Blog - The Eastern Mindset and other Curiosities

The Eastern Mindset and other Curiosities

Jan 15

Written by: Kristin Drauschke
1/15/2010 3:25 PM

We all know about the various challenges of operating businesses in different cultures. Especially East Asian worldviews and attitudes might be hard to grasp for Westerners.

This blog entry intends to address cultural and business disparities on three different levels with regards to doing business in Asia. Relief is in sight:

For anybody interested in truly getting a better understanding of the reasons and principles that govern the Western and Asian worldviews respectively, I highly recommend: The Geography of Thought by Richard Nisbett. Although as individuals interested in cross culture studies many of you will be somewhat familiar with some of the theoretical references the author makes, it is fun and insightful to read the anecdotes and findings, woven into an easy to read Reference book. A friend of mine had recommended the book and I read over the Holidays. One of the best ideas I ever had!
For anybody who doesn’t have the time to read an entire book (or for that matter has any other excuse), I’ll suggest to start with the rather short but quite comprehensive list of “Seven Rules of Closing a Deal in China”, accessible through bnet @ http://www.bnet.com/2403-13239_23-204806.html?tag=content;col1.
Finally, I don’t want to withhold from you a comment by Stratfor on the current state of the Chinese strategy on fostering economic growth while maintaining social stability with Google’s dilemma being the prime example. Hence for any business owners currently struggling with their overseas ventures it might be relief to know that you are not alone and maybe can help put challenges into perspective. (see below for article)

For more information along the same lines, I’d like to invite you to return shortly and read my colleague’s blog “Where East Eats West – A Street Smarts Guide to Doing Business in China.”

Stratfor
---------------------------

GOOGLE'S ROCKY RELATIONSHIP WITH CHINA

UNITED STATES SECRETARY OF STATE Hillary Clinton called on China Wednesday to respond to allegations that an advanced cyberattack originating in China had targeted U.S. Internet company Google, resulting in intellectual property theft and stolen information on two Chinese human rights activists' email accounts. An unnamed Chinese official with the State Council Information Office said that Beijing is seeking clarification on the complaints and that it is not clear whether Google will stay or go. These statements come one day after Google surprised the business world by announcing it was reviewing its venture in China and might have to close operations if it cannot arrive at a deal that allows it to run its popular search engine without censorship.

Google, like many American companies, has had a rocky relationship with China. Since the days of Marco Polo, China has inspired Western countries with visions of prosperity and opportunity, and it continues to do so today. With a massive and rapidly urbanizing population and a rising middle class, China offers attractive markets, especially for companies that offer high-tech products and services that Chinese people cannot get at home. Once these companies arrive in China, however, they often find that the combination of a relatively small consumer market and high hidden costs -- relating to a difficult regulatory and political environment -- eats away at their profits, leaving them with far fewer earnings than they first imagined. On top of these problems, as STRATFOR has long argued, companies often face the threat of having their intellectual property stolen or their security compromised with the apparent complicity of Chinese authorities.

"If an industry giant like Google should decide to jump ship, it may cause others to rethink whether China is more trouble than it is worth."

But the deeper problem for these companies arises from some uncomfortable truths about China's geopolitical situation. China has a massive population that is difficult to bring together under a single centralized power since it is divided starkly along ethnic, cultural and economic lines. Historically, Chinese governments have especially had trouble keeping the country together when faced with wave after wave of foreign influence -- in other words, times like these. Of course, the Chinese economy needs foreign trade, investment and technology. But as Beijing opens up the doors and foreign enterprises generate new wealth, the imbalance between China's poor (mostly rural) masses and its wealthier urban elite begins to grow, and coastal provinces that are integrated into the international trade system develop interests at variance with those of the central government. Since China's central government cannot compromise on social stability and internal security, it tries to control foreign presence.

Chinese authorities view foreign information technology companies suspiciously because of these geopolitical interests. The flow of information -- both within Chinese regions and between China and the outside world -- has the potential to weaken Beijing's social controls. The Iranian protests in June 2009, and China's own Xinjiang riots in July 2009, served as recent reminders of this fact, and prompted China to block Internet services such as Twitter, Facebook and YouTube, to ensure they would not be used as forums to criticize the government. By many measures, Google falls into the same basket.

Foreign businesses generally accept China's policies as a necessary evil to gain access to the country. But if an industry giant like Google should decide to jump ship, it sends a strong signal and may cause others to rethink whether China is more trouble than it is worth, at least for mobile information technology companies whose success depends on preserving their intellectual property. Regardless, Beijing's fundamental requirement stays the same: it must preserve a balance of social forces at home. Concessions are possible as long as this rule is observed. Otherwise, alienating foreign technology is a price that Beijing has paid before and is willing to pay again.

Copyright 2010 Stratfor.

Trackback Print

Location: Blogs

Life in a global environment

Tags:

0 comment(s) so far...