Market Cultural Report: Analysis of China's Business Environment

This report provides a comprehensive analysis of the cultural and business environment of China. It begins with an introduction to China, its demographics, and economic significance. The report then delves into a detailed cultural analysis, covering aspects like communication, language, etiquette, religion, ethics, and values. It explores how these cultural components integrate with the Chinese business environment, including discussions on corruption, etiquette, relationships, gift-giving, meetings, social structure, negotiation, appearance, and body language. The report also includes a comparison of Chinese culture with that of Malaysia, highlighting similarities and differences. Furthermore, it applies Hofstede's five cultural dimensions to analyze China. The report concludes with a summary of key findings and insights into the complexities of doing business in China. This report is designed to provide a thorough understanding of the Chinese market for those involved in international business.

Running head: MARKET CULTURAL REPORT
MARKET CULTURAL REPORT
Name of the Student
Name of the University
Author Note

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................5
Cultural Analysis of China.....................................................................................................5
Integrating these Cultural components with the business environment of China..................8
Comparing the culture of China with that of the home country Malaysia:............................9
Hofstede’s 5 cultural dimensions analysis...........................................................................10
Hofstede’s five Cultural Dimensions for China...................................................................11
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
The country China, also known as the People`s republic of China is one of the largest
countries of East Asia. Occupying approximately the entire East Asian landmass, it occupies
one-fourteenth of the land mass of the planet and has the largest population in the world. The
country has thirty-three administrative units under the domain of the Central Government.
The capital of the nation is Beijing, which is also the communication, economic and cultural
capital of the country (Shambaugh, 2013). The leading port and commercial centre is Hong
Kong, with Shanghai being the industrial city of China.
The country is highly complex and a diverse country in terms of climate. The climate
ranges from extremely arid conditions in the northwestern part of the country to southeast
with one of the greatest contrasts in temperature. This diversity has resulted in the world`s
widest collection of ecological niches, with these being rich in a vast variety of animals and
plants of all kind. In terms of history, China is one of the few civilizations, which are still
existing (Poston Jr. & Yaukey, 2013). The Chinese civilization flourished both culturally and
economically in its earliest stages.
Although there have been cases of social and political turbulence in the country,
China has shown commendable longevity and resilience in its cultural-political unit. This
country has developed its culture without much outside intervention, Buddhism from India
being the only exceptional case. This non-existence of any intervention from the outside
world, although made China a culturally rich country, but it also left China paralyzed when
faced by the technologically superior nations (Scharping, 2013). Amongst this foreign on
slaughter, China found itself in a weak position. However, this inability brought about a
revolution, which fought against the old regime and gave rise to the establishment of a
communist regime. This was the turning point for China, where thereafter the nation was

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reshaped in every aspect including political, business and infrastructure. Since then China has
become one of the most influential and powerful countries in the world
The economy of China is one of the largest in the world for the last few years during
which it has witnessed the cycles of decline as well as prosperity. The country is the world`s
second largest economy in terms of GDP (Gong, 2012).The country has built itself into an
economic giant with trillions of reserved and Foreign Direct Investment opportunities. China
in the global economy. The country is also the largest international holder of United States
debt owning over $ 1.15 trillion in their treasury bonds. With high rankings in the Global
Competitiveness Index, China has low rankings in terms of economic freedom
The country has made huge investments in terms of scientific research. The Chinese
believe that science and technology are vital for the achievement of the country`s political
and economic growth. They have been developing their educational system as well especially
in the domain of mathematics, science and engineering (Jiang, 2013). Some of the brands of
Chinese technology like Huawei and Lenovo have become world leaders in personal
computing.
China realized the dependence of its economic system on the US Dollar and
recognized this weakness in its international monetary system. It improvised the system and
because of this, the Chinese currency became the eighth most traded currency in the world.
This report throws light on the environment of China with special aspects to the cultural and
business in the nation (Yin, 2013). It includes a study of Hofstede`s five cultural dimensions
of China.
China has been chosen as the country in the assignment because when the topic of
international business arises, China is a lead player in the global market and the highest

