REPORT

ON
CULTURAL & MANAGEMENT PRACTICES IN CHINA

Report on
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Culture and Management practices in China Course no. 402

Submitted To
Mrs.Ferdousi Sultana Associate Professor Department Of Management Studies Faculty of Business Studies University Of Dhaka

Submitted By
No 1 2 3 4 5 Name Sharmin Sultana Md. Didarul Islam Sobal Shila Nasrin Md.Mojammal Hoq Md.Mahamudul Islam Group- 01 Section-A BBA 14th Batch Department Of Management Studies Faculty of Business Studies University Of Dhaka ID no. 001 010 020 030 040

DATE OF SUBMISSION: March 01, 2011

Letter of Transmittal

March 01, 2011

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Mrs.Ferdousi Sultana Associate Professor, Dept. of Management Studies University of Dhaka Subject: Final Report on the Analysis of cultural and management practice in China. Dear Madam, As per your order we have completed assessment of analysis on cultural and management practices in china. We have concentrated on different parts of the report but the main concentration was on the management and negotiation practices. We found that they are very much are very much efficient in performing their managerial practices activities in China.

Sincerely, GROUP- 1 BBA 14th batch, Sec: A, Dept. Of Management Studies University of Dhaka

Executive Summary
China is one of the worlds major countries. Its situated in central and East Asia. Its known because of its rich population, a rising economic super power and its different style of management. China is a country with golden history. Especially, its Chinese Revolution brought a lot of progress in all its sectors. . World politics is becoming even more dynamic and different blocs
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are emerging in the world. These blocs are of multiple nature, among them are the countries, which are although included in developing countries, but they are trade winners. Their G.D.P rate is increasing continuously. So is the case with china. China is an emerging nation. Experts say that its GDP rate will cross the GDP rate of America until 2001.Nowadays the business organizations of China are becoming very much improved because of their efficient and effective management practice. China's economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. Now China is characterized as a potential superpower by a number of academics, military analysts, and public policy and economics analysts. It is now the world's third largest economy, after the United States and Japan. Negotiation in China are that senior members of the negotiating team will speak. Designation is on the most senior person in your group as your spokesman for the introductory functions. Business negotiations occur at a slow pace. Be prepared for the agenda to become a jumping off point for other discussions. Chinese are non-confrontational. They will not overtly say 'no', they will say 'they will think about it' or 'they will see'. Chinese negotiations are process oriented. They want to determine if relationships can develop to a stage where both parties are comfortable doing business with the other. .

Table of Contents
Serial 2.1 2.2 2.3 2.4 3.0 Topics Page no. 05 06 08 08 11

Chapter- 2
Introduction China-profile Economic overview Leading sectors of business in China

Chapter-3
Culture of China
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3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12

Language (Verbal) Chinese spoken language Differences between English and Mandarin language Language (Non-verbal) Religion Values and Beliefs Dining Etiquette Gift Giving Etiquette Chinese business culture and practice Geert Hofstede Analysis of China Chinese business customs Differences between business culture of East and West

12 12 13 14 14 16 17 18 19 20 22 24

Chapter -4
4.0 4.1 4.2 4.3 4.4 4.5 4.6 5.0 5.1 5.2 Management practice in China Planning in China Organizing in China Staffing in China Leadership in China Controlling in China Decision making Negotiation in China
Chinese Negotiation practice contains some elements they are ---

25 25 25 26 26 27 28 28 29 30

Chapter-5

Suggestion for negotiating with the Chinese

6.0

Entry modes for Bangladesh Conclusion Appendix

Chapter-6

31 41 42

Chapter - 1
China is one of the worlds major countries. Its situated in central and East Asia. Its known because of its rich population, a rising economic super power and its different style of management. China is a country with golden history. Especially, its Chinese Revolution brought a lot of progress in all its sectors. . World politics is becoming even more dynamic and
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2.1 Introduction

different blocs are emerging in the world. These blocs are of multiple nature, among them are the countries, which are although included in developing countries, but they are trade winners. Their G.D.P rate is increasing continuously. So is the case with china. China is an emerging nation. Experts say that its GDP rate will cross the GDP rate of America until 2001. With more than 4000 years of history, China has the oldest civilization. In Ancient times, Xia Tribe, establish a state in the area of the Huang He River (Yellow River) basin. The tribesmen, believing that this was the center of the world, called this state the Middle Kingdom and regarded the surrounding areas as peripherals. Thus China has been known by this name even after the 1911 Revolution which abolished the feudal monarchy and gave birth to the Republic of China. Further again in 1949, after a long struggle, the Chinese communist party under the leadership of chairman Mao Zedong led the Chinese people of all nationalities to over throw the rule of imperialism, feudalism, and capitalism, gaining victory for the new democratic revolution and establishing the Peoples Republic of China. From then Chinese people took control of their countrys fate and became its masters. For centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences, but in the 19th and early 20th centuries, the country was beset by civil unrest, major famines, military defeats, and foreign occupation. After World War II, the Communists under MAO Zedong established an autocratic socialist system that, while ensuring China's sovereignty, imposed strict controls over everyday life and cost the lives of tens of millions of people. After 1978, MAO's successor DENG Xiaoping and other leaders focused on marketoriented economic development and by 2000 output had quadrupled.

2.2China-profile:

Capital:: Beijing Total Population: 1.330.141 Annual growth rate:: 0.51% Density:: 142.02/km2 Urban population:: 43% . Population of Shanghai (17.900), Guangzhou (Canton) (15.300), Beijing (13.200), Shenzhen (9.400), Wuhan (9.000), Tianjin (8.200) Official language: In China, the national language is Mandarin. However, it is to be noted that there are many different dialects and variants of it.

Other languages spoken: There are more than a hundred dialects. You can differentiate Mandarin in the north and Cantonese in the south of the country. The official language coexists with the other languages of the autonomous regions (Mongolian, Uyghur, Korean, Tibetan...). Business language: When the foreigners do not speak Chinese, business discussions are generally held in English. The Chinese do not speak English as well as they read or write it. Ethnic Origins:: Chinese: 91.9%; Zhuang, Oughour, Hui, Yi, Tibetan, Miao, Mandchous, Mongol, Buyi, Korean and other nationalities: 8.1%. Beliefs: The Chinese are generally atheists. However, Buddhism, Taoism and Confucianism are relatively widespread amongst senior citizens and attracts a part of the well-to-do class today. There are also Christian and Muslim minorities. Tele communication profile : Telephone Codes : 00 To make a call to : +86 Internet Suffix : cn Type of State:: The People's Republic of China is a communist state. Deng Xiao Ping had suggested the phrase "market socialism" to qualify the evolution of the PRC. China corresponds to a centralised unitary state completely managed by the Chinese Communist party with a great national administration, authoritative in its structure as well as its ideology. Type of economy:: Country with intermediate income (low bracket), emerging financial market. AT last it can be said about China that largest population in the world; highest GDP growth rate in the world over the last 10 years.

