of imports and its second largest export market, and Australia isChinas ninth largest trade partner (Austrade Media Release, 2010).In the long-run, the fundamental drivers of urbanization,industrialization industrializationProcess of converting to a socioeconomic order in which industry is dominant. The changes thattook place in Britain during the Industrial Revolution of the late 18th and 19th century led the wayfor the early industrializing nations of western Europe and, and population growth should continueto stimulateChinas demand for Australian resources as China continues todevelop as the worlds manufacturing"factory"(Fredriksson & Jonsson, 2009).Chinese Perspectives on Business Relationship Development
The debate over the differences in approaches to business exchangeand business relationships between Eastern and Western cultures is notnew. Scholars have been examining differences in Chinese negotiationstyles and personal characteristics that influence businessrelationships for the past two decades. For example, based on their20-year research on business relationships between the United States United States, officiallyUnited States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sqkm), North America. The United States is the worlds third largest country in population and thefourth largest country in area. andChina, Graham and Lam (2003) claim that Western business people tend tobe task-oriented and use direct communication styles, whereas Chinesebusiness people are relationship-oriented and prefer indirectcommunication styles. Differences in communication styles have beenfound to be the root cause for a breakdown of a long-term businessrelationship between Chinese and their US business partners. Althoughthe integration of China into the modern world economy since theeconomic reform has brought the Chinese ways of doing business more inline with their Western counterparts, the fundamental cultural belief inChinese relationship development (e.g., reliance on guanxi) remains andis still reflected in international business exchange even today.Moreover, the increasing globalization of markets and the development ofinternational business partnerships driven by strong economic growth inChina, Japan and Taiwan have reinvigorated re·in·vig·o·ratetr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·ratesTo give new life or energy to.re the examination ofculture-related factors that differentiate Eastern and Westernbusinesses in their approaches to successful business partnerships.In her seminal seminal /sem·i·nal/ (sem´i-nl) pertaining to semen or to a seed.sem·i·naladj.Of, relating to, containing, or conveying semen or seed. article on differences between East AsiaEast Asia
A region of Asia coextensive with the Far East.East Asian adj. & n. and the USon interpersonal relations, Yum (1988) argues that the overlapping ofpublic and private relations characterizes East Asian perspectives oninterpersonal relationships. In the business context, this is translatedinto the Chinese placing emphasis on establishing personal connectionswith their business partners--Guanxi - the relationship capital uponwhich an individual can draw to secure access to resources or advantageswhen doing business, as well as in the course of social life (Gu, Hung,& Tse, 2008). Guanxi rests on the notion of a continuing reciprocalrelationship over an indefinite time period and extends beyond therelationship between two parties to include other parties within thesocial network. Chinese business relations are frequently developed andnurtured via personal connections, relationships, obligations, andinfluence, which parties can use to obtain access to resources throughcontinual cooperation and the exchange of favors (Wang, Piron, &Xuan, 2001). Developing networks of mutual dependence and creating asense of obligation and indebtedness often serve as a"lubricant LubricantA gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reducefriction and wear. In many machines, cooling by the lubricant is equally important. " for successfulbusiness and business relations. Although the term guanxi has been used in the Western businessliterature, it is difficult for Westerners to capture fully itsoperational dynamics in the Chinese context, and, as a result, it hastriggered a plethora plethora /pleth·o·ra/ (pleth´ah-rah)1. an excess of blood.2. by extension, a red florid complexion.pletho´ricpleth·o·ran.1. of research. Kiong and Kee (1998) conducted a studyon the social functions of guanxi in Chinese business firms, focusing onthe inclination to incorporate personal relationships in decision
making. The findings showed that a key aspect of personalism per·son·al·ismn.1. The quality of being characterized by purely personal modes of expression or behavior;idiosyncrasy.2. waspersonal control effected largely through depending on people whom anindividual personally trusts, as this reduces risks in exchange viabroaching broaching: see quarrying. information asymmetries and facilitates better businesscontrol. The key conclusion is that economic decisions in China are notbased solely on market considerations but rather are embedded Inserted into. See embeddedsystem. in thecontext of larger social relations and institutional forces. Similarly,Law and his colleagues (2000) examined the role of building andmaintaining good guanxi in the successful management of Chinesesubordinates by collecting data from 189 supervisor-subordinate dyads inan organization in China. The findings revealed thatsupervisor-subordinate guanxi was a strong predictor of relationshipquality. Although previous studies were conducted in different contexts,one key element that consistently plays an important part inestablishing guanxi is trust.Communicating trust in Chinese Businesses Trust is present when one party has confidence in an exchangepartners reliability and integrity, such that there is ageneralized expectancy held by an individual that the word of the otherperson can be relied on (Rotter, 1967). In a business setting, trust canbe defined as one companys belief that another company willperform actions that will result in positive outcomes for the mutualbusiness and will not take unexpected actions that could lead tonegative outcomes for the business (Anderson & Narus, 1990). Throughtrust, the parties involved in a relationship can develop confidencethat allows any short-term inequities to be balanced and long-termbenefits to be yielded. Long-term business relationships are based onthe assumption that the stability and longevity of the relationship willresult in both parties achieving mutual benefits. Research hasconsistently identified trust as an important factor in the developmentof long-term business relationships (Das & Tend, 2004), a trend that
has been identified in China (Wang, Siu, & Barnes, 2008). Trust is viewed as important in both Western and Chinese contexts,however, there are differences between the two perspectives. Empiricalresearch Noun 1. empirical research - an empirical search for knowledgeinquiry, research, enquiry - a search for knowledge; "their pottery deserves more research than ithas received" suggests that Western and Eastern firms engaging ininternational business are simply looking for different indicators ofbusiness relationship success. In the West, trust is often related tothe system or organization in order to reduce the reliance on personalintegrity. Hence, when two business parties sign a written agreement,they place emphasis on the law to bind the contract. Westernorganizations rarely depend on personal trust or mutually agreed wordsin business transactions because these are not legally binding and theylack objectivity. Evidence from Western firms with foreign investment inChina shows that they do not seek to extend personal trust to theirChinese joint venture counterparts to cover organizational risk orresource sharing (Luo, 1997), but are motivated to generate "systemtrust" within an organization, not trust in specific individuals.This "trust" is more impersonal im·per·son·aladj.1. Lacking personality; not being a person: an impersonal force.2.a. Showing no emotion or personality: an aloof, impersonal manner. and supposedly increasesthelegitimacy of a transaction by incorporating procedural documentationwithin the transaction. In contrast, the Chinese emphasize personal trust instead of systemtrust in business interactions, partially due to the imperfectionswithin Chinas legal system (Wong & Chan, 1999). Chinesecommercial practices do rely on the legal system in part, but they aremore dependent upon personal trust and personal relationships (guanxi)for operationalization. Members of collectivist col·lec·tiv·ismn.The principles or system of ownership and control of the means of production and distribution bythe people collectively, usually under the supervision of a government. societies such as Chinaplace greater emphasis on dealing with specific people in relationships,
and personal networks of mutual assurance play a more prominent role.This general expectancy is normally associated with such qualities asconsistency, honesty, fairness, responsibility, helpfulness, andbenevolent be·nev·o·lentadj.1. Characterized by or suggestive of doing good.2. Of, concerned with, or organized for the benefit of charity. behavior. Research conducted inChina consistently indicatesthat the Chinese rely more on personal trust than contractual armslength exchange to conduct business. Good business is conducted on thebasis of honesty and integrity of individuals, a "gentlemansword" or "personal guarantee", rather than a legalcontract between firms (Xu, 2006). Consequently, Chinese business relationships are frequentlylong-term oriented, as members in the network are tied together throughan invisible and unwritten LAW, UNWRITTEN, or lex non scripta. All the laws which do not comeunder the definition of written law; it is composed, principally, of the law of nature, the law ofnations, the common law, and customs. code of reciprocity reciprocityIn international trade, the granting of mutual concessions on tariffs, quotas, or other commercialrestrictions. Reciprocity implies that these concessions are neither intended nor expected to begeneralized to other countries