According to an American Economist and a Nobel Prize winner and professor at Columbia University, globalization involves several things. This includes sharing of cultural, cross border flow of knowledge and ideas, movement of global environments, and global civil society (Stiglitz, 2006). Companies expand into global markets for a number of reasons; key among them is the need to grow their market share and gain competitive in the market. However, expanding into global environment comes with both extensive benefits and enormous challenges to companies that wish to start this journey. Extensive research, learning and a lot of patience is necessary before embarking on global expansion to conduct business outside familiar territory. The focus of research should be on socio-cultural elements, legal and political environment and economic implications.
China has become a popular and attractive destination for global business expansion in recent years. This paper analyzes the Chinese culture and how it impact local business practices. It will further analyze and compare Chinese culture with that of the United States as well as the implications of cultural differences for the U.S businesses that wish to expand and establish business operations in China.
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Research Question 1: What are the Major Elements and Dimensions of Culture in China?
The culture is unique to every society and is reflected in a variety of ways and integrated into several elements within the society. Culture is defined as the set of shared values, attitudes, goal and practices characterizing an organization or institution (Merriam-Webster, 2009). Cultural dimensions are classified in terms of communication, ethics, religion, customs, values and attitudes, social structures, manners and organizations. These cultural elements are influencing decision making, ongoing operations and negotiations in international business environment. Therefore, any astute manager understands these cultural elements for long terms success of their business in global business landscape. Successful managers are also able to integrate the existing culture with the new culture. The following section describes each of these elements in relation to China.
Communication
Chinese society is considered a non-verbal and high context society. The knowledge is acquired during the upbringing where people come to know how to communicate both in conversation and indirectly. The facial expression and tone is commonly used to reveal how someone is feels. However, Chinese are known to show little or no facial expression when speaking or listening. In addition, Chinese also avoids eye contact and believe that it is a sign of disrespect to stare or look directly someone speaking ( Hofstede, 2011) .
Chinese language has a different alphabet with characters representing whole words, concepts or ideas. The Chinese symbols representing these words are always the same irrespective of the dialect. The main dialects spoken by people of China are Mandarin which is common in the southern part of the country and Cantonese which is mainly spoken in the northern part of China ( Ling, 2008) . Dialect refers to how words are pronounced as opposed to how they are written. In other words, people that speak different dialect will have difficulties to communicate to each other. Further, tones also have different meanings of Chinese words such that when the same would have a different meaning if it is pronounced in the wrong tone.
Religion
Officials of Chinese Ruling Communist Party are Atheists. Atheists have no religion and believe that God does not exist. According to a report by Bhattacharji (2008), a research associate with foreign relations council, all government officials of China were ordered not to have any spiritual or religious beliefs. It further reported that any officials found to practice or hold are type of religions would be relieved their duty in government.
The freedom of worship and religion beliefs are clearly outline in constitution of China. However, there have been several cases of religious persecution and harassment in the People’s Republic of China. The following religions are acknowledged and covered in the laws of China: Buddhism, Islam, Catholicism, Taoism and Protestantism, but any other religion of faith are not covered and protected under the law (Bhattacharji, 2008).
Buddhism is the dominant religion in People’s Republic of China which has been practiced since the first century A.D and was brought into China by Monks (Heirman & Bumbacher, 2007). Buddhism is purely based on the teachings of Buddha which touches on rituals, traditions, morals and values. Despite being a non theistic, Buddhism is not a religion by many people.
According to Hu and Allen (2005), Taoism or Daoism is essential to the culture of Chinese people. The ideas, attitudes and values of Taoism have helped in shaping the characters and minds of millions of people in China, Hong Kong, Mongolia, Taiwan, Korea, East and Southern Asia and wherever the Chinese people have been settled around the world. Taoism and Confucianism are the main philosophical and religious systems of the Chinese communities. For instance, ‘Tao or the way has been widely integrated into several things besides Taoism; ranging from the martial arts and T’ai-chi, acupuncture Feng shui among others and have also gone beyond the Chinese culture. Taoism is described as the mystical philosophy founded in sixth century B.C by Lao Tzu to teach people to conform to the Tao through simplicity and unassertive action (Merriam-Webster, 2009).
