Running head: BUSINESS STRATEGY

Business Strategy Lois Griffin Leading in China Liberty University LDR 520 Dr. Adkins December 2, 2013

BUSINESS STRATEGY An Integration Strategy for Business in China

Cross cultural differences is identified as the greatest challenge in doing business, ranking first in the world market when considering: law, price competition, language, and delivery, Boontanapibul (2010). An entrance strategy within China will be planned considering its cultural differences and how its difference in market might affect its potential employees. Also to be considered is how to prepare for these differences and if the best practice would be to hire locally or expatriate. As practices of management vary across countries the desire and ability to become and remain successful involve companies to always consider the differences and affects that come with each culture (Boontanapibul, 2010). Hiring Expats vs. China local talent When deciding how to enter the China market one must first decide its best practice for hiring. The options to be considered are hiring locally and expatriate. There could be issues in obtaining expat employees as the hardest issue for expatriates success in China is th e time required to adjusting within its foreign country making hiring locally most feasible. Finances could be another reason why hiring locally would be in the greatest interest of the company. Selmer explains that the expense of the assignments for several expats could exceed the budgets as risk of failure is too great. The expats could experience dissatisfaction from the job itself due to the lack of being able to adjust within the country or separation from family living abroad. While there is evidence showing the negatives to hiring expats, there are positives as well. Hiring the right expat that is talented with technical skills, cross-cultural knowledge, and Chinese language abilities can provide a competitive edge to a variety of companies in many industries (Sorock, 2013). This sort of knowledge and experience would be considered a bonus.

BUSINESS STRATEGY Companies should anticipate expatriates to have issues cross-culturally,

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recommendation to alleviate or mitigate these issues should include expatriates to be trained specifically in China culture before beginning any assignments. Within the duration of each assignment expatriates should be provided ongoing assistance and resources to further develop culturally. Companies should also provide a stipend, housing, or other accommodations for those who are hired with families as it will eliminate a strain of communication with a spouse and or adolescent children. Expatriates find value in and want their employers to provide crosscultural and language training for employees, and offer cultural assistance to employees families (Britt, 2002). HR Critical Issues/ Implications There are several main HR implication differences between China and the United States which should be considered and these implications include: Chinas power is very much centralized, they operate within collectivism, their approach is more feminine, and there is great value in orientation being long term. With all of this the U.S. is the polar opposite in each one of these categories. With economic situations, financial risks, and currency being major issues, the most serious challenge for doing business in China is human resources. Some of the issues conducting business in China included: retaining and attracting qualified individuals, effectiveness of both management and leadership, compensation/benefit competitiveness, motivating employees and gaining a level of commitment, management of talent, and competency development just to name a few.

Like companies and organizations all over the world, businesses in China face many opportunities and challenges related to human resources. HR divisions are under pressure to

BUSINESS STRATEGY demonstrate their value to the company, provide the talent and organizational capabilities that will drive business results for the company. There are multiple reasons why companies and HR are struggling to contribute strategic value to the business. HR is still too focused on administrative tasks. Based on Aon Hewitt's research, more the 60% of HR's time is transactional, administrative in nature.

In addition, HR is often not included "at the table" with business and end up being informed too late about the potential workforce challenges related to the execution of business strategies. Other Strategic HR Issues include: an increase in manpower requirements, heavy demand for training new recruits and ongoing training for all employees, officers being required to spend more time on recruitment exercises, and continuous expansion of passenger/cargo traffic at Hong Kong-China border. Respondents reported HR issues as top business challenges: bureaucracy, management-level human resources constraints, unclear laws and regulations, inconsistent regulatory interpretation, intellectual property rights infringement, corruption, obtaining required licenses, non-management level human resources constraints, and local protectionism. More issues were increase in manpower requirements, addition of consumer protection responsibilities, training to develop new skills, increasing public expectations for service quality, a need to communicate new service standards and assessment methods, and training on improving service quality.

Cross-cultural issues that might emerge (major differences with U.S.) Many considerations and close adherence to customs and traditions is an important part of bringing a business to China. The Chinese are a very conservative culture and respect is

BUSINESS STRATEGY shown by understanding their customs. Behavior, appearance, and communication play important roles in conducting business with the Chinese in China.

Williams tells us the Chinese have very distinct views on appearance. Conservative suits for men are expected, and clothing for women should not bear too much skin. Both should be in subtle, neutral colors. Chinese businessmen consider short sleeves on women offensive and frown upon high heels. As with most of Chinese customs, casual attire is expected to be conservative. Jeans may be worn but they are never worn for business (Williams, 2012). A persons actions and behavior give the Chinese a distinct first impression and several actions are considered offensive. Never use your hands when you speak and avoid all contact with the mouth (Williams, 2012). The Chinese do not like to be touched physically (Pitta, Fung & Isberg, 1999). Personal contact of any kind should be avoided and the Chinese find it highly offensive to touch a woman in public (Williams, 2012). Never point when speaking, and never discuss business during meals (Williams, 2012). Gift giving to government officials are against the law, but giving gifts to businessmen has become acceptable as long as the gift is not considered offensive. The best gift is a banquet or large meal. During the meal toasting is expected with one toast being directed toward the highest ranking member of the Chinese party as is customary (Legacy, 2013). Williams notes that fine writing pens are also a favored gift (2012). Communication is another major consideration. The common greeting is bowing or nodding, and a handshake may be acceptable if initiated by the Chinese. Introductions are always formal; therefore, formal titles should be used. When considering a business meeting appointments are always required, and being on time is essential (Williams, 2012). Business decisions are never made quickly by the Chinese since they are known for consulting the stars