with which the contracting parties, which extendsindefinitely. While enjoying the benefits of a relationship, businesspartners are bound by a reciprocal obligation that must be"repaid" in the future. Disregarding this obligation canseriously damage ones social reputation and lead to loss ofprestige or face (Yau, 1988). Long-term trading partnerships have becomea preferred business arrangement between Chinese business people andtheir foreign counterparts in international business, as this form ofexchange retains sufficient flexibility to adjust to contingencies, butyet retains the basis for the fundamental guanxi orientation (Phan,Styles, & Patterson, 2005). Therefore, as the world turnsincreasingly to international trade to support economic growth, anunderstanding of the factors that affect long-term trading and businesspartnerships becomes an ever more valuable endeavour. It is importantfor foreign firms seeking to enter the Chinese market to have a clearunderstanding of the dynamics of trust and guanxi in business exchange.To this end, we conducted field research to elicit e·lic·it
tr.v. e·lic·it·ed, e·lic·it·ing, e·lic·its1.a. To bring or draw out (something latent); educe.b. To arrive at (a truth, for example) by logic.2. Chinese businesspeoples views on the social, cultural and institutional factorsunderpinning un·der·pin·ningn.1. Material or masonry used to support a structure, such as a wall.2. A support or foundation. Often used in the plural.3. Informal The human legs. Often used in the plural. their decisions to engage in internationalbusiness withAustralian firms.The Present Study The present study was conducted in two phases. In Phase 1, in-depthinterviews were conducted with six Chinese business people, who heldsenior management positions in China. Phase 1 functioned as a pilotstudy to solicit attitudes and opinions of Chinese senior managers inregard to their international business experience, intentions to engagein business with Australian firms and the potential factors that mightinfluence their business decisions. Data obtained from Phase 1 informedthe design of the questionnaire for Phase 2 of the study. In Phase 2, a survey was administered to 49 Chinese businesspeople, predominantly in managerial positions. This phase aimed to testthe extent to which the views and factors identified in Phase 1 wererepresentative of a more diverse sample. Similar to Phase 1, the surveycovered areas such as business experience, intentions to engage inbusiness with Australian firms, social, institutional and culturalfactors that may potentially influence business engagement with foreignfirms.
Phase 1: Participants and procedures The six participants were selected through the researcherspersonal contacts in China. Their ages ranged from 30 to over 50 yearsold; one participant was female. The six firms represented were locatedin Beijing, Tianjin, Guangzhou and Zhejiang province, coveringindustries including textile manufacturing, import and export trading,media and consumer research, and agricultural and food production. Allsix firms had foreign business partners in the USA, UK, EU nations andEast Asian countries. Their reported annual sales ranged from US$670,000to US$13 million. The interview protocol consisted of 30 open-ended questions,canvassing topics related to participants business experience(e.g., What do you see as major challenges and difficulties in doingbusiness with foreign firms?), intentions to engage in business withAustralian firms (e.g., Does your firm intend to do business withAustralian firms in the near future?), attitudes to doing business withAustralian firms (e.g., What do you see as the advantages of yourengaging in business with Australian firms in the near future?),institutional environment (e.g., In your opinion, how important is theinstitutional environment for success in your business?) and culturaldistance (e.g., Do you feel differences in language, business practices,and culture would affect your engaging in business with Australianfirms? Why?). All in-depth interviews were conducted over the phone andwere audio recorded with consent from the participants. On average, eachinterview lasted 40 minutes. The interviews were transcribed verbatim ver·ba·timadj.Using exactly the same words; corresponding word for word: a verbatim report of theconversation.adv. before data analysis.Phase 1: FindingsIntentions to do business with Australian firms
