China: A Quest for Global Dominance

Topics: China Economy

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To truly understand China’s economic emergence over the last decade, we must first explore China’s vast history. Built on Confucian cultural principles, China has seen a rise in its economic fortunes over the last 20 years.

Many factors have contributed to China’s economic boom. This paper attempts to explore China from the days of its isolated beginnings and bring you up to speed on China we see in the 21st century. This paper will also examine the many dimensions of culture on display in China, as well as just what attracts multinational corporations to China and the implications of doing business there.

Research Questions

  1. What are the major elements and dimensions of culture in this region?
  2. How are these elements and dimensions integrated by locals conducting business in the nation?
  3. How do both of the above items compare with US culture and business?
  4. What are the implications for US businesses that wish to conduct business in that region?

The Chinese culture is steep in history and tradition.

In fact, according to the U.S. Department of State (2012), “China is the oldest continuous major world civilization, with records dating back about 3,500 years.” Archaeological studies have even provided evidence of Chinese origin in cultures that flourished as far back as 2000 B.

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C. “in what is now known as central China and the lower Huang He (Yellow River) Valley of northern China” also known as the cradle of Chinese civilization (Worden, Savada, & Dolan, R, 1987, p. 1). From art to philosophy to their distinctive system of writing, China is truly a unique and fascinating place. China’s culture has survived several conquests including by the Mongols and Manchus. As a result of these invasions from what appeared to be lesser developed societies, it conditioned the Chinese to believe “their domain was the self-sufficient center of the universe (Worden, Savada, & Dolan, R, 1987, p. 2). This belief brought about the “traditional Chinese name for their country which is Zhongguo, literally meaning Middle Kingdom or Central Nation” (Worden, Savada, & Dolan, R, 1987, p. 2). Around this same time frame, a famous sage and influential philosopher named Confucius teachings were deeply influencing all of Asia. Confucius’s writings tended to “primarily deal with individual morality and ethics and the proper exercise of political power by the rulers” (Satterlee, 2009, p. 47). It is thought that many if not all of Confucius’s writings were the result of “having endured a poverty-stricken and humiliating youth” (Riegel, 2012, p. 1). Nevertheless, “his teachings were preserved in the Lunyu or Analects, form the foundation of much of subsequent Chinese speculation on the education and comportment of the ideal man” (Riegel, 2012, p. 1). To put in perspective just what Confucius meant to Chinese culture, “Fung Yu-lan, on the greatest 20th-century authorities on the history of Chinese thought, compares Confucius’ influence in Chinese history with that of Socrates in the West” (Riegel, 2012, p. 1). It is worth noting that in China and other areas in Asia, the social ethics and moral teaching of Confucius have been blended with the Taoist communion with nature and the Buddhist concepts of the afterlife to form a set of complementary, peacefully coexistent, and ecumenical religions (Satterlee, 2009, p. 47).

However, followers of Confucianism consider it to be a way of life more so than a religious belief (Satterlee, 2009). To illustrate his philosophy, Confucius revealed a step-by-step process known as “The Great Learning.” In it, he outlined how one may attain self-development and by which it flows over into common life to serve the state and bless mankind. The order of development that Confucius set forth is as follows:

  1. Investigation of phenomena
  2. Learning
  3. Sincerity
  4. Rectitude of purpose
  5. Self-development
  6. Family discipline
  7. Local self-government and
  8. Universal self-government (Satterlee, 2009, p. 47).

As a result of Confucius’ impact on China, the Chinese can private-sector-oriented society as a predominantly communitarian culture, “people who place the community before the individual” (Sattlerlee, 2009, p.58). China can also be described as having a High Power Distance ranking, in that, the Chinese people believe inequality of power and wealth among the population is acceptable (Sattlerlee, 2009). In addition, the Chinese can also be characterized as having a High Masculinity ranking with a culture that is success-oriented and driven. However, this belief does not appear to be equal across all genders, as males seem to have consolidated most if not all of the power and control in Chinese society.