Islam and Christianity are other religions recognized under Chinese law professed by less than six percent of Chinese people. Christianity constitutes both the Protestantism and Catholicism and they among the least practiced religions in China. Islam was founded by Prophet Mohammed in 610 A.D and its teachings and beliefs have some resemblance with Christianity. These include beliefs in existence of Supreme Being, eternal life, holy books and prophets among others. However, Muslims believe that Jesus was God’s prophet and human being and not the son of God as claimed by Christians.
Ethics
Ethics is basically the standards of conduct and morality. There are several aspects of ethics that must considered by global businesses; these include corruption, use of child labor, corporate social responsibility and compensation of workers among others. Companies usually come up with moral standards to guide their employees on how to conduct themselves in serving the company. However, what is considered moral in one culture may not be morally accepted in another culture. Bhattacharji (2008) argued that ethics and morality is closely connected to religion. However, the two should be considered separately because not every of aspect of ethical standards is a result of religious standards. When it comes to global business environment, it is paramount to understand the ethics of a given culture to inform business decision such as marketing strategies among others.
Chinese ethics and moral system of China are largely based on Confucianism which stems from the teaching of a Chinese philosopher; Confucius. For thousands of years, Confucianism has shaped the cultural value and morals of most East Asian countries. It also continues to influence the culture of China and is still a dominant philosophical system in china (Hoobler & Hoobler, 2009). Corruption is considered unethical behavior in China yet is prevalent in high ranking government offices ( Pei & Kaufmann, 2007) . In Chinese business world, it is ethical to give and receive gifts. However, the gifts should be wrapped and offered using both hands as a sign of respect.
Values and Attitudes
Cultural studies must also include the aspects of value and attitudes. The culture of a society is drawn from its history and environment while social norms are derived from value of the society. Values are things that are highly esteemed by a given culture. They are simply an interpretation of culture by members of the society. Every member of the society is expected to comply with social norms. On the other hand, attitude is the revelation of beliefs, values, states of mind and feelings ( Xi & Zhang, 2013) .
An astute global business manager should recognize differences in attitudes between the host and home culture. These include differences in regard to time, gender, work, social status and social mobility and how they impact business relationship (Pan, Rowney, & Peterson, 2011). Time is of value in Chinese culture and punctuality is emphasized during meetings. Chinese society is long term oriented hence preservation of tradition is highly valued. In this society, people do not readily accept and embrace change. It is also noted that differences in gender roles in Chinese society is slowly narrowing and the number of women in workforce has increased steadily in the recent years. Therefore, global managers should know that gender diversity in work force is not limited in China.
Manners
Confucianism is integrated in all aspect of the Chinese culture and emphasized the significance of Golden Rule of doing unto others how you would like them do unto you ( Berthrong & Berthrong, 2000) . This is based on five virtues, namely courtesy, good faith, magnanimity, diligence and kindness, loyalty, duty, honor and respect. As a collectivist society, every member is answerable to his or her group and is responsible for the action of group member. Respect for elderly and those in authority is highly regarded in Chinese culture.
Gender roles are clearly defined in Chinese culture with men and women playing distinct roles in the society. Family unit is highly valued in Chinese culture and is even considered more important than work. This means that in absence of house help, Chinese woman will prefer attending to the younger ones than going to work (Pan et al, 2011). Greeting in China is formalized with elders being the first people to be addressed. People are addressed by their title and the last name unless it is based on the firs name. However, note that Chinese names are always reversed such that a person by the name James Smith will be addressed as Mr. James instead of Mr. Smith . In most cases, Chinese keep their heads down when they greet each other and shaking hands is appropriate when being introduced to foreigners.
Punctuality is highly regarded virtue in China and coming late to a meeting is considered and insult. Patience is another ethical in Chinese culture and interruption when one is presenting his agenda in the meeting is a sign of disrespect (Gift, Gift & Zheng, 2013). Entertainment in China is rather conducted at a public place as opposed to homes. Inviting someone home is considered a great honor for guests. Shoes are removed and tardiness is not tolerated in this society. During dinning, eating starts with the host and is the one to propose a toast. It is advisable to eat a lot to show that the food is enjoyable. Large amount of alcohols and a lot of smoking is allowed to accompany the meal. Furthermore, the guest is not expected to consume the last item on a serving dish ( Bucknall, 1999 ). Traditional eating tools are chopsticks, and if not in use, they are set on the table and it is disrespectful to play around with chopsticks.