In general, all six participants expressed interest in doingbusiness with Australian firms, should such opportunities arise in thenear future. In relation to preferred types of business arrangement,long-term partnerships were most preferred (5 persons, 83%), followed byjoint ventures (1 person, 17%). These two types of business arrangementswere considered beneficial from the perspective of developing long-termtrading because risk and profits can be borne by both parties (ITW ITW In The Wild (informatics,antivirus research)ITW Information Theory Workshop (IEEE)ITW Into Thy Word (religion)ITW Into the Woods 01,ITW02, ITW03, ITW04, ITW06). In addition, the long-term partnership wasconducive to the building of trust between business partners, a conceptwhich has been consistently identified as crucial in businessengagement.Factors influencing business decisions The six business executives uniformly identified trust as the mostimportant supporting factor in business engagement. The Chinese cultureplaces great value on trust in developing interpersonal relationshipsincluding business partnerships. The Chinese rely more on personal trustand mutual assurance than contractual terms to conduct businesses."Since you have chosen me to be your business partner, you shouldtrust me. This means that you should not specify too many details andthen monitor the procedures. As friends, we have shared understandingand mutual trust. Thus, there is no need to detail everything in awritten contract" (ITW02). "Trust means quality in products ormaterials supplied" (ITW03). "Trust facilitates communicationand lubricates business relationships. If there is a problem, it can beeasily resolved through communication between trusting businesspartners" (ITW05). "Unless your clients trust you, theywont give you their market share" (ITW06). Business networks were also identified by all interviewees as animportant factor influencing business engagement with foreign firms.
business network ties were regarded as resource capital because theycould enable a business to be set up within a short period of time."If you dont have a good network, it will be difficult foryou to open a market within a relatively short period of time. Thus, youmust have sufficient financial capital. In this sense, business networkis capital" (ITW02). Business network ties also referred torelationships with suppliers and clients, which was considered importantfor sustaining a business. "Suppose you were to set up an enterprise in China, you musthave access to three constituents of your business: supplier, laborresources, and transportation. This is business network. For example, ifyour textile factory was located in north China and your supplier was inthe southern part of China, then your business would not be viable dueto the cost of transportation of raw materials and time" (ITW01).business network ties included relationships with government bodies andfinancial institutions. Connections with government agencies were viewedas particularly important to certain businesses, such as import andexport trading, because their daily operations involve dealing with manydocuments that government authorities require. Financial institutionswere perceived as important for business start-ups (e.g., accessing bankloans) but less so once the firm has established its business operations Business operations arethose activities involved in the running of a business for the purpose of producing value for thestakeholders. Compare business processes. The outcome of business operations is theharvesting of value from assets (ITW05, ITW06). The ability to navigate through myriads ofnetwork tiesis considered crucial by the interviewees for business operations inChina.Cultural barriers When we asked the interviewees about the influence of culturaldifferences in business engagement, interestingly, foreign languageproficiency Language proficiency or linguistic proficiency is the ability of an individual to speak orperform in an acquired language. As theories vary among pedagogues as to what constitutesproficiency, there is little consistency as to how different organisations (e.g., theability to speak English or Chinese) was notconsidered as important as we had expected. Instead, norms of business
practices were regarded as most likely to influence businesscooperation. These differences were often reflected in differentattitudes to contracts. The Chinese preferred contract terms to be moregeneral, whereas Westerners would like to specify every detail in thecontract. "When we communicate with the British or Swiss businesspeople, we feel they sometimes make a very simple matter soundcomplicated. They use paragraphs to describe what could be explained inone or two sentences. Of course, this could reflect their cautiousattitude to business, but sometimes we feel there is no such need"(ITW02). Another cultural barrier was overlap between business andinterpersonal relations. The Chinese placed values on interpersonalrelationship This article or section may contain original research or unverified claims.Please help Wikipedia by adding references. See the for details.This article has been tagged since September 2007. development, as business partnerships tendto be perceivedas long-term. For example, it is customary for the Chinese to hostformal dinners for their foreign business partners. Accepting suchinvitations gives face to the Chinese partners who pride themselves onextending hospitality and friendship to their foreign guests.Understandably, the Chinese would feel uncomfortable when their Americanpartners each carried a lunch bag to a business meeting. One intervieweerelated an experience, "We arranged a business meeting with ourAmerican partners in Ningbo and planned for dinner after the meeting.However, the Americans each carried a bag of KFC KFC Kentucky Fried Chicken (restaurantchain)KFC Kenya Flower CouncilKFC Kitchen Fresh Chicken (Kentucky Fried Chicken motto)KFC Kung Fu Cult (Cinema)KFC Kitchen Fixed Charge meal and were eatingKFC food while attending the meeting. We felt a bit uncomfortablebecause the Chinese would not do such a thing" (ITW06).SummaryFindings from Phase 1 consistently shows trust, business network