Additionally, Chinese cultural dimensions are vastly different from the United States in just about every aspect. “Chinese students traditionally concentrate on memorizing material without asking questions or discussing the content” (Trompenaars & Hampden-Turner, 1998). Whereas, in the U.S., professors routinely provoke debates as a way to spark student interest and discussion. This is a sort of back and forth debate that would never occur in Chinese culture who’s “ideal educator can be seen as a benevolent autocrat. Chinese students expect to be told what to do, and it is not rare for a Chinese professor to lecture right out of the textbook” (Trompenaars & Hampden-Turner, 1998).

Although elders, as well as government officials, are shown respect in the U.S., I do not believe is a society that exists as in Chinese culture where

there is utmost respect for age and hierarchy, which is based on the Confucian concept of Li. Everyone in society has a specific position in society. Elders, hierarchy in the withinfastest-growing Walmartwithin Walmart within the test, and the government are traditionally respected. (Trompenaars & Hampden-Turner, 1998).

Although I could go on and on about Confucius and his impact on Chinese culture, let’s move forward to after the Communist takeover in 1949. Historians in mainland China begin to write their versionversionsaspects of China’s past. However, this history would be “built on a Marxist model of progression from primitive communism to slavery, feudalism, capitalism and finally socialism” (Worden, Savada, & Dolan, 1987, p. 2).

Although the Chinese have done an excellent job keeping important cultural the U.S.-based intact, there is still no denying Western influence has come to Cfastest-growingS. based Walmart, the world’s largest retailer was perhaps one of the first companies to recognize the huge upside of conducting successful business in China, the world’s fastest growing marketplace, one needs only to analyze the footprint Wal-Mart Stores, Inc. have in China to understand itsWalmart true impact. With over 100 Wal-Mart stores already established, Wal-Mart is thriving in China. So much so that if that was a nation it would be China’s eighth-largest Walmart trading partner (Matusitz & Leanza, 2009, p. 192).

Like McDonald’s, before them, Wal-Mart has seemed to master the art of glocalization, a term which constitutes the interaction of global and local environments. In a nutshell, it means meanings, to co-opt and cater to local tastes and preferences while simultaneously maintaining some sort of product/brand identity and appearance as well as an overall reputation (Matusitz & Leanza, 2009, p. 189).

But just like understanding the term glocalization mentioned above,  multinational corporations wishing to conduct successful business in China will also have to understand the term Guanxi. Translated, in its simplest form, Guanxi literallysector-orientedmeansoriented means relationships or connectsconnections (Fang, 2011, p.163). However, in the Chinese business community G, guanxi is more complicated than just a simple connection. We all know that networking between firms plays an essential role in companies’ success all over the world, including in western countries. However, it should be noted that Guanxi has a unique characteristic when compared to just networking. “Guanxi is personal, reciprocal and more long-term orientated” (Fang, 2011, p.164). But mastering the art of Guanxi as an organization or partnering with a local company is an essential element and should be part of any transnational company conducting business in Chinese. Because in China

Guanxi can not only assist transnational companies in obtaining sources of information and resources, including business opportunities, government policies and,, opportunistic scarce necessities and professionals, but also be of great value to them in terms of building up a corporate reputation, enlarging market share, and even motivating employees (Fang, 2011, p.163).

To truly understand just why so many companies are expanding their operations to China, one only has to follow the numbers. Second, only to the United States in terms of overall the predicted economy, many experts predict that China will become the largest economy in the worlsometimed sometimes this century. However, a few short decades ago in 1990, China’s average per capita national income was only around $350. Within a decade, there was a threefold increase, taking the figure to $1,000. At the end of 2008, the figure tripled yet again and China’s average per capita national income reached another high of $3,000. If China’s average national income continues to rise at an annual rate of 8%, the country’s per capita income will reach $8,500 by 2020 and will touch the $20,000 mark by 2030 (EconomyWatch 2010).

China is considered one of the BRIC countries which includes Brazil, Russia, can India as well. You may ask yourself why these countries have been singled out and just why are they so important. “The BRIC countries are both the fastest growing and largest emerging markets economies” in the world (EconomyWatch, 2010). In fact, “they account for almost 3 billion people, or just under half of the world’s total population” (EconomyWatch, 2010). His fastest-growing to maintain their vibrant economies partly by relying on each other and because they have all carved out a nitch; China dominates manufactured goods, India the services industry, and Russia and Brazil control the raw material industry (EconomyWatch, 2010).

