Universal Journal of Management and Social Sciences Vol. 3, No.9; September 2013 Research on the Effects of Culture Differences on Business Communication Between China and U.S. --A Case Study of Cross-cultural Management of Joint Venture Enterprise in China Pan Mengyu, *Cai Li International Business School, Dalian Nationalities University, Dalian, China * caili@dlnu.edu.cn Abstract Since China becomes much stronger in economy development, the communication and activities between China and other countries is more frequent which makes intercultural communication play an essential role in business activities. It is more important to deal with the obstacles in business affairs caused by culture conflicts and differences. With the rapid expansion of Chinese economy, communicators have played an important role in international business. This paper shows the cultural differences which influence business activities and takes a joint venture enterprise in China as an example and points out the policies to solve the problems of cross-cultural management. Keyword: Intercultural communication, Culture differences, Business negotiation, Strategy 1 Introduction With the rapid development of the world economy, the process of globalization is going faster. With the improvement of technology and the decreasing cost of international communication, the distant between people from different countries has been narrowed which causes the more frequent intercultural communication. However the smaller distant doesn’t mean the gap between cultures becomes smaller. On the contrary, people have to learn something new to adapt this new world and deal with lots of new problems, such as some obstacles in business negotiation. Following with the new century, every citizen of the “world village” is related to the wave of globalization. However globalization doesn’t mean there is no difference, there are differences between ethnic groups, nations or countries in the area of culture. In order to develop international relations and enhance each country’s economic level, people need develop their intercultural communication ability to meet the needs of this new century. That makes cross-culture communication so important. 2 Effects of Cultural Differences on the Business Communication between China and U.S. The scope of cultural differences is very broad, including the way of thinking, customs, morals, etc. With the influence of cultural environment, there are diverse culture backgrounds. There are 56 nationalities in China, Chinese culture is shared and acknowledged by all citizens, while every culture of every nationality also exists obvious differences. Here divide all countries into two forms: low-context country such as U.S. that prefers verbal communication with features as explicit and direct, and high-context country such as China that prefer nonverbal communication which is character as indirect and allusive. 45 Universal Journal of Management and Social Sciences Vol. 3, No.9; September 2013 2.1 Decision-making Differences In intercultural business communication, whether communicators can achieve the objectives depends largely on the way of decision-making. The culture that a negotiators belong to is an important factor that affects business negotiation, even subtle differences among different cultural backgrounds can make the negotiator to change the decision. Understanding different ways of making decisions in different regional or countries helps business negotiations go smoothly. In low-context country, decisions are based on ends, which means the companies focus on results. While in high-context country, the companies aim to building relationships and try very hard to keep harmony between business partners. And there are also differences between the decision makers. In different cultures, decision maker is quite different. In North America the representatives of a business negotiation can make the final decision, and decide whether to go on the negotiation or not. However in China the one who make final decision must be in the top position of the company. 2.2 Problem Solving Differences In addition to decision-making style, problem solving takes the same important role in intercultural business negotiations. Low-context culture views conflict as a disagreement and a part of life, it’s common and happens all the time, and the most important is that conflict is something outside business relations, there is no harm to business relationships between two individuals or groups even they have conflicts regularly. However the high-context culture holds the opposite view about this kind of problems, they regard conflict a close connection with business relationship. People think conflicts can be solved. If any conflict comes out, they just take it out in low-context country while high-context countries try to avoid it and even will not mention it in order to avoid break harmony between business partners. 