ties, government support and personal contacts as important factors ininfluencing business exchange. The Chinese business executives preferlong-term business partnerships and placed emphasis on trust. Integrity,credibility, trustworthiness trustworthiness Ethics A principle in which a person both deserves thetrust of others and does not violate that trust, and the reputation and character of aperson encapsulate en·cap·su·latev.1. To form a capsule or sheath around.2. To become encapsulated.en·cap trust. Trust is effected largely through depending onpeople whom an individual personally knows well and such personal trustis believed to reduce risks in business exchange and facilitate businesscontrol. Economic decisions in China are not based solely on marketconsiderations, but rather are embedded in the context of larger socialrelations and institutional forces, including government bodies andfinancial institutions. To test the extent to which the views andfactors identified in Phase 1 are representative of a more diversesample, we conducted a survey in Phase 2.Phase 2: Participants and procedures Forty-nine business people (63% male) from different cities inChina China is a geographical area encompassing multiple territories, under two states. You maybe looking for: List of cities in the Peoples Republic of China List of cities and towns in Hong Kong, and with cross-industry variation, participated in an interviewsurvey. The participants were recruited by using a combined method ofwebsite search and researcher contact. Most participants were highlyeducated, under 45 years of age (77%) and from the more developedregions (60% from Beijing and Shanghai; 26% from Tianjin and Guangzhou);others were from developing regions (14% from Hubei, Xinjiang, andChengdu). All but one participant spoke English and 12% of theparticipants spoke a second foreign language including French, German orJapanese. Senior managers made up 44%, and middle to lower level mangerscomprised 40% of the sample. The remainder were divided betweenprofessional staff, such as engineers and lawyers (8%) andadministrative officers (8%). Business types included import/export
trade, manufacturing, technology and media communication, food andmedicine, retail, education and consultancy firms. A significantproportion of the firms were Chinese-owned private companies (40%). Thenext most prevalent ownership structures were state-owned enterprises(22 %) and wholly foreign-owned subsidiaries (18%). Only 10% of thefirms were joint ventures, with the remaining 10% being otherstructures, such as listed companies and partnerships.[FIGURE 1 OMITTED] The questionnaire consisted of 41 closed and open questions abouttheir business experience (e.g., How would you rate the importance ofthe following factors for doing business with overseas firms?);intentions to engage in business with Australian firms (e.g., Does yourfirm intend to do business with Australian firms in the near future?);and factors that may potentially influence their business engagementwith Australian firms (e.g., How would you rate the importance ofbusiness network ties in doing business with Australian firms?). Inlight of evidence that Chinese respondents may overuse overuse Health care The common use ofa particular intervention even when the benefits of the intervention dont justify the potential harmor cost–eg, prescribing antibiotics for a probable viral URI. Cf Misuse, Underuse. the neutralmid-point of scales (Lee, 2000), a six-point scale, rather than thetraditional 7-point scale was used. The survey was conducted via eitherface-to-face or over the telephone interviews.Phase 2: Findings Intentions to engage in business with Australian firms, preferredchannels and business type On a 6-point Likert scale Likert scale A subjective scoring system that allows a person beingsurveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important,relevant, interesting, most ho-hum, or other, and 5 being most excellent, yeehah important, etcwhere 1 stands for "definitelyno" and 6 "definitely yes", 46% of the participantsindicated that they were likely to engage in business with Australian
