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Culture & International Business

By Edited May 22, 2016 1 1

Does culture relate to international business?

Perhaps the political economy of a nation is the most important factor to understand when conducting foreign business, however; underlying this is a nation’s culture. While culture is not a key indicator in the growth of an economy, it defines the society in which the economy operates, and this is how it relates to international business. While culture is not a key economic indicator, it is a key indicator for the types of people and region in which you will have to work with, so cross culture literacy is of grave importance when operating beyond native borders. The main components that international businesses should concern themselves with is the degree to which social strata is emphasized, the prevalent religion or religions in the region, the spoken and unspoken language or languages in the particular region of interest and the educational opportunities the host country offers its citizens. All of these are relational to the values and norms of the culture and ultimately the work environment of a society.

When observing the differences in social stratification, China is an interesting example. Before we go into detail, I want to briefly touch on class and caste systems. A class system is a less rigid form of social stratification in which social mobility is possible due to personal achievements or luck; while a caste system is a closed system of stratification in which social position is determined by the family in which the person is born, and they generally cannot change this position within a lifetime. However, it is possible to have a class system that makes mobility very difficult.  While many believe with the end of communism came a sharp decline in the importance of China’s class system; in actuality, the Chinese are borderline obsessive about class rank, especially when it comes to business. They have certain indicators and ways of flashing their rank to the outside world in order to gain respect from those around them. To the average Westerner, these signs of position and rank come across as quirky, but they need to be adopted in order to gain respect and develop a strong guanxiwang with the businesspeople in China. The first quirk is the emphasis the Chinese put on skin color. In America, we are taught that we should not judge based on skin color, however in China it reveals your social class. Those with darker skin are associated with day laborers and farming which is seen as “low class” to the Chinese. Ever wonder why certain Chinese women look pale and are obsessed with umbrellas? They often spend a lot of money on facial products that make them appear pale; and use umbrellas to  keep the sun from “tainting” the skin. While this may seem silly to a Westerner, it’s a part of class distinction to the Chinese. The men in China also have a way to distinguish themselves, which would be their fingernail. A Chinese man in business will not cut his thumb’s fingernail to show that he isn’t a day laborer. A polished and long fingernail means he holds a high position in the class system. Again, this would seem silly and un-masculine to a Westerner, but it is just how their culture dictates the status of an individual. Other components of their class system, which I would argue makes more sense, is that one must develop a relationship before speaking to someone of a higher rank. Unlike in the United States, the Chinese will not conduct business with anyone before a relationship is established. Loyalty and business go hand in hand, and they do not tolerate exploitation on any level. For this reason, one can’t just “jump” into business, they must take baby steps to earn the trust and respect of those around them. Developing business connections, or guanxiwang, takes time and requires loyalty, honesty and reciprocation of favors. In the Western world, we don’t nearly respect each other as much; and when one individual can step over another, they often do. In China, they deter this from happening by holding businesspeople accountable through social sanctions. Since reputation and class rank is so important to the Chinese, businesspeople often will follow the social rules more strictly than technical legalities set by the government.

Religion, too, has implications for international business. Think of the many world religions such as Hinduism, Christianity, Islam, Buddhism and the ethical codes of Confucianism and how they relate to a person’s life and the way the go about their financial destiny. An important point is that many religions can be prevalent in a nation state; and even more common, religions can cross many nation states. Think about Islam and the many countries in which it is practiced. When it comes international business the challenge arises when two people of two different cultures and religions mix. How do you create a business environment when two people hold different value systems? How do you ensure mutual respect and understanding of these value systems? Well, while it is important to respect the other person, often times it helps to not even delve into the topic of religion during business.  Religion is often an emotional subject, and when it is talked about it can lead to tensions, especially if the two parties disagree with one another.  So instead, one should focus on the ethical implications of their partner’s particular religion. For example. while Confucianism is not a religion, it has a set of ethical guidelines in which people who practice it abide by. Confucianism teaches the importance of loyalty, honesty and the reciprocation of favors; to understate this would be detrimental when conducting business in many Asian countries. Guanxiwang is derived from the teachings of Confucius, and as mentioned before, is an integral part of the Chinese and many other Asian cultures, so to ignore it would be a mistake. Understanding the ethics behind religion can help minimize any misunderstandings and promote an understanding of the values within other religions.

Perhaps the most apparent difference between nations is the language that is spoke and the nonverbal language, or body language that is acceptable.  Like religion, many languages can be spoken within one nation, and one language can also be spoken in many nations. Think about the English language; it has been widely accepted as the language in which international business is conducted. No matter where you are in the world, you can generally find an English speaking person; and it is often the second language of individuals. But language has severe implications for international business. Every wonder why those who are fluent in more than one language often receive a higher salary? As our national marketplaces become one large global marketplace, there is an increased demand for those who speak local languages. French, Spanish and Chinese are all desirable languages for multinational enterprises. Also, have you ever been in front of two people who are speaking a different language, it seems like they are talking about you, but since you don’t speak the language you don’t actually know? A lot of the time, they are talking about you; and to be able to know what they are saying is invaluable. This is why firms often call upon locals who speak the language and understand the culture to gain the trust of their future business partners. In places like China, this is very important as the businesspeople are more skeptical of foreigner’s intentions. The Chinese want to make sure there is a mutual, instead of just an individual, benefit; and this relationship takes time to foster and develop. But the payoff is huge, when you have a strong reputation and network to call upon for help, people depend on you. Therefore, employing locals who speak the native language of the nation, can help foster the relationships that are formed.

