Understanding Cultural Factors In Business Essay.

Evolving Market of China

Question:

Discuss about the Analyzes The Cultural Factors Of China.

Corporate culture refers to those believes and behaviors which determine the behavior of management and employees of the company, and how they interact and handle business transactions in external environment. Corporate culture includes various factors such as dress code, hours of the business, setup of the office, employee benefits, turnover, and decisions related to hiring, treatment of clients, satisfaction of clients, and other aspect of operations.

In other words, market culture is a relative term of corporate culture which mainly describes overarching culture of the business in particular country or region which mainly focuses on the customers and markets. It also describes the skills which are used to create the value for customers and the level of belief that actual aim of the business is to create the superior customer value that is profitably. Market culture includes both external factors and internal factors, which mean combination of both the factors, create the market culture of the particular country. It can be said that culture is the basic factor which determine the wants and behavior and of the person. China has very long and rick history of cultural background, and because of this it becomes difficult for international corporates to do business in china, and to understand the Chinese culture and how it drive the behavior of buyers. This report mainly considers the marketing culture of China and also how this culture influences the behavior of buyers in the country.

Structure of this report includes brief history and information about the chosen country, business culture of the China and difference between the culture of Australia and china is sated, and recommendations for foreign companies are stated on the basis of Hofstede’s cultural dimensions guide are stated. Lastly, paper is concluded with brief conclusion.

On the other hand, Australia is considered as vibrant free market democracy which recorded impressive progress in economy even after recession in last 25 years. Even after abundant to natural resources, economy of Australia get benefit from an effective system of government, a well-functioning legal system, and an independent bureaucracy. All these factors result in entrepreneurial development in Australia (Heritage, 2017). In Australia, all the industries are open for foreign competitors and workforce is also available for foreign competitors. Australia is considered as attractive and dynamic destination for investment by foreign investors. From maximum areas of the market, government withdrawn its contribution and competition has increased such as in financial service sector. Although, debt in case of government has been rising from the time of global financial crises, but still it is lower as compared to other advanced economies (Focus Economies, 2017).

Impact of Cultural Factors on Business in China and Australia

Market of china is constantly changing, but as income level arise in china many new consumers and first time buyers are introduced to market who wants to purchase the new products and services, and also experience them. Chinese market is evolving rapidly and tries to win these new consumers and first time buyers, and for this purpose it is necessary for business to reassess their marketing strategies and for raising the image, profile, and understanding the business in China.

Tradeshows and exhibitions are considered as best option to meet the potential customers, but still there is need to influence the consumer to buy the product.  Business must ensure that their products and must meet the Chinese preferences and requirements. In other words, if product or service does not meet the Chinese local regulations, tastes and cultural preferences then there are high chances of failure (Kermeliotis, 2011; Zhu, 2013).

Various factors affect the business in China such as it is necessary for international companies to understand that low brand awareness in the local market is the key market entry barriers in China. It can be said that it is for business to position itself in the Chinese market for being successful. Consumers in China strongly connected with the brands that they have heard and with those also which are established in the market of China. Therefore, it is necessary for businesses who are new comers to build their brand recognition if they want to get success in the market of China (Luo, 2009).

Experts say that global brand consistency is important, but in China situation are little different because Chinese language creates some specific brand issues. For the purpose of creating favorable impression of the company and brand in China, it is necessary to have such name that Chinese consumers can remember.

Chinese are very cautious about their culture, and one of the most important factors of Chinese culture is the concept of "face”. Face is considered as mix of public perception, social role and self-esteem which help in destroying and building the business. Foreign competitors provide face by attending the meetings, accepting invitations, and show sensibility to the culture of China. This can be understood through example, symbols are very important for the people in China as they directly relates with the culture of China. There are number of companies which use positive symbols and avoid negative symbols for the purpose of maximizing the success of their products such as number 4 is considered as unlucky because when it spoken it sounds like death, and number 8 is considered as luck because when it spoken it sounds like wealth. Therefore business avoids using the number 4 in their promotions and advertisements and use number 8 in their promotions and advertisements (Institute of Export & International trade, 2015).

Tradeshows and Exhibitions in China

Australia has substantial liquid assets and also has high standard of living. Population of Australia mainly demands the products from Asia, North America and Europe. Market of Australia is considered as pilot market. There are number of companies who want to penetrate the American market and they use market of Australia as test zone, because consumption in both the markets is very similar.

Australian consumer willing to pay more for healthy products and they mainly preferred the healthy and high standard products. National production of Australia is not enough to meet all the needs of the consumer which increase the scope of foreign business in the market. In Australia, decision of buyer to buy the product is mainly driven by the price factor and also with the quality factor. However, growing impact of fashion phenomena which is accompanied by the media and advertising make authentic products, brand name, and top range goods more popular (Santander, n.d.). Consumers in Australia have high consumption habits and their purchasing power is comparatively high and it is grown by more than 43% in 15 years.

Difference in the market culture of Australia and china is clear as in China people are more cautious about their culture and preferred the products which they recognized well and connected to their culture. On the other hand, people are more concern about the quality of the products and decision to buy the product is influenced by the price factor (Export.gov, 2017; Lowe & Corkindale, 1998).