firms. The mean score for their ratings on the six-point scale was 4.27,suggesting a level of reasonable likelihood of future businessengagement with Australian firms (see Figure 1). When we asked participants about the channels through which theywould choose to communicate business intentions, over half of theparticipants (55%) identified "personal contacts" as thepreferred channel of business engagement, whereas 45% of them did notidentify it as their preference. The next preferred channel was"professional associations" (43% yes; 57% no) and"Chinese government Ever since Republic of China founded in January 1st, 1912, China has hadseveral regional and national governments. ListChinese Soviet Republic Provisional Government of the Republic of China Reformed Governmentof the Republic of China bodies" (32% yes; 68% no). A fewparticipants (9%) nominated "trade exhibitions" as a preferredchannel of initiating business relations. In relation to the preferredtypes of business arrangement, most participants indicated"long-term trading partnership" (69%), followed by "onetime contract" (18%). Neither "joint ventures" nor"wholly-owned subsidiary" were popular business arrangements. Firm-related factors influencing doing business with foreignventures Participants rated "precise terms for formal contract"and "common understanding of business norms" as two highlyimportant factors in doing business with foreign firms. Factors, such as"English language English language, member of the West Germanic group of the Germanicsubfamily of the Indo-European family of languages (see Germanic languages). Spoken by about470 million people throughout the world, English is the official language of about 45 nations.proficiency pro·fi·cien·cyn. pl. pro·fi·cien·ciesThe state or quality of being proficient; competence.Noun 1. proficiency - the quality of having great facility and competence of Chinese businesspeople","close interpersonal relationships" and "familiarity ofeach others culture", were considered fairly important by
participants (see Table 1). In Table 1, those who had experience doing business with Australianfirms (n =18) consistently showed higher mean scores, compared withthose who did not have such experience, but who did have experience ininternational business beyond Australia (n = 27). However, when wecompared the differences on the ratings statistically, results fromindependent sample t-tests did not reveal statistically significantdifference between the two groups. We next asked participants to ratethe importance of a number of factors for entering into business withAustralian firms. Overall, having "trusting businessrelations" was rated as most important, while "internationalmarketing experience" and "human resources The fancy word for "people." The human resourcesdepartment within an organization, years ago known as the "personnel department," manages theadministrative aspects of the employees. " were alsorated as important (see Table 2). The results indicated higher ratings by those who had Australianexperience across all factors. We then conducted t-test to compare themean scores for participants whose firms had business experience with anAustralian firm (n =18), with those from participants whose companiesdid not have Australian experience (n =29). However, only the differencein ratings on "human resources" (i.e. the firmsemployees with relevant expertise) reached statistical significance (p<.05). Having the employees with necessary expertise was consideredmore important by participants whose companies had engaged in businesswith an Australian firm, than participants whose companies did not havesuch experience. Subsequently, the 18 participants (37%) with experience doingbusiness with Australian firms were asked to rate the level of perceiveddifferences between Australian and Chinese business partners. Comparedto local Chinese companies Chinese owned companies can be defined as enterprises withinmainland China, Hong Kong, Macau and the Republic of China (Taiwan): List of companies in thePeoples Republic of China List of companies in Hong Kong List of companies in Macau ,Australian firms were seen as moderately"willing to adapt to Chinese way of doing business" (M = 3.2)and "sensitive to the difficulties Chinese firms encounter" (M
= 3.2). The extent to which Australian firms were aware of "howChinese conduct business in China" received a relatively low rating(M = 2.6) as did "Australian companies understand how Chinese firmsdo business" (M = 2.7). Nevertheless, even the lowest ratings didnot deviate from the neutral point. The overall findings suggest acertain level of confidence in Sino-Australian business partnerships(see Table 3).Institution related factors influencing business engagement In regard to the institutional environment, the Chinese businesspeople rated "business network ties" as most important indoing business with Australian firms, followed by ties with"government agencies" and "financial institutions"(see Table 4). In Table 4, those who did not have experience doing business withAustralian firms tended to rate all factors, except one (tradeassociations), slightly lower in importance compared to those who hadAustralian business experience. Ratings from those without Australianexperience were more likely to be based on assumptions, instead ofactual experience. Our results confirmed the importance of establishingbusiness network ties and building relationships with Chinese governmentagencies, when doing business with Australian firms. We next asked the participants to rate the importance of a numberof supporting factors for business engagement with Australian firms.Again, "trust" emerged as the most important factor in doingbusiness with Australian firms, followed by "governmentsupport". Consistent with findings from Phase 1, connections withgovernment agencies were viewed as especially important for import andexport trade (see Table 5). When we asked participants to rate the factors that mightdiscourage them from doing business with Australian firms, they rated"differences in business practices" as most likely to