Customs
Customs and traditions are highly regarded and preserved in Chinese society ( Ling, 2008) . There are a number of festivities celebrated in China with the spring Festival that mark the start of lunar New Year being the mother of all festivities. This is celebrated between mid January and mid February in honor of ancestors. This holiday is marked by fireworks and parades of dancers dressed as dragons. The moon festival celebration is marked between the months of September and October and characterized by paper lanterns, fireworks and moon gazing.
The birth of Confucius is marked on 28 th of September; the birth of Mazu or the sea goddess between May and June and birth of Guanyin or goddess of mercy. Other Chinese celebrations and holidays include National Day, the dragon boat festival, the youth day, women day, the New Year, May Day, Arbor Day, International Nurse Day, Anniversary of Communist Party, Teachers’ Day, the Army Day, Children’s Day and Journalists’ Day (Public holidays, 2009).
Social Structures and Organizations
Social structure refers to how the society is organized in terms of institutions, social groups, status and roles. Confucianism identified five key relationships in Chinese culture as husband and wife; father, mother and children; sisters and brothers; relationship between friends and ruler subject relationships (Hoobler &Hoobler, 2009). With exception of friends, the parties in the rest of the relationship do not have equal rights. For instance, father is considered the head of the family and ruler has authority over his or her subjects.
Marriage and family institution is highly regarded in Chinese culture and union between a man and a woman is associated with many customs. Generally, this union is not just limited to the man and the woman, but also extends to the two families (Pan, Rowney & Peterson, 2011). It starts with a proposal and meeting between the parents of the two families. If the proposal is accepted by the bride’s family, a wedding date is set. Incest and polygamy as well as arranged marriage are prohibited under Chinese law. However, due to its huge population and in bid to control population growth, the government of China has placed a limit to the number of children a couple can have to one child. Nonetheless, a couple can still petition the government for a second child under some grounds.
There are also other forms of nontraditional institutions that are gaining popularity; these include social media, technology, sport, military and medicine. Social media platforms have strong influence on businesses operating in China despite considerable restrictions. These have become important tools for internal and external communication. Business entities in China are using social media tools such as company websites, Facebook and Twitter to communicate and engage closely with customers. However, the use of digital media in communication in China is highly restricted.
Education
Education and training is very significant in preparing Chinese children for employment. The education system is also based on philosophy of Confucius who stressed the need to study hard (Hoobler & Hoobler, 2009). A good score in examination is necessary for appointment in government position which elevates the status and wealth of the appointed individual and the family at large. However, like in most countries, children coming from wealthy and upper class families have advantages over children from poor and lower class families when it comes to education opportunities. They also have advantages over their poor counterparts in getting appointments.
Research Question 2: How are these Elements and Dimensions Integrated by Locals Conducting Business in the Nation?
Communication
The conduct of business in China is largely based on face to face interaction. Any business communication must be official and business matters are not discussed on social occasions after the official meeting. An appointment for the meeting is done well in advance and anybody who is not invited is not allowed. Punctuality is highly regarded virtue in China and coming late to a meeting is considered an insult. Every person in the meeting has his or her agenda and could have an extended period of time on the floor to present his or her agenda. Patience is also important during meetings and interruption someone when making presentation is not tolerated. People are addressed by their title and the last name during meetings unless it is based on the first name.
As a high power distant society, Chinese accept hierarchical and unequal distribution of power. Seniority and rank is significant concept in Chinese culture. In this respect, senior members are accorded the first priority to talk during meetings. The sitting arrangement is also made according to seniority of members in the meeting with senior members taking the front seats while junior employees are required to sit behind ( Xi & Zhang, 2013) .
Business cards are usually exchanged after the meeting. It is important to have detailed information on the card and should have both the native language translated into Chinese language on the back if they are received from a foreigner. Business cards are usually treated with respect. Chinese is a high context society; hence, non-verbal communication is highly valued during communication.
