The Change Process Of Chinese Business Culture Management Essay

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This essay reviews the Chinese business culture and the Western as well. There are wide areas of different thinking and different ways of reacting to and handling in the business situation, for both individual and organization. By understand the characteristic Chinese business culture by comparing with the Western culture; we are able to go future for change. Core of this study is the changing process which applied John P. Kotter's Eight Steps Leading Change model. The change process will be fun if we did it correctly and the people involvement will not resist the change as well.

Purpose Statement

There are several studies done for the topic about the Chinese and West business culture. This study is to identify the characteristic of Chinese business culture and what makes the Chinese want to change toward the West. Understand how the Leading Change model (John P. Kotter) can be use for this change of culture when applied appropriately.

Table of Content








Purpose Statement



Table of Content






Chinese Business Culture



Chinese versus Western



Current Situation



Change Development









Culture is learned, we are not born with a culture; we are born into a culture. Culture is something that dynamic and interactive. It is subjective and attributes a meaning to what we can see and what we can feel about it. Objective or tangible aspects of culture include tools, roads, television programming, architecture, and other physical artifacts. Subjective or intangible aspects of culture include norms, values, ideas, customs, and other meaningful symbols. Goldman Sach's BRICS study predicts that by the year 2050, three of the four largest economies in the world will be Asian: China, USA, India and Japan (in that order) and no European economy will be among the top four.

Many of us may ask, why Asia? This is because Asian market growth is equal to emergence of world's largest new middle class, it is about half billion. Besides, Asia is a source of highly educated, skilled labor which at low cost in term of the pay which still valid up to now. So, it makes Asia a special place in business globalization, especially in supply chains and Asia is becoming a world incubator for new high-tech businesses as well.

Chinese Business Culture

Chinese organization, which are run by ethnic Chinese and can be headquartered anywhere, are said to make up the world's fourth economic power after North America, Japan, and Europe (Kao 1993). Sharing a common culture and working within a network of entrepreneurial relationships, Chinese organization has gradually formed what Kao calls the Chinese commonwealth. With world markets rapidly merging, companies have become more and more globally oriented. While some Chinese organization may be content to operate on a small domestic scale, more are considering overseas expansion.

Chinese organizations are under the strong pressure of a changing environment to upgrade their present level of technology and management know-how in order to compete in the local, regional, and international markets. As a result, many Chinese organizations are facing a dilemma that they have to choose whether to retain traditional Chinese management practices or to adopt modern Western management styles. There is a strong desire to find a proper balance between acquiring the knowledge needed for the modern economy on the one hand, and maintaining character development, moral values, and loyalty to the country on the other.

There are four key features of Chinese management that are distinctive from Western management and are persistent in most of the Chinese organizations: human-centered, family-centered, centralization of power, and entertainment issues.


Chinese management is perceived as a human-centre management style, emphasizing human relationship (Warrington and McCall 1983; Sheng 1979; and Menkhoff 1993). People are the centre of concern, and great attention is paid to issues of emotion and trust. For Chinese, the business relationship (guanxi) is always subsumed under the moralistic notion of friendship, loyalty, and trustworthiness (Sheng 1979). Chinese business contacts are mostly referrals; essentially a business relationship is struck based on another business associate recommendation. The best prices and deals often come from a strong recommendation. Chinese business relationship inevitably becomes a social relationship after a while. Unlike Western business relationship which remains professional and perhaps, aloof, even after a long time, Chinese business relationship becomes a social one.

Highly associated with concern for feelings and respect of relationships is the concept of "face" (Redding and Ng 1982). "Face" is used as a mechanism for inculcating a strong sense of group responsibility and serves as a mediating force in social relationships. It is role in maintaining harmony in social hierarchies (Gabrenya and Hwang 1996).The Chinese have been characterized as being very particular in dealing with others. Giving face is also very important in Western relationship (Earley 1997).


Family is important in any culture; however, it is extraordinarily so in Chinese culture. Chinese have learned relationships with others almost exclusively from the family experience (Hsu 1984). Being the primary agent of socialization for Chinese culture, the family has exerted the most significant influence on the individual's value system and role expectations. These personality features form the basis of cooperation and interaction with others. Many Chinese organizations are family-run businesses; family relationships are inevitably brought into organizations, and organizations are run like a family.