BUSINESS STRATEGY and waiting for a lucky day before making their decision (Williams, 2012). The Chinese enjoy sharing business cards so bring a good supply (Legacy, 2013) but never put them in a pocket or wallet which they find offensive; instead, always bring a card case (Williams, 2012). The most

important person in your group should lead the meeting because status and rank are important to the Chinese. When business is concluded, always allow the Chinese to leave the meeting first (Williams, 2012) as is customary. The more you know about the customs in China, the more readily you will be accepted. First impressions carry a lot of weight. How to prepare for such cross-cultural issues. The business of operating in China presents many issues that need to be overcome to be successful. China operates in a different culture that has been present for over 1000 years and common behaviors are often very different than what is seen in western culture. To be an effective business in China, one has to understand the country and its people. A structured format for classes on the business and cultural differences would be needed. These classes are offered by many consulting firms in the United States, which have done business in China. One issue that needs to be thought to executives is the concept of Face; it maintains that one has a social role and public perception (Canada, 2013). If one were to misuse this in their relationships or business dealings, they could be placed in jeopardy. It is imperative that upper management is very familiar with this concept, so business can be conducted in a successful way. Education is the key for a foreigner to become successful in the Chinese marketplace. Knowledge of the Chinese language would be very helpful for upper management, perhaps a small group could attend language classes before conducting business; it would a great sign of respect. Many Chinese speak and understand English but it would show that the management team is interested in China. They have to be very familiar with customs,

BUSINESS STRATEGY body language, and culture, as well as being adaptive to change as the marketplace in China is growing very rapidly. Conclusion

Essentially there would need to be much planning and education before any entry into the Chinese marketplace. Preparation is the key and a strong knowledge of culture and practices needs to be understood to be successful. The company must be willing to spend capital to provide the needed training as this is the first step into integration into the Chinese marketplace. Success can only be achieved if the company is accepted as a contender in the marketplace and this would only come with knowledge and acceptance of Chinese values and culture.

BUSINESS STRATEGY Reference Boontanapibul, C. (2010). Doing business in China: Cultural factors, start-up concerns, and professional development. Executive Journal, 170-182. Retrieved from http://www.bu.ac.th/knowledgecenter/executive_journal/july_sep_10/pdf/aw26.pdf Britt, J. (2002). Expatriates Want More Support From Home. HR Magazine, 47(7), 21. http://www.chinabusinessreview.com/the-expats-competitive-edge/ Canada. (2013). The Canadian Trade Commissioner Service. Business Etiquette in China. Retrieved from

http://www.tradecommissioner.gc.ca/eng/document.jsp?did=107932&cid=512&oid=958 Doing Business in China: The American Chamber of Commerce. Retrieved March, 2011 from http://www.chinaglobaltrade.com/article/american-chamber-of-commerce-2011-chinabusiness-climate-survey De'Edra Williams. (1998-2012). Chinese Business, Etiquette, Culture, and Manners. InternationalBusinessCenter.org Retrieved from http://www.cyborlink.com./ besite/china.htm Executive Summary: Challenges and Success Factors for the Human Resources Management of Multinational Companies in China. Retrieved December 2, 2013 from http://www2.china.ahk.de/download/news/Executive_Summary_HRStudy.pdf Guide on Developing a HRM Plan. Retrieved December 2, 2013. Retrieved from http://www.csb.gov.hk/english/publication/files/Develop_HRM_Plan_e.pdf Legacy Management Systems, Inc. (1996-2013). The Global Leader: Understanding Chinese Business Culture and Business Practices. Retrieved from http://www.legacee.com/ Culture/CultureOverview.html#sthash.Zh1lhBVf.dpuf Pitta, D.A., Fung, H., Isberg, S. (1999(. Ethical issues across cultures: managing the differing

BUSINESS STRATEGY Perspectives of China and the USA. Journal of Consumer Marketing. 16(3). Retrieved from http://home.ubalt.edu/ntsbpitt/ethics.pdf Selmer, J. (n.d.). International Adjustment of Business Expatriates: The Impact of Age, Gender, and Marital Status. In BRC Papers on Cross-Cultural Management. Retrieved November 25, 2013 from http://ied.hkbu.edu.hk/publications/ccmp/CCMP200008.pdf Sorock , A. (2013, October 21). The Expats Competitive Edge. China Business Review. Retrieved November 28, 2013 from