Observers of business trends worldwide recognize the progress of the world into a global village. Under this scenario, countries are required to transcend their differences, including those of culture to function with efficiency in the global market arena. Globalization over the years brought to focus the increasing importance of cultural diversity as a concept with immense influence on social and political harmony, and efficiency and cohesion between organizations from different countries. Scholars in different fields, over the past decades, dedicated time and resources to the study of management theory in broad cultural contexts, but issues requiring deeper reflections and empirical analysis persist. Lozano and Escrich (2017) contended that management of cultural diversity is critical to organizational success. The process harmonizes different beliefs, values, customs, and perceived identity. In national contexts, consideration and harmonization of cultural differences is a human rights issue with immense implications for corporate social responsibility. For strategic partnerships between countries to succeed, careful planning and consideration is necessary. In cases, involving cross-cultural partnership, focus on culture clashes, language barriers, and different approaches to doing business are of central importance. China and Australia are two culturally diverse countries with significant economic power in Asia. This paper explores the cultural differences between China and Australia, and identifies how it affects ways in which the two countries do business.
Comparison of Chinese and Australian Cultures
Cultural differences between China and Australia cascade down to individual level, which suggests the extent to which they influence their engagements. Culture instills into an individual specific attributes that affect their worldview of phenomena, affecting their future involvements. A study by Chen et al. (2015) examining mental travel, which refers to the ability to remember notable events of the past and project the future, revealed significant differences in the emotional valence and nature of events generated. The two study groups generated more positive events than negative events, but the Chinese demonstrated more positivity towards their past compared to Australians. The Chinese demonstrated higher levels of recall for interpersonal relationships than Australians. On the contrary, Australians showed higher imagination for personal future achievements (Chen et al. , 2015). The findings offer insights into how exposure to culture can influence an individual’s perception of the world and ways of doing things. In addition, they provide the basis for exploration of cultural differences between Chinese and Australians in a global corporate and business environment.
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Data from the Central Intelligence Agency factbook on China and Australia indicates the existence of significant cultural differences between them in relation to diversity. China and Australia have many ethnic groups that contribute to cultural diversity to the two countries. The Han Chinese comprise 91% of the 1.4 billion population, the Zhuang 1.3%, and other international the remaining 7% (CIA Factbook, 2019). The Chinese government officially recognizes 56 ethnic groups. Australia’s 23.4 million population has many ethnic groups with the English and Australian making the majority at 30% and 25.5% respectively. The Irish make up 7.5%, Scottish 6.4%, Italians 3.3%, German 3.2%, and Chinese 3.1%. The remaining population segment comprises the Indians, Greek, Dutch, in addition to Australian Aboriginal others that are unspecified (CIA Factbook, 2019a).
The above data shows that Australia is among the world’s most culturally diverse societies. The multicultural aspect makes it difficult to identify what it means to be an Australian or define the Australian culture. Australia shares this characteristic with China, but the ethnic diversity contributes to the differences in cultures between the two countries. Chinese and Australian cultures differ in relation to meaning, practices, language, artwork, lifestyle, and leisure activities. Notable differences exist in discourses such as language, religion, gender, and lifestyle. In China, the dominant language is Standard Chinese, commonly referred to as Mandarin, which is also the official language. The Chinese practice Buddhism, Christianity, Islam, folk religion. There are minor segments of the population that engage in Hindu, Jewish, Daoism and Taoist worship practices. A few others are unaffiliated to any religious group (CIA Factbook, 2019).
In Australia, English is the dominant and official language used by at least 72% of the population. Other languages are Mandarin, Arabic, Cantonese, Vietnamese, Italian, and Greek. The leading religious group is Protestant, followed by Roman Catholic, and other Christian sects, Islam, Buddhism, and Orthodox. Some Australians practice Hindu worship, while about 30% have no religious associations (CIA Factbook, 2019a). Gender is a critical factor for understanding social reality. China and Australia are patriarchal societies, but have significant differences in terms of gender paradigms. Men are more likely to hold political or powerful corporate positions in both cultures. Women engage in domestic labor. However, Australian culture is more egalitarian in terms of gender compared to the Chinese. The cultural differences potentially influence strategic partnerships between the countries intended to advance individual and join economic and corporate interests.
