Communicating through networks: Chinese business people's views on engaging inbusiness with foreign firms.

To open a shop is easy; to keep it open is an art.--Chinese Proverb proverb, short statement of

wisdom or advice that has passed into general use. More homely than aphorisms, proverbs

generally refer to common experience and are often expressed in metaphor, alliteration, or rhyme,

e.g.

Introduction

China is a country in which the forces of globalization globalization

Process by which the experience of everyday life, marked by the diffusion of commodities and

ideas, is becoming standardized around the world. Factors that have contributed to globalization

include increasingly sophisticated communications and transportation have

altered its economic fabric noticeably and have projected it into an era

of unprecedented growth and prosperity. With a growth rate of

approximately 8% in the 2009-2010 fiscal year, China is amongst the

fastest growing economies in Asia and forecasted to be the eighth

fastest growing economy worldwide in 2010 (The 12 fastest growing

economies, 2010). As a result of the globalization of production and of

markets, China is engaging in economic integration with the rest of the

world and its capacity to harness resources is positioning China to

potentially become the world's largest economy during this century.

The growing Chinese economy has attracted foreign ventures from around

the globe to engage in business partnerships with Chinese firms. This

can be seen in the increasing tendency of foreign firms to move their

offshore manufacturing activities into China, in order to capture the

advantages of its skilled workforce and the burgeoning Chinese market

(Doh doh or do

Noun

Music (in tonic sol-fa) the first note of any ascending major scale

Noun 1. doh - the syllable naming the first (tonic) note of any major scale in solmization

do, ut, 2005).

Despite the enormous opportunities for business engagement in

China, many foreign ventures have experienced setbacks because they have

expanded their scales of operation in China without fully understanding

the Chinese business culture in the localities in which they are

operating. Lack of culture-based knowledge prevents them from

communicating effectively and efficiently with Chinese business

partners. Some foreign companies have come to realize that China's

market is one that they cannot afford to stay in, rather than one that

they cannot afford to stay away from (Business infatuation, 1999). Thus,

the challenge for foreign businesses is a good understanding of the

social and cultural environment which is crucial to effective

communication between foreign businesses and their Chinese business

partners. Such understanding sheds light on how foreign businesses can

be competitive and sustainable in the Chinese market. An understanding

of Chinese business norms and practices will enable foreign ventures to

effectively communicate with Chinese partners and manage business

relationships with them, minimize the liability of foreignness, and

maximize the sustainability of these relationships (Zhou, Barnes, &

Lu, 2010). This is essential as substantial establishment costs are

incurred in winning entry to markets, particularly markets that are

culturally distant (Brewer, 2007).

This paper reports a study on how varied social and cultural

factors influence Chinese business people's communication with

foreign firms and their decisions to engage in business partnerships

with Australian firms. Australia and China enjoy a long-term

international trade relationship. China is now Australia's largest

source of imports and its second largest export market, and Australia is

China's ninth largest trade partner (Austrade Media Release, 2010).

In the long-run, the fundamental drivers of urbanization,

industrialization industrialization

Process of converting to a socioeconomic order in which industry is dominant. The changes that

took place in Britain during the Industrial Revolution of the late 18th and 19th century led the way

for the early industrializing nations of western Europe and, and population growth should continue

to stimulate

China's demand for Australian resources as China continues to

develop as the world's manufacturing

"factory"(Fredriksson & Jonsson, 2009).

Chinese Perspectives on Business Relationship Development

The debate over the differences in approaches to business exchange

and business relationships between Eastern and Western cultures is not

new. Scholars have been examining differences in Chinese negotiation

styles and personal characteristics that influence business

relationships for the past two decades. For example, based on their

20-year research on business relationships between the United States United States, officially

United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq

km), North America. The United States is the world's third largest country in population and the

fourth largest country in area. and

China, Graham and Lam (2003) claim that Western business people tend to

be task-oriented and use direct communication styles, whereas Chinese

business people are relationship-oriented and prefer indirect

communication styles. Differences in communication styles have been

found to be the root cause for a breakdown of a long-term business

relationship between Chinese and their US business partners. Although

the integration of China into the modern world economy since the

economic reform has brought the Chinese ways of doing business more in

line with their Western counterparts, the fundamental cultural belief in

Chinese relationship development (e.g., reliance on guanxi) remains and

is still reflected in international business exchange even today.

