Culture in Chinese Business
Nowadays, with the development of economic and technology, there is no nation and enterprise can resist the impact of the trend of globalization, and culture is a big mirror that reflects the history and the development of a country, is also definitely to be strongly affected by the trend of globalization. Because of economic environment, Chinese economic is increasing rapidly, which attracts a lot of people's attention; more and more people want to invest in China. In this essay, we will look deeply about the importance of culture in Chinese business.
The core content of traditional Chinese culture is Confucianism, it was noticed by more and more people because of its impact of social development in the world , more and more people began to study Confucian, such as managers,scholars, which is widely used in business Management, in Chinese business as well, especially Chinese Family Based System Business.
1. Chinese Culture
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Chinese culture has many features that are very difficult for Westerners to understand. Their view of world has been built by very different experiences and cultural tradition. If you want to run business successfully in China, you have to understand the traditional concepts and moral values, which build the Chinese mentality. (Holden 2002)
Confucius, the great man lived 2500 years ago, who greatly build the modern mentality of the Chinese people. The influence of Confucianism is so pervasive in China. The basic principle of Confucian thought are respect and obedience for seniors and parents, responsibilty to family, loyalty and sincerity to friends, humility and courtesy.
Confusion views that people sustain a kind of family relationship with each other. Family is kind of a miniature of a state, and the state is an enlarged family. Family as basic unit uniting individuals, family relationship often can be extended to other groupings, for example, family owned and managed business companies. The extension of family relationships has many ways: common ancestry, neighborhood, school and university.
The family is the basic institution in China, people's first responsibilty is to consider the benefit of their family, and working family members often need their financial resources. In many ways, Chinese view themselves more as parts of the family unit than as just free individuals, so obviously,Chinese emphasis on family merits much more attention.
In China, the leading organizational form is the family based system business. Usually are small or medium sized companies. People viewed this as Chinese capitalism or `guanxi capitalism'. Chinese family companies prefer to internal finance because of the family rules. Family members see the family interests as the most important thing; most of time personal interests must be subordinated to the benefits of the family. And Family based system businesses often best fit the principle of Chinese culture when they are deal with business. Family based system companies ususally allow their family members to exercise the maximum control over their fortune and destiny. (Philippe 2007).
Confucianism is the most vital part of traditional Chinese culture, and plays an important role in the society, therefore, to if you want to build your own family business , you must learn from the best elements of Confucianism; at the same time, you have to eliminate some bad elements of Confucianism that does not match the times, and to establish a good family business culture.
2. Family Based System Business
2.1Family Based System Business in China
Family Based System Business is quite common in China now, 50.5% of married spouses of business owners are doing management in the company, 20.3% of their adult children are doing management in the company, 13.8% are responsible for the purchase and sale part. In all managers, 26.7% family business are held by investors, 16.8% are held by family business owners or investors, and 5% are held by his neighbors or fellows.
"Forbes "recently shows that the earning power and growth of Chinese family companies are much faster than those listed state-owned enterprises in the past three years,
According to the Statistics , at the end of June 2010, in Shanghai and Shenzhen, a total of 305 listed companies are family businesses. We have to pay attention that private listed companies accounted for 36.2% of the total. And the total market value of listed family firms is 1.4657 trillion Yuan, accounting for the total market capitalization of listed companies in Shanghai and Shenzhen up to 7%.
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When we talking about listed family enterprises in China, there are the relationship between husband and wife account for 110 enterprises; brotherhood are accounted for 133 enterprises, which are the main two family relationships in Chinese family companies. "Forbes" explains that "many private companies in the start period, the company can get business support from family easily, there is no doubt that they are their husband, wife and sibilings."
Although most of the Chinese family business start from a small workshop, but their earning power and growth rate let other companies feel shame. According to the recent survey, listed family business sales growth the last 3 years to reach 17.24%, at the same time, state-owned enterprises listed on sales growth of only 7.04% in the same period. From a profitability aspect, the net profit of listed family enterprises is 12.53% in the past three years, but only 2.85% of listed state-owned enterprises. When talking about Successor for the company's in the future, 65.8% of family business owners expressed that they hope their second generation of family business can get the succession.
2.2 Li Ka-shing Family Business
Li's businesses almost cover every aspects of life in Hong Kong, from electricity to telecommunications, from real estate to retail , from shipping to the Internet. The Cheung Kong Group's market capitalization is HK $647 billion (US $82.9 billion) in December 2009 , which has some double counting of the Group's controlling stake in 12 listed companies in the world. The group has business in 55 countries and more than 260,000 employees worldwide.