discourage them from entering into business partnerships. Interestingly,again "differences in language spoken", was less likely todiscourage the Chinese from business collaboration with foreign firms.This finding suggests that language difference might not be assignificant a barrier as it has been assumed by Western businessexecutives who have positioned themselves to enter the Chinese market.Chinese business people are gradually familiarizing fa·mil·iar·izetr.v. fa·mil·iar·ized, fa·mil·iar·iz·ing, fa·mil·iar·iz·es1. To make known, recognized, or familiar.2. To make acquainted with. themselves withWestern business practices; it is also necessary for overseas firms tounderstand Chinese business culture (see Table 6).Discussion The factors consistently perceived as important in influencingChinese business peoples intentions to engage in business withforeign firms are: trust, business network ties, government support andpersonal contacts. The findings from our study suggest that networkingplays an important role in Chinese business engagement. Foreign venturesin the Chinese market may consider targeting more developed regions,where foreign businesses already exist, as a seeding process, for marketentry to China. These existing foreign businesses and their Chinesepartners can function to build networks and expand business operationsin new regions. Word-of-mouth communication strategies and opinionleaders can be powerful tools for advertising products and businesses incollectivist cultures such as China. The growth of private entrepreneurship and the spread of marketrelations form the primary condition for autonomous, vibrant businessassociations to occur. As yet, there has not been sufficient researchconducted in this domain to make claims regarding any conclusive Determinative; beyond disputeor question. That which is conclusive is manifest, clear, or obvious. It is a legal inference made soperemptorily that it cannot be overthrown or contradicted. patterns of the business operationsenvironment in China. Chinesebusiness practices are moving increasingly away from agovernment-dominated model to one of marketization This article or section is in need of attention
from an expert on the subject.Please help recruit one or [ improve this article] yourself. See the talk page for details. andprivatization privatization: see nationalization.privatizationTransfer of government services or assets to the private sector. State-owned assets may be soldto private owners, or statutory restrictions on competition between privately and publicly owned.This shifting of control over the core business decisions to individualfirms and their senior managers provides a fertile ground for foreignbusinesses to explore opportunities in Chinas enormous market.However, it is more difficult to manage operations in countries that areculturally different. The differences, expressed in social, cultural,institutional, and socio-economic aspects, constitute psychic distance The term ‘PsychicDistance’ is a composite of the Greek word ‘Psychikos’ referring to anindividual’s mind and soul (Simpson & Weiner 1989) and ‘Distance’ whichis based on perceived cultural differences between a ‘home’ country and a,which materializes as uncertainties in establishing internationaloperations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency inWildstorm comics. It was originally called International Operations. I.O. first appeared inWildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. inChina (Brewer, 2007). However, as foreign firms accumulateexperience and learn more about Chinese business norms, acclimatization acclimatizationAny of numerous gradual, long-term responses of an individual organism to changes in itsenvironment. The responses are more or less habitual and reversible should conditions revert toan earlier state. to these uncertainties will occur and they will progressively becomemore competent and comfortable engaging in business with Chinese firms.Accounting for the Chinese business peoples views on factorsinfluencing their business communication and engagement with foreignfirms will help foreign firms to minimize the liability of foreignness.In addition, as business people establish a greater shared understandingof the cultural factors underpinning business decisions, exchangerelationships will have an enhanced prospect for sustainability.business engagement with China promises net benefits for all countriesinvolved, but this will only be realized with culturally sensitivemanagement. Acknowledgment acknowledgment, in law, formal declaration or admission by a person whoexecuted an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment ismade before a court, a notary public, or any other authorized person.