Moreover, the increasing globalization of markets and the development of

international business partnerships driven by strong economic growth in

China, Japan and Taiwan have reinvigorated re·in·vig·o·rate  

tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates

To give new life or energy to.

re the examination of

culture-related factors that differentiate Eastern and Western

businesses in their approaches to successful business partnerships.

In her seminal seminal /sem·i·nal/ (sem´i-n'l) pertaining to semen or to a seed.

sem·i·nal

adj.

Of, relating to, containing, or conveying semen or seed. article on differences between East Asia

East Asia

A region of Asia coextensive with the Far East.

East Asian adj. & n. and the US

on interpersonal relations, Yum (1988) argues that the overlapping of

public and private relations characterizes East Asian perspectives on

interpersonal relationships. In the business context, this is translated

into the Chinese placing emphasis on establishing personal connections

with their business partners--Guanxi - the relationship capital upon

which an individual can draw to secure access to resources or advantages

when doing business, as well as in the course of social life (Gu, Hung,

& Tse, 2008). Guanxi rests on the notion of a continuing reciprocal

relationship over an indefinite time period and extends beyond the

relationship between two parties to include other parties within the

social network. Chinese business relations are frequently developed and

nurtured via personal connections, relationships, obligations, and

influence, which parties can use to obtain access to resources through

continual cooperation and the exchange of favors (Wang, Piron, &

Xuan, 2001). Developing networks of mutual dependence and creating a

sense of obligation and indebtedness often serve as a

"lubricant Lubricant

A gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reduce

friction and wear. In many machines, cooling by the lubricant is equally important. " for successful

business and business relations.

Although the term guanxi has been used in the Western business

literature, it is difficult for Westerners to capture fully its

operational dynamics in the Chinese context, and, as a result, it has

triggered a plethora plethora /pleth·o·ra/ (pleth´ah-rah)

1. an excess of blood.

2. by extension, a red florid complexion.pletho´ric

pleth·o·ra

n.

1. of research. Kiong and Kee (1998) conducted a study

on the social functions of guanxi in Chinese business firms, focusing on

the inclination to incorporate personal relationships in decision

making. The findings showed that a key aspect of personalism per·son·al·ism  

n.

1. The quality of being characterized by purely personal modes of expression or behavior;

idiosyncrasy.

2. was

personal control effected largely through depending on people whom an

individual personally trusts, as this reduces risks in exchange via

broaching broaching: see quarrying. information asymmetries and facilitates better business

control. The key conclusion is that economic decisions in China are not

based solely on market considerations but rather are embedded Inserted into. See embedded

system. in the

context of larger social relations and institutional forces. Similarly,

Law and his colleagues (2000) examined the role of building and

maintaining good guanxi in the successful management of Chinese

subordinates by collecting data from 189 supervisor-subordinate dyads in

an organization in China. The findings revealed that

supervisor-subordinate guanxi was a strong predictor of relationship

quality. Although previous studies were conducted in different contexts,

one key element that consistently plays an important part in

establishing guanxi is trust.

Communicating trust in Chinese Businesses

Trust is present when one party has confidence in an exchange

partner's reliability and integrity, such that there is a

generalized expectancy held by an individual that the word of the other

person can be relied on (Rotter, 1967). In a business setting, trust can

be defined as one company's belief that another company will

perform actions that will result in positive outcomes for the mutual

business and will not take unexpected actions that could lead to

negative outcomes for the business (Anderson & Narus, 1990). Through

trust, the parties involved in a relationship can develop confidence

that allows any short-term inequities to be balanced and long-term

benefits to be yielded. Long-term business relationships are based on

the assumption that the stability and longevity of the relationship will

result in both parties achieving mutual benefits. Research has

consistently identified trust as an important factor in the development

of long-term business relationships (Das & Tend, 2004), a trend that

has been identified in China (Wang, Siu, & Barnes, 2008).

Trust is viewed as important in both Western and Chinese contexts,

however, there are differences between the two perspectives. Empirical

research Noun 1. empirical research - an empirical search for knowledge

inquiry, research, enquiry - a search for knowledge; "their pottery deserves more research than it

has received" suggests that Western and Eastern firms engaging in

international business are simply looking for different indicators of

business relationship success. In the West, trust is often related to

the system or organization in order to reduce the reliance on personal

integrity. Hence, when two business parties sign a written agreement,

they place emphasis on the law to bind the contract. Western

organizations rarely depend on personal trust or mutually agreed words

in business transactions because these are not legally binding and they

lack objectivity. Evidence from Western firms with foreign investment in

China shows that they do not seek to extend personal trust to their

Chinese joint venture counterparts to cover organizational risk or

resource sharing (Luo, 1997), but are motivated to generate "system

trust" within an organization, not trust in specific individuals.

This "trust" is more impersonal im·per·son·al  

adj.

1. Lacking personality; not being a person: an impersonal force.

2.

a. Showing no emotion or personality: an aloof, impersonal manner. and supposedly increases

the

legitimacy of a transaction by incorporating procedural documentation

within the transaction.

In contrast, the Chinese emphasize personal trust instead of system

trust in business interactions, partially due to the imperfections

within China's legal system (Wong & Chan, 1999). Chinese

commercial practices do rely on the legal system in part, but they are

more dependent upon personal trust and personal relationships (guanxi)

for operationalization. Members of collectivist col·lec·tiv·ism  

n.

The principles or system of ownership and control of the means of production and distribution by

the people collectively, usually under the supervision of a government. societies such as China

place greater emphasis on dealing with specific people in relationships,

and personal networks of mutual assurance play a more prominent role.

This general expectancy is normally associated with such qualities as

consistency, honesty, fairness, responsibility, helpfulness, and

benevolent be·nev·o·lent  

adj.

1. Characterized by or suggestive of doing good.

2. Of, concerned with, or organized for the benefit of charity. behavior. Research conducted in

China consistently indicates

that the Chinese rely more on personal trust than contractual arm's

length exchange to conduct business. Good business is conducted on the

basis of honesty and integrity of individuals, a "gentleman's

word" or "personal guarantee", rather than a legal

contract between firms (Xu, 2006).

Consequently, Chinese business relationships are frequently

long-term oriented, as members in the network are tied together through

an invisible and unwritten LAW, UNWRITTEN, or lex non scripta. All the laws which do not come

under the definition of written law; it is composed, principally, of the law of nature, the law of

nations, the common law, and customs. code of reciprocity reciprocity

In international trade, the granting of mutual concessions on tariffs, quotas, or other commercial

restrictions. Reciprocity implies that these concessions are neither intended nor expected to be

generalized to other countries with which the contracting parties, which extends

indefinitely. While enjoying the benefits of a relationship, business

partners are bound by a reciprocal obligation that must be

"repaid" in the future. Disregarding this obligation can

seriously damage one's social reputation and lead to loss of

prestige or face (Yau, 1988). Long-term trading partnerships have become

a preferred business arrangement between Chinese business people and

their foreign counterparts in international business, as this form of

exchange retains sufficient flexibility to adjust to contingencies, but

yet retains the basis for the fundamental guanxi orientation (Phan,

Styles, & Patterson, 2005). Therefore, as the world turns

increasingly to international trade to support economic growth, an

understanding of the factors that affect long-term trading and business

partnerships becomes an ever more valuable endeavour. It is important

for foreign firms seeking to enter the Chinese market to have a clear

understanding of the dynamics of trust and guanxi in business exchange.

To this end, we conducted field research to elicit e·lic·it  

tr.v. e·lic·it·ed, e·lic·it·ing, e·lic·its

1.

a. To bring or draw out (something latent); educe.

b. To arrive at (a truth, for example) by logic.

2. Chinese business

people's views on the social, cultural and institutional factors

underpinning un·der·pin·ning  

n.

1. Material or masonry used to support a structure, such as a wall.

2. A support or foundation. Often used in the plural.

3. Informal The human legs. Often used in the plural. their decisions to engage in international

business with

Australian firms.

The Present Study

The present study was conducted in two phases. In Phase 1, in-depth

interviews were conducted with six Chinese business people, who held

senior management positions in China. Phase 1 functioned as a pilot

study to solicit attitudes and opinions of Chinese senior managers in

regard to their international business experience, intentions to engage

in business with Australian firms and the potential factors that might

influence their business decisions. Data obtained from Phase 1 informed

the design of the questionnaire for Phase 2 of the study.