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attractor of the Foreign Direct Investments as stated earlier. Hence, China was an optimum
country to understand the issues in international business.
Discussion
Cultural Analysis of China
The given section will discuss the business cultural analysis of china which shall
provide an exploration of China`s culture and their business cultural structure. The aim of this
section is to identify the daily elements of the culture of China and how this culture is
incorporated in their business.
Globalization has opened various doors for expansion of trade into the other countries
of the globe. Therefore, when a company is expanding its operations, the knowledge about
the culture of the other country is crucial (Ardichvili et al., 2012).
Demographics
The country ranks one in the world with respect to its population, which are more than
one billion people. The country encompasses several ethnic groups with the Han Chinese
being the largest of all (Kleinman & Lin, 2013). It includes other minority groups as well like
Tibetan, Korean and Zhuang.
Communication
China has a high context , non-verbal society which helps them to gain the art in their
growth to understand what to say and what action needs to be taken even if it is not said to
them directly (Griffin & Pustay, 2012).They rely on facial expressions and tone of voice to
determine one`s feelings. They also tend to avoid eye contact, as they believe that eye contact
is a sign or disrespect.

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Written and Spoken Language
Mandarin and Cantonese are the two primary dialects spoken (Warner, 2014). The
first belonging to the southern part while the latter belongs to the northern part
Basic Etiquette
Greetings
Greetings are an important aspect of China with the elders being given most
importance. The people are addressed using the last name unless advised otherwise
(Ardichvili et al., 2012). They tend to bow their head when greeting other and with respect to
foreigners, a handshake is considered appropriate.
Dining
The host is always the first person to begin eating during a feast. He also tends to
propose a toast. When the feast begins, the host will be the first one to begin eating. The host
is also the person who proposes the toast (Gomez, 2012). The chopsticks when not in use
should be laid on the table; they are not something to be played with, as this is a sign of
disrespect for the host.
Religion
The communist party of China is atheists. Religious freedom is allowed in China;
however, many are harassed for their religious beliefs and practices. Five religions are
acknowledged by China, which include Buddhism, Islam, Protestantism, Taoism and
Catholicism.

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Ethics and Values
The Chinese have high ethical and moral values.
Marriage
Marriage comprises a significant part of the Chinese culture. The acceptance of both
the parties to marriage is important (Gomez, 2012). Arranged marriages, Polygamy and
Incest are forbidden.
Children
The government had placed a limit of the number of children a family can have. The
limit being set to one. However, recently when it was discovered from a study that the ageing
population of China has increased, the limit was raised to two.
Confucianism
This principle can be defined as a set of ethical and moral system, which represent the
rules that one person, should abide by based on the teachings of Confucius who was a
Chinese philosopher (Warner, 2014). He had laid down various systems of social structure
system based on the equality of relationships and educational system, which is considered
extremely important in China. Children of wealthy families have a better advantage at
gaining high post governmental position in jobs.

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Integrating these Cultural components with the business environment of China
Corruption
Recently, corruption has been observed as an emerging threat to China. It has
increased in the mid level and senior level involvement for monetary reasons. Enforcement
has not been very successful (Gomez, 2012). The Chinese government has certain anti-
corruption measures however, according to a report less than 3 % of corrupt officials end up
behind the bars.
Etiquette
Social interactions require proper etiquette
Relationships and communication
Business in china is generally done with known companies because of the
confidentiality of business data. The business information of the two companies who are
dealing is sent ahead of time. Gender roles do not exist and respect is given to the rank of the
person (Ardichvili et al., 2012). The Chinese prefer face-to-face interaction. In social
occasions, they Chinese do not like to discuss matters related to the business.
Gift giving and Greetings
Giving gifts and receiving is not acceptable in the domain of business. The gift even if
given with due respect is considered to be a form of bribery which is considered to be illegal
in the country. Handshakes are considered the formal greeting. While using titles of courtesy
most of the business executives should be addressed with a title, which is followed by their
last name.

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Meetings
Appointments for the meetings scheduled are made in advance and punctuality is of
extreme relevance in meetings (Kleinman & Lin, 2013). Talking out of turn or intervening
when a person is explaining his agenda is not acceptable. Senior management sits along with
other senior members. The Chinese expect the business partners or prospective partners to be
well prepared for the meeting. It is suggested that the business proposal has at least 20 copies
so that it is handed out to everyone present in the meeting. The presentations need to be build
in black and white, any other color should be avoided. Composure must be maintained during
the meetings. Reflection of emotions tends to put a negative effect for the concerned business
organization.
Social Structure
A person is associated with their work circle and the individual should not depart
from his group. It is also said that while entering a meeting, the organizational hierarchy
should be followed.
Negotiation
Negotiations may be done by the senior management of the company. People in china
do not like confrontation. In addition, they prefer not being pressurized to take certain
decisions. The Chinese tend to have a habit of extending negotiations beyond the deadline to
gain advantage in dealings. Patience is the key.
Appearance
Dark color business attires are considered appropriate for the men and on the other
hand, women should be wearing a dress or a business suit with flat shoes and a high neckline
(Chan & Tong, 2014).