 A more subtle factor is the non-verbal language of a country. Some nonverbal or body language signs are universally accepted such as the peace sign; others have different meanings across borders. Let’s take a look at some of the differences between a western and Chinese body language. The first difference is how eye contact is viewed. Growing up my father always taught me to look someone in the eye when you speak to them, maybe this is true in the United States and other western cultures; but it is viewed as inappropriate in China. As mentioned before, China views status as supreme importance, so when you speak to someone who is “above” you in rank, it would be disrespectful to challenge them with eye contact. In the United States, we often use our index finger to point someone out; in China this is seen as rude; instead, they use their palm to call upon someone. Another interesting difference is a smile. When a Westerner smiles it is often a sign of happiness, while the Chinese smile when they are happy, they also smile when they are embarrassed or uncomfortable. This could lead a westerner to misinterpret how their business partner is really feeling. One last interesting difference is that women are not to wear provocative clothing in public or business, and men are not supposed to touch women in public. Personally, I feel this social guideline should be carried within any business context. Often in the western business place women are treated disrespectfully and office relationships are all too prevalent. The idea of keeping your social life separate from your work life promotes a higher degree of professionalism within the business environment.

Lastly, the educational environment is important for international business, and perhaps the most crucial to the economic growth and success of a country. Our education system shapes and reinforces the values and norms of our society, and thus how we interact with those around us. Beyond this, the more education is prevalent in a nation the more productive citizens are and can be a good indicator of what is produced (specialization) and consumed in that country. It can also be a good indicator of the future economic growth of a country.  Therefore it would be interesting to look at the different educational systems of the United States and China and assess the influence the education system has on international business. It often sounds cliché, “the best investment for our  nation is our children,” but in an increasingly competitive global market, it is a reality. While the United States concerns itself with the politics of education, China and India are shaping their education system to ensure they surpass the United States, particularly when it comes to math and sciences.

In the United States if a child doesn’t succeed, it does not mean it is the end of the road for their future, however in China and India failure in school will shape your destiny. The repruccussions of doing badly in China and India lead to yelling, mountains of homework and even beatings. In the United States, this would not be tolerated. Students in the United States generally don’t have a problem being a “class clown,” but in China if you act like a class clown, you will be the only one laughing at your jokes. Thus, educational achievement will make you more popular; in the United States educational achievement in lower schools means you are a geek; and geeks get bullied. So I think the social aspect of schools sets the stage for how willing children are to learn and how seriously they take their personal education. I also think that many teachers in the United States until now, have viewed their job as “safe” and protected with tenor; in turn teachers aren’t paid based on their achievements, but on how long they have been with the school (lack of incentives to be a better teacher). I definitely do not see this as a recipe for success. Teachers and professors in China are very well respected and to defy them would mean extreme embarrassment to not only the student but the family. My mother is a teacher for a school in the Bronx, and she has had numerous students who are just plain lazy, when she calls to try to ask the parents for some help at home; she gets yelled at. The mothers say in their broken language, “Well why you don’t just stop givin’ them so much damn homework.” The question should be, “Why isn’t my child performing the way he or she should be?” I, in no way condone abuse or giving up on a child based on poor performance due to learning disabilities, but I do condone discipline, and it is severely lacking in this country especially when it comes to education- and this could be where the United States is going wrong.

 There is no doubt that the United States has the best higher education system in the world, so then, why are we only offering student visas to the foreign graduates of our best universities?  I have a serious problem with this because I don’t see the point in giving someone an education, essentially to send them home. I think that a percentage of graduates based on educational achievements should be granted citizenship to the United States. I am not trying to be racist, but we have a million unskilled workers from down south living within our borders, not paying taxes; and yet we let them stay, however we won’t grant the graduates and experts from our best school citizenship? If we grant citizenship to these young, ambitious and intelligent individuals, we can capture a part of each country’s specialization; and thus help America get back on its feet by creating businesses, which in turn creates jobs, that creates room for economic growth. Getting jobs into America, starts with our education system.

Culture has many components, and although it is not a key indicator of economic growth like political economies are, it is important to respect and understand these differences to create a friendly environment in which business can be conducted. 



Oct 17, 2012 4:31pm
Hi--What incredible reporting...and just plain smart. I loved the insight of this wonderful, mindful article and can't wait for your next piece. You get 5 BIG stars from me--keep up the excellent work!!!
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