Caught at the Crossroads of Culture: Utah Asphalt in

China

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Author: Teri C. Tompkins, Julie A. Chesley, Terri D. Egan

Pub. Date: 2019
Product: Sage Business Cases
DOI: https://doi.org/10.4135/9781526479556
Keywords: Utah, cultural intelligence, China, cross-cultural management, intelligence, cultural differences,
inferences
Disciplines: Business Ethics (general), Managing Across Cultures, Organizational Behavior, Business &
Management, Business Ethics & Corporate Social Responsibility, International Business & Management,
Organization Studies
Access Date: December 25, 2023
Publishing Company: Pepperdine University, Graziadio School of Business and Management
City: London
Online ISBN: 9781526479556
Sage Sage Business Cases
© 2019

© 2019 Pepperdine University, Graziadio School of Business and Management All Rights Reserved.

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Abstract

Daniel Wang, educated in China, submitted an expense report for USD 72,000 along with a USD 4
million contract for asphalt material to his boss at Utah Asphalt company. Embedded in the expense
report was USD 16,850 for “entertainment fees,” which Daniel felt was necessary to secure the con-
tract from officials in a Chinese city. When his boss, Jack, demanded that Daniel stop unethically “brib-
ing” government officials, Daniel was offended and worried that the company might be compromised if
he could not continue to woo the customer. Why didn’t Jack understand?

Case

Learning Outcomes

By the end of this case study, the student should be able to

• understand how differences in cultural values shape behavior and contribute to differences in per-
ceptions;
• understand ethical pressures that employees face and discuss the values, beliefs, and assumptions

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that shape business perceptions and business behavior;

• explore how advocacy and inquiry can be used to increase understanding when there are different
points of view;
• understand how the four dimensions of cultural intelligence relate to individual and leadership effec-
tiveness in cross-cultural settings; and
• practice individual and organization strategies for assessing and increasing cultural intelligence.

Introduction

On a hot, muggy morning in Mianyang, China, Chao “Daniel” Wang gazed out of the window of his consulting
office with its view of People’s Park. His eyes returned to the computer screen and he read the email for the
tenth time. He shut the lid of his laptop, feeling confused as to why Jack at Utah Asphalt Company near Salt
Lake City wouldn’t want the success he could bring them. Hadn’t the company done well because of his ef-
forts? Shouldn’t he be rewarded instead of punished? Daniel wondered if company execs were so blind that
they couldn’t see that they would effectively kill their business in China. If his boss enforced the actions laid
out in the email Daniel was reading, it would cut off any opportunities for Daniel to be successful. How could
two people look at the same situation, and see two very different things?

Background

Daniel Wang, age 27, tucked in his Armani dress shirt and checked to make sure he had fastened the second
button on his three-button Brunello Cucinelli jacket and, crucially, left the bottom button unfastened. When
he’d first put on a business suit for his job as a tour guide, right after college, he had unknowingly buttoned all
the buttons. He was embarrassed when a U.S. tourist pulled him aside and told him he should never fasten
the bottom button. As he gained experience, he prided himself in dressing well and appropriately. He asked
many questions of the tourists and learned what type of tours Americans wanted when they visited China. He
focused on meeting their needs and had seen many projects and sales through to completion. He attributed
his impressive sales record to the fact that he was unafraid to take initiative.

In November of 2012, Daniel Wang’s ambition to find a U.S.-based company with products he could sell had

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brought him to the 6th International Trade Fair for Construction Industry and Construction Related Compa-
nies, held in the Pudong Area of Shanghai. Opportunities in construction were plentiful, with prospects to build
roads and parking lots in smaller cities and rural areas. He had learned that small businesses in the United
States had products to sell in China, but Chinese law made it difficult for them to hire a salesperson. It was
challenging for foreign companies to hire Chinese employees unless they established a limited partnership or
Wholly Foreign-Owned Enterprise (WFOE), a common investment vehicle for China-based business wherein
foreign parties (individuals or corporate entities) could incorporate a foreign-owned limited liability company.
He reasoned that if he established a consulting company, which wasn’t at all difficult for a Chinese national,
then the foreign company could directly pay his sales commissions through his consulting company.

Daniel had walked many kilometers the first day of the show, making his way down aisle after aisle of con-
struction equipment and display booths. Nearly two-thirds of the stalls were Chinese companies. All the U.S.
companies he saw the first day were selling construction equipment, but not road material.