Effects of Cultural Differences on the Cost of Doing Business
Cultural practices have immense influence on the cost of doing business at the national level. According to Autio et al. (2013), national culture regulates entrepreneurship. Societies that practice institutional collectivism have negative effects on business entry, though they may provide reprieve for growth aspirations. National culture determines the nature and scale of business an investor is likely to open. For instance, the Chinese business culture is founded on the concept of small district communities that grant legitimacy to any form of business. A person can sell a similar product outside the doors of a main dealer in the same without attracting any consequence. This type of business culture is related to the populous nature of China that makes planning of settlements a challenge. On the other hand, Australia culture dictates that a starting point for a business should be at the level of McDonald’s, which reflects the aspects of western cultures owing to the fact that English are the main ethnic group.
Therefore, culture makes the cost of setting up a business low in China compared to Australia. The Chinese culture of collectivism allows both modern businesses and small shops to thrive. The small shops are made profitable by the large customer base that perceives them as convenient. This makes the cost of doing business manageable. In Australia, the business culture assumes the organized attributes of the society. Setting up a business requires conformity to the standards set by the government. The implication is that regardless of the size of the business, the owner must get all relevant paperwork and pay taxes. Businesses have to comply with occupational and health requirements, and food safety regulation. Overall, the Australian culture makes doing business for small and medium business owners difficult because the costs are high.
Impacts on Future Economic Development of the Respective Countries
The effects of culture on economic development of the two countries should be looked at from the global perspective. Each of the countries has a business culture that favors investments within its borders, but poses challenges to local firms with global aspirations. Historically, culture stands as a primary impediment to Chinese economic progress. For instance, in the mid-1990s when China’s economy program appeared to be taking a more defined path, the proletarian cultural revolution disrupted the progress. Lo (2019) argued that the future of China’s economic development is an intrinsic factor. The boom in Chinese economy witnessed in the last few decades is fading, and with it the impacts of investments and exports. However, the Chinese culture of consumption and service utilization would continue to drive the economic expansion. The developments are limited to China because the prevailing culture of doing business appears to fall short of the standards practiced in other countries such Australia. Overall, China’s culture would be detrimental to its future economic prospects in the global context.
The Australian scenario is different from that of China owing to a culture of business organization and regulation. Despite the high cost of setting up a business in Australia, having the required documentation to prove conformity with relevant regulations is a global phenomenon. In the modern marketplace of a globalized world, such a culture can give Australian firms a competitive edge when setting up business subsidiaries in other countries. This is critical to the economic growth of the country given that survival in an increasingly competitive world calls for the expansion of market horizon. With a diverse culture that recognizes international business standards, Australia has better economic prospects than China.
Impacts on Business Practices
Review of cultural diversity between China and Australia establishes a strong connection between culture and business practices. The effects of national culture spill over to corporate practices, hence plays an important role in informing business strategy. The case of Australia suggests that firm corporate social responsibility programs are outcomes of the prevailing culture. Kinderman (2015) observed that firms must strive to align their business culture with the global corporate culture. This implies that national cultures that are detrimental to progress of companies in a global context must devise ways of adopting an acceptable worldview of phenomena. However, the cultural differences highlighted impact critical elements of business including communication, organizational hierarchy, workplace etiquette, and business operations. Culture affects the processes of decision-making and negotiations and perceptions towards management that in turn influence business outcomes. As noted by Chen et al. (2015) culture has the potential to influence individuals’ ability and propensity to recall episodic events and project future achievements. The attributes are vital in business settings where critical thinking is a necessity in strategy development and decision-making.
References
Autio, E., Pathak, S., & Wennberg, K. (2013). Consequences of cultural practices for entrepreneurial behaviors. Journal of International Business Studies , 44 (4), 334-362.
Central Intelligence Agency Factbook. (2019). East Asia/Southeast Asia: China. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/ch.html
Central Intelligence Agency Factbook. (2019a). Australia – Oceania: Australia. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/as.html
Chen, X. J., Liu, L. L., Cui, J. F., Wang, Y., Shum, D. H., & Chan, R. C. (2015). Chinese and Australians showed difference in mental time travel in emotion and content but not specificity. Frontiers in psychology , 6 , 879.
Kinderman, D. P. (2015). Explaining the rise of national corporate social responsibility: The role of global frameworks, world culture, and corporate interests. World Culture, and Corporate Interests (January 10, 2015). Forthcoming as , 107-146.
Lo, K. (2019). The future of China’s economic growth is personal; JPMorgan’s Jing Ulrich says. South China Morning Post. Retrieved from https://www.scmp.com/economy/china-economy/article/2187166/future-chinas-economic-growth-personal-jpmorgans-jing-ulrich
Lozano, J. F., & Escrich, T. (2017). Cultural diversity in business: A critical reflection on the ideology of tolerance. Journal of Business Ethics , 142 (4), 679-696.