Religion
Religion is a key factor influencing business decision for purposes of avoiding any clash with local religious beliefs. In China, Buddhism is dominant religion; hence, business strategies including marketing and employee management should be consistent with Buddhism religion teachings and beliefs to avoid religious backlash. In line with Buddhism teaching, it is ethical to preserve environment. Environmental preservation among other social support activities is practiced by entities conducting business in China ( Xi & Zhang, 2013) . Furthermore, workplace environment should also be conducive for employees. This is in line with Buddhism teaching that any actions taken should avoid harm. On the role of enlightenment, businesses are avoiding occupation and partnering with businesses associated with violence such as dealing in arms.
Ethics
Corruption is illegal under Chinese laws and business is expected to comply with all ethical standards ( Pei & Kaufmann, 2007) . Business entities should not engage in any acts of corruption while operating in China. In order to mitigate the risk of corruption, companies in China have integrated code of ethics for their workers. These codes are essential in safeguarding the company against corruption and also helping employees to maintain ethical standards.
However, receiving and giving of gifts is a common practice among businesses operating in the country. The gifts should be wrapped and delivered using the two hands. The receiver of the gifts is not allowed to open the gift on the spot ( Roy, Walters & Luk, 2001). Chinese value relationships and would not engage in business activities with strangers. Negotiation and signing of contract agreement marks the beginning of a long term relationship rather than just an official business accord as is the case in the U.S business environment. In line with ethical demand, firms in China are engaged in corporate social activities to gain market share in China.
Values and Attitudes
Chinese value systems place greater emphasis on collective of group achievement, cooperation and interdependence. In this regard, employee salary is always based on the principle of equity where academic qualification and work experience are considered ( Xi & Zhang, 2013) . In contrast, performance based pay is used in individualistic societies such as the U.S. Therefore, strategic plans for local companies in China are geared towards supporting group harmony and goals.
With high regard for social status, organizational structure of local firms usually has a clear hierarchy complied by employees. Seniority is highly regarded and hence supervisors are expected to give directions on task and duties. As a long term oriented society, strategic change is done gradually in local Chinese firms due to high preference for tradition. However, any changes that bring innovation and creativity are highly encouraged in local firms ( Selmer, 2006) . Despite distinct gender roles, gender diversity is taking shape in local firms as more women are recruited to join the workforce.
Manners
Work etiquette is highly valued in Chinese society and must be complied by those conducting business in China. When attending business meetings in China, it is expected to be humble, and conventional in the manner you approach issues. Dark colored attires are recommended for men while women are expected to wear business suit or a dress and put on flat shoes ( Xi & Zhang, 2013) .
It is important to be punctual in meeting and only those with appointment are allowed in the meetings. This is because coming late to a meeting is considered an insult and is highly discouraged because they value time. It is also advisable to remain calm during meeting and any disturbance is sign of disrespect. As a collectivist society, group efforts or goals is highly encouraged than individual efforts ( Bucknall, 1999 ) . Most business entertainments in China are conducted at a public place as opposed to homes. This is because inviting someone home is considered a great honor for guests.
Customs
Customs and celebration are highly regarded and valued in Chinese cultural environment. In this view, local business accord give employees some days off during cultural celebrations. In other instances, some bonuses are given to employees to enjoy the celebration with the rest of Chinese people. Normally, Chinese spend a lot of money during celebrations hence production and marketing strategies is directed towards meeting the demands of Chinese people during festivities ( Kwong, 2011) . Furthermore, the high number of holidays and festivities in China present a great opportunity for local companies market and promote their product to Chinese populace.
Structures and Organizations
Chinese value group and members are responsible for the action of other members of their group. In this regard, work group or team is highly encouraged as opposed to individual efforts. Chinese employees are very unlikely to depart from their workgroup. The high emphasis on groups means that Chinese group affiliation is more important than individual affiliation and their success are usually based on group work.
Employee motivation systems are geared towards work group rather than individual efforts. Instead of pay for performance, Chinese companies allocate pay based on the principle of equity ( Selmer, 2006) . In setting salaries for Chinese workers, mangers looks into the work experience as well as academic qualifications. However, the main reason considered for employee promotion is their political quality and interpersonal relationships.