Most of the Chinese organizations started with small capital, and a small number of people. The size of the Chinese organization is usually kept small. A small enterprise is easy to control and manage - it allows for closer interpersonal relationships, a shorter decision-making chain, and faster decision-making. Since the organization is small, the manager is able to stay involved in everything. Instead of growing the organization itself, expansion is achieved by financially coordinating a set of small businesses.

Centralization of Power

The power structure in Chinese organizations is usually characterized by two distinct levels: the power core controlled by the boss or a small number of people, usually family members; and the second level formed by the employees, who are relatives, friends, or outsiders. There is no ranking among the workers. Obligation is what bonds the two hierarchies together.

With these characteristics, the power struggle occurs at both a vertical level and a horizontal level. A vertical-level power struggle goes on between the old and young generations; a horizontal power struggle is carried out among the shareholders. The proprietor rarely delegates authority or management functions; even sons are permitted little participation in the decision-making process. Besides, seniority is very important to the Chinese especially if you are dealing with a State owned or government body. Similarly, sitting positions in a meeting room or a dining table is accorded accordingly to rank, importance and seniority. It is good to seek advice before embarking on your first meeting with Chinese business contacts to avoid making the wrong move. We must give the appropriate respect according to rank and seniority. For example, if we are buying gifts for an initial contact, make sure we buy better gifts for the senior managers instead of buying similar gifts across the board.

Conflicts are usually avoided due to "face consciousness" and a desire to maintain social harmony. The centralization of power is maintained both because of nepotism, which maintains ownership and control within a family group, and because of the Chinese ethic of respect toward and compliance with the father-figure (Lau 1974).

Entertainment Issues

There is no business talk in China without at least one trip to a restaurant. Sometimes, a trip is made to the restaurant even before any business discussion take place. Inevitably, the restaurant will always be a grand one and you are likely to be hosted in a private room. There is an elaborate seating arrangement for a Chinese business meal. There are fixed seating positions for the host and the guest and then they are seated again according to seniority. This is a very important aspect of a formal dinner and it is important that you follow the rules accordingly. Formal business dinner normally drags for quite some time as there will be much social talk, some karaoke, and drinking contests. Most of the time, everyone is too drunk to indulge in further entertainment after a dinner. In addition, if you are just new to this partnership, you are unlikely to be invited to further after dinner entertainment. However, once you are familiar with them, you may be invited to a Karaoke, or a Night Club, or a Sauna. Do note that if they are the host for the night, all bills will be picked up by them for the night, including all entertainment. It is impolite to fight for the bill or worst, split the bills. Similarly, if you are the host for the night, you are expected to pick up all bills for the night.

These four characteristics are by no means unique to Chinese organizations. However, when grouped together they reinforce each other and form a chain that holds Chinese management in its unique form. Much literature has described the characteristics of Chinese management, how about the new challenges posed by multinational corporations? Will Chinese management maintain its present form with the social-cultural changes that are occurring in the larger society?

Chinese versus Western

From a Western perspective, while we were growing up, we subconsciously developed an ingrained sense of the way things work. A common language gave us the ability to communicate effectively with the people around us like our family, friends, and work colleagues and even with strangers in public. Besides, we learned something of our country's history, people's habits, likes and dislikes, politics, religion, traditions, legal and facets of life. This understanding influenced our own behaviour, and what we expect of others. We also will have some idea of what people can or should not do without consequences.

Living abroad, it does not take long to realise that many things that do not work the same, especially when moving from the West to the East. Apart from different languages, each country has its own social systems and laws and ways of implementing them to resolve problems and disputes. We will find some of them strange and alien. There will be times when we feel alienated or uncomfortable because we realise that things are not the same as we think they ought to be. This is what is often described as Culture Shock.

Here are the personal observations of the differences in emphasis between Chinese and Western cultures:

Chinese Culture

Western Culture

Live in time

Value rest and relaxation

Passive, accepting


Accept what is

Live in nature (part of nature itself)

Want to know meaning

Freedom of silence

Lapse into meditation

Marry first, then love

Love is silent

Focus on consideration of others' feelings

Learn to do with less material assets

Ideal: love of life

Honour austerity

Wealth or poverty: results of fortune

Cherish wisdom of years

Retire to enjoy the gift of one's family

Live in space

Value activity

Assertive, confronting


Seek change

Live with nature (co-existing with nature)

Want to know how it works

Freedom of speech

Strive for articulation

Love first, then marry

Love is vocal

Focus on self-assuredness, own needs

Attempt to get more of everything

Ideal: being successful

Honour achievement

Wealth or poverty: results of enterprise

Cherish vitality of youth

Retire to enjoy the rewards of one's work

Table 1: Chinese Culture versus Western Culture.