In Phase 2, a survey was administered to 49 Chinese business

people, predominantly in managerial positions. This phase aimed to test

the extent to which the views and factors identified in Phase 1 were

representative of a more diverse sample. Similar to Phase 1, the survey

covered areas such as business experience, intentions to engage in

business with Australian firms, social, institutional and cultural

factors that may potentially influence business engagement with foreign

firms.

Phase 1: Participants and procedures

The six participants were selected through the researchers'

personal contacts in China. Their ages ranged from 30 to over 50 years

old; one participant was female. The six firms represented were located

in Beijing, Tianjin, Guangzhou and Zhejiang province, covering

industries including textile manufacturing, import and export trading,

media and consumer research, and agricultural and food production. All

six firms had foreign business partners in the USA, UK, EU nations and

East Asian countries. Their reported annual sales ranged from US$670,000

to US$13 million.

The interview protocol consisted of 30 open-ended questions,

canvassing topics related to participants' business experience

(e.g., What do you see as major challenges and difficulties in doing

business with foreign firms?), intentions to engage in business with

Australian firms (e.g., Does your firm intend to do business with

Australian firms in the near future?), attitudes to doing business with

Australian firms (e.g., What do you see as the advantages of your

engaging in business with Australian firms in the near future?),

institutional environment (e.g., In your opinion, how important is the

institutional environment for success in your business?) and cultural

distance (e.g., Do you feel differences in language, business practices,

and culture would affect your engaging in business with Australian

firms? Why?). All in-depth interviews were conducted over the phone and

were audio recorded with consent from the participants. On average, each

interview lasted 40 minutes. The interviews were transcribed verbatim ver·ba·tim  

adj.

Using exactly the same words; corresponding word for word: a verbatim report of the

conversation.

adv. before data analysis.

Phase 1: Findings

Intentions to do business with Australian firms

In general, all six participants expressed interest in doing

business with Australian firms, should such opportunities arise in the

near future. In relation to preferred types of business arrangement,

long-term partnerships were most preferred (5 persons, 83%), followed by

joint ventures (1 person, 17%). These two types of business arrangements

were considered beneficial from the perspective of developing long-term

trading because risk and profits can be borne by both parties (ITW ITW In The Wild (informatics,

antivirus research)

ITW Information Theory Workshop (IEEE)

ITW Into Thy Word (religion)

ITW Into the Woods 01,

ITW02, ITW03, ITW04, ITW06). In addition, the long-term partnership was

conducive to the building of trust between business partners, a concept

which has been consistently identified as crucial in business

engagement.

Factors influencing business decisions

The six business executives uniformly identified trust as the most

important supporting factor in business engagement. The Chinese culture

places great value on trust in developing interpersonal relationships

including business partnerships. The Chinese rely more on personal trust

and mutual assurance than contractual terms to conduct businesses.

"Since you have chosen me to be your business partner, you should

trust me. This means that you should not specify too many details and

then monitor the procedures. As friends, we have shared understanding

and mutual trust. Thus, there is no need to detail everything in a

written contract" (ITW02). "Trust means quality in products or

materials supplied" (ITW03). "Trust facilitates communication

and lubricates business relationships. If there is a problem, it can be

easily resolved through communication between trusting business

partners" (ITW05). "Unless your clients trust you, they

won't give you their market share" (ITW06).

Business networks were also identified by all interviewees as an

important factor influencing business engagement with foreign firms.

business network ties were regarded as resource capital because they

could enable a business to be set up within a short period of time.

"If you don't have a good network, it will be difficult for

you to open a market within a relatively short period of time. Thus, you

must have sufficient financial capital. In this sense, business network

is capital" (ITW02). Business network ties also referred to

relationships with suppliers and clients, which was considered important

for sustaining a business.

"Suppose you were to set up an enterprise in China, you must

have access to three constituents of your business: supplier, labor

resources, and transportation. This is business network. For example, if

your textile factory was located in north China and your supplier was in

the southern part of China, then your business would not be viable due

to the cost of transportation of raw materials and time" (ITW01).

business network ties included relationships with government bodies and

financial institutions. Connections with government agencies were viewed

as particularly important to certain businesses, such as import and

export trading, because their daily operations involve dealing with many

documents that government authorities require. Financial institutions

were perceived as important for business start-ups (e.g., accessing bank

loans) but less so once the firm has established its business operations Business operations are

those activities involved in the running of a business for the purpose of producing value for the

stakeholders. Compare business processes. The outcome of business operations is the

harvesting of value from assets (ITW05, ITW06). The ability to navigate through myriads of

network ties

is considered crucial by the interviewees for business operations in

China.

Cultural barriers

When we asked the interviewees about the influence of cultural

differences in business engagement, interestingly, foreign language

proficiency Language proficiency or linguistic proficiency is the ability of an individual to speak or

perform in an acquired language. As theories vary among pedagogues as to what constitutes

proficiency[1], there is little consistency as to how different organisations (e.g., the

ability to speak English or Chinese) was not

considered as important as we had expected. Instead, norms of business

practices were regarded as most likely to influence business

cooperation. These differences were often reflected in different

attitudes to contracts. The Chinese preferred contract terms to be more

general, whereas Westerners would like to specify every detail in the

contract. "When we communicate with the British or Swiss business

people, we feel they sometimes make a very simple matter sound

complicated. They use paragraphs to describe what could be explained in

one or two sentences. Of course, this could reflect their cautious

attitude to business, but sometimes we feel there is no such need"

(ITW02).

Another cultural barrier was overlap between business and

interpersonal relations. The Chinese placed values on interpersonal

relationship This article or section may contain original research or unverified claims.

Please help Wikipedia by adding references. See the for details.

This article has been tagged since September 2007. development, as business partnerships tend

to be perceived

as long-term. For example, it is customary for the Chinese to host

formal dinners for their foreign business partners. Accepting such

invitations gives face to the Chinese partners who pride themselves on

extending hospitality and friendship to their foreign guests.

Understandably, the Chinese would feel uncomfortable when their American

partners each carried a lunch bag to a business meeting. One interviewee

related an experience, "We arranged a business meeting with our

American partners in Ningbo and planned for dinner after the meeting.

However, the Americans each carried a bag of KFC KFC Kentucky Fried Chicken (restaurant

chain)

KFC Kenya Flower Council

KFC Kitchen Fresh Chicken (Kentucky Fried Chicken motto)

KFC Kung Fu Cult (Cinema)

KFC Kitchen Fixed Charge meal and were eating

KFC food while attending the meeting. We felt a bit uncomfortable

because the Chinese would not do such a thing" (ITW06).

Summary

Findings from Phase 1 consistently shows trust, business network

ties, government support and personal contacts as important factors in

influencing business exchange. The Chinese business executives prefer

long-term business partnerships and placed emphasis on trust. Integrity,

credibility, trustworthiness trustworthiness Ethics A principle in which a person both deserves the

trust of others and does not violate that trust, and the reputation and character of a

person encapsulate en·cap·su·late

v.

1. To form a capsule or sheath around.

2. To become encapsulated.

en·cap trust. Trust is effected largely through depending on

people whom an individual personally knows well and such personal trust

is believed to reduce risks in business exchange and facilitate business

control. Economic decisions in China are not based solely on market

considerations, but rather are embedded in the context of larger social

relations and institutional forces, including government bodies and

financial institutions. To test the extent to which the views and

factors identified in Phase 1 are representative of a more diverse

sample, we conducted a survey in Phase 2.

Phase 2: Participants and procedures

Forty-nine business people (63% male) from different cities in

China China is a geographical area encompassing multiple territories, under two states. You may

be looking for: List of cities in the People's Republic of China List of cities and towns in Hong Kong

, and with cross-industry variation, participated in an interview

survey. The participants were recruited by using a combined method of

website search and researcher contact. Most participants were highly

educated, under 45 years of age (77%) and from the more developed

regions (60% from Beijing and Shanghai; 26% from Tianjin and Guangzhou);

others were from developing regions (14% from Hubei, Xinjiang, and

Chengdu). All but one participant spoke English and 12% of the

participants spoke a second foreign language including French, German or

Japanese. Senior managers made up 44%, and middle to lower level mangers

comprised 40% of the sample. The remainder were divided between

professional staff, such as engineers and lawyers (8%) and

administrative officers (8%). Business types included import/export

trade, manufacturing, technology and media communication, food and

medicine, retail, education and consultancy firms. A significant

proportion of the firms were Chinese-owned private companies (40%). The

next most prevalent ownership structures were state-owned enterprises

(22 %) and wholly foreign-owned subsidiaries (18%). Only 10% of the

firms were joint ventures, with the remaining 10% being other

structures, such as listed companies and partnerships.