Family is highly valued institution China than work. In addition, women have the role of caring for the young ones in the family. In line with these cultural demands, female employees are given flexible working time to attend to the family needs. Maternity leaves are important for Chinese female employees to attend to their younger ones ( Xi & Zhang, 2013) . However, this has the potential of affecting the career growth of Chinese female employees.
Education
In China, education is the main underlying factor in getting government position. Most local companies would consider among other things, the academic qualification of the candidate during employee recruitment. China has a well established education system producing adequate number of skilled personnel each year. For instance, there are many universities and colleges in China training students in different disciplines from information technology, management, engineering, medicine and so forth. In addition, thousands of Chinese are getting scholarships to study in Western countries where they gain cultural knowledge of western countries. This people become resourceful in integrating American and Chinese culture when they come back home ( Kwong, 2011) . Therefore, Chinese education is providing locals firms with required human resources to carry out business activities. Education is highly valued in Chinese society, therefore on job training and development is used to advance education and professional skills of employees.
Research Question 3: How do Both of the Above items Compare with United States Culture and Business?
Hofstede Analysis
Understanding the difference cultural dimensions is essential for global business managers. Studies have shown that neglect of cultural differences is the main cause of most failures by cross-national corporations. Hofstede cultural dimensions can be used to clarify cultural differences between China and United States. The six dimensions of Hofstede include power distance, masculinity/femininity, collectivism/ individualism, uncertainty avoidance and long term/short term orientation ( Hofstede, 2011) .
Generally, American society is ranked lower while China is ranked higher in power distance scores. Secondly, U.S is an individualistic society while China is a collectivism society. Thirdly, American is short term oriented society meaning that changes can take place easily and rapidly while China is long term oriented society meaning they have preference for traditions. China is ranked higher in terms of uncertainty avoidance compared to meaning that Chinese society is relatively risk avoiding while U.S is a risk taking society. United States is ranked moderately in terms of masculinity while is ranked moderate in terms femininity scores ( Hofstede, 2011) .
Impact on cooperation
Since entrepreneurs mature within the society, their attitudes towards cooperation are largely shaped by societal values and beliefs. Because of individualistic and masculine culture, Americans prefer to work alone on their own and are reluctant to cooperate and work with others. In fact, Americans attach high value on independence and control and view cooperation as a weakness. The case is different in collectivism and feminine societies such as China where group dependence is highly emphasized. Chinese attach great value on institutions and groups and hence tend to cooperate with others to reduce responsibility and avoid risks ( Chen & Wolf, 2001) . Therefore, group work and harmony among members is important and individualism of pursuing personal goals is not encouraged in this society.
Great emphasis is placed on contractual agreement in American society than in Chinese society who does attach great value on contractual agreement. In China, contractual is just the beginning of relationship and can be modified accordingly to suit the circumstance of the day ( Hofstede, 2011) . In simple words, Americans entrepreneurs have lower appreciation for cooperation strategies compared to Chinese entrepreneurs. Furthermore, people from individualistic societies attach greater value on contractual agreements than people from collectivist societies.
Managing Conflicts
There is notable difference in the way Chinese and Americans resolve conflicts. Chinese value harmony and building personal relationships thus tends to use indirect ways to avoid open and direct conflicts. In fact, when faced with conflicts, Chinese would prefer to use authority figure to help solve the problem or settle the scores in private through compromise and negotiation. This is what characterizes feminine and collectivist societies around the world. However, open confrontation and bringing conflict in open is common in individualistic and masculine societies such as the U.S. American managers prefer using direct confrontations tactics involving rational arguments, presentation of factual evident and suggesting solution in solving conflicts ( Chen & Wolf, 2001) . This conflict resolution approaches is consistent with lower power distance and pragmatic short term orientation dimension that characterize American society. The use of such tactics is undesirable in Chinese society because they will escalate disagreement.
Additionally, American society value time and hence managers are reluctant to use their efforts and time in helping other people in conflicts. This is contrary to the collectivist culture and uncertainty avoidance Chinese culture that encourage value relationship more than time. In this culture, managers are encouraged to invest their time and use indirect influence to help third party to solve third party conflicts. In dealing with controversial and difficult conflicts, Chinese managers prefer the use of indirect forms to avoid damaging guanxi. In fact, they feel embarrassed whenever their counterparts suggest using direct, open and round table methods in dealing with conflict within members of the organization. Similarly, American managers are often confused with round about tactics employed by Chinese managers in solving a seemingly simple conflict.
Decision Making
American values and attitudes towards risks are quite different from that of Chinese. Generally, Americans society is ranked lower than Chinese in Hofstede uncertainty avoidance scores. This means that Unlike China, American managers are risk takers when it comes to decision making while Chinese managers would delay decisions to avoid making risks. The high uncertainty Chinese managers lack the sense of risk and adventurous spirit and would not make immediate decision in uncertain circumstances. The preference for less risky and safer decisions has the potential of depriving Chinese managers the opportunities compete in fast changing global business environment. The contrary is the case for low uncertainty American global managers who consider risk taking as normal. They would dare make risky decisions to capitalize bone merging business and market opportunities such as new product development in response to market demand, opening new markets and adopting new technology.
Participation in Decision Making Process
There is notable difference in levels of participation between collectivist and individualistic societies. This is closely connected to difference in power distance between American and Chinese societies. Instead of consulting other group members, American managers prefer making individual decisions or defer them to their seniors. As a low power distance society, Americans value equality and shared or decentralized structure where subordinates are empowered ( Shearer, 2008) . The situation in China is a bit complex with respect to participation in decision making process. Some scholars have argued that decisions are typically participatory due to the collectivism nature of the society that emphasizes group loyalty.
However, other scholars believe that China is high power distance society, hence, employees are readily receptive and accept decisions handed down to them by their seniors and their unquestioning attitudes towards seniors diminish their participation in decision making process. Generally, the first case (participatory) is experienced to some extent across China but the second one (non-participatory) is the most dominant in Chinese society. However, it all depends on a number of factors; and mostly the kind of decision to be made. Non participatory approach to decision making is preferred by managers in state owned entities where decisions are made at high management levels without consulting employees. Therefore, employees are rarely given a chance to participate in the process of decision making due to centralization, formality and low disclosures element that characterize state owned entities. However, participatory decision making is gaining popularity in these entities following the recent forms in public sector as most Chinese firms are now adopting this approach in decision making process.
Work group Characteristics
Chinese people attach much value on relationships and group loyalty. Group goals are more important than personal goals. The focus of Chinese managers during interaction is to build social and interpersonal relationship before entering into contractual and business relationship. This is a prerequisite for doing business and they would spend some time developing the relationship with potential partners before entering into business. Contrary is the case for American managers that focus on business deal and task at hand to build confidence for superior performance as opposed to social and interpersonal relations ( Shearer, 2008) . As achievement oriented society, they focus on business matters hence building social and interpersonal relationship is a waste of time and efforts.
Chinese is a collectivist society and hence view people either as ‘in-group’ or ‘out group’. They have confidence and are also responsible for action of the ‘in group’ members. However, with time, the ‘out group’ members can turn into members of the ‘in group’. This means that Americans entrepreneurs can still become members of the ‘in group’ but they should give them time to develop personal relationships and to know them before they become partners and considered the’ in group’ members. They can become business partners and conduct smooth business only after they become trusted partners and part of their ‘in group’ members. This is contrary to Americans who are inpatients and unwilling to commit their precious time on building long term relationship through group interactions ( Begley & Boyd, 2003) . This has been the main undoing by American managers pursuing business partners in China and cannot understand how significance the relations in business in Chinese society.
Motivational systems
Cultural are critical aspect when it comes to distribution of pay or employee compensation. Principle of equity or pay based on the needs of employee is common in collectivist societies such as China while equality or performance based pay is common in individualistic societies such as the U.S. The distinction between these societies can be described on the four universal dimensions. First, in individualism society, ‘self’ is independent but interdependent in collectivist society. Secondly, personal and communal goals are closely linked in collectivist society but they are not aligned in individualist society. The difference in motivation systems system between American and Chinese societies is attributed to these two dimensions of universality ( Montoya & Briggs, 2013) . Generally, American managers pay on the basis of performance while Chinese pay is based on the principle of equity.
Individual achievement is emphasized in the U.S society and achievement of success is by individual efforts. Competition is highly valued in this society as well as personal goals and achievement and the desire to plan for individual contributions. The success is basically a contingent of individual efforts hence the preference for performance based pay. This means that even if an employee was helped by others, they are solely responsible for their accomplishment and get rewards accordingly ( De Mooij & Hofstede, 2010) . This compensation system is used to motivate employees hence their salary increases and promotion are pegged on talents and job performance.
Collaboration, interdependence, group goals and plans that support group efforts are emphasized in collective society of China. Chinese are loyal and devoted to their groups in which they have a sense of belonging. They believe that individual success is derived or contributed by the group and hence there is no claim of reward for oneself ( De Mooij & Hofstede, 2010) . This makes the use of equity based pay system appropriate in determining salaries of Chinese workers. Therefore, managers pay attention to both academic qualification and work experience in determining salaries of employees. However, one‘s history, political quality and interpersonal relationship are the main factors considered by managers for employee promotion.
Research Question 4: What are the Implications for United States Businesses that Wish to Conduct Business in that Region?
SWOT Analysis
Strengths
American business wishing to move into China has a number of strengths over their Chinese counterparts. Technological advancement is another key strength enjoyed by American firms than can be utilized in China produce at low cost and gain competitive advantage over local Chinese firms. Americans firm are reputable fort their high quality products and this explains the high preference for American brands in China.
Weaknesses
Cultural difference between American and Chinese society is the most fundamental weakness for America managers that wish to expand into China. This means that management style applied in American cannot be directly transferred into China. This calls for American managers to research and understand cultural difference to succeed in Chinese market.
Religious difference between U.S and Chinese religious beliefs are critical challenge to Americans global managers intending to expand into Chinese. Most Americans are Christians and their cultural beliefs are shaped by Christian teachings. However, Buddhism is the dominant religion in China and most cultural values, beliefs and attitudes are shaped along Buddhism and Taoism teachings, as well as Confucianism ( Berthrong & Berthrong, 2000) . This presents a great challenge in making business and marketing strategies. The high demand for environmental protection and other corporate social responsibility will be in line with teachings of Buddhism. This will improve reputation of American companies among the Chinese the profess Buddhism.
Language is another barrier to American managers wishing to invest in China. English is the Official and most spoken language in United States while Chinese is the most spoken language in China. Therefore, U.S global managers and expatriates are required to learn and understand Chinese language prior to starting operations in China. Individual versus group achievement is another challenge that must be addressed by American managers moving into Chinese Market. This calls for a shift from equality based pay to equity based pay for their Chinese workers.
Opportunities
There are various opportunities in China that can be exploited by cross border American firms. China is an emerging economy with high number of middle income population with high disposable income. The economy of China is growing more rapidly that developed nations and it is estimated that it will overtake United States in a few years to become the largest economy in the world. This provides lucrative market for products made by U.S companies that plan to invest in China. The cost of production in China is relatively high compared to United States. This can be translated into reduced prices for American products in the global market to gain competitive edge over competitors.
Technological advancement and adoption present another opportunity that can be utilized by Americans in business operations in China. American firms can gain competitive advantage over local Chinese firms by faster adoption of technology. This is because America is ranked low in uncertainty index and their managers are risk takers while Chinese managers are risk averse and would delay decision to make adopt emerging technology in their business.
Low uncertainty American managers will have the opportunity to take advantage of emerging opportunities in Chinese markets more quickly than their Chinese counterparts ( De Mooij & Hofstede, 2010) . For instance, Americans can respond easily and rapidly to new market demand ahead of their Chinese managers and gain competitive advantage in the market.
Group loyalty presents an opportunity to make effective use of team work to attain high employee performance in China (Wall, Preston & Zhang, 2009). Chinese employees value group work as opposed to individual goals. American managers can easily organize Chinese employees into groups/ team to benefit from advantages of team work.
Joint ventures, mergers and acquisition as well as formation of strategic alliance with local Chinese present an opportunity for Americans to enter Chinese market (Wall, Preston & Zhang, 2009). These are essential mode of entry that can help American managers to learn and understand Chinese culture before becoming fully established in the country.
