Analysis of Intercultural Competence for Foreign Companies in China

This report delves into the critical topic of intercultural competence for foreign companies operating in China. It begins by defining intercultural competence and highlighting the significance of understanding Chinese culture, which is rooted in Confucianism, Taoism, and Buddhism, for business success. The report emphasizes China's economic importance and its attractiveness to foreign investors, while also acknowledging the cultural differences that can lead to misunderstandings and financial setbacks. It explores the challenges faced by foreign companies, such as cultural differences, legal regulations, and language barriers, with a specific focus on the experiences of German companies. The report highlights the importance of joint ventures and the need for cross-cultural training to mitigate potential issues. The research employs a qualitative research method, drawing on customer viewpoints to analyze the impact of intercultural differences on decision-making processes and overall business success. The report concludes by emphasizing the necessity for investors to recognize cultural factors that can impact market growth and company performance, providing a comprehensive overview of the topic.

Intercultural competence of
foreign companies operating in
China

Table of Contents
1. Introduction..................................................................................................................................1
Reference.........................................................................................................................................5

Topic :- “Intercultural competence of foreign companies operating in China”
1. Introduction
Intercultural competence can be understood as scope of psychological feature, emotional,
and behavioural accomplishment which helps business firms in doing communication in an
appropriate manner with the other companies or members who are following a whole antithetic
culture (Briscoe, Tarique and Schuler, 2012). On the other hand, China's culture is being stated
as 5000 years old where most of Chinese people do follows Confucianism, Taoism and
Buddhism. It has been located that economy of China always stayed at a booming position and
can be stated as sort of magnet for foreign companies who are looking forward to expand their
business so that to enhance profitability.
China is a developing economy which is one of leading country over the world; its a
magnet for foreign investors. Its a multi racial nation which consider 56 ethnic groups. In order
to gain sustainable development, all economies are joint hand together for developing a great
cultural of China and also boom up its economic development. In this aura, international
business associations found China is a beneficial and wealth generated country due to its high
population, however there are certain cultural changes which are taken into consideration so as to
avoid misunderstandings, disputes and substantial costs to the organisations. The report has
stated that many foreign companies are willing to do their business in china so as to accomplish
high competitive edge (Jiang and et. al., 2011). German are directed express their views and
opinions whereas Chinese people tend towards feel some kind of hesitation while giving their
views.
There are several benefits to do business in China as it can ensure success of international
business venture as well as improve economic growth of the nation and business cultural also. It
1

will also provides clear understanding of cultural of the country and recognising all internal and
external factors which will affect foreign companies in direct and indirect manner.
According to Fang and Faure, (2011), there are ample number of problems which can be
faced by foreign companies who are trying to expand their business in China. Here, it has been
critically analysed that the major problems that can be faced by alien firms in China is culture,
technology, laws and language. If German companies like Deutsche Bank, Bosch are looking
forward to expand their business in China it is may be possible that they may face issues because
German culture is totally different from China. Along with this, legislations, rules and
regulations that has been made by government of China stays strict for alien companies which
can be stated as another issue that can be faced and may put impact on decisions of managers and
leaders of these organisation. The thesis is based upon how intercultural differences can affect
business growth and success of the foreign companies so as to gain high cutting edge. The
concept of joint ventures has also raised in this present scenario, it helps in growth and
expanding business at global level (Tian and Borges, 2011).
Along with this, while doing businesses in other countries like- language barriers, needs
and wants of customers, climate changes etc. at this time firms are required to analyse these
factors so as to make necessary business decisions. Normally the companies have their own
objectives which will be different than the JV objectives. Imbalance in levels of expertise, assets
and investments will lead to a poor integration and co-operation. Different culture and
management styles will also lead to poor performance and co-operation.
There are several cross cultural training programmes should be provided to businesses as
they can doing business in China; it increases awareness and understanding towards the cultural
of the nation. Along with this, in order to ensure stumbling blocks of the cultural it is essential
2

for foreign investors to ensure about developing strategies so as to attain future benefits by
reducing all differences. While locating into different aspects current thesis is an academic
document where topic is “Intercultural competence of foreign companies operating in China”
which is being made through following steps. Current situation in china is filled with ample
number of problems and under description about the topic which has been chosen for entire
study. It provide more and relevant information to readers as they can know what is going to be
explained later. In this present study, readers will get aware about cultural differences which can
affect foreign companies investment in China. The report has stated corporate cultural of china.
After that, report will also show proper description of viewpoints of different authors and writers
who have studied on the same area of the concern previously (Kankaanranta and Lu, 2013). It
helps researcher to accomplish relevant data and information about the chosen topic.
3

German cultural is totally different from China thus it is essential for nations to
understand the cultural of an economy so as to do business at there in an effective manner.
Although, Germans are little bit more individualised in comparison with Chinese people. Maybe
that is why the depression rate in China is very low since few people have the chance to shut
interaction with other people easily. It describes several methods which are getting used while
doing a thesis so as to arrive better conclusion in the best possible manner. For doing this
research, there is used qualitative research method so as to get more relevant and effective
information. In addition to this, qualitative data assists in getting making entire thesis in the best
possible manner and arriving towards better outcomes. It involves evaluating the data and
information which has been gathered by the company or researcher so as to make imperative
research. Findings are based upon customers' viewpoints and opinions of customers. According
to this research, it get analysed that Chinese economy is developing day by day which opens
door of success for future business organisations. Along with this, understanding the cultural
environment of a nation is crucial to get high market growth and success of business
associations. Cultural is essential and describe various differences towards the living standards of
people (Jiang and et. al., 2011).
Variable culture and different management styles will lead to dissolution of the venture.
Thus, it can be said that intercultural differences always affect decision making process of
companies and helps them in re4solving business problems as well (Bücker and et. al., 2014).
Therefore, it is necessary for investors who wants to invest in China economy needs to recognise
all those factors which have vast impact on market growth and success of the company.
4

Reference
Books and Journals
Briscoe, D., Tarique, I., & Schuler, R. (2012). International human resource management:
Policies and practices for multinational enterprises. Routledge.
Fang, T., & Faure, G. O. (2011). Chinese communication characteristics: A Yin Yang
perspective. International Journal of Intercultural Relations, 35(3), 320-333.
Bücker, J. J. & et. al., (2014). The impact of cultural intelligence on communication
effectiveness, job satisfaction and anxiety for Chinese host country managers working
for foreign multinationals. The International Journal of Human Resource
Management, 25(14), 2068-2087.
Birkinshaw, J., Brannen, M. Y., & Tung, R. L. (2011). From a distance and generalizable to up
close and grounded: Reclaiming a place for qualitative methods in international
business research.
Jiang, C. X. & et. al., (2011). Effects of cultural ethnicity, firm size, and firm age on senior
executives’ trust in their overseas business partners: Evidence from China. Journal of
International Business Studies, 42(9), 1150-1173.
Kankaanranta, A., & Lu, W. (2013). The evolution of English as the business lingua franca:
Signs of convergence in Chinese and Finnish professional communication. Journal of
Business and Technical Communication, 27(3), 288-307.
Tian, K., & Borges, L. (2011). Cross-cultural issues in marketing communications: An
anthropological perspective of international business. International Journal of China
Marketing, 2(1), 110.
Moran, R. T., Abramson, N. R., & Moran, S. V. (2014). Managing cultural differences.
Routledge.
5