Finally, mid-afternoon on the second day, he came across a booth with the product he thought would sell
well. Daniel had the contacts for this product, developed the last six years while he’d been arranging tours
with governmental agencies. The sign announced, “Utah Asphalt.” He introduced himself to a man wearing a
wrinkled dress shirt with contrasting collar and tie. Instead of a jacket, he wore suspenders. His dress slacks
lacked the crease that Daniel considered important for a polished look.

Daniel introduced himself. “I’m Daniel Wang,” he said.

The man reached out his hand. “Hello there! I’m Jack Bailey.” He shook Daniel’s hand vigorously. “We have
some of the best asphalt in Utah. We also have a new green-product called porous asphalt, which is great for
parking lots. Depending on quantity, I can give you a fair price on our quality materials.”

Daniel sucked in his breath, taken aback by Jack’s rudeness at talking business so quickly. Daniel was sure
this man had little success selling his product in China because he lacked sophistication at understanding the
Chinese consumer. He dropped Jack’s hand and looked around the booth, taking in displays on road pave-
ment and porous asphalt, all in English.

“Let me show you our porous asphalt.” Jack pointed to a tablet computer on the display table.

“Okay,” said Daniel, stepping over to the tablet.

Watching the video, Daniel was impressed. As someone sprayed the parking lot with large quantities of water,

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the porous asphalt absorbed the water into a bed of rocks below the asphalt instead of the water sheeting off
into drains. This helped return rainwater into the ground instead of washing into the gutters.

“Besides porous asphalt for parking lots, we’ve also got a high-quality product that can be used for roads and
easily lasts 20 years. Utah Asphalt’s quarry contains higher percentages of binding material than most other
quarries. Our quality is far better than most, we can easily ship it to you in dry form, and our price is better
than most as well.”

Daniel imagined the advantages of Utah Asphalt’s products in rural parts of China, places that lacked sewers
and other mechanisms to avoid flooding. He felt confident he could sell it to the local officials. They were the
ones that approved the building of roads and parking lots in each geographic area.

“How much are you looking to purchase?” Jack had a friendly smile.

“Your product’s very good.”

Jack tilted his head, “Thank you. I’m very proud of our company.”

“I have never seen porous asphalt. It is unique.” Daniel asked more questions about the product and praised
what he heard. “Mr. Bailey, how do you envision to sell in China?”

“Well, we thought we’d hire someone from here to sell for us, but we heard it’s very challenging.”

“Ah, I see.” Daniel cleared his throat. Remembering how direct people from the United States were on his
previous job of arranging tours, he began his pitch. “Mr. Bailey, do you already have a Chinese business part-
ner?”

Jack pushed his hand through his hair. “No, not yet at least. It’s expensive to operate a business in China. For
now, I’m hoping to take orders during trade shows.”

The two men continued to talk about Utah Asphalt, and U.S. and Chinese businesses. They agreed to meet
later that evening. Over dinner and a few drinks, Daniel learned that Jack Bailey was a very experienced
salesman and a manager in the asphalt industry but knew very little about sales in China. He was born and
college-educated in the United States. Like Daniel, Jack felt that his success was a result of his ability to take
initiative. Jack had been with Utah Asphalt for 10 years as the General Manager of Western Operations. He
believed that a company’s success was based on the quality of its product and its price. Daniel told him that
he had opened a consulting company in Szechuan Province.

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Daniel took Jack to karaoke and they rented a private room. He told the server to keep the drinks coming. He
encouraged Jack to pick songs he knew and they laughed, sang, and enjoyed themselves until 2 a.m. Daniel
ordered a car and delivered Jack to his hotel before going to his own hotel.

Having agreed the night before to meet in the morning, Daniel arrived at Utah Asphalt’s booth dressed in an-
other quality suit. He felt good about his ability to go out drinking and still get up in the morning ready to work
hard.

Jack arrived 45 minutes later, looking like he had slept in his shirt.

“Good morning, Jack.”

Jack groaned and ran his hand through his barely combed hair. “You look chipper today. How’d I get home
last night?”

Daniel laughed.

Jack peered at Daniel, “I think you told me last night that you were a good salesman.”

Daniel’s face flushed. “I have been very lucky.”

“There must be more to it than that. How have you been successful for such a young man?”

“I’m lucky that I’ve always found a way to turn a ‘no’ or ‘maybe’ into a ‘yes.’ I have many contacts with govern-
ment officials and organizations. I have very good stamina and can stay out late and still arrive at work early
the next morning.”

“I noticed you seem to be much better off this morning than I am.” Jack scratched his chin. “Hey, I have an
idea. Would you consider selling asphalt?”