Source: www.cia.gov

2.3 Economic overview

China's economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more marketoriented economy that has a rapidly growing private sector and is a major player in the global economy. Reforms started in the late 1970s with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, the foundation of a diversified banking system, the development of stock markets, the rapid growth of the non-state sector, and the opening to foreign trade and investment. Now China is characterized as a potential superpower by a number of academics, military analysts, and public policy and economics analysts. It is now the world's third largest economy, after the United States and Japan. Below is the economic overview of China

GDP( Purchasing Power Parity GDP- Real growth rate GDP- Per Capita (PPP) GDP- Composition By Sector

$8.789 trillion (2009 est.) 8.7% (2009 est.) $6,600 (2009 est.) agriculture: 10.6% industry: 46.8% services: 42.6% (2009 est.) $2.434 trillion (31 December 2008) 4.3% (September 2009 est.) $297.1 billion (2009 est.)

Stock of money Unemployment rate Current account balance

2.4 Leading sectors of business in China:

Contacting Chinese Companies
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Medium-sized and small companies are more and more trying to benefit from export to China. However they are hindered by high investment costs and administrative hurdles in China. Based on the above, the following points are introduced on how a contact can be obtained and which marketing opportunities are available to companies desiring to enter the Chinese market.

Automotive Companies
Chinas automotive sector is growing at an astonishing rate. Auto makers from all over the world want to sell in the worlds fastest growing auto market. However, the real winner in this industry will be China which is fast building an automotive industry of its own with the help of foreign investors. Click here for company profiles for the biggest players in China's automotive sector. Aviation Companies In this section you can find company profiles for China's largest air lines including Air China and China United Arilines. The company profiles will provide you with information on company history, passenger numbers, growth and development, recent news and future projects and company goals. The largest airline in China is Air China operating a fleet of over 200 Boeing and Airbus craft to more than 250 domestic and international destinations. No other airline offers so many flights to the Chinese capital Beijing, or onward flights to regional points in China.

Banking Companies
Banking has become an extremely competitive business in China since the countries entry into the World Trade Organisation (WTO) and the development of a rapidly decentralising market driven economy. This section will provide you with detailed company profiles for the largest banks in China. Including information on the history of the banks and future projects and goals.

Energy Companies
With Chinas unquenchable thirst for energy the sector has grown dramatically in recent years. Justin Yifu Lin the chief of the China Centre for Economic Research at Beijing University claims that China uses 15% of the worlds energy. Sinopec is Chinas largest producer and supplier of oil and petrochemical products and Chinas second largest producer of crude oil. PetroChina supplies the country with natural gas and oil and according to the Forbes ranking is the largest publicly owned company in China. This section with provide you with company profiles for the largest energy firms in China.

Insurance Companies
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The insurance industry in China has grown enormously in recent years. Between 1999 and 2000 premium insurance revenues grew by 14.5% to 159.59 billion RMB. According to the Forbes rankings of the top forty largest companies in China the top ten contains two insurance firms, China Life Insurance and Ping An Insurance. In this section you can find detailed company profiles for the biggest players in the Chinese insurance industry including company histories, revenues, profits, market values and future goals and ambitions.

Materials Companies
In recent years Chinas economy has grown steadily and at a fast rate rate, and so has demand for materials to produce everything from automobiles to household appliances. Chinas unquenchable thirst for construction has also led to high demand for materials. For Chinas numerous ambitious construction projects it is estimated the country is currently using half the worlds concrete and a third of its steel supply.

Telecommunication Companies
The telecommunications industry in China has grown exponentially in recent years. China Mobile is now the largest mobile phone provider in the world with a customer base of more than 269 million people. The company also has a registered capital of 58.2 RMB and investment capital of approximately 400 billion RMB. By clicking here you will be able to view company profiles for the largest telecommunications providers in China. These profiles will include company histories, customer base, figures on growth and development and future projects and goals

The draft Industrial Policy, 2004, which is yet to be finalized and published, is supposed to contain 33 "thrust sectors, according to media reports. However, in the Export Policy 2003-2006, the Government had identified the following five sectors to have "High Priority": Software and ICT products; Agro-products and agro-processing products; Light engineering products (including auto-parts and bicycles); Leather goods; and High value-added readymade garments

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In 2009, Chinese direct investment abroad in non-financial sectors increased by 6.5% to USD 43.3 billion dollars. China is one of the few countries that experienced growth in its direct investment abroad during the financial crisis. Thus from the overview points , it can be said opportunity lies in Large sector as well as SME in China .So if companies want to do business in China in SME swector they have to think Many companies have come to think that sending out quotations on product is the way to measure new opportunities. In China, the price received on a quotation is not the true cost of an opportunity. Logistics, lead times, material prices, exchange rates, quality considerations are just some of the factors that measure into cost. Now, more than ever, understanding the factors that affect cost is important in developing a good sourcing strategy. In this regard supplier considerations including: RMB appreciation VAT Quality Service provision, and more.

3.0 Culture of China

Chapter 2

The Culture of China is one of the world's oldest and most complex cultures. The area in which the culture is dominant covers a large geographical region in eastern Asia with customs and traditions varying greatly between towns, cities and provinces. Chinese culture has several distinct elements. In this report we are going to cover the following elements of Chinese culture. Language Religion Values Customs

3.1 Language (Verbal)

Chinese now has earned itself greater status in the World. About one-fifth of the worlds population, or over one billion people, speak some form of Chinese as their native language. The Chinese language has over 400 dialects in continental China alone. The people of each province have a special dialect, and then the people of each city, town, and village have their own special dialect as well. However the official national spoken language of China (except in Hong Kong and Macau) is Standard Mandarin. Over 90% of Chinese people speak Mandarin, but also may very likely speak another dialect. Standard Mandarin has eight dialects. They are--Beijing Mandarin
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Northeastern Mandarin Ji Lu Mandarin Jiao Liao Mandarin Xhongyuan Mandarin Lan Yan Mandarin Southwesten mandarin Jianghuai Mandarin

Source:en.wikipedia.org

3.2 Chinese spoken language

The Sinitic languages, often synonymous with the Chinese languages, are a language family frequently postulated as one of two primary branches of Sino-Tibetan. The Bai language may be Sinitic (classification is difficult); otherwise Sinitic is equivalent to the Chinese languages, and often used in opposition to "Chinese dialects" to convey the idea that these are distinct languages rather than dialects of a single language. There are Chinese spoken languages and the number of people who are using these languages in speaking.

3.3 Differences between English and Mandarin language

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There is a very clear distinction between English and Chinese language. The two languages are of two different language families, English comes from Indo-European and Chinese from SinoTibetan, this gives rise to many more differences in mode of expression, grammar, syntax, meaning system. The major differences between Chinese and English are as follows. Point of Differences Phonology English In English, changes in pitch are used to emphasize or express emotion, not to give a different word meaning to the sound. Alphabet Chinese does not have an There have specific set of alphabets alphabet but uses a logographic system for its written language. Tense & Verbs Uninflected language and English much information is conveys meaning through carried by the use of auxiliaries and word order. by verb inflections: is/are/were. Articles Dont use Use Articles Phrasal Verbs Dont use Use Phrasal Verbs e.g. give in, put on etc. Source: http://esl.fis.edu Mandarin It uses the pitch of a phoneme sound to distinguish word meaning.

3.4 Language (Non-verbal)

Nonverbal language is the process of communication of sending and receiving wordless messages through gestures, posture, touch or by facial expression and eye contact. Every culture has some form of non-verbal language that conveys certain messages to other people which if not understood, can be quite confusing for the people of another culture. Chinese non-verbal form of communication has a few distinguishing signs which are quite shocking for a culture like ours. For example To show curiosity When Chinese people find something is curious, they may glare blankly at it for too long. For mourning In China, people will cry sadly at the funeral rites. According to Chinese culture, people who dont cry when attending the funeral are not filial persons. To show anger When people get angry or irritated over someones craziness or foolishness they usually make a circular motion near the temple or ear to show that someone is crazy, because to the psychology, crazy man is something wrong with his brain. But in China it is just a gesture of thinking.
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To point at something Where we use the index finger to point at something. Chinese people use an open palm. It is considered offensive to point a finger at someone in China. Source: (Cultural differences in Body Language -- Huan Jianfei)

3.5 Religion
The People's Republic of China was established in 1949. Its government is officially atheist, which viewed religion as emblematic of feudalism and foreign colonialism. Religious belief or practice was banned because it was regarded as backward and superstitious by some of the communist leaders, from Vladimir Lenin to Mao Zedong, who had been critical of religious institutions. This policy relaxed considerably in the late 1970s at the end of the Cultural Revolution and more tolerance of religious expression has been permitted since the 1980s. The 1978 Constitution of the People's Republic of China guarantees "freedom of religion. However, the Chinese government has also banned certain new religious movements such as the Falun Gong and Xiantianism in recent times. At present there are five recognized religions by the state, namely Buddhism, Taoism, Islam, Catholicism, and Protestantism. The religious practice called as Confucianism is now regarded as an ethical and philosophical system rather as a religion.

Religious Distribution & Description

Buddhism is a religion and philosophy encompassing a variety of traditions, beliefs and practices, largely based on teachings attributed to Siddhartha Gautama, commonly known as the Buddha. Buddhism spread from India to China some 2,000 years ago and is the largest organized religion in China since its introduction in 1st Century Confucianism is a Chinese ethical and philosophical system developed from the teachings of the Chinese philosopher Confucius. It is a complex system of moral, social, political, philosophical, and quasi-religious thought that has had tremendous influence on the culture and history of East Asia. It might be considered a state religion of some East Asian countries, because of governmental promotion of Confucian philosophies. Confucianism is a system of behaviors and ethics that stress the obligations of people towards one another based upon their relationship. The basic tenets are based upon five different relationships: . Ruler and subject . Husband and wife . Parents and children . Brothers and sisters . Friend and friends
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Confucianism stresses duty, sincerity, loyalty, honour, filial piety, respect for age and seniority. Through maintaing harmonious relations as individuals, society itself becomes stable. Taoism (or Daoism) refers to a variety of related philosophical and religious traditions that have influenced Eastern Asia for more than two millennia. The word Tao roughly translates as, "path" or "way" (of life). Taoism has a history of over 1,700 years in China. There are numerous Taoist temples and priests in China even now Islam is followed by ten National minorities in China .Islam was introduced in China in the 7th Century and even now there are several mosques in China served by the Imams. Catholicism is the term referring to Christians and churches belonging to the Roman Catholic Church. Catholicism was introduced in the 7th century; it became popular only after the Opium War. There are around 4,600 churches now in China. Protestantism is one of the four major divisions within Christianity. Protestantism gained ground in China with the end of the Opium War and presently there are around 10 million Protestants in China.

3.6 Values and Beliefs

The Chinese people have strong values and beliefs that have been developed for thousands of years. The Chinese are strongly influenced by the Confucian Philosophy. As a result their values and beliefs reflect Confucian beliefs and values. The chief values of Chinese people that can be pointed out are ---- Moralities: Chinese develop their moralities into several areas: for the nation, for the family, for the friend, for others, and for the society. They have been taught to be loyal to their nation, and even the leader of the nation. Charity: Chinese believe that all humans are born with kindheartedness, so they treat others peacefully and their ideal society is the world without arguments, fighting, stealing, and robberies. Ethic of the family: Everybody is raised by the family. The family becomes the center of Chinese people's life. The influence of the concept is that there are seldom arguments in the family. Children are filial and respect their parents, show love and respect to brothers and sisters. Parents get taken good care by their children when they are old. Veneration for intellectuals: In traditional Chinese social position, the intellectual is always in the highest level, then the farmer, the worker, and the businessman is the lowes

3.7 Dining Etiquette . Chinese prefer to entertain in public places rather than in their homes, especially when entertaining foreigners.
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. If you are invited to their house, consider it a great honour. If you must turn down such an honour, it is considered polite to explain the conflict in your schedule so that your actions are not taken as a slight. Arrive on time. Remove your shoes before entering the house. Bring a small gift to the hostess. Eat well to demonstrate that you are enjoying the food! Table manners: Learn to use chopsticks. Wait to be told where to sit. The guest of honour will be given a seat facing the door. The host begins eating first. You should try everything that is offered to you. Never eat the last piece from the serving tray. Be observant to other peoples' needs. Chopsticks should be returned to the chopstick rest after every few bites and when you drink or stop to speak. The host offers the first toast. Do not put bones in your bowl. Place them on the table or in a special bowl for that purpose. Hold the rice bowl close to your mouth while eating. Do not be offended if a Chinese person makes slurping or belching sounds; it merely indicates that they are enjoying their food. There are no strict rules about finishing all the food.

3.8 Gift Giving Etiquette

. In general, gifts are given at Chinese New Year, weddings, births and more recently (because of marketing), birthdays. . The Chinese like food and a nice food basket will make a great gift.

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. Do not give scissors, knives or other cutting utensils as they indicate the severing of the relationship. . Do not give clocks, handkerchiefs or straw sandals as they are associated with funerals and death. . Do not give flowers, as many Chinese associate these with funerals. . Do not wrap gifts in white, blue or black paper. . Four is an unlucky number so do not give four of anything. Eight is the luckiest number, so giving eight of something brings luck to the recipient. . Always present gifts with two hands. . Gifts are not opened when received. . Gifts may be refused three times before they are accepted.

Source:http://cidb1ed5e535d30c0d7.spaces.live.com/blog/cns!B1ED5E535D30C0D7!453.entry

3.9 Chinese business culture and practice

The Chinese business practice is vastly different from the Western method that most of us may be used to. Nevertheless, with the reform of Chinese economy in the past 30 years Chinese business practice are now beginning to align with more conventional methods. However, China will always have their own unique business culture and etiquette, given their unique history and background. In this section we are attempting to illustrate the Chinese business culture and practices.

Business Meeting Etiquette

on white background. Colours have special meanings and if you are not careful, your colour choice could work against you.