Education is high valued in Chinese society and this will provide U.S firms planning to invest in China with adequate number of skilled and qualified personnel. Besides, the Chinese system is focused on training workers for employment. In addition, Chinese value education and hence on job training will be highly embraced by Chinese employees to enhance their skills which is essential in improving productivity.
Threats
The main threats of moving into China are the growing and intense competition from state owned Chinese firms as well as foreign based company from Europe and North America. In particular, state owned firms present the greatest threat to firms from outside China. The growing number of Chinese entrepreneurs with global aspiration for their brands is another threat to foreign firms operating in China. This transformation means that businesses from outside China are increasing facing stiffer competition from younger Chinese entrepreneurs who are conversant with cultural demands of the Chinese market. Furthermore, domestic firms are closer to Chinese customers and have already established better marketing and distribution channels.
The second major threat to U.S firms wishing to move to China is strict control and restriction on online technology that could lead to loss of IP. The high rate of corruption and rent seeking is another threat to fair playing ground in China. It is not that giving of gifts is not unethical in China, and this has worked to promote rent seeking and corruption in China.
Infringement on copyrights and patents rights is another key threat to firms that plan to invest in China. There are no strict laws in China to deal with practice hence these rights are likely to be violated in China. Mandatory joint venture partnership is another threat to American firms wishing to expand into China. Excessive regulatory frameworks are also working s a barrier to foreign firms wishing to operate in China.
FDI Analysis
China is leading recipient of foreign direct investment because of its attractiveness to foreign multinational. This means that foreign investors are willing to take the risks and put their money into China than in most other countries competing for FDI inflows. In general, the flow of FDI is influenced by the global market condition and the general global economic environment ( Ahmed & Zlate, 2014) . China has invested heavily in infrastructural development, workforce skills and resources availability including human and physical resources and productivity. The maturity level of these instruments make China most attractive to FDI compared to other emerging economies such as Brazil, India and Russia competing for the same capital investing.
The lower cost of transaction is another factor driving FDI into China. The maturity of the above elements facilitates the sale of goods and services to generate return on investments. The low cost of transaction is attributed to good and well maintained infrastructure that offer sufficient and safe transportation of products and employees (Cheung, Chinn & Qian, 2015). Low cost skilled employees with appropriate experience, aptitudes and proficiency also makes China an attractive destination for foreign capitals.
Political and economic stability is also important factor in boosting influx of FDI into the country. However, counterfeit currency, products, criminal activities, kidnappings and blackmail have been experienced in China and can undermine the flow of capital into the country. The judicial system has also been ineffective in tackling corruption especially those involving high ranking government officials. The sheer size of Chinese market and population as well as business climate is driving the flow of FDI into China. Openness to international land regional trade has been crucial in attracting DFI into China.
Regulatory framework also plays a key in movement of capital into China. Generally, laws and regulations that favor state entities over private ones can be detrimental to the flow FDI into the country ( Tsuchiya, 2016) . Ideally, laws and regulation should provide a level playing field for all business entities operating in the country. Furthermore, excessive laws can also be a hindrance to movement of FDI into China because it takes a lot of time and money to comply with enacted laws and regulations.
China has mandatory joint venture partnerships that require a foreign investor to partner with local firm of government agency ( Li, Li & Liu, 2013 ). This is unbiased regulation aimed at protecting local Chinese firms that sometimes engage in unfair, unethical and illegal business practices. This requirement has the potential of making China unfavorable for foreign investment. Government inducement to local firms through grants, tax breaks; subsidies and low cost state loans is another regulatory hindrance to foreign direct invest investment in China.
Conclusion
Many global business managers do not understand the challenges and steps that should be taken to deal with cultural differences in global market. One can conclude from this global business analysis that there are more cultural differences than similarities between United States and China. This difference is evident in most cultural dimensions. In this regard, American style of management cannot be transferable to work in China. Neglecting these differences has been one of reason for high failure of foreign multinational in China. However, there are more opportunities in China than threats which make China the most attractive destination for foreign direct investment. In addition, American managers have several strengths than can be used to gain competitive advantage in Chinese market. Therefore, by weighing the merits and demerits of doing business with China, the there are more merits than merits investing into China. It is therefore prudent for American firms to expand into China because they stand to gain a lot than investing in other countries.
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