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Yi Ren, Macquarie University LocationUniversity publications and material indicate that its campus is located in the suburb of NorthRyde, although the Geographical Names Board of NSW indicates it is located in the suburb ofMacquarie Park. The University has its own postcode: 2109.Cindy Gallois, University of QueenslandCorrespondence to:Dr Shuang Liu, School of Journalism and CommunicationThe University of QueenslandBrisbane, QLD QLD or Qld Queensland 4072, AustraliaEmail: firstname.lastname@example.org.Table 1. Importance of Firm-related Factorsfor Doing Business with Foreign Firms (Mean)Factors Experience with Experience with Australian firms other foreign (n = 18) firms (n = 27)Precise terms in formal contract 5.4 5.2Common understanding of business 5.2 5.1normsEnglish language proficiency of 4.9 4.3Chinese business peopleClose interpersonal relationships 4.8 4.9
Familiarity of each others 4.6 3.9cultureNote: Six- point scale where 1 = unimportant and 6 = important.Table 2. Importance of Firm-related Factorsfor Doing Business with Australian Firms (Mean)Factors Experience with No Experience Australian firms with Australian (n = 18) firms (n = 29)Trusting business relations 5.9 5.7International marketing experience 5.2 4.9Human resources 5.2 4.5Financial resources 4.9 4.4Legal resources 4.8 4.3Government support 4.7 4.3Note: Six- point scale where 1 = unimportant and 6 = important.Table 3. Chinese Business PeoplesPerception of Australian Firms (n = 18)Australian firms... MeanAre willing to adapt to Chinese way of doing business 3.2Are sensitive to the difficulties Chinese firms encounter 3.2Are easier to work with than Chinese firms 3.0Understand how Chinese firms do business 2.7Are aware of how Chinese conduct business in China. 2.6Note: Six- point scale where1 = Strongly disagree and 6 = Strongly agreeTable 4. Institutional Network Ties in Doingbusiness with Australian Firms (Mean)Institutional network ties Experience No Experience with Australian with Australian firms (n = 18) firms (n = 30)
business network ties 5.1 4.6Government agencies 5.0 4.2Financial institutions 4.6 4.1Law firms 3.9 3.7Universities 3.8 3.4Trade associations 3.6 3.8Note: Six- point scale where1 = unimportant and 6 = important.Table 5. Factors Influencing Doing Business with Australian Firms (Mean)Factor Experience with No experience Australian firms with Australian (n=18) firms (n=28)Trust 5.9 5.7Government support 5.0 4.3Legal support 4.7 4.2Official interpretation of rules 4.7 4.0Note: Six- point scale where 1 = unimportant and 6 = important.Table 6. Factors that Might Discourage Doingbusiness with Australian Firms (Mean)Factors Experience with No Experience Australian firms with Australian (n = 18) firms (n = 30)Differences in business practices 4.1 3.6Differences in culture 3.7 3.0Differences in language spoken 3.5 3.0Geographic distance 2.8 2.5Note: Six- point scale where 1 = unlikely and 6 = likely.