[FIGURE 1 OMITTED]

The questionnaire consisted of 41 closed and open questions about

their business experience (e.g., How would you rate the importance of

the following factors for doing business with overseas firms?);

intentions to engage in business with Australian firms (e.g., Does your

firm intend to do business with Australian firms in the near future?);

and factors that may potentially influence their business engagement

with Australian firms (e.g., How would you rate the importance of

business network ties in doing business with Australian firms?). In

light of evidence that Chinese respondents may overuse overuse Health care The common use of

a particular intervention even when the benefits of the intervention don't justify the potential harm

or cost–eg, prescribing antibiotics for a probable viral URI. Cf Misuse, Underuse. the neutral

mid-point of scales (Lee, 2000), a six-point scale, rather than the

traditional 7-point scale was used. The survey was conducted via either

face-to-face or over the telephone interviews.

Phase 2: Findings

Intentions to engage in business with Australian firms, preferred

channels and business type

On a 6-point Likert scale Likert scale A subjective scoring system that allows a person being

surveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important,

relevant, interesting, most ho-hum, or other, and 5 being most excellent, yeehah important, etc

where 1 stands for "definitely

no" and 6 "definitely yes", 46% of the participants

indicated that they were likely to engage in business with Australian

firms. The mean score for their ratings on the six-point scale was 4.27,

suggesting a level of reasonable likelihood of future business

engagement with Australian firms (see Figure 1).

When we asked participants about the channels through which they

would choose to communicate business intentions, over half of the

participants (55%) identified "personal contacts" as the

preferred channel of business engagement, whereas 45% of them did not

identify it as their preference. The next preferred channel was

"professional associations" (43% yes; 57% no) and

"Chinese government Ever since Republic of China founded in January 1st, 1912, China has had

several regional and national governments. List

Chinese Soviet Republic Provisional Government of the Republic of China Reformed Government

of the Republic of China bodies" (32% yes; 68% no). A few

participants (9%) nominated "trade exhibitions" as a preferred

channel of initiating business relations. In relation to the preferred

types of business arrangement, most participants indicated

"long-term trading partnership" (69%), followed by "one

time contract" (18%). Neither "joint ventures" nor

"wholly-owned subsidiary" were popular business arrangements.

Firm-related factors influencing doing business with foreign

ventures

Participants rated "precise terms for formal contract"

and "common understanding of business norms" as two highly

important factors in doing business with foreign firms. Factors, such as

"English language English language, member of the West Germanic group of the Germanic

subfamily of the Indo-European family of languages (see Germanic languages). Spoken by about

470 million people throughout the world, English is the official language of about 45 nations.

proficiency pro·fi·cien·cy  

n. pl. pro·fi·cien·cies

The state or quality of being proficient; competence.

Noun 1. proficiency - the quality of having great facility and competence of Chinese business

people",

"close interpersonal relationships" and "familiarity of

each other's culture", were considered fairly important by

participants (see Table 1).

In Table 1, those who had experience doing business with Australian

firms (n =18) consistently showed higher mean scores, compared with

those who did not have such experience, but who did have experience in

international business beyond Australia (n = 27). However, when we

compared the differences on the ratings statistically, results from

independent sample t-tests did not reveal statistically significant

difference between the two groups. We next asked participants to rate

the importance of a number of factors for entering into business with

Australian firms. Overall, having "trusting business

relations" was rated as most important, while "international

marketing experience" and "human resources The fancy word for "people." The human resources

department within an organization, years ago known as the "personnel department," manages the

administrative aspects of the employees. " were also

rated as important (see Table 2).

The results indicated higher ratings by those who had Australian

experience across all factors. We then conducted t-test to compare the

mean scores for participants whose firms had business experience with an

Australian firm (n =18), with those from participants whose companies

did not have Australian experience (n =29). However, only the difference

in ratings on "human resources" (i.e. the firm's

employees with relevant expertise) reached statistical significance (p

<.05). Having the employees with necessary expertise was considered

more important by participants whose companies had engaged in business

with an Australian firm, than participants whose companies did not have

such experience.

