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Examining Differences in Corporate Culture: Canada versus China

Research · May 2019

DOI: 10.13140/RG.2.2.28512.94726

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Examining Differences in Corporate Culture: Canada versus China

Globalization has introduced to the professional world a myriad of opportunities for

connectivity and international relations. As a result, business professionals are increasingly likely

to encounter cultural differences in the workplace. Without a proper understanding of the

differences in corporate culture, business professionals risk hindering corporate success.

According to the Cambridge Dictionary, corporate culture is defined as “the beliefs and ideas

that a company has and the way in which they affect how it does business and how its employees

behave” (corporate culture). Canada and China differ ethnically, linguistically and politically.

The result of these differences is that Canada and China have very different corporate cultures.

Through bilateral examination of the corporate cultures of Canada and China – two countries

with markedly different approaches to business – one might develop a better understanding for

corporate culture on a global scale. Hence, this research paper will examine the three greatest

differences between corporate culture in Canada versus China: high versus low power distance,

individualism versus collectivism, and long-term versus short-term orientation. Equipped with

knowledge of these important cultural differences, business professionals can operate more

efficiently, respectfully, and successfully in either country.

Canada and China have vastly different concepts of power distance. Power distance can

be described as “the extent to which a community accepts and endorses authority, power

differences and status privileges” (Carl et al. 513). According to Hofstede and Hofstede’s

“Power Index Survey”, involving seventy-four countries, China ranks twelfth in terms of power

distance and Canada ranks sixtieth (43). This means that, in China, power distance is a cultural
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norm and, in Canada, it is of much less significance. As a result, Canadians doing business in

China need to reconsider their relationship with superiors. For example, “non-Chinese people . . .

need to be very careful when negotiating with older senior [Chinese] managers or officials who

are lacking in modern technical knowledge [in order to not] cause them to lose face” (Child and

Warner 11). “Face” is an important concept in Chinese culture. The concept of face is akin to the

western idea of reputation or character. Forgetting to refer to a superior by their title may result

in their loss of face. Accordingly, it is important to address Chinese business partners by their

title and with respect according to their rank in the corporate ladder. Rash or edgy comments that

may be acceptable in a Canadian workplace will likely be detrimental to business relationships in

China (National Centre for Language Training 16).

In addition, when negotiating in China, it is important to be patient. Business negotiations

in China often take longer than they would in a Canadian setting. This is because “the

negotiators you meet [with] will [not] have the power to make the decision alone” (National

Centre for Language Training 68). One of the consequences of China’s large power distance is

that decisions are largely made by the senior management. As a result, even small decisions will

take time to be made. This understanding of China’s top-down approach to business explains

why negotiation can move slowly.

Another important difference in corporate culture, influenced by power distance, is

subordinate-superior relations. In Canada, superiors expect their subordinates to be proactive in

their approach to work while in China subordinates expect to be told what to do by their

superiors. This can lead to frustration in intercultural subordinate-superior relationships. In

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general, China’s acceptance of power distance results in an autocratic corporate culture. In

contrast, Canada’s low tolerance for power distance results in a more diplomatic corporate

culture (Hofstede and Hofstede 59). Being cognisant of this difference is vital to successful

business in either cultural landscape.

Whether a culture is individualistic or collective plays a big role in how the corporate

culture operates. According to Harry Triandis, “ [c]ollectivism may be initially defined as a

social pattern consisting of closely linked individuals who see themselves as parts of one or more

collectives … [whereas] individualism is a social pattern that consists of loosely linked

individuals who view themselves as independent of collectives” (2). Child and Warner propose

that “collective orientation . . . has become today commonly regarded as an inherent

characteristic of Chinese culture” (2). In fact, Hofstede and Hofstede’s “Individualism Index

Survey” ranks China sixty-first out of the seventy-four countries surveyed. Canada ranks fourth

(78-79). This means that Chinese businesses and employees value collective behaviour whereas

Canadian businesses and employees value individualistic behaviour. Business professionals need

to be aware of this difference if they want to be successful negotiating between the two

countries.

An important concept to be familiar with when discussing collectivist societies is the

ingroup. According to Triandis, “[i]ngroups are groups of individuals about whose welfare a

person is concerned, with whom that person is willing to cooperate without demanding equitable

returns, and separation from whom leads to anxiety” (9). In an individualistic society, like

Canada, promotions are based on skills, performance and knowledge. In China, an employee
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who possesses these attributes may be held back if they do not belong to the corporate ingroup

(Hofstede and Hofstede 104). Canadians doing business in China should aim to build long-term

relationships with Chinese co-workers. These relationships should be rooted in trust, confidence

and, friendship. Building these types of relationships is imperative to successful business in

China because they signify commitment to ingroups (National Centre for Language Training 96).