Another interesting study is that a Chinese girl who grows in Germany named Yang Liu born in 1976; she draws the graphics that raise the message about differences between Eastern and Western culture. A great picture worth a thousand words, this actually can be retrieve from the pictures she draw. However, many of the pictures are applicable to most non-Western cultures, not just Chinese as intended.

Blue --> Westerner

Red --> Asian


Way of Life



Queue when Waiting


In the restaurant

Handling of Problems 

Table 2: Differences between Western and Eastern Culture, by Yang Liu (2004).

Chinese and West cross cultural relationships can be extremely successful as long as both partners make the effort to understand and accept the differences in each other's culture and traditions. Human nature makes us all think our way is best. This actually is not necessarily true.

Current Situation

Traditional Chinese management is embedded in a collective society in which individuals can expect their relatives, clan, or other in-group to look after them in exchange for unquestioning loyalty. Some country going through a process of Westernization and modernization, it is inevitable for the citizen to be exposed to Western management concepts. They more emphasize on expertise, reward-performance, individual achievement, and professional relationships by younger managers nowadays. As a result, hiring of staff is based on merit rather than on relationships to owners.

Traditional Chinese management does not emphasize formal rules, written plans, and organizational objectives, fixed times for meetings, or fixed criteria for performance evaluation. However, with the impact of the young generation, there is a stronger demand for some kind of structure and standardization. Many Chinese organizations have started implementing monthly meetings, planning sales strategies and budgets, setting recruitment criteria, and producing reports.

Change Development

By understanding the culture is only the first step to changing it. However, changing the culture is not just about changing the attitudes and behaviours but removing some of the barriers and constraints which are often built into the management systems, organisation structure and the prevailing management style.

Why do so many transformation efforts produce only middling results? One overarching reason is that leaders typically fail to acknowledge that large-scale change can take years. Moreover, a successful change process goes through a series of eight distinct stages. These stages should be worked through in sequence. Skipping steps to try to accelerate the process invariably causes problems. And since the success of a given stage depends on the work done in prior stages, a critical mistake in any of the stages can have a devastating impact.

Although the need for change is widely recognized and acknowledged, but the reality of creating that change and making the change "stick" are extremely difficult.

Granted, managing change is important. Competent management is required to keep change efforts on track. But for most organizations, the much bigger challenge is leading change. Only leadership can blast through the many sources of corporate inertia. Only leadership can motivate the actions needed to alter behaviour in any significant way. Only leadership can get change to stick, by anchoring it in the very culture of the organization.

But leadership, Kotter stresses cannot be confined to one larger-than-life individual who charms thousands into being obedient followers. Modern organizations are far too complex to be transformed by a single giant. The leadership effort must have support from many people who assist the leadership agenda within their sphere of activity.

The eight stage process in leading change by John P. Kotter:

Establishing a sense of Urgency

Major changes necessitate motivation among relevant people and sense of crises or potential crises. Examine market and competitive realities that show the facts why change is necessary. Transformation programs require aggressive co-operation by many individuals. Without motivation, people won't help and the effort goes nowhere. In example, the global is moving to westernization, if the Chinese management organization did not take the initiative to change; it may cause out of track. By cross cultural may lead the unpredictable result.

At first we have to decide why we want to change the culture. Think carefully because this is not going to be easy. It took a long time to build where we are and the people, even though it may not be pleasant are used to it. The rules are established, changing them now will bring resistance.

Creating a guiding coalition

Assemble a group with enough energy and authority to lead the change effort. Encourage this group to work together as a team. Involve the influential people in the organization. Develop the shared commitment to renewal. In the Chinese organization, this group of people normally comes from the family members or the prime mover. According to the characteristic mentioned earlier, the human-centered and family-centered factors will drive through this step.

Developing a vision and strategy

Vision can provide motivation, sense of direction, basis for alignment of efforts and processes. Vision needs to be supported by a respective strategy. Transformation effort can easily dissolve into a list of confusing and incompatible projects. Without clear and sensible vision, it can lead to the wrong direction or nowhere at all. Transformation does not mean change everything single trait. The said leader should identify the area to be cover for the change. List down the vision and strategy used, and then evaluate and feedback during the change. However, some of the unique characteristic must remain which is the trademark that cannot find in any other culture.