But fast-forward to 2012, currently, China is the world’s largest population, the world’s biggest energy user, the world’s market for an automobile,les and the world’s second the second second-largest largest consumer of oil (Cáceres & Ear, 2011). China is a very opportunisticit, opportunistic country, and   its reach is truly global. China recently replaced the United States as Brazil’s leading trade partner (Cáceres & Ear, 2011). This Chinese-stylerapidlystyle rapidlyrapidly takeover comes on the hills of Brazil, another rapid growing economy, announcing a large oil deposit just over a hundred milo off o their coast. But China really has no choice, they must feed the beast and explore every energy source they can find. I say this because “China accounts for 40 percent of the global growth in oil demand in the last six years, and its consumption is projected to rise from five million barrels per day in 2009 to 13 million barrels day units-decision unitslargest second decision record in 2015” (Cáceres & Ear, 2011). Although they are not the best of friends, ever opportunistic Chinese have also found their way into India’s economy. anits Chinese banks recently bailed out India’s second-largest mobile phone carrier (Joshi, 2012). This bailout was seen in many circles as extraordinary because India’s economy rarely opens its front door to China and routinely blocks businesses seeking a piece of India’s strategic industries such as telecommunication, technology, rapidly rapinergy citing quality-control issues or national security though many experts believe political posturing is perhaps a more likely cause (Joshi, 2012).

However, the economic advancement among the BRIC countries has not necessarily translated into economic prosperity for everyone. are termsChina and India, two of the most successful BRIC countries still have some of the lowest per capita incomes globally.

But make no mistake about it, all the BRIC countries are not created equal. China truly still stands out among the BRIC countries. In fact, “if the BRIC countries were listed in order of importance they would actuallactuallyrecord be called the CIRB Countries, with China leading the way” (EconomyWatch, 2010). As a result of their tremendous economic emergence, many experts have projected that China will become the world’s largest economy sometime between 2030 and 2050 (EconomyWatch, 2010). Not bad for a country that has been isolated for most of its existence.

However, within China, it appears that the social structure and organization areterms largely controlled by the Communist government. The government controls everything from what religions can be practiced to how many children each family can have. The population tends to do what they are told for fear of government retaliation. Any Global business professional seeking to do business in China will have to be well-diverse in China’s dimensions of culture and be able to conduct themselves appropriately under the watchful eye of the Chinese Government. Because as many multinational corporations find out the hard way, it is impossible to do well in China without some sort of government backing. This backing is not simply “forging high-level connections or lining the right pockets”, it also consist of determining how your company’s project fits into China’s overall development (Paine, 2010). In other words, it may be beneficial when doing business in China to align yourself with the Chinese government’s priorities and refer to your investment in termterms of how you can assist the Chinese government in combating issues facing them (Paine, 2010). When compared to the U.S. culture and business, I would tend to say that the Chinese are private-sector-oriented and opposite sector-oriented in describing e  many ways. The U.S. is more private-sector oriented and prefers less government intervention. Also whereas the Chinese are a High Power Distance society, I believe the U.S. would be considered a Low Power Distance society with its stance on promoting equality and opportunity for all its citizens (Sattlerlee, 2009).

I would also tend to categorize most if not all of the U.S. as predominately an individualist culture based largely on our belief in freedom. In the U.S. “society expects people to decide matters large decisions n their own and take care primarily of themselves and their immediate family” (Sattlerlee, 2009, p. 58). This is just the opposite of China, where government officials make many of the decisionsrecord for the population.

Conducting business in China asrecord-setting, unlike hurdlesofhurdles of many Communist countries can be quite difficult without the right skill set. Any global business professional doing business in China will also have to be proficient in Mandarin as it is the predominant dialect spoken by over 70% of the population. It is also the dialect taught in all schools and spoken by most government officials (DOS, 2012).

But language is not the only hurdleobstacleshurdle obstacles, there are several other obstacle any multinational corporation will have to overcome as well as a multitude of contributing factors. Difficulties include the “lack of cultural fit, familial issues, and inadequate support from headquarterheaheadquarters headquarters at headquarters” (Paine, 2010). Successful “foreign burial-time executives must be adept atreal-time reworking management orthodoxies in real time” (Paine, 2010). Success, in China all but demands a cultural understanding and adaptability, market knowledge, the ability to sense and respond to rapid change, and support from higher headquarters. The most effective foreign business leaders in China have perfected the following attributes, they are strategic yet hands-on process-oriented; disciplined yet entrepreneurial; process-oriented, yet sensitive to people; authoritative yet nurturing; firm yet flexible and action-driven, yet circumspect (Paine, 2010).