Embracing a collectivist mindset is imperative to successful business in China.

Furthermore, according to Child and Warner, in China “there is often resistance to the

introduction of individually based performance-related pay” (11) while in Canada, individual

performance-related pay is considered normal. It is important to think about this difference when

considering salary negotiations or compensation packaged for employees. Due to differences in

individualistic versus collective thought, concepts of salary and compensation differ greatly

between Canada and China. These differences contribute heavily to the way that corporations

and business professionals conduct themselves in the two countries. These differences must be

accounted for when conducting oneself in a foreign corporate climate.

The idea of long-term versus short-term orientation governs much of the way businesses

and individuals conduct themselves. As stated by Hofstede and Hofstede, “long-term orientation

stands for the fostering of virtues oriented toward future rewards . . . Its opposite pole, short-term

orientation, stands for the fostering of virtues related to the past and present” (210). According to

Hofstede and Hofstede’s “Long-Term Orientation Index”, China ranks first among the thirty-

nine countries surveyed. Canada ranks thirty-fourth (211). What this means is that China is an

overwhelmingly long-term oriented country whereas Canada is short-term oriented. This

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difference has a significant impact on the way people and corporations approach business in both

countries.

Long-term versus short-term oriented cultures display many differences. One such

difference is the degree to which “guanxi” is embraced. Guanxi can be thought of as “an

interpersonal connection or relationship network between people and things” (Weingardt 7). In a

long-term oriented culture, like China, guanxi is an integral part of business (Hofstede and

Hofstede 225). As articulated by Weingardt, “persons [participating in guanxi] exchange favors,

advice, material goods, or business deals with the expectation or hope for diffuse reciprocity”

(7). This approach to business is very different from the approach taken in a short-term oriented

country, like Canada, where “personal loyalties vary with business needs” (Hofstede and

Hofstede 225). This is a reflection of the idea that in China “long-term mutual benefit is more

important than short-term individual gain” (Reuvid 167). Canadians doing business in China

need to consider the importance of guanxi if they want to find business success in China.

Chinese people doing business in Canada need to focus on the short-term results that drive

Canadian business and accept that business loyalties may shift frequently (Hofstede and

Hofstede 225).

Another key difference between long and short-term oriented cultures is the value

associated with leisure time. According to Hofstede and Hofstede, short-term oriented countries

place considerable value on leisure time whereas long-term oriented countries do not (225). This

explains why many Canadian employees expect vacation pay and are comfortable taking

holidays whereas Chinese employees would rather focus on learning, accountability and self-
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discipline (Hofstede and Hofstede 225). As a result, managers in China may expect their

employees to work longer hours than would be expected in Canada. Being aware of the different

approaches to work-life balance goes a long way in explaining how employees and employers

approach business in Canada and China.

Canada and China are two vastly different countries. As a result, they have strikingly

different concepts of corporate culture. What can happen to a business professional who does not

consider differences in corporate culture? They might say something disrespectful to the wrong

person, cause offence, and compromise negotiations. They could be dismissed due to their lack

of commitment to an ingroup. They may compromise business relationships by focusing on

short-term rather than long-term results. They might be unhappy when expected to work

evenings and weekends. These negative outcomes are the consequence of a lack of intercultural

understanding. By exploring the primary differences in corporate culture between Canada and

China, this research paper is intended to inform the reader on how to maximize business success

between the two countries. By considering high versus low power-distance, individualism versus

collectivism and, long-term versus short-term orientation, one should be able to easily

understand, navigate, and succeed in either corporate culture.

Works Cited

Cambridge English Dictionary. Meaning of corporate culture in English. n.d. Website. 09 April

2019. <https://dictionary.cambridge.org/dictionary/english/corporate-culture>.

Carl, Dale, Vipin Gupta and Mansour Javidan. Culture, Leadership, and Organizations The

GLOBE Study of 62 Societies. Thousand Oaks: Sage Publications, 2004. Book.

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Hofstede, Geert and Gert Jan Hofstede. Cultures and Organizations Software of the Mind. 2nd ed.

New York: McGraw-Hill, 2005. Book.

National Centre for Language Training. Doing Business in China: A Guide for Australians.

Sydney: University of New South Wales Press Ltd, 2008. Book.

Reuvid, Jonathan and Li Yong. Doing Business In China. 5th. London: GMB Publishing Ltd,

2005. Book.

Triandis, Harry C. Individualism & Collectivism. New York: Routledge, 2018. Book.

Warner, Malcolm and John Child. Culture and Management In China. Research Paper.

Cambridge: Judge Institute of Management, 2003. Document.

Weingardt, Heidi M. "Friends with Benefits: The Evolution of Chinese Guanxi in Conjuction

with the One Child Policy and Improvements in Communicative Technologies." Honors

Thesis. 2016. Document.

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