Communicating the changed vision

To induce understanding, develop a gut-level commitment, and liberate more energy from a critical mass of people. Transformation is impossible unless hundreds or thousands people are willing to help, often to the point of making short-term sacrifices. As change process is tough, communication within the organizational toward the goal is very important; it will help in connecting everyone that involved.

Empowering broad-base action

The focus of empowerment should be on removing barriers and obstacles for people to effect the change. Encourage risk taking and non-traditional ideas, activities and actions. Obstacles can be: the organizational structure, narrowly defined job categories, compensation and performance-appraisal systems. Chinese usually giving an image of conservative, this step actually is one of the changes that happen, because it involve risk taking.

Generating short-term wins

Plan for visible performance improvements, then recognize and reward the employees involved in the improvements. Effecting a major change may take time. The end may not come as quickly and pain-free. The short term goal set is to motivate the change go future when it achieved. If we change culture change the story. Begin rewarding the behavior we want to see. Let others see the reward and talk about it.

Consolidating gains and producing more change

Use increased credibility to change systems, structures, and policies that do not fit the vision. Reinvigorate the process with new projects, themes, and change agents. In the absence of continuous engagements, people may return to the old status.

Anchoring new approaches in culture

Articulate the connections between the new behaviors and corporate success. Make a conscious attempt to show people that the new behaviors have improved performance. It is like the way we do thing around here. Change will stick to the organization.

It is important to go through all eight stages in sequence; however, normally one operates in multiple phases at once. A purely linear, analytical plan is likely to fail. There are many forces at work creating a dynamic, complex and messy environment. This is why leadership is so critical, not just management. Management is a set of processes that can keep a complicated system of people and technology running smoothly. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances. Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles.

Kotter asserts that all of the stages must be worked through in order, and completely, to successfully change. Skipping even a single step or getting too far ahead without a solid base almost always creates problems. People under pressure to show results will often skip the warm-up or defrosting activities (the first four steps). Failing to reinforce the earlier stages as we move on, results in the sense of urgency will dissipating, or the guiding coalition breaking up. Without the follow though which takes place in the final step, we never get to the finish line and make changes stick.

Asian patterns of personality, feeling and thinking, and psychopathology, they take the discussion to new level of looking at psychotherapy in the broader context of healing. The spiritual leadership in Chinese mentions that "In order to guide people, the leader must put him behind them. Thus when he is ahead they feel no hurt." (Lao Tzu). He emphasize on the spirit of walking behind people; silent is golden. This is totally different with Western philosophy, "Leadership is done from in front. Never ask others to do what you, if challenged, would not be willing to do yourself." (Xenophon). He is emphasizing the hands-on issue, walking ahead of people; speech is golden. Usually, when conduct the change process, the leader or the prime mover have to take the initiative to make the first move to influence those followers. Hence, this action may affect the industry as the competitors will follow the trend of change as well.

In an example, there are a series of experiments conducted on children to see what would get them to eat vegetables they disliked in the late 1970's. It is not talking about simply eating more vegetables. But talking about eating specific vegetables, the ones the children did not like.

We could tell the children we expect them to eat their vegetables. And reward them with ice cream if they did. We could explain all the reasons why eating their vegetables is good for them. And we could eat our own vegetables as a good role model. But the researcher from University of Illinois, Leann Lipps Birch found one thing that worked predictably. She put a child who did not like peas at a table with several other children who did. Within a meal or two, the pea-hater was eating peas like the pea-lovers.

This is the peer pressure that happens in this experiment. We tend to conform to the behavior of the people around us. This is what makes culture change particularly challenging because everyone is conforming to the current culture. Sometimes though, the problem contains the solution.


The Chinese have their management style which is distinct from the Western management style. The basic value assumptions underlying Chinese management are human-centered and family-centered. However, traditional Chinese management is faced with the challenge of social-cultural change in the larger society as well as within the organizations. Many Chinese organizations have struggled to westernize by sending younger family members abroad for a Western education, hoping that the eventual successors can bring Western concepts and technologies to the organization. Although such changes could have some positive outcomes, the attempt to integrate Western management concepts into Chinese management often engenders many problems. How Chinese management is going to evolve depends on how it copes with the changing value dimensions in the larger culture as well as within its business organizations. Actually, Western organizations could also benefit from Chinese management culture by application of those characteristics mentioned.