Subsequently, the 18 participants (37%) with experience doing

business with Australian firms were asked to rate the level of perceived

differences between Australian and Chinese business partners. Compared

to local Chinese companies Chinese owned companies can be defined as enterprises within

mainland China, Hong Kong, Macau and the Republic of China (Taiwan): List of companies in the

People's Republic of China List of companies in Hong Kong List of companies in Macau ,

Australian firms were seen as moderately

"willing to adapt to Chinese way of doing business" (M = 3.2)

and "sensitive to the difficulties Chinese firms encounter" (M

= 3.2). The extent to which Australian firms were aware of "how

Chinese conduct business in China" received a relatively low rating

(M = 2.6) as did "Australian companies understand how Chinese firms

do business" (M = 2.7). Nevertheless, even the lowest ratings did

not deviate from the neutral point. The overall findings suggest a

certain level of confidence in Sino-Australian business partnerships

(see Table 3).

Institution related factors influencing business engagement

In regard to the institutional environment, the Chinese business

people rated "business network ties" as most important in

doing business with Australian firms, followed by ties with

"government agencies" and "financial institutions"

(see Table 4).

In Table 4, those who did not have experience doing business with

Australian firms tended to rate all factors, except one (trade

associations), slightly lower in importance compared to those who had

Australian business experience. Ratings from those without Australian

experience were more likely to be based on assumptions, instead of

actual experience. Our results confirmed the importance of establishing

business network ties and building relationships with Chinese government

agencies, when doing business with Australian firms.

We next asked the participants to rate the importance of a number

of supporting factors for business engagement with Australian firms.

Again, "trust" emerged as the most important factor in doing

business with Australian firms, followed by "government

support". Consistent with findings from Phase 1, connections with

government agencies were viewed as especially important for import and

export trade (see Table 5).

When we asked participants to rate the factors that might

discourage them from doing business with Australian firms, they rated

"differences in business practices" as most likely to

discourage them from entering into business partnerships. Interestingly,

again "differences in language spoken", was less likely to

discourage the Chinese from business collaboration with foreign firms.

This finding suggests that language difference might not be as

significant a barrier as it has been assumed by Western business

executives who have positioned themselves to enter the Chinese market.

Chinese business people are gradually familiarizing fa·mil·iar·ize  

tr.v. fa·mil·iar·ized, fa·mil·iar·iz·ing, fa·mil·iar·iz·es

1. To make known, recognized, or familiar.

2. To make acquainted with. themselves with

Western business practices; it is also necessary for overseas firms to

understand Chinese business culture (see Table 6).

Discussion

The factors consistently perceived as important in influencing

Chinese business people's intentions to engage in business with

foreign firms are: trust, business network ties, government support and

personal contacts. The findings from our study suggest that networking

plays an important role in Chinese business engagement. Foreign ventures

in the Chinese market may consider targeting more developed regions,

where foreign businesses already exist, as a seeding process, for market

entry to China. These existing foreign businesses and their Chinese

partners can function to build networks and expand business operations

in new regions. Word-of-mouth communication strategies and opinion

leaders can be powerful tools for advertising products and businesses in

collectivist cultures such as China.

The growth of private entrepreneurship and the spread of market

relations form the primary condition for autonomous, vibrant business

associations to occur. As yet, there has not been sufficient research

conducted in this domain to make claims regarding any conclusive Determinative; beyond dispute

or question. That which is conclusive is manifest, clear, or obvious. It is a legal inference made so

peremptorily that it cannot be overthrown or contradicted. patterns of the business operations

environment in China. Chinese

business practices are moving increasingly away from a

government-dominated model to one of marketization This article or section is in need of attention

from an expert on the subject.

Please help recruit one or [ improve this article] yourself. See the talk page for details. and

privatization privatization: see nationalization.

privatization

Transfer of government services or assets to the private sector. State-owned assets may be sold

to private owners, or statutory restrictions on competition between privately and publicly owned.

This shifting of control over the core business decisions to individual

firms and their senior managers provides a fertile ground for foreign

businesses to explore opportunities in China's enormous market.