2.3 Style of Negotiation Differences Here focus on style of business negotiations in Chinese culture. First, Chinese take great importance to face-saving. They pay attention to the relation of friends and also value the relationship between the relatives, as well as value the system of reciprocity and mutual benefit. Unlike the Americans, in China, even if one part takes one step back in negotiation, the other side who make profits does not necessarily return the benefit to the partner at once. Someone help others solve some difficulties today, however it will not necessary for him to repay at once, however one day he will pay back finally. Second, Chinese people have a sense of collective responsibility. They are modest, good at mutual cooperation. Consequently they are represented by one small group collectively. The small group of people at high level can represent the whole company. Therefore in the process of business negotiation, Chinese always look forward to drawing a conclusion of the negotiation, and then make the final decision by the leader. Third, the Chinese negotiators prefer to first starting from the whole, have a general outline and make sure that both parties are consistent with the overall interests and principles, and then they proceed on a series of the negotiation with more details. If interests of 46 Universal Journal of Management and Social Sciences both parties are different, there is no necessity of Vol. 3, No.9; September 2013 further negotiations. 3 Case study of Cross-cultural Management of Joint Venture Enterprise in China In April 2001, one of the world's leading car companies- Ford motor company established a joint venture enterprise "Changan Ford Motor Co., LTD" with a Chinese automobile company Changan Motor Co., LTD . which is located in Chongqing, China. In March 2006, Mazda automobile company joined Changan Ford, and then the company officially changed its name to "Changan Ford Mazda Automobile Co., LTD." The three parties’ stakes are the following: 50% by Changan, 35% by Ford and 15% by Mazda. On November 30, 2012, Changan Ford Mazda Automobile Co., LTD formally divided into two joint venture companies "Changan Ford Motor Co., LTD." and "Changan Mazda Motor Co., LTD.". Stakes of Changan Ford are as following: 50% by Changan, 50% by Fords. Having been founded for 11 years, Changan Ford has grown into an automobile enterprise with cross-regional and multiple brands. The core values of Changan Ford's are: "our business motivation stems from our focus on consumers, and our strength, wisdom and entrepreneurial spirit. We value everyone's respect for differences and contributions, insist on good faith, actively contribute to the society, and continuously improve everything we do." This kind of culture reflects the strong market awareness and tolerance of different cultures. 3.1 Manifestations of Cross-cultural Conflicts in the Joint Venture Enterprise in China 3.1.1 Attitude towards Individualism and Collectivism American social culture take the individual as the basic unit that is because the United States is an immigrant country, the United States gathered those who stay on their own strength to farmland with their bare hands, so they advocate individualism and independence. Different from American culture, collectivism is an important factor that affects Chinese culture. This is because in Chinese culture, group is the basic composition unit of the society, a person's identity is defined by the group he belongs to. The Chinese have even moderate and compromise national character, particularly about "harmony" and unity. Chinese is good at reaching balance and coordination to solve conflicts and antagonism, attaches great importance to the ethics and morality, promotes collectivism and the spirit of arduous struggle, despise the individualism and the attitude of pleasure-seeking. In China, emotional feelings are often overweight truth, and highly value interpersonal relationships and emotions. For example, during the meeting in Changan Ford company, generally it is American who speak of the opposition, because in their opinion vending different opinion is something healthy. While for most Chinese, “harmony”, which means maintain relationships is more significant. Thus, it is the difference of the cultural values leading to both sides in the conflict and contradiction of administration. 47 Universal Journal of Management and Social Sciences Vol. 3, No.9; September 2013 3.1.2 Attitude towards Self and Anatman In the Changan Ford Company, the idea about whether to announce the punishment to the employees in public is entirely different between China and the United States. Chinese managers think it appropriate that whatever it is praise or punishment to the employees, it is better to spread the news in the whole company. While the American managers pay more attention to positive incentives. Such as employee's birthday party, the human resources department should send congratulation personally, and news of employee’s promotion and praise can be announced in the whole company. However Americans does not advocate public criticism, they think such an approach as invasion of privacy, and will cause harm to the person's self-esteem who made a mistake. Such conflict of attitude towards the punishment results from the difference of understanding of "self" concept. China is influenced by Confucianism, regard “Anatman" as noble spirit realm and advocates obedience. American culture emphasizes on the center position of "ego" in the value system and advocates autonomy, responsibility and pride. Therefore, American managers think that public punishment is detrimental to "self", while the Chinese managers think it quite the opposite. 