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. Presentations should be detailed and factual and focus on long-term benefits. Be prepared for the presentation to be a challenge. . Appointments are necessary and, if possible, should be made between one-to-two months in advance, preferably in writing. . If you do not have a contact within the company, use an intermediary to arrange a formal introduction. Once the introduction has been made, you should provide the company with information about your company and what you want to accomplish at the meeting. . Visual aids are useful in large meetings and should only be done with black type . You should arrive at meetings on time or slightly early. The Chinese view punctuality as a virtue. Arriving late is an insult and could negatively affect your relationship . Pay great attention to the agenda as each Chinese participant has his or her own agenda that they will attempt to introduce. . Send an agenda before the meeting so your Chinese colleagues have the chance to meet with any technical experts prior to the meeting. Discuss the agenda with your translator/intermediary prior to submission. . Each participant will take an opportunity to dominate the floor for lengthy periods without appearing to say very much of anything that actually contributes to the meeting. Be patient and listen. There could be subtle messages being transmitted that would assist you in allaying fears of on-going association. . Meetings require patience. Mobile phones ring frequently and conversations tend to be boisterous. Never ask the Chinese to turn off their mobile phones as this causes you both to lose face. . Guests are generally escorted to their seats, which are in descending order of rank. Senior people generally sit opposite senior people from the other side. . It is imperative that you bring your own interpreter, especially if you plan to discuss legal or extremely technical concepts as you can brief the interpreter prior to the meeting. . Written material should be available in both English and Chinese, using simplified characters. Be very careful about what is written. Make absolutely certain that written translations are accurate and cannot be misinterpreted. This section contains: Geert Hofstede analysis of China, Chinese business customs, management practices, negotiation presentation to be a challenge. tactics.

3.10 Geert Hofstede Analysis of China

Geert Hofstede is an influential Dutch organizational sociologist, who studied the interactions between national cultures and organizational cultures. Geert Hofstede found five dimensions upon studying the culture of different societies. Analysis of China by Geert hofstede reveals the following characteristics of Chinese people. Power Distance: This dimension measures how much the less powerful members of institutions and organizations expect and accept that power is distributed unequally.
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China scores 80 in Power Distance which is very high if compared to other countries of the world. Because of this high score -- Decisions are taken mainly by top management. Decisions taken by top management are readily accepted by employees. Moving up the corporate ladder becomes very hard.

Source: http://www.geert-hofstede.com/hofstede_china.shtml, Cross-cultural challenges when doing business in China by Zhang Zigang Singapore Management Review January 1 2004

Individualism

This dimension measures how much members of the culture define themselves apart from their group memberships. China is low in individualism. Individualism score is only 20. As a result-- They follow we concept rather than I concept. Depend more on groups or institutions to determine what they should do and emphasis loyalty to the group. More likely to cooperate with others to avoid risks and reduce responsibilities. Appreciate duty to the group and harmony among its members while pursuing personal goals is viewed rather negatively

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Masculinity: The value placed on traditionally male or female values and the role differentiation in a society. China scores 66 in Masculinity. This shows there is still differentiation and discrimination between male and female. Uncertainty Avoidance: How much members of a society are anxious about the unknown, and as a consequence, attempt to cope with anxiety by minimizing uncertainty. China is low in uncertainty avoidance. Uncertainty avoidance score is only 30. Therefore--- Managers dont plan much; when they plan it tends to be much relaxed. Dont think much about minute details of the contractual relationship. More readily accepts change They prefer more experimental jobs. Long-Term Orientation: A society's "time horizon or the importance attached to the future versus the past and present. Chinese people are very long term oriented. Their score in this dimension is 118. They prefer to know a client well at first then they starts dealing. Initially focus more effort on building social relations. Tend to continue relationship with a business partner for a long period of time.

3.11 Chinese business customs

Chinese business customs differ greatly from the west. They have specific decorum for every aspect of business related tasks like greeting, seating, dress code, gift giving, eating etc. Greetings: When greeting each other or meeting acquaintances nodding of the head or shaking hands is acceptable. This applies to greetings between the same sexes and the opposite sexes. A handshake may linger for longer than is normal in Western culture - this is a gesture of respect. Dress: Chinese tend to dress formally. Therefore when they say `informal', they expect you to wear a shirt, tie and pants, but never shorts. White is used for funerals it is to be avoided. Red, suggests power, prosperity and authority, and is the preferred color in China. Names: Chinese place the surname (family name) first then the personal name. Women normally keep their own family name. Unless invited to do so use of personal names or nicknames should be avoided. Punctuality: Punctuality is important, as it can be interpreted as a measure of courtesy and professionalism. Gifts: It is appropriate that gifts should be given on the appropriate occasion, such as the farewell banquet or at the conclusion of an important introductory meeting. The gift should be made as a formal presentation to the entire group as a gesture of goodwill and friendship.
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Extremely valuable gifts shouldnt be given because; the Chinese may take it with suspicion which can cause undesirable consequences. . In general, gifts are given at Chinese New Year, weddings, births and more recently (because of marketing), birthdays. . The Chinese like food and a nice food basket will make a great gift. . Do not give scissors, knives or other cutting utensils as they indicate the severing of the relationship. . Do not give clocks, handkerchiefs or straw sandals as they are associated with funerals and death. . Do not give flowers, as many Chinese associate these with funerals. . Do not wrap gifts in white, blue or black paper. . Four is an unlucky number so do not give four of anything. Eight is the luckiest number, so giving eight of something brings luck to the recipient. . Always present gifts with two hands. . Gifts are not opened when received. . Gifts may be refused three times before they are accepted. Additionally, there are certain things that should never be given as gifts. Such as a clock, a handkerchief, an umbrella, or any white flowers. All these objects represent death in the Chinese culture. Business cards: The Chinese are very keen about exchanging business cards. When presenting or receiving a business card, both hands should be used. It is considered rude to write on the business card. It is polite to admire and read what is on the card before putting it away. The business cards one side should be in English and the other in Chinese. Drinking: It is customary for guests to drink only when making or receiving toasts. When the Chinese make toasts, both parties are expected to drink. The cup is held in the right hand, and it is polite to place the left hand as if supporting the cup. The first toast is frequently a general one with everyone drinking together, perhaps with the arrival of the first dish. After this, it is standard practice for everyone at the table to toast all others. Conversation: Controversial issues like Taiwan, Tibet should be avoided in conversation. Although Japan and China are neighboring countries praising Japan too much in front of Chinese people can make conversation argumentative so this should be avoided as well. Saying No is normally regarded as Impolite. So Instead of saying No one should respond to Chinese with answers like Inconvenient Under consideration Maybe or That might be difficult etc. Chinese people also do the same in this case.

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Source:http://www.austcham.org/page/china-business/doing-business-in-china/understandingbusiness-etiquette-in-china/

3.12 Differences between business culture of East and West

The following table presents some of the differences between how the Chinese and the Western individuals think about culture and values. Cultural Values Expressed West (America & most European countries) East (The Chinese and Most Asian cultures)

Type of Logic

Linear (More causal Spiral (more roundabout and subtle) relationships and direct associations between A and B) More argumentative, willing to express disagreement verbally More difficult to say no even if one means no, disagreement expressed nonverbally Meaning is often implied or must be inferred Use of indirect language patterns Subtle, nonverbal

Expression of Agreement and Disagreement Communication of Information

More meaning is in the explicit, verbal message. Use of direct language More overt, one is more likely to ask the person to "speak their mind" or "get it out on the table" "I"-oriented More rule based or based on application of abstract principles such as regulations or laws Has to have rights and greater need for autonomy and individual achievement Less important, tend to substitute relationship for written agreement, superficial, easy to form, not long lasting

Expression of Honesty

Expression of Self Thinking Orientation

"We"-oriented Tends to take context and the specific situation into account in rule interpretation Group duty ,preservation of harmony

The Individual

Nature of the Business Relationship

Most important business cannot occur until relationship if sound, written agreement secondary to quan xi, hard to form, long lasting

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Conflict Resolution

Trial or confrontation, use of lawyers and courts

More mediation though trusted third parties

Source:http://www.legacee.com/Culture/CultureOverview.html

Chapter 4
4.0 Management practice in China
In a transition economy, business leaders must adopt certain management practices to ensure the strong performance of Chinese companies. These practices are role-specific and vary according to whether a manager is in charge of environment analysis, operations planning, control and follow up ,for example. They are also strongly influenced by a managers personality and cultural background, and reflected in the way he or she deals with risk, asserts his or opinions in front of employees, acts in a determined manner, as well as in the methods he or she uses to please, communicate with and interact positively with others, and his or her propensity to use other methods in the Chinese conception of an interaction-based society (Yang, Yu and Yeh, 1989). As company leaders gain more independence, management practices become extremely important. Aside from having an effect on employee behaviour, they can incite employees to take an active role in the company, which in turn leads to better results. Highly complex approaches that rely on seduction not only have a normal effect on employee work habits, they also influence their attitudes. In our view, Chinese business managers must therefore adopt practices that are likely to produce proactive employees who will help the company gradually achieve high-level performance. Management is a set of activities (Including planning, organizing, leading and controlling) directed at an organizations resources with the aim of achieving organizational goals in an efficient and effective manner. Chinese management practice is described in brief below.

4.1 Planning in China

Planning organization Decision Making Level of Involvement? Where are decisions initiated? How quickly are decisions made How quick is the decision implementation Long-term orientation. Centralized decision making by few people. Involvement of few people at higher level. Decisions flow from the top to down Slow decision-making : fact implementation of the decision Quick Implementation

4.2 Organizing in China

Who is responsible for activities? How clear are the responsibilities Collective responsibility and accountability Clear and specific decision responsibility
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Structure of organization Nature of Organizational Culture Identification with what?

Formal organization structure Well-known common organization culture and Philosophy Identification with the company but not so much with profession

4.3 Staffing in China

When are people hired ? How much advancement wanted? Loyalty is to whom? How is performance evaluation done? What type of results are appraised ? How are promotion allowed? How is training and development done? What is the basis of remuneration? Level of Job security Young people hired out of school, no mobility of people among companies Slow promotion through the ranks Loyalty to the company Very infrequent performance evaluation for new employees Appraisal of long-term performance Promotion based on multiple criteria Training and development considered a longterm investment Lifetime employment common in large. High

4.4 Leadership in China

Leadership of the top management plays a decisive role in deciding the success of the company. In face of greater competition brought about by globalization, management today will need to possess stronger judgment, decision ability, adaptability and greater foresight. Ability to look far is crucial as one need to be able to foresee unforeseen circumstances in order to be ready at all times to react to any changes.Form key competitiveness for the enterprise, and
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grow together with the economy. Treat your staff with an open heart, cultivate the enterprises values . Build and strengthen the institutional framework and economic system of the enterprise. MNCs usually will establish main or Asian headquarters in key cities in China. Beside that, research and development centre, training centre and logistic base will also be built. Therefore it is vital for the organization to have a strong organization structure dealing with its cash flow, flow of information and manpower movement in order to ensure its success in China. It is essential for the foreign-funded enterprises to understand the Chinas culture, especially regarding the culture of Guangxi (relationship), so as to be able to gain the p .popularity and trust of China population. With a good relationship, business can become smoother and probability of failure will be greatly reduced. Stronger bonds can also be built with the customers, suppliers and partners. Now let me how the more clear view about leadership: How does the leader react? What style of management is followed? Leader acting as decision-maker and head of the group Participative style

How do values of individuals function in Common values facilitating cooperation teams? How is confrontation done? Nature of communication Communication primarily top-down. Up-bottom communication

Source: www.amcy5.com/projects/marketing/amcy37.htm

4.5 Controlling in China

Who Controls? What is the focus of controlling? Is blame fixing done? Use of Quality Circles Control by superior Control focus on group performance Blame fixing is avoided; rather face saving is done. Increasing use of quality control circles

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4.6 Decision making

Decision making is vastly different in western and Chinese business cultures In the West it is seen as positive if you can gather and process information quickly for rapid decision making. The Chinese prefer instead to deliberate, even on decisions that may seem simple, which can cause decisions to take a long time It is unlikely you will convert a prospect at the first meeting Decisions are unlikely to be made during the meetings you attend Ask for feedback, discuss the issue and explain your thinking to avoid looking as though you have made a snap decision Being included in the decision-making process is important to the Chinese culture Sourcehttp://www.rsmi.com/attachments/approved/chinese-business-practices etiquette/en/Chinesebusinesspractices_w.pdf

5.0 Negotiation in China

. Only senior members of the negotiating team will speak. Designate the most senior person in your group as your spokesman for the introductory functions. . Business negotiations occur at a slow pace. . Be prepared for the agenda to become a jumping off point for other discussions. . Chinese are non-confrontational. They will not overtly say 'no', they will say 'they will think about it' or 'they will see'. . Chinese negotiations are process oriented. They want to determine if relationships can develop to a stage where both parties . Your starting price should leave room for negotiation. are comfortable doing business with the other.
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. Decisions may take a long time, as they require careful review and consideration. . Under no circumstances should you lose your temper or you will lose face and irrevocably damage your relationship. . Do not use high-pressure tactics. You might find yourself outmanoeuvred. . Business is hierarchical. Decisions are unlikely to be made during the meetings you attend. . The Chinese are shrewd negotiators.

5.1 Chinese Negotiation practice contains some elements they are --Guanxi (personal connections) Chinese businesspeople prize relationships among friends, relatives, and close associates. Favors are always remembered and returned, though not necessarily right away. Ignoring reciprocity is considered immoral. Zhongjian ren (the intermediary) An intermediary is essential during meetings with strangers. This trusted business associate connects you with his trusted associate, creating a personal link to your target organization or executive. Intermediaries interpret negotiators moods, body language, and facial expressions. Theynot the negotiatorsfirst raise business issues for discussion, and often settle differences. Shehui dengji (social status) Casualness about social status doesnt play among people who value obedience and deference to superiors. Sending a low-level representative to a high-level negotiation can kill a deal. Renji hexie (interpersonal harmony) Relationships of equals are cemented through friendships and positive feelings, generated during months of home visits and long dinners. Any attempt to do business without first establishing harmony is rude. Zhengti guannian (holistic thinking) Chinese discuss all issues simultaneously in apparently haphazard orderemphasizing the whole package over details. Nothing is settled until everything is. This holistic thinking contrasts with Westerners linear approach Westerners think sequentially and individualistically, breaking up complex negotiation tasks into a series of smaller issues: price, quantity, warranty, delivery, and so forth. Chinese negotiators tend to talk about those issues all at once, skipping among them, and, from the Western point of view, seemingly never settling anything and spawns the greatest tension between negotiating teams. Jiejian (thrift) Chinese bargain intensely over price, padding offers with room to maneuver and using silence and patience as tactics. They expect both sides to make concessionsoften after weeks of haggling. Mianzi (face or social capital) A broken promise or display of anger or aggression causes mutual loss of facedisastrous to any deal.
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Chiku nailao (endurance, relentlessness) Chinese prize relentless hard work. They prepare diligently for negotiations and expect long bargaining sessions. Demonstrate your endurance by asking many questions, doing your research, and showing patience. Source: The Chinese Negotiation by John L. Graham and N. Mark Lam Harvard Business Review article

5.2 Suggestion for negotiating with the Chinese

The Chinese are renowned for being tough negotiators. When negotiating one must show compromise so their negotiators feel they have gained concessions. Only senior members of the group should speak during Negotiations. Short, simple, sentences should be used when speaking and jargon and slang should be avoided. A great deal of research regarding subject matter should be done prior to meeting. Use of high pressure tactics should be avoided. Decisions may take a long time. So one should refrain from mentioning deadlines, be patient, show little emotion and calmly accept that delays will occur.

6.0 Entry modes for Bangladesh:

Entry modes means the mode through which a firm can enter into another market in other country . The choice of entry mode for entering into the foreign market is another major issue with which business must wrestle . The choice of entry mode should be driven by the assessment of relative long term growth and profit potential .The magnitude of the advantages and
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disadvantages associated with each entry mode is determined by a number of facts including transportation costs , trade barriers , political risk , economic risk and firms strategies . There are various entry modes through which a firm can enter into a foreign market : Direct distribution Exporting Turnkey projects Joint Venture Licensing Franchising Agent or distributor with network Participating in trade fair

6.1 Direct distribution : Before entering into the direct distribution firm must convey the market research so that it will be easy for them to sell product effectively and to capture the market . In this regard a representative office is required . In the direct distribution licensing process is an potential issue and this facts should be favourable in effective direct distribution .

6.2 Exporting: exporting means producing goods in home then shipping them to other receiving country for sale . The advantages of exporting is to help firm achieve experience curve and location economies . . 6.3 Turnkey projects Firms that specialize in the design , construction and startup of turnkey plants are comm,on in some industries .In a Turnkey projects , the contractor agrees to handle every detail of the projects for a foreign client , including the training of operating personnel . But this is not suitable for all sectors . 6.4 Joint Venture A joint Venture entails establishing a firm that is jointly owned by two or more other independent firm . Joint Ventures with local partners face a low risk of being subject to nationalization or other forms of adverse government interference . Here main benefits from a
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local partners knowledge of the host country's competitive conditions , culture , language , political systems and business systems . The disadvantages includes inability to realize location and experience economies , inability to engage in global strategic coordination . Here it is to be noted that Bangladesh has a long relationship in Joint Venture with China . A joint venture, between a Chinese and a Bangladeshi company, is set for producing low cost, but more efficient solar panels to tape the country's growing market for green energy especially among rural population.The joint venture of Bangladeshi Auto Power Private Limited and Chinese Zhejiang Jinxi Solar Energy Equipment Company Limited is expected to start production early next year, Chairman of Auto Power Engineer Abul Hossain told BSS today.the factory had already been set up in Gazipur to produce the low cost solar panels ranged between 50 watts to 1500 watts for low to high demanding customers.

6.5 Licensing A licensing arrangement is an agreement whereby a licensor grants the rights to intangible property to another entity for a specific period and in return the licensor receives a royalty fees from the licensee . Intangible property includes patents , inventions, formulas, processes, designs , copyrights , trademarks . A firm may use licensing when it wishes to enter into the foreign markets but is prohibited from doing so by barriers to investments .Main disadvantages of licensing is not to give a firm a tight control over manufacturing, marketing and strategies that is required for realizing the experience curve and economies . 6.6 Franchising Franchising is a specialized form of licensing in which a franchiser not only sells intangible property to the franchisee but also insists that franchisee agree to abide by strict rules as to how it does business .The franchiser also assist the franchisee to run the business on an ongoing basis . The franchiser typically receives royalty fees which amounts to some percentages of franchisees revenue . Here main disadvantages is lack of control over quality . 6.7 Agent or distributor with network Another way to enter into market is through a reputable or well-known agent or distributor. These companies are located regionally and typically have large sales network. Thus they will be able to have a better understanding of the market and can provide assistance in developing distribution strategies in the desired region. In this way, new products can be launched .

6.8 Preferential Entry modes

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Entry modes are many and among them preferential will be those which provides the highest opportunity. If we overlook China's market then it will be seen that most overseas companies who set up operations in China were in the form of a joint venture (JV) with a Chinese organization. The biggest benefit from this approach is probably to establish local relations and get access to local markets. The importance of guanxi, or personal connections in China, makes Joint Venture an effective way of developing business relationships in this country. However, Joint Venture often leads to conflict between foreign and Chinese entities due to the differences inherent in management styles. A side issue to note will be that joint venture usually requires large amount of capital and Chinas government may have capital control towards outflow of funds should one transfer his/her funds back to his/her home country .Besides this problem Joint venture is suitable mostly in big sector .If we overlook small and medium sector then most preferential entry mode in China may be the following :
Preferential Entry Mode In China

Agent or Distributor With vast network

Participating In Trade Fair

Direct Distribution

6.8 Direct Distribution: Before exporting your goods into China or Chinese partner, it is advised for you to conduct thorough market research and due diligence. Companies should be mindful of possible problems in export rights, regulations and intellectual property rights protection. If the company decides to distribute the goods directly, then it will have to be aware of the distribution rights and understand the licensing process in China.

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6.9 Agent or Distributor with Vast sales network : The best way to enter the China market is through a reputable or well-known agent or distributor. These companies are located regionally and typically have large sales network. Thus they will be able to have a better understanding of the Chinas market and can provide assistance in developing distribution strategies in China and the region. In this way, new products can be launched easier into the market and distribution network can be set up rapidly without any problems dealing with distribution rights and licensing.

6.10 Participating Trade Fair Trade fair can be an acceptable mode to enter into a market .Trade Fair is a common affair in China . Trade fair occurs in China all year around . Guangzhou is a place where trade fair occurs all year with a specialize product or more emphasizing product .As all types of product are available in trade fair so huge opportunities lies here through participating in trade fair . Some cities which arranges trade fair in China are Beijing, Shanghai ,Qingdao, Chengdu , Dongguan , Shenzhen etc . To participate in the trade fair one must have to select specific fair with product then steps have to be taken . Besides all these, the most important step that one must take before exporting products into China will be have a thorough understanding Chinas customs, regulations and controls towards imported goods. A sound market entry strategy is also necessary in order to penetrate the Chinas market. An assessment of goods strengths, weakness, opportunities and threats can allow you
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to promote and distribute products better. Understanding the profitability and marketability of products in the Chinas market is thus vital before exporting products into China.

6.11 Trade Fair: An Easy Acceptable medium:

Trade Fair is the most easy way to attract the customer of China for Bangladeshi Product If Bangladeshi business become able to participate in Chinese Trade Fair only then they will be able to introduce our product in Chinese market . If they participate in Trade Fair th en the following opportunities will lead them to success : Chinese customers come to know about our product Trade Fair reflects our product quality Chinese importer companies become attracted toward our product as well as our country. Chinese investors knows about our product & opportunities It provides easy marketability It makes us able to understand the demand of Chinese customers

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Though it is tough to enter into the Chinese trade fairs but Bangladesh Govt and then business people jointly can make it possible .In this regard firms which are interested in doing business in China have to identify where they will get the best opportunities and in which product.

