The following scenario illustrated how ineffective intercultural communication leads a failure in business.
Several years ago, a German company found a profitable project that provided by a Chinese company and wanted to invest in the project. The German company then sent his men over China to explore the possibility of the investment. The Chinese company, which is a big state-owned one, also wanted to do the business with the Germans. After knowing that the German company was sending people around, the Chinese company did a lot of preparation in order to make the deal. On the first day German people arrived, the Chinese company held a very big welcome dinner, after which they bring the Germans to watch a famous traditional Chinese play. On the second day, