TRIP TO CHINA. A country of contrasts and opportunities

Before travelling to China I had a lot of initial expectations of how the country would look like but no actual first-hand knowledge of it. When I arrived some of my expectations were certified to a certain extent. For example, I was expecting everything to be big in Shanghai, but the size of the buildings and population actually surpassed my initial thoughts. I have learned a lot of valuable things during the trip, both from the academic sessions held at Jiao Tong University but also from the business visits and cultural trips, which opened my eyes in a more practical manner, allowing me to see the real life of Chinese people.

During the 10 days spent in the country we have learned the Chinese way of doing business, with both its opportunities and limitations. I have considered different factors that have to be acknowledged in order to understand China and its business practices: Culture, Size and its economic system.

Culture

Chinese people have a complete different culture to western people, and as a Melia Hotel Manager in Asia-Pacific told us at Jiao Tong University; the best strategy in order to enter this market is to learn and adapt to their culture, instead of trying to change it. Their culture is completely different to ours in basically all aspects; gastronomy (which I personally enjoyed a lot), timetables and specially their relationships with others. During our first day in Shanghai we were introduced to Chinese history, geography, culture and values by an excellent lecturer (Jason Inch). Two concepts were outlined during this session: “Guanxi” and “Mianzi”( also referred as “Face”).

· Guanxi

This is basically the networks of influence a person has and how they keep a good connection. This can involve treating people with special care by giving gifts in special occasions. On the other side this also implies that it is unnecessary to show courtesy to strangers. I experienced this while walking through the streets, where vehicles show little or no respect for pedestrians.

· Face

This is an important cultural concept that must not be underestimated. It is one’s perception to the eyes of others. For example, treating someone with respect gives them “face”, while criticizing or saying “no” directly can cause people to lose face.

These two concepts are of great relevance for managers working with Chinese employees or business contacts. Another curious cultural issue, predominantly seen in Shanghai is showing off with luxury products. Business men in Shanghai need an expensive car in order to give a good image necessary to do business. Same happens with watches, clothes and jewelry.

Size

Despite being a country, China is more of a continent due to its size with huge regions, each with their own culture and dialect. Therefore when addressing a customer segment or trying to enter a market it is essential to differentiate between the different needs of each region. To put China’s size in context, Shanghai has a population of roughly 24 million; this is approximately half of the whole population of Spain. Further to this, what are considered to be medium size cities have around 5 million people; this is more than most European capital cities. So size matters in China and it can be advantage for doing business, as a small segment group of 1% can be of huge potential for marketing. During a marketing segmentation session we had, it seemed that children accessories and luxury products have big opportunities for future development. CSR can also play a major role in the future as pollution in major cities like Beijing and Shanghai is affecting the well-being of its citizens.

(Lujiazui, the financial district of Shanghai. What seems to be fog is actually air pollution, a growing and uncontrollable problem in developing cities of China)

Economy

Most of the economic activity is concentrated in the East coast, while the west remains wild for doing business. However, as the east consists of most of the economy, the west is starting to flourish, opening the door for massive business opportunities. When considering the business opportunities in China it is important to take into consideration the constant change the country is experiencing. Salaries in Shanghai are increasing at an average rate of 10-15% per year; therefore the perception of cheap labour is changing in the east, enabling the west part of the country to be exploited.

In terms of Government participation in the economy it is huge. Most private companies coming from Europe or the US are in partnership with the Chinese state. Therefore they are not wholly private and so have constant relations with government officials. During our visit to Baosteel and Volkswagen Shanghai we were able to see how government intervention is not as bad as we in the west believe. Our visit to the Volkswagen assembly surprised me for its efficiency, cleanliness and working conditions. It was a fully new and efficient plant that operated very well. On the other side, you can see the lack of transparency when sharing information. One of our teammates asked a simple question to the person in charge of the tour: “How many employees do they have in the plant?” And the tour guide was unwilling to answer the question, as if it was better not say a word. This is an example of how chinese companies are not as “open” as European companies when it comes to the sharing of information.

Bureaucracy is another important issue as we were explained during a session on “how to establish a business in China”. Companies trying to establish in China need to pay special attention to tax systems and are recommended to have constant relations with institutions that help ameliorate private and government relationships (like the European Chamber of Commerce).

Overall I have been amazed and shocked by the cultural differences between the east and the west. I have learned a lot on how to do business in China and my final conclusion is that in order to be effective when dealing with Chinese business partners is it important to respect their culture and to learn their modus operandi (i.e. Guanxi). The country is full of contrasts and contradictions. You can see people begging in front of brand new massive skyscrapers and a political regime which seems to work perfectly with its new economic trend: communist China is a capitalist paradise.

Comments Off on TRIP TO CHINA. A country of contrasts and opportunities / 14 Mar 2014 por alvarohernandez
IMSD /

Comentarios cerrados.