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Event NEPCON SHIENZHE N

City

Month

Venue Shenzhen int convention and exhiobition center Shenzhen int convention and exhibition center

Details

Cycle

SHENZHEN September

Leading Once a year electronics manufacturin g exhibition in China Trade show Once a year and conference for the entire manufacture market focusing on electronic equipment Wireless forum Once a year

ASSEMBLY SHENZHEN September TECHNOLO GICAL EXPO CHINA

WIRELESS CHINA

BEIJING

September

The Landmark Hotel &Towers China import & export fair pazhou complex China national convention center

HOME GUANGZH TEXTILE OU AND HOME DECOR CHINA COS+H BEIJING

September

Home textile Twice a year and home decoration exhibition China int Twice a year occupational safety& health exhibition

September

ALL CHINA SHANGHAI September LEATHER EXHIBITIO N QITMF QINGDAO September

Shanghai Int leather Once a year new int expo show:raw center materials , tanning machine etc Qingdao int China int Once a year convention txtile center machinery Shanghai China new int expo footwear center unknown
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CHINA INT. SHANGHAI September FOOTWEA R FAIR ICC-CHINA CHENGDU CHENGDU September

Once a year

High-end components

Twice a year

MODA SHANGHAI September SHANGHAI

Shanghai Int fashion Once a year new int expo focus of center leather garments & travel goods Shanghai mart Filtration Once a year product, technology & equipment

FILEXPO CHINA

SHANGHAI September

WORLD OF SHANGHAI September FOOD CHINA FAMOUS FURNITUR E FAIR DONGGUA September N

Shanghai Food & Once a year new int expo beverage center exhibition unknown Furniture Twice a year fair, homewood working machinery

NEXCON EXPO &CIPCC

SHANGHAI September

Pudong expo Telecommun Once a year ication event targeting enterprise users & carriers Shenyeng int Equipment exhibition manufacture center expo Once a year

CIEMESHENYANG September CHINA INT. EQUIPMEN T MANUFAC TURING EXPO PET FAIR SHANGHAI September ASIA PROFESSIO NAL

Intex shanghai

Pet fair

Once a year

6.12 Guangzhou , a city of Trade

Fair
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Guangzhou ,3rd largest city after Shanghai & Beijing ,is adjacent to Hongkong & Macau forming and urban try-angle . It is a city with 10 million of population . The city s famous for foreign trade and business doings and holds China's largest trade fair , the Canton Fair or China Import & Export Commodities . The Canton Fair takes place annually during the 3rd & 4th weeks of April & October . If a businessmen of Bangladesh wants to take participate in this trade fair then Metro Authority Headquarters permission is needed along with Govt. permission .

Conclusion
China is a very prosperous country. It is quite unique in many aspects. It has a very long goldenhistory behind it. The history goes beyond even the birth of Christ. It has a very strong and deep-rooted cultural and historical background. In addition to this the country has a very different life style. Its religions, customs, and its society are much different than the other parts of this world. Apart from its social, historical and traditional aspects China has got a unique way of managing things and doing the business. It has its own set of norms and values that are very much deep rooted in its every day life. The Chinese way of managing the things have got a deep impact of culture on them. Chinese plan, organize and work in a very different manner. Their way of interacting with each other and their way of evaluating each other is also very much different. Chinese give more importance to known material than the material values as they evaluate and get work from others. Chinese management style is very much different than the rest of management styles in the world. Their management style has different criteria of managing the things, doing the things and evaluating the things. There work pattern and working environment is also much more different
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than the rest working environments of world. Chinese attitudes and there orientation towards management is very much specific and it has got a different way of achieving results. Chinese are very much conscious about their values and it is very much opposite to the west. Chinese give more importance to norms and values than money. In west money is the god but Chinese will never be ready to sacrifice their any of value, norm or tradition just for the sake of money. The final lesson that we can derive from Chinese is that only continuous hard work in a proper direction will lead to happiness and prosperity. There is no short cut to continuous handwork.

Appendix
Deng Xiaoping: A Chinese politician, statesman, theorist, and diplomat. As leader of the Communist Party of China, Deng was a reformer who led China towards a market economy. Falun Gong: A system of beliefs and practices founded in China by Li Hongzhi in 1992. Western academics have described Falun Gong as a "spiritual movement" based on the teachings of its founder. Xiantianism: A religious system that encompasses five religious groups of Chinese origin. They claim to strive for the unification of Confucianism, Taoism, Buddhism, Christianity and Islam. Quality Circles: A volunteer group composed of workers (or even students), usually under the leadership of their supervisor (but they can elect a team leader), who are trained to identify, analyze and solve work-related problems and present their solutions to management in order to improve the performance of the organization, and motivate and enrich the work of employees. Quality circles were first established in Japan in 1962; Kaoru Ishikawa has been credited with their creation. According to Wikipedia there are more than 20 million Quality Circles in China. Mao Zedong: A Chinese revolutionary, political theorist and communist leader. He led the People's Republic of China (PRC) from its establishment in 1949 until his death in 1976. His theoretical contribution to Marxism-Leninism, military strategies, and his brand of Communist policies are now collectively known as Maoism.
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Huang He River: The second-longest river in China and the sixth-longest in the world at the estimated length of 5,464 kilometers (3,395 mi).

