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Globalization provides better chances of growth and development for businesses, as it provides a wider reach of customers and more possibilities of increasing brand awareness and hopefully, patronage and loyalty. However, there also exists a likelihood of negative outcomes especially if intercultural conflicts are not resolved early.
Case Study
The recent issue of Alexander McQueens (Alexander McQueen Company 2014) new perfume causing skin rashes and ruining clothes of its consumers has stirred a huge controversy for the company. Its exclusive distributor in China, Lane Crawford, has been receiving the burden of complaints from customers, threatening the cancellation of contract between Lane Crawford and Alexander McQueen if the problem is not managed soon. Lane Crawford is already putting its reputation on the line by endorsing Alexander McQueen products, but it stands to lose its customers if Alexander McQueen will not move to amend the damages already done. The problem has already harmed Alexander McQueen, as it faces 150 lawsuits so far and a probable loss of 80,000£ in damages plus more in incurred losses from its cancellation of production. Alexander McQueen fully intends to manage the ongoing crisis in order to compensate affected customers and save its business relationship with Lane Crawford.
Before one can think of strategies to resolve the matter with minimal costs and avoidance of a cancellation of contract from Lane Crawford, the Alexander McQueen team from UK should be able to understand Chinas culture so they are guided accordingly in their intercultural communication with the Lane Crawford group, which is mostly composed of Chinese individuals. Concurrent with this, they also need to be aware of their native culture (UK) to understand how similar or different they are from the Chinese culture.
Chinese Culture
China is becoming a very powerful country in Asia, leading as a goods trader since 2014 (Monaghan, 2014). Hence, many international businesses from Europe and America have taken interest in either investing in China either as wholly-foreign-owned venture, equity joint venture, contractual or cooperative joint venture (Economist Intelligence Unit Ltd., 2012). Other international companies establish some franchises there or engage a local company to be their distributor. The capital of China is Beijing but its largest city is Shanghai. The major religions are Buddhism, Christianity, Islam and Taoism (BBC News, 2013).
The Chinese have a penchant for saving/giving face (Li, 2014) or in Mandarin, mianzi which means dignity, prestige and reputation . This implies that losing face is one of their greatest fear as they value their reputation. Hence, they strive to do well to others, try to be as accommodating as possible in order to maintain their dignity. They avoid circumstances that would bring about disputes, conflicts and embarrassment. They are also loyal and faithful in keeping their promises. The Chinese are a very clannish people and will do everything to protect the integrity of the family name (Chinese Personality Traits & Characteristics, 2010).
Hofstede (2000) designed a framework for understanding the value orientations of different countries and its effect on the workplace. His remarkable work involved studying the culture of more than 50 countries. He observed the differences in specific cultural dimensions such as how the people behave as per individually or collectively (social orientation), their views on power (power distance), uncertainty (uncertainty avoidance), the prevailing gender traits of the culture (masculine and feminist) and philosophy with regards to time orientation. The newer version of Hofstedes cultural dimension model replaces time orientation with the dimensions of range of pragmatism and degree of indulgence (The Hofstede Center, 2014). In comparing the various cultures, he ascribed an appropriate score to a particular cultural dimension as its country values. His work has been a valuable guide for businesses dealing with intercultural stakeholders. The following are the scores for China:
In Hofstedes cultural dimension scales, the Chinese people have been evaluated as a collectivist race, meaning they usually consider the perspectives of the groups they belong to and value everyones collective participation instead of individual decisions (Itim International, 2009). With regards to power, the Chinese are easily intimidated by it and give due respect to those in authority. They are also a resilient people and are not fazed by uncertainty. This means that they are accepting of different views as well as unique and unusual situations because they are open to discovering and learning new things (Itim International, 2009).
The character and personality of the Chinese is considered balanced in terms of its masculine and feminine traits. Traits in the people that are considered masculine are being assertive, competitive, results-oriented and strong. Feminine traits include being modest, cooperative, nurturing, and belief in equity for all (Schneider & Barsoux, 2003). In terms of time orientation, the Chinese people value punctuality and are very much concerned with long-term goals, as reflected by their persistence and perseverance in their tasks. They work hard towards the achievement of their long-term vision (Itim International, 2009).