Over several more conversations via Skype and email, Daniel and Jack came to an agreement about Daniel
selling asphalt in China for Utah Asphalt Company. Utah Asphalt flew Daniel to Utah to visit the plant and
to complete negotiations. Jack met him at the airport with his wife and they took Daniel to dinner. The next
morning, he got a tour of the plant and Jack introduced him to his boss and staff.

After some discussion, Daniel agreed to work for commission of 3% on overall sales. For incentive, they of-
fered him 1% on additional sales over USD 3 million.

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Daniel kept a straight face, but inside he was happy. He had only one more requirement to guarantee his
success. “I will need sales expenses to attract the customer,” Daniel explained.

“Of course, we’ll cover sales expenses. You’ll need brochures in Chinese, advertising, travel expense, meals
with the clients, and other expenses, I’m sure.”

“Yes, yes, this will make us very successful. I have many contacts. I’ll make Utah Asphalt very prosperous.”

For lunch, Jack took Daniel to his favorite pizza place.

“Do you like pepperoni pizza?” Jack asked.

“Yes, it’s my favorite.”

“Mine too.”

“Do you like Coke or Pepsi?” Daniel asked.

“Coke.”

“Me too! We have a lot in common.” Daniel grinned. “You know, Jack, we are similar in how we do business
as well. You are outgoing and friendly with all of your employees. I can see that you are respected amongst
your coworkers. You are a very smart and astute businessman.”

What Daniel didn’t mention was the difference in how they dressed. He felt that Jack lacked a certain sharp-
ness that most successful people had. Jack was the kind of guy who would buy a lot of new dress shirts and
forget to buy hangers. He wore shirts with contrasting collars complemented by loud ties. Daniel thought that
Jack’s outfits were tacky and out of fashion.

“You have a distinctive way of dressing,” Daniel added. “I notice you always wear white shirts with contrasting
collars, a bright tie, and matching suspenders.”

Jack nodded. “Yup, a different color for every day of the week. I find it’s a good way to stand out from the
crowd and for clients to remember me.”

Daniel nodded, but said nothing.

After work, Jack pointed out a few sights in Salt Lake City on their way to dinner. Over drinks, Daniel explained
China’s development into a capitalist state. He pointed out that “Look for Money” had replaced the official slo-
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gan “Look Forward,” and that these phrases—“money” and “forward”—had exactly the same pronunciation in
Chinese.

They shared a vision of Utah Asphalt’s future overseas. They discussed China’s undertaking of massive high-
way construction projects throughout the country, and how each contract would be negotiated with local gov-
ernments, all to the benefit of Utah Asphalt and Daniel.

Between December and January, Daniel put together several well-organized bids for road construction for
local governments. He made several modest sales.

In mid-January, the company sponsored Daniel and his wife on a trip to Las Vegas. Daniel told Jack they
were impressed with the lights of the Las Vegas hotels, circuses, Paris, and pyramids. They also enjoyed the
variety of entertainment available in the casinos—food, slot machines, and shows.

Daniel returned to China and for the next few months, he continued to report progress in his negotiations.
Jack seemed happy that Daniel was selling their product and worked hard.

For Business or Pleasure

In May of 2013, Daniel came to North America with a group of Sichuan provincial officials, ostensibly to in-
spect Utah Asphalt’s research facility and headquarters.

Upon arrival, the group stayed in Las Vegas. When Jack asked why they had not come immediately to the
production facility in Utah, Daniel explained that they would be attending an “exhibition.”

“When can we expect your group to come for a tour of the plant? I want them to see the quality of our prod-
ucts.”

“Jack, it isn’t necessary for us to come to see the plant. Our visit to Las Vegas is sufficient to convince these
officials that we offer a good product. It’s very normal in China for business deals to close over the dinner
table.” Daniel decided not to mention that he had purchased chips for the five men to do some gambling. He
told his guests that the chips came with the hotel room.

Daniel tried to explain again. “These men are from Mianyang and they expect special treatment. The people
in this city are not as business savvy as the people in Shanghai.”

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Jack reiterated his desire for the officials to visit the Utah facilities so Daniel convinced them to go the next
morning. That last night in Las Vegas, the head official of Mianyang hinted that he would enjoy company that
evening in his room. The other men hinted that they would enjoy a similar experience. Daniel wasn’t sure
what he should do, but finally decided to oblige his guests. He found an escort service on the Internet and
called them. He was told their fees were USD 200 per escort plus the girl’s “tip” to be discussed with the client.
Daniel thought it was a reasonable fee and that it would be easy to disguise it in his final expense report. At
around 1 am the head delegate called him concerned that his companion wanted a USD 650 “entertainment
and tip fee.” Dismayed, but trying to stay calm, Daniel arranged for each of his guests to receive an envelope
to tip his evening host.