Case Study-1: Chinese Negotiation

Volkswagen (VW), the first overseas carmaker in China, is the only foreign manufacturer to have been making a profit in China over the past ten years. It all began in October 1984, when VW signed a joint venture agreement with China. One of the countrys first major joint venture agreements, it involved several government authorities, including the Ministry of Foreign Trade and Cooperation (MOFTEC, now MoCom), the State Planning Commission, the State Economic Commission, the Ministry of Finance, the Bank of China (BOC), the Municipal Government of Shanghai, and the China National Automobile Industry Corporation (CNAIC). A manufacturing facility was built in Shanghai, and VWs partners were Shanghai Tractor and Automobile Corporation (STAC), with a twenty-five percent share, as well as the BOC, Shanghai Trust and Consultant Company, and the CNAIC, which together had a twenty-five percent share. VW was approached by the China National Technical Import Corporation in 1977, and in 1978 a Chinese delegation visited VW headquarters in Wolfsburg, Germany. The first VW delegation went to Beijing in 1979. So there were six years of negotiations, involving at least seven parties on the Chinese side, and major contracts were negotiated, including a joint venture contract, a technology transfer agreement, articles of association, supply agreements, and a planning agreement. According to Heinz Bendlin, one of the original VW negotiators with China, even in the early days the Chinese behaved courteously. He has commented as follows: "I learned in China that foreigners tend to have a typical mode of behavior. They want to achieve results quickly, get answers to all their queries, and immediately come up with solutions to problems. But in China one has to be patient and be prepared to spend
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considerable time solving problems step by step, or ibu ibu, as the Chinese say. Setting deadlines or showing impatience leads to disadvantages in negotiations." "The Chinese like to negotiate in rather large groups. Fairly frequently, three or four VW people negotiated with ten to twenty Chinese. However, typically only one would speak while the others took notes. They were all very disciplined." "There were times when they would cultivate a friendship, seemingly to manipulate situations. Our Chinese partners also frequently asked us to explain matters several times. This was not a sign of insufficient professional knowledge on their part, but just a tactic, as are the meticulously organized extras during negotiations, such as banquets, toasts, and sightseeing." "We should listen carefully to the Chinese. Never try to convince them by saying that only your products or plans are outstanding. Instead, explain the facts and figures as often as they require; explain why you believe yours is the best offer; and explain why you are asking for certain payments." "Do not show that opinions are divided on a given topic within your team, and avoid discussions in front of them. They cannot understand such behavior and will interpret this as a sign that you lack clarity about your concept." Source: http://www.negotiations.com/case/well-managed-negotiations/ Case Study-2: Chinese Culture (GuanxiTies That Bind) In 1992, McDonalds Corporation opened its first restaurant in Beijing, China, after a decade of market research. The restaurant, then the largest McDonalds in the world, was located on the corner of Wangfujing Street and the Avenue of Eternal Peace, just two blocks from Tiananmen Square, the very heart of Chinas capital. The choice of location seemed auspicious, and within two years, sales at the restaurant were surpassing all expectations. Then the Beijing city government dropped a bombshell; officials abruptly informed McDonalds that it would have to vacate the location to make way for a commercial, residential, and office complex planned by Hong Kong developer Li Ka-shing. At the time, Mc-Donalds still had 18 years to run on its 20 year lease. A stunned McDonalds did what any good Western company would doit took the Beijing city government to court to try to enforce the lease. The court refused to enforce the lease, and McDonalds had to move. Chinese observers had a simple explanation for the outcome. McDonalds, they said, lacked the guanxi of Li Ka-shing. Given this, the company could not expect to prevail. Company executives should have accepted the decision in good grace and moved on, but instead, McDonalds filed a lawsuita move that would only reduce what guanxi McDonalds might have with the city government! This example illustrates a basic difference between doing business in the West and doing business in China. In the advanced economies of the West, business transactions are conducted and regulated by the centuries-old framework of contract law, which specifies the rights and obligations of parties to a business contract and provides mechanisms for seeking to redress
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grievances should one party in the exchange fail to live up to the legal agreement. In the West, McDonalds could have relied on the courts to enforce its legal contract with the city government. In China, this approach didnt work. China does not have the same legal infrastructure. Personal power and relationships or connections, rather than the rule of law, have always been the key to getting things done in China. Decades of Communist rule stripped away the basic legal infrastructure that did exist to regulate business transactions. Power, relationships, and connections are an important, and some say necessary, influence on getting things done and enforcing business agreements in China. The key to understanding this process is the concept of guanxi. Guanxi literally means relationships, although in business settings it can be better understood as connections. McDonalds lost its lease in central Beijing because it lacked the guanxi enjoyed by the powerful Li Ka-shing. The concept of guanxi is deeply rooted in Chinese culture, particularly the Confucian philosophy of valuing social hierarchy and reciprocal obligations. Confucian ideology has a 2,000-year-old history in China, and more than half a century of Communist rule has done little to dent its influence on everyday life in China. Confucianism stresses the importance of relationships, both within the family and between master and servant. Confucian ideology teaches that people are not created equal. In Confucian thought, loyalty and obligations to ones superiors (or to family) is regarded as a sacred duty, but at the same time, this loyalty has its price. Social superiors are obligated to reward the loyalty of their social inferiors by bestowing blessings upon them; thus, the obligations are reciprocal. Source:http://highered.mcgrawhill.com/sites/dl/free/0072973714/214805/Sample_Chapter03.pdf Case study-3: The KFC case study. human resouce problem in china Thanks to cultural differences and Social Background influences, KFC in China faces challenges: it needs to establish a new management style. The KFC must develop the new management style to match up Chinese habit. For example accept the commission in China is the normal phenomenon but in the West was not. The KFC must to understand the different habitual behavior in China and try to adapt it. The different management style will make a lot of conflict. Some times will make the company lost the market or suffer a setback. For example Taiwans company was suffering a setback in China. It was a famous department store in Taiwan. It was as a leader in the department store in Taiwan. But they involves of many details staffs, and is controllable. For the suppliers, the evaluation is not for the eliminating through the selection or contest, but for strict control of the products from the beginning. Later on, we also need to train and support the suppliers. Through the evaluation program, we can see through the week points of the suppliers, and focusing on the week points, KFC must give the relative training, that will invite the standard of international quality to the suppliers. The training includes:1. Altitude: how to be a good and trustable suppliers 2.Technology: the technical information of raising the chicken. 3.Finance support: for the suppliers, who need the finance supportThrough the alternatives we talked above. Case study-4:Wal-marts customization emphasis in china Wal-mart mainly focuses on the customers. It has laid down three basic believe to be carried out in doing a retailer business. They respect for individual, serve their customer, and strive for
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excellence, these 3 basic believe furthermore create culture of the sun down rules, ten foot rule and pricing philosophy. These culture value customer as the most important to all, where managers are consider as servants leader that helps the associate to realizes there potential and have to answer the question made by customers within 24 hours. Moreover, when ever associates of wal-mart come to the customer within 10 feet, they will have to greet and offer helps to the customers. Source: www.casestudy.com in china

References
Articles 1. Cross-cultural challenges when doing business in China by Zhamg Zigang Singapore Management Review January 1 2004 2. Bond M and G Hofstede, 1989. "The cash value of Confucian values", Human System Management, 8, pp 195-200. 3. Hofstede G, 1980. Culture's consequences: International differences in work-related values. Beverly Hills, CA: Sage 4. "Cultural constraints in management theories". The Academy of Management Executives, 7(1): pp 81-94. 5. Sosik, John and Jung Dong, 2002. "Work-group characteristics and performance in collectivistic and individualistic cultures". The Journal of Social Psychology. Washington, pp 523. 6. Axtell, Roger E. Gestures. The Dos and Taboos of Body Language Around the world[M], John Wiley & Son, 1991. 7. RSM International, Chinese Business Practices and Etiquette Vada Ng, Chinese Business Culture, The Confucius Institute, University Of Western Australia 8. John L. Graham and N. Mark Lam, The Chinese negotiation, Harvard Business Review, October 2003 9. Zhang Zigang, Cross-cultural challenges when doing business in China January 1 2004 10. Huang Jianfei. Cultural differences in Body Language 11. International Business Review 17 (2008) Page no.141-145 12. IMF, World Economic Output April 2007 Web www.casestudy.com www.icmrindia.com www,chinaorbit.com www.amcy5.com/projects/marketing/amcy37.htm www.51share.net/upfiles/2004512844319300.doc http://esl.fis.edu/grammar/langdiff/chinese.htm http://www.southwestfocus.com.au/_content/documents/2009%20conference/Vada%20Ng.pdf http://www.chinaprimer.com/chinese-business-culture/chinese-business-etiquette-meetings.html http://www.legacee.com/Culture/CultureOverview.html http://ezinearticles.com/?Doing-Chinese-Business-Based-On-Hofstede&id=797967 Hofstede dimensions
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http://www.rsmi.com/attachments/approved/chinese-business-practices-etiquette/en/Chinesebusinesspractices_w.pdfhttp://hbr.org/2003/10/the-chinese-negotiation/ib

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