Chinese Opportunities

Importance of bringing us together

The current world battlefield is centered on aggravated tensions between the US and China at the moment, our long term goal should always be bringing us closer together. China has become the world's largest economy (on a purchasing power parity basis), manufacturer, merchandise trader, and holder of foreign exchange reserves. As China is growing, both they and the United States are in a battle to secure foreign relations and solidify their spheres of influence before the dust settles and growth slows. Despite this competition, citizens from both nations should understand the strengths of both nations, and the significant opportunities presented by the gargantuan amount of trade between our nations. Regardless of our governments' political motivations or national motivations, we must recognize that we are all still people, and that disregarding one of either the two largest economies in the world on the basis of the governmental rule is a grave mistake.


Underdeveloped markets

China leads the world in production. There is no nation, not even the US, that could seriously claim to rival their production of products. Because of this, when we look at China, and Chinese cities, we see high-tech infrastructure and lifestyles supported by a digitized population. From this perspective, it is hard to find a market or sector that would succeed in China. Hundreds of industries are controlled directly by the government, and the commercial goods market is oversaturated with native products that you cannot compete with. It seems hopeless

But really what this does is provide us with two opportunities:

Services

The Chinese services market is both one of the least regulated markets in china, even in non-special economic areas, and the most underdeveloped market. Because of the large reliance on online shopping/services in China, which is centered around their massive amount of goods production, and many more traditional chinese values, China never developed a services market near the scale of any western nation, especially the United States. With the westernization of Chinese culture and the popularity of the American lifestyle, China is shifting closer and closer to an American service economy. Many sectors have a complete lack of service availability, for example the medical industry. Although China may have large, modern hospitals, many services, such as nursing homes, in-home nurses, and age-restricted neighborhoods simply do not exist. This is largely due to the traditional cultural idea that it is the responsibility of the children to support the elders in the family. While in the US, this might be seen as monetary support, in chinese culture this is an expectation that the children do the every-day care required for their elders, cooking meals, etc. This leads to a severely underdeveloped market. Now, due to the one child policy, and the westernization of culture, it is in many ways seen as impossible for the one child of the family to take care of both parents and four grandparents. This has slowly led to the popularization of nannies who take care of the elders, and is still slowly transitioning to the popularization of nursing homes, a large US market that can be expanded in China.

Rural development

Although often what we see about China is the high-tech super cities, 2/3 of the Chinese population live in the countryside. Outside of the east-coast Chinese cities, there is still large areas with very low levels of development. Only 1/2 of farmland in China is irrigated, and the majority of that percentage is traditional paddy irrigation. Despite being one of the most developed nations, it sits 10th in the amount of tractors with under a million, compared the US's 4.3 million the same year. China is rapidly growing in this area, and likely has evened the score since this study, but it goes to illustrate the point that the economically-controlled west of China lags far behind the East, and if there is a way to navigate the governmental regulations outside of the special economic zones, this would be an incredibly lucrative area to explore.

How to conduct business in china

Anthropological Indicators

The 6 dimensions model of national culture by Geert Hofstede is a common anthropological scale used to measure cultures based on 6 axis- Power Distance Index (PDI), Individualism Vs Collectivism, Masculinity Vs Femininity, Uncertainty Avoidance Index (UAI), Long Vs Short Term Orientation, and Indulgence Vs Restraint.

(Masculinity is a preference in society for achievement, heroism, assertiveness, and material rewards for success. Society at large is more competitive. Femininity is a preference for cooperation, modesty, and quality of life.)

Obligation - 义

Fully living up to your commitments till the end.

  • You have the freedom to do what you think is good or what fulfills your self desire, but above all we have duties.

  • Living up to you obligations ensures the value of your words.

  • Obligation is what hold yourself to the rest of these values.

This confucian value explains the chinese preference for long-term orientation of goals as demonstrated by the Hofstede scale

Trusting that a contract will be adhered to helps create a stable, healthy society. Individuals, corporations, governments, banks, and institutions—any entity that operates within a society—must regularly fulfill their obligations, or else face punishment.

This long term obligation ensures long term stability and deals within companies. There is an expectation that you do not jump around jobs looking for a slightly better salary or better benefits as is common in american business culture


Propriety - 礼

Showing people proper respect and courtesy

  • The art of developing a relationship through courtesy

  • Being respectful to those around you

  • Respect those that are you seniors

  • Respect means obey and follow proper courtesies

  • A level of civility you must have to operate within society

Business is Personal

  • Family and business is deeply intertwined.

  • You personally are the face and the representative of your business and your ideas

  • This is why it is crucially important to understand chinese value systems and how they weigh on your business practices

  • If you do not observe these practices, it is a reflection not only on you, but your company as a whole, so people will be compelled to not do business with you.

  • You must acknowledge and practice traditional courtesy and respect.

Integrity - 廉

Living honestly with ethics and honor

It is very important to show your integrity, as it fosters trust and benefits 关系

Integrity is the idea of “goodness”:

“A harmless man is not a good man. A good man is a dangerous man who restrains himself”

Integrity is not just being good, but showing restraint and choosing to act with honor and ethics in accordance with 礼

  • The idea of a noble, selfless, incorruptible soul is a good character

  • Self-control, the idea of not being taken over by personal desires

When businesses act with integrity, they have the opportunity to build incredible trust and loyalty with the public, their customers, suppliers, industry partners, regulators, shareholders, and other stakeholders in the business. That trust translates into customer confidence and brand loyalty.

Integrity gains the trust of leaders, colleagues, and teams.