China scores high in the Pragmatism scale. Even if their history is rich with traditions, the Chinese can easily adapt to changes if necessary, to be able to adjust to the present situation. With regards to the Indulgence scale, China garnered a low score because it is more of a restrained society. This implies that the people do not put much emphasis on their leisure because they need to be disciplined to work (The Hofstede Center, 2014).
UK Culture vs. Chinese Culture
The following figures show the differences between the two countries, UK and China:
UK scores low on the power distance dimension as compared to the Chinese. This explains why the British believe in equality of people and are not intimidated by those in power. This runs contrary to the Chineses regard for their superiors. Hence, if a representative from UK talks to a represent from China, he needs to maintain an appearance of authority so that the Chinese listens well to him.
This country also scores high in the individualism dimension meaning British people are highly individualistic and mostly live for themselves and their direct family. Again, this is different from the Chinese who were identified as a collectivist people and look after each other as they decide as one group.
UK is considered a masculine society based on their score on the gender scale. This means that they are highly successful and driven to achieve their goals. China scores exactly like UK in this area.
In the Uncertainty Dimension, UK scores low, like China, meaning they do not mind living in uncertainty or ambiguity (The Hofstede Center, 2014). In the pragmatism scale, UK scores lower than China. This may mean that UK is not as ready to let go of traditional, tried and tested practices. Finally, in the indulgence scale, UK scores much higher than China, meaning UK is an indulgent culture and its people would not mind splurging, relaxing and taking time for themselves once in a while as opposed to the Chinese who practice more restraint (The Hofstede Center, 2014).
Managing Business Deals with the Chinese
It is a common business practice in China to wear dark coloured full suit and tie to important business meetings. In that aspect it is the same in UK. However, if gift giving to stakeholders is an accepted practice in China, it is not a cultural practice in businesses in UK (Kwintessential.co.uk, 2014). Another thing to remember about the Chinese is that their language used for business is Mandarin and they are not adept in the English language. Hence, a translator is necessary to mediate the communication between the UK team and the Chinese team. The UK team should be able to pronounce important Chinese words such as their Chinese colleagues names (Philo, 2014). They should also be careful in their non-verbal gestures to avoid any misinterpretations of messages conveyed (Business Insider, 2011).
In understanding Chinese culture, the UK team should remember that their goal is to synergize with their counterpart Chinese team. Both parties should collaborate in finding solutions to the current business crisis. Synergy is achieved when both parties are on the same page, fully understanding where each one is coming from regardless of their cultural differences (Harris, 2004). It is proposed that Alexander should offer compensation to the aggrieved customers harmed by their perfume, along with some other benefits such as free products from the company. Lane Crawford, being the distributor of their products, and is also receiving the complaints, should be compensated with a 2% decrease in franchisors revenues.
Conclusion
The British company should make their proposed solution attractive enough to Lane Crawford in an effort to avoid the cancellation of their contract with this strong trading company in China. Negotiations between the two countries would involve compromise, in consideration of everyone involved. Alexander McQueen needs to exert all effort to gain back Lane Crawfords confidence and provide assurance that the quality of their products will be kept to its highest quality so as not to displease customers again in the future. They should do the necessary steps to correct the situation so that their contract will not be cancelled.
References
Alexander McQueen Company 2014. MCQ. Web.
BBC News 2013. China profile.
Business Insider 2011, How to Behave at a Business Meeting in China. Web.
Chinese Personality Traits and Characteristics 2010. Web.
Economist Intelligence Unit Limited [EIU] 2012. Web.
Harris, P.R. 2004. European leadership in cultural synergy, European Business Review 16 (4): 358-380.
Itim International 2009, Geert Hofstedes Cultural Dimensions. Web.
Kwintessential.co.uk (2014). Doing business in China/etiquette. Web.
Li, H. 2014. Doing Business in China: Cultural Differences to Watch for, International Business Times. Web.
Monaghan, A. 2014. China surpasses US as worlds largest trading nation. Web.
Schneider, S. and Barsoux, J.L. 2003. Managing across Cultures, Prentice Hall. London
The Hofstede Centre 2014. Web.
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