The next morning, the delegation made the short flight to Salt Lake City. During the Utah visit, the officials
showed only polite interest in the product. Jack suggested to Daniel that they all go to his favorite pizza parlor
for lunch. Daniel, knowing the inexpensive restaurant would insult his guests, told Jack that the businessmen
wanted to do a little shopping before heading back to the airport.

“Look Daniel, what goes here?” Jack’s eyes narrowed. “Something doesn’t square up. They don’t seem at all
interested in our product.”

“Jack, believe me, this has been a successful trip. You’ll see. I am almost certain we will have a contract
soon.”

Culture and Ethics

In June, Daniel closed a USD 4 million contract in Mianyang. Daniel calculated the expense report (see Ex-
hibit A). He sent Jack a copy of the contract as well as a huge expense report detailing the group’s North
American tour in which he included all their entertainment but did not itemize the entertainment expenses
(see Exhibit B).

An hour after he sent in the contract, Daniel received a call from Utah.

“Daniel, I just received your expense report. The visit to our plant and the stopover in Las Vegas cost over
USD 72,000 for three days. I can’t imagine how you spent this much money. Explain to me your sales ap-
proach.”

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Daniel stuttered when he said, “I figure out who I need to convince to make the sale.”

“Go on,” Jack said.

“Usually we get to know each other better. It’s important to build trust.”

“How do you get to know each other better?”

“I will take them to good meals.”

“And buy them drinks, right?”

“Yes. It is essential, especially for the older businessmen. They are the ones that purchase our materials. It
helps lubricate deal-making. Traditionally, business drinkers gather around the dinner table and everyone has
to make at least one toast. We drink baijiu, which is very powerful. The younger generation prefers a good
red wine at home with friends or buying mixed drinks at a bar, but not the older generation.”

“Do you buy them gifts or give them money?” Jack asked.

“Oh, no. Gift giving is strictly prohibited in China.”

“Then tell me about this entertainment expense I see on your expense report. If you didn’t buy them gifts, how
could you spend so much money?”

“I bought gambling chips and told them it was from the hotel.”

“USD 1,123 each day for each person!”

“No, I took them to a Las Vegas show on two nights.”

“Okay, that’s a maximum of USD 250 each night per person. Where are the receipts for these expenses?”

“I didn’t know you needed them. It is part of my consulting business.”

“No, your commission is part of your consulting business. Your expense is additional, and I need those re-
ceipts. Please send them to me today.”

Jack hung up. Daniel pondered his problem but decided he would send all the receipts and hoped Jack would
understand.

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Jack called him back.

“Tell me you didn’t get our guests prostitutes,” Jack seethed.

“Oh, no, Jack. Never prostitutes. No, these were escorts that are legal in Las Vegas.”

“What’s the difference besides the price? I can’t believe this.”

“Please let me explain. The head of the delegation hinted he would like company on our last night in Las
Vegas. The others, of course, agreed. I tried to get a good deal and was quoted USD 200 per escort when
I called the company. I didn’t know that was just the agency fee. The women required additional fees when
they visited the men’s rooms. It upset our clients. What could I do, but arrange to pay the cost?”

“How can I explain this to my boss? This is totally unethical!”

“No, Jack. I am not an unethical person! I’m doing what’s best for the company to make sales in China.”

They each hung up angry. An hour later, Jack sent an email forbidding Daniel to bribe officials. Daniel won-
dered what he should do.

Discussion Questions

1. What are the key areas of difference in how Daniel and Jack view the situation from Daniel’s point of
view? What role did cultural differences play in their different perceptions?
2. How did differences in ethical approaches contribute to the conflict between Daniel and Jack? What
pressures does Daniel face and what are the messages he is getting from the corporate office?
3. If Jack and Daniel are going to have another conversation, how can Daniel use the ladder of inference
to examine his assumptions? How can they both use advocacy and inquiry to improve the dialogue?
4. Why is cultural intelligence an important set of capabilities for managers and employees? How would
you assess Daniel and Jack’s cultural intelligence based on the facts of the case?
5. What can Daniel and Jack do to increase their cultural intelligence? What management practices
could increase cultural intelligence among employees at Utah Asphalt?

https://doi.org/10.4135/9781526479556

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