His two sons Victor Li and Richard Li are also important figures in the Hong Kong business.The first son Victor Li works with his father directly as managing director and president of Cheung Kong (Holdings) Limited, and at the same time the second son Richard Li is the CEO of PCCW, the biggest telecom company in Hong Kong.
Obviously, Li's business is a typical example of Chinese Family Based System Business, we can know a lot of Chinese culture about business, and know well about business in China.
3. Additional information
"Guanxi" means "relationships" literally, which means many kinds of relationship. In the Chinese business world, it is also can be understood as the network among different parties , you can cooperate together or support each other. One of the Chinese mentality of is "If you scratch my back, I will scratch yours." Actually, this means a way of exchanging each other's favors. Therefore, it is an important culture to understand deeply in Chinese society .
Except business experiences in China,the correct "Guanxi" can make sure business be successful. If you can get the correct "Guanxi", the company can easily minimize the risks, disappointments and frustrations when running business in China. Usually if you can acquire the correct "Guanxi" with the related authorities in government ,you can be competitive in the long run in China. What's more, you will meet many inevitable risks and barriers in China, but they will be minimized when you have the correct "Guanxi" network. So that is why the right "Guanxi" is so important to successful business in China.(Cero11 2011)
Although builiding the "Guanxi" is very necessary on time and money in China, which let people feel wasting time and money sometimes, but it is quite worth the investment to establish a strong network. Because it can let your business more valuable and like an investment, especially in the long run. It is quite vital to establish wide and strong networks with their surrounding, such as suppliers, banks, retailers and government . You have to know that It is very common for representative of a company to visit another organization with gifts. Because it can link you to new acquaintances or get information indirectly if you do so, which can help you to develop other correct "Guanxi" that you may need.(Chinese School 2011)
Mianzi in Chinese literally is a quite important concept in Chinese culture, which build the Chinese mentality as well. People have strong dignity when they can have high status in peer's eyes. Chinese are quite sensitive to have and keep face in all aspects of social life and business . Face can be given, also can be lost and earned. You should always notcie the face matter when you do buiseness with Chinese , and you have to notice that never do or say something that may cause someone to lose face. If you do so, it may destroy your business in the future. (Pat1996)
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Confucian ethics are advocated by the "self-cultivation, regulating the family, rule the world ", so the philosophy of running business also have to be similar."self-cultivation" corresponds to "their Good character, personally "," regulating the family "corresponds to" put the relationship between the family and friends in right place, and managers should consider the life and welfare of employees; " rule the world "means " favorable development of the community, pay attention to make more contributions for the country ".It can be seen that the rich and profound spirit of Confucian ethics in every aspect. So it is better for those who want to run business in China to follow the Confucian ethics.
Keeping "Guanxi" can be taken on many ways. It does not have to be built on money. It is absolutely legal in Chinese culture and no one regarded it as bribery. So, it is unnecessary to feel uncomfortable about it. Being trustworthy for an individual or an organization is an crucial part of this part. What's else, keeping promises is also very important, if you treat someone with courtesy ,you will get others trust. And frequent contact can help you to build friendship as well. (Edward 1994)
The most common to let someone to lose face is to insult l or criticize someone strongly in front of others.. Another way to let someone to lose face is to treat them as an underling when their official status in an organization is high. People in China must always be treated well with proper respect.
As face can be lost, at the same time ,it can also be given by praising someone for doing a good job in front of others or by thanking someone for good work . What's more, you will be thankful for someone because of saving someone`s face by helping him to avoid an embarrassing situation. In addition, your relationship with the person can be the key to your business success in China.(Cero11 2011)
China is a big land which has abundant cultural heritage, culture has profound influence on the development of business, especially Confucianism. We have to notice here that the Chinese culture is quite different from the Western culture in many aspects in our life, such as how commercial activities is conducted. Most of time, Chinese prefer to do business with people who they know well and trust more. Actually , this seems not too much difference from doing business in the western commercial activities. But actually the solid relationship in network means western companies have to make themselves known to the Chinese before business start. What's more, this relationship is not only necessary among companies but also among individuals . The relationship is not just before deals happen but also it is an long-term process. The company has to sustain the relationship if you want to do more business in China. (Edward 1994)
If you spend more time on learning the Chinese culture, it will become much more easier for you to understand and take practice, which is quite central to be successful in Chinese commercial activity.