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Body Language
Body language and movements are needed to be taken care of and a person needs to
be constantly conscious when doing business in China. A person needs to stay calm and
collected.
The body posture should be attentive and formal thereby demonstrating self-control
and respectfulness. Actions such as biting nails. Removing food from teeth, placing hands on
the mouth are considered rude.
Comparing the culture of China with that of the home country Malaysia:
Malaysia is a combination of various cultures of China and India as well. However,
there are certain similarities and differences between the two. Malaysia is a multicultural
society where multiple religions are allowed and encouraged. There are certain inherited
customs and traditions, which are blended with the foreign culture. Approximately 50% of
the population in Malaysia is Malaysians, the rest comprising of Chinese, Indian and others
(Warner, 2014).
Therefore, Chinese, Indian, English, Indonesian and Thai are the majority of the
languages, which are spoken. The Malaysian way of Business comprises of diplomacy,
politeness, negotiation, sensitivity, understanding and compromise (Wild et al., 2014).
The business structures are hierarchical, information flows towards the top, and decisions are
generally taken by the senior management. Meetings can be lengthy and usually begin with
the small talk. Generally, initial meetings are focused on non-business issues.
Unlike the Chinese, meetings in Malaysia start later than the prescribed time and last
longer than intended (Kleinman & Lin, 2013). There should be flexibility in work schedules.

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Since the place is a hybrid of all cultures, gifts exchange and other activities must be sensitive
and thoughtful. It is very difficult for the Malaysians to use the word `no` and therefore,
consideration should be given to their constraints.
Hence, China has a strict culture on the other hand; Malaysia has a diverse and
flexible culture. While doing business in China, the Malaysians should see to it that all
Chinese cultures are adhered to.
Hofstede’s 5 cultural dimensions analysis
Geert Hofstede developed a framework for cross-cultural communication named the
Hofstede's cultural dimensions theory. The theory explains the impact of the culture of a
society on the values and ethics of its members (Taras, Steel & Kirkman, 2012). It also
analysis how these ethics are related to behaviour, using the structure which has been derived
from factor analysis. The theory consists of five dimensions:
 power distance (strength of social hierarchy)
 individualism-collectivism
 masculinity-femininity( Also known as Achievement versus Nurturing)
 uncertainty avoidance
 Long term-Short term orientation (task orientation versus person-orientation)
 In 2010, Hofstede added a sixth dimension called indulgence versus self-restraint.
Hofstede`s work is often drawn upon by consultants and researchers in various
dimensions relating to international business and communication. The theory has been used

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as a basis for various fields like psychology, and international management (Minkov &
Hofstede, 2012).
Hofstede’s five Cultural Dimensions for China
The dimensions of culture are given below:
 Power Distance (PDI) – This dimension is the measure of extent to which the people in
the organization with less power will except and accept power to be distributed in a
different manner. The rank of China in this index is 80, which is extremely high. The
interpretation of this is that there exists a vast difference between the powers of the senior
management but that is acceptable and normal.
 Individualism/Collectivism (IDV) –This is to identify the mentality of the people whether
they consider `I` or `we`. The culture in America is focused on `I` which means people
there are focused highly on themselves and their careers (Minkov & Hofstede, 2012).
China on the other hand, ranks 91 on this dimension which means they have a
collectivistic mentality and think more about the group`s interest rather than the interest
of an individual.
 Masculinity/Femininity (MAS) (Achievement versus nurturing) – The rank of China is 66
in the MAS Index. This means that they are driven by competition, achievements and
success. The Chinese often place work before other responsibilities (Hofstede &
Dimensions, 2012). This has been portrayed by the fact that Chinese workers and laborers
leave their families behind and work for eleven months out of twelve.
 Uncertainty Avoidance (UAI) – China ranks 40 in this dimension proving that they tend to
accept situations, which are ambiguous rather than being deterred by them. Although the
Chinese are bound by many rules and regulations, to avoid such situations, however,