However, it is more difficult to manage operations in countries that are

culturally different. The differences, expressed in social, cultural,

institutional, and socio-economic aspects, constitute psychic distance The term &#8216;Psychic

Distance&#8217; is a composite of the Greek word &#8216;Psychikos&#8217; referring to an

individual&#8217;s mind and soul (Simpson & Weiner 1989) and &#8216;Distance&#8217; which

is based on perceived cultural differences between a &#8216;home&#8217; country and a,

which materializes as uncertainties in establishing international

operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in

Wildstorm comics. It was originally called International Operations. I.O. first appeared in

WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. in

China (Brewer, 2007). However, as foreign firms accumulate

experience and learn more about Chinese business norms, acclimatization acclimatization

Any of numerous gradual, long-term responses of an individual organism to changes in its

environment. The responses are more or less habitual and reversible should conditions revert to

an earlier state. to these uncertainties will occur and they will progressively become

more competent and comfortable engaging in business with Chinese firms.

Accounting for the Chinese business people's views on factors

influencing their business communication and engagement with foreign

firms will help foreign firms to minimize the liability of foreignness.

In addition, as business people establish a greater shared understanding

of the cultural factors underpinning business decisions, exchange

relationships will have an enhanced prospect for sustainability.

business engagement with China promises net benefits for all countries

involved, but this will only be realized with culturally sensitive

management.

Acknowledgment acknowledgment, in law, formal declaration or admission by a person who

executed an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment is

made before a court, a notary public, or any other authorized person.

This research is supported by the Australian Research Council

(LP0776272). We also acknowledge the support of our industry partners:

Queensland Government--International Collaborations, The Chamber of

Commerce & Industry of Queensland, and Middle Kingdom (Aust.) Pty

Ltd PTY LTD Propriety Limited (company structure in Australia).

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Table 1. Importance of Firm-related Factors

for Doing Business with Foreign Firms (Mean)

Factors Experience with Experience with

Australian firms other foreign

(n = 18) firms (n = 27)

Precise terms in formal contract 5.4 5.2

Common understanding of business 5.2 5.1

norms

English language proficiency of 4.9 4.3

Chinese business people

Close interpersonal relationships 4.8 4.9

Familiarity of each other's 4.6 3.9

culture

Note: Six- point scale where 1 = unimportant and 6 = important.

Table 2. Importance of Firm-related Factors

for Doing Business with Australian Firms (Mean)

Factors Experience with No Experience

Australian firms with Australian

(n = 18) firms (n = 29)

Trusting business relations 5.9 5.7

International marketing experience 5.2 4.9

Human resources 5.2 4.5

Financial resources 4.9 4.4

Legal resources 4.8 4.3

Government support 4.7 4.3

Note: Six- point scale where 1 = unimportant and 6 = important.

Table 3. Chinese Business People's

Perception of Australian Firms (n = 18)

Australian firms... Mean

Are willing to adapt to Chinese way of doing business 3.2

Are sensitive to the difficulties Chinese firms encounter 3.2

Are easier to work with than Chinese firms 3.0

Understand how Chinese firms do business 2.7

Are aware of how Chinese conduct business in China. 2.6

Note: Six- point scale where

1 = Strongly disagree and 6 = Strongly agree

Table 4. Institutional Network Ties in Doing

business with Australian Firms (Mean)

Institutional network ties Experience No Experience

with Australian with Australian

firms (n = 18) firms (n = 30)

business network ties 5.1 4.6

Government agencies 5.0 4.2

Financial institutions 4.6 4.1

Law firms 3.9 3.7

Universities 3.8 3.4

Trade associations 3.6 3.8

Note: Six- point scale where

1 = unimportant and 6 = important.

Table 5. Factors Influencing Doing Business with Australian Firms (Mean)

Factor Experience with No experience

Australian firms with Australian

(n=18) firms (n=28)

Trust 5.9 5.7

Government support 5.0 4.3

Legal support 4.7 4.2

Official interpretation of rules 4.7 4.0

Note: Six- point scale where 1 = unimportant and 6 = important.

Table 6. Factors that Might Discourage Doing

business with Australian Firms (Mean)

Factors Experience with No Experience

Australian firms with Australian

(n = 18) firms (n = 30)

Differences in business practices 4.1 3.6

Differences in culture 3.7 3.0

Differences in language spoken 3.5 3.0

Geographic distance 2.8 2.5

Note: Six- point scale where 1 = unlikely and 6 = likely.