China, the fourth largest country in terms of size after Russia, Canada and the USA is now the world’s second units largest longest secondlong-lasting-largest economy after the USA if adjusted for differences in cost of living (purchasing power parity differences) although it is only about 10% of the U.S. economy in dollar terms. Tremendous comparative advantage in terms of cheap labor and low production costs has given Chinese goods an edge over others in the world markets (Economy Watch, 2010).

These sorts of comparative advantages as well as China’s accession into second of -the largest World Trade Organizationrecord-setting  (WTO) are just a few reasons why China’s economy has seen such a massive expansion (Economy Watch, 2010).

But despite all its record setting achievements, any multinational corporation doing business in China will also have to deal the China’s human-rights climate and the neassociatedigma associated with it. The recently U.S ambassador to Beijing, Gary Locke recentlylrecently longing-lasting said in an interview that “China’s human-rights record is deteriorating” (Spegele, 2010). U.S. Ambassador Locke said in so many words that China’s recent human-rights deterioration and dissent crackdown was spurred on out of fear that a similar uprising to last year’s Arab Spring would migrate to the Chinese homeland (Spegele, 2010). With China’s enormous population this sort of uprising could have devastating and long-lasting long lasting consequences on the Chinese economy. So to avert any negative media on the issue, China’s Foreign Ministry quickly labeled the dissent in China as a minority voice but acknowledged that China does indeed have some social problems. In a statement responding to U.S. Ambassador Locke’sspent claims China’s Foreign Ministry spokesman said “We have a population of 1.3 billion people, and we have completed in 30 years what took the Western world 300 years (Spegele, 2010). But the issue of Locke’shuman rights has been a part of the Chinese scene since China’s opened up to the rest of the world and I do not believe it is going away anytime soon. Therefore, multinational corporations will have to balance the negative aspects and stigma of doing business in a place where human-rights issues are repeatedly questioned with the enormous potential for profits.

But for the most part, it appears that the quest for profits seems to be winning despite negative aspects and stigma of human-rights issues as Google recently announced it was making another new push to “capitalize publicized the popularity of Android devices that power 60% of the smartphones in China” (WSJ, 2012). To truly understand why Google would attempt to re-enter a market in which they had a highly publicized spat, one has to examine the vast number of potential customers in the Chinese market, which has an estimated “500 million Internet users, compared to 220 million in the U.S.” (WSJ, 2012).

But Google is not alone, “Global U.S. based companies such as 3M, Caterpillar Inc., spent and General Electric have spend billions of dollars in recent years to expand their overseas research labs” at the expense of high-technology U.S. jobs (Hagerty, 2012). Many of these companies see this move as athetheconclude U.S.-based brainer. Although the U.S. based on concluded research and Development “labs continue to innovate, developing such popular products as the iPad tablet and the Kindle e-book reader, these products are made in Asia” (Hagerty, 2012). Therefore, many multinational corporations “find it easier to work near factories where ideas can be tested quickly” (Hagerty, 2012).

Looking at this situation from another angle one could easily of that these moves are an indictment on our American education system which has been receiving less and less attention for many years now. I say this because to a large extent, companies are simply setting up labs where engineering and scientific talent is becoming concentrated.

About 56% of the world’s engineering degrees awarded in 2008 were in Asia compared with 4% in the U.S. Moreover, a large portion of engineering students in the U.S. are foreign-born; 57% of U.S. doctoral degrees in engineering in 2009 were to foreigners, mostly from East Asia or India (Hagerty, 2012).

Businesses are in business to make a profit so they are merely doing what is best for their organization and who can blame them. I believe if the average American actually knew just how bad America and its youth were following behind the rest of the world and especially Asia, there would be immediate panic. It is really sad thaSadlythat sadly,t it has come to this h, however, if America does not get her act together and stop all the political in-fighting by the end ofthis of this this our youth may be forced to learn Mandarin, Hi,ndi, or one of the other BRIC countries languages as means of survival.


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