3.1.3 Attitude towards Decision-making Due to the collectivism of Chinese culture and high risk aversion tendencies, when making important decisions Chinese supervisors of Changan Ford must consult the opinions of others, also will consider factors that maintain harmony and reduce the conflict within the company. While American culture typically respects individualism with low risk aversion tendency. In the model of decision-making of Chinese enterprises, decisions are often made by collective, and the collective undertake the responsibility as well as the achievement. Americans are used to making decision individually and individuals take the ultimate responsibility for decision making. Corresponding to this, enterprises in the United States tend to focus on diversification of decision-making, while the Chinese enterprises tend to emphasis on the centralization of the decision. In Changan Ford, Chinese managers are used to concentrated decision-making, very detailed plan must be drafted before final decisions are make and then circulate it to all members of the company. While the U.S. managers emphasis on clear responsibilities and rights of decentralized decision-making, implementation of independent determination and personal responsibility. These different attitude makes U.S. manager often complain about the slow decision making process, because every decision has to be discussed twice or three times. 3.1.4 Attitude towards the Elderly Emplyees On the perceptions of employee’s age, managers from different cultural backgrounds hold the different cultural values. Chinese culture attaches great importance to respect for the elderly, they regard seniors as representatives of qualities and virtues such as knowledge, experience, competence and authority and so on. Thus the Chinese representative of Changan Ford is still 48 Universal Journal of Management and Social Sciences Vol. 3, No.9; September 2013 affected by the restriction of "seniority" model on the policy of employment. While American culture doesn’t care about that so much, Americans emphasizes the respect for youth and adherence to the "capacity". 3.2 Recommended Measures for Solving Problems of Cross-cultural Management 3.2.1 Respecting Cultural Differences Business negotiators must be aware that different cultural backgrounds influence the ways of thinking and the negotiation styles. Sometimes even the same behavior also represents different meaning under the different cultures. Because of cultural differences are objective, communicators can't change this kind of difference, what communicators can do only is to try best to adapt to it and to be integrated with different cultures and try to comprehend how and why the business partners have form this kind of culture, and finally accept this culture with the most sincere attitude to make the partners feel the understanding of their culture and embracement, rather than simply to tolerate and ignore. 3.2.2 Improving Cross-cultural Understanding In order to solve the problems of cross-cultural management, the first is to understand business partner’s culture. In order to promote the mutual understanding and communication of cultures of United States and China, one of the most effective measures is to solve cultural conflicts by cross-cultural training program. The main content of the cross-cultural training program can cover: the introduction of the essence of Chinese culture and the original corporate culture, intercultural communication skills training, cross-cultural conflict processing ability training and language training. In this way, employees can understand cultural differences, so as to correctly treat this kind of difference of cultures to achieve internal harmony in one company. As an employee in a cross-cultural multinational company, it is not enough to understand and respect other countries' culture, and for better and effective business activities, employees must master the foreign language and culture of their business partners. 3.2.3 Establishing the Unified Enterprise Culture After realizing the above two steps, which are the basic knowledge of cultural differences, the next step is to establish a common enterprise culture, gradually reduce the cultural friction and improve the integration to make the employees to associate themselves with the company to guarantee efficient and long-term stable business operation. Changan Ford Company’s culture, for example, is the mutual concerned about staff and managers. Only in this way, can a company establish the punishment and reward system that both employees and managers feel feasible. 4 Conclusion Every culture corresponds to the different world view, values, and also corresponds to the different thoughts and behaviors. International business communication is a complex international activity which is closely related to cultural differences. Therefore, in order to do business in a successful way, 49 Universal Journal of Management and Social Sciences Vol. 3, No.9; September 2013 communicators must understand the cultural differences. After the analysis of the differences between cultures, and what kind of obstacles might be with culture differences in business communication, people should regard cultural difference as objective existence. What communicators or negotiators need to do is to try to reduce the negative effects brought by the cultural differences and minimum the negative effects. 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