Following are the five factors of Hofstede’s cultural dimensions which states the market culture of Australia:

Power Distance- this factor mainly deals with the approach that all the individuals in the society cannot be considered as equal and it also state the attitude of the culture towards these inequalities present in the society. China scores 80 on this index which means in China society accepts the inequalities exist among the people. Relationship of subordinate-superior exists in the society and no defense is used against the power abused by superiors. On the other hand, Australia scores low on this index that is 36 only which means hierarchy is established in the Australian organization for the convenience of every individual, and superiors are relied on the individual employees and teams for their expertise (Hofstede insights, 2017).

Individualism- this factor addressed the fundamental issue that is degree of independence maintained by society among the members of society. China score low at this factor that is 20 only which means china is highly collectivist culture in which individuals act in the interest of the group and not for themselves. This also affects the hiring and promotion activity because those who are close in groups get preferential treatment. On the other hand, Australia scores 90 of this dimension which means Australia is highly individualist culture in which people usually look after themselves and their immediate family members.

Factors Affecting the Chinese Market

Masculinity- high score related to this factor states that society will be driven by competition, achievement and success, and success is defined as best in the field. Value system initiated from the school and continues throughout the life of the organization. Low score on this dimension states that dominant values in society are caring for others and quality of life. It shows feminist behavior of society which means in this quality of life is considered as sign of success and standing out from the crowd is not considered right. This dimension states the fundamental issue what motivates the people, wanting to be bests (Masculine) and what you like to do (Feminine).

China scores 66 on this dimension which means china is a masculine society and also success oriented society. This can be understood through fact that many Chinese people sacrifice their families and leisure for the purpose of giving priority to their work. Service people provide services very late at night. Australia scores 61 on this dimension which means Australia is also a masculine society, and behavior of individual at school, work and play are based on the shared values that individual must try to be best.

Uncertainty avoidance- this dimension states the way in which society deals with the fact that it is not possible to know the future, and whether society tries to control the future or let it happen. China scores 30 on this dimension and Australia scores 51 on this dimension.

Long term Orientation- this factor states how society maintain its links with its past at the same time while dealing with the issues of present and future. Society must prioritize these two existential goals in different manner. On this dimension, score of Australia is 21 which mean this country has a normative culture. In these types of society people have strong concern to establish absolute truth, because such peoples have normative approach. China scores high on this dimension as compared to Australia that is 87 which means it is very pragmatic culture, in this people determine the truth on the basis of situation, context, and time (Hofstede insights, 2017).

Conclusion:

After considering the above facts, it is clear that both the countries have very different business culture which affects the competition and behavior of consumers in the market. For getting the success it is necessary to adopt the culture of country. As stated, Chinese are very cautious about their culture, and one of the most important factors of Chinese culture is the concept of "face”. Face is considered as mix of public perception, social role and self-esteem which help in destroying and building the business. On the other side, people are more concern about the quality of the products and decision to buy the product is influenced by the price factor in Australia.

References:

Export.gov, (2017). Australia - Market Overview. Retrieved on 14^th November 2017 from: https://www.export.gov/article?series=a0pt0000000PAtCAAW&type=Country_Commercial__kav.

Focus Economies, (2017). Australia Economic Outlook. Retrieved on 14^th November 2017 from: https://www.focus-economics.com/countries/australia.

Heritage, (2017). Australia. Retrieved on 14^th November 2017 from: https://www.heritage.org/index/country/australia.

Hofstede Insights, (2017). Country comparison. Retrieved on 14^th November 2017 from: https://www.hofstede-insights.com/country-comparison/australia/.

Hofstede Insights, (2017). Country comparison. Retrieved on 14^th November 2017 from: https://www.hofstede-insights.com/country-comparison/australia,china/.

Institute of Export & international Trade, (2015). Doing Business in China. Retrieved on 14^th November 2017 from: https://www.china.doingbusinessguide.co.uk/the-guide/marketing/.

Kermeliotis, T. (2011). Doing business in China: Five tips for success. Retrieved on 14^th November 2017 from: https://edition.cnn.com/2011/10/21/business/china-business-investors-culture/index.html.

Lowe, A. & Corkindale, D. (1998). Differences in “cultural values” and their effects on responses to marketing stimuli: A cross?cultural study between Australians and Chinese from the People’s Republic of China. European Journal of Marketing, Vol. 32 (9/10),  pp.843-867.

Luo, Y. (2009). Analysis of Culture and Buyer Behavior in Chinese Market. Asian Culture and history, Volume 1 (1).

Santander. Australia: reaching the consumer. Retrieved on 14^th November 2017 from: https://hbr.org/2013/11/understanding-chinese-consumers.

The World Bank, (2017). The World Bank In China. Retrieved on 14^th November 2017 from: https://www.worldbank.org/en/country/china/overview.

Zhu, R. (2013). Understanding Chinese Consumers. Retrieved on 14^th November 2017 from: https://hbr.org/2013/11/understanding-chinese-consumers.