This is a crucial aspect of being a business leader in China, as acting with integrity not only maintains your 关系, but also maintains employee trust and confidence.

This is reflected by China’s low self-indulgence score on the Hofstead test

Humility - 耻

Being reserved and not arrogant

  • Don’t flaunt what you have or know

      • This also applies to expressing yourself

  • Arrogant behavior loses respect

Americans are seen are over-expressive with their thoughts and ideas

  • Humility fosters self-cultivation

      • Improving of yourself

  • There must be a sense of shame

Being arrogant is one of the worst things you can do in Chinese business culture, and in business in general. You need to be able to recognize when you are not the best in certain areas or situations so you can learn and develop from that. This also goes with the idea of harmony, as when you are not arrogant, the pieces of the puzzle can fit together nicely and you will have a partnership or business that flows smoothly.

Arrogance is seen a lack of empathy and inability to see things from others' points of view. People see arrogant people as having an inflated self-perception of power. Arrogance closes people off, it repels your 关系

This is reflected by China’s low individualism dimension, which supports the chinese idea of controlling your self-expression

Loyalty - 忠

The devotion of commitment cannot be changed

  • You must be committed and patient

  • Loyalty is also very important in 关系 networks

Being loyal also extends to everything around you

  • Not just an employer or Emperor, but to your culture, your career(the cause of what you are doing), your people, your family, your friends

It is very common to see people changing jobs often in the US as people attempt to get better and better jobs

In China this is seen as unloyal, and it is preferred to stay in one company until they promote you. This is seen as a lack of patience and a lack of commitment.


Piety - 孝

Deep devotion and respect for one’s seniors

Unlike the western connotation of piety being religious, 孝 simply means to be devoted(in a non-religious sense)

  • Reverence and faithfulness

  • The character 孝 is made of a father on top of a son

      • This is because the son is supporting the father

Younger people are supposed to care for their parents in the family unit, and this is seen as one of the most important character traits in a person

  • You must also respect your master as a senior, and your partners as brothers

Because of the chinese traditional value structure of honor and respect for your elders, Chinese business takes on a similar form.

This is actually measured by the Power-Distance Index, or PDI, which is a measurement of the acceptance of a hierarchy of power and wealth by the individuals who make up the general population of a nation, culture, or business.

China has a very high power distance index, which means that there is complete respect for the authority of superiors, and questioning the judgement of a superior is taboo and unacceptable. This means china does not lend itself well to american business or company practices. Several companies in China and other countries found it hard to get employee feedback or get employees to participate and offer ideas because of this cultural standard. While this is a good thing for directing a company, as mentioned is severely restricts the flow of good ideas and can become a serious issue for the person at the top if something goes wrong, as they are the only ones to blame.

Benevolence - 仁

The belief in the overpowering persuasion of kindness and mercy

There is a traditional story in chinese history of a rebellion where the king had defeated the rebel tribal leader and captured him 7 times, just to release him every time. On the 7th time, the rebel leader was overcome with guilt and swore loyalty to the king and that he would help end the rebellion.

  • The idea that regardless of differences, the ability to recognize there are so many similarities as human beings

Still a very important social value in modern context. In both chinese domestic and international relations. Politically, the chinese people expect a rulers to be benevolent(similar to the western idea of the social contract) and expect the rulers to be acting in the best interests of the people. This ties in with the ideas of order and harmony in chinese society, as the people will follow order and do what the ruler says, but there is trust that the ruler in benevolent.

In business, this means there should not be a pettiness or placing yourself above others, but you also shouldn't be jealous of those better than you.

This also means as a business leader, you are expected to do the best for those below you, or risk being ousted.

Harmony - 和

The idea of an achievable peace if we act in a certain manner

  • One of the most important social fabrics of Chinese society

      • The society and community wants to work together in harmony to achieve peacefulness

  • Also is part of the idea of a supplementary society

      • Where each member of society complements to create a smooth running society

  • Harmony is considered the base of success in everything

In modern times, harmony is seen as a union of people.

  • Coordination and order are very important

Another trait supported by China’s low individualism score, and much of the reasoning behind China’s collectivist tendencies.

In business it is important to develop a culture that fosters growth and find ways to have teams work better together experience greater success in their organization.


Trustworthiness - 信

Being true to your commitments and faithful with unwavering honesty

  • There is no point to a relationship without trust

  • You also must believe in what you do and how you act (自信)

  • Because of the way traditional chinese business was based in family, Guan Xi, or networks outside the family are very close and personal. This is why trustworthiness is crucial to chinese business relationships

  • This means your public face is very important to maintain trust, and is the reasoning behind the concept of “saving face”

  • Maintaining trust and relationships is most important, even respecting relationships even if they result in lost profits or opportunities


Righteousness - 义

Doing the right thing regardless of circumstance in the honorable correctness

  • Righteousness is a developed part of your character which fosters trust

  • Fair, complaint(礼), and reasonable

This is another trait impacting the hofstead metric of Self-indulgence.

Righteousness is an important value for maintaining trust in deals and subordinates. You do not want to be seen as someone who is trying to undercut or serve your own interests.

Despite the very competitive nature of chinese business, there is an expectation to uphold honor.

Balance - 平

Finding stability

  • Essential to the idea of harmony

      • The idea is also that peace(an alternate translation of 平) is a state of balance, not of domination

  • Traditional Ying/Yang iconography

  • Moderation is also very important in chinese values

      • You don’t want to be at either extreme

There is an idea that success is developed through a balance

Shifting Markets

Despite the prevalence of traditional values on the expectations and practice of Chinese business, between Mao's cultural revolution and growing western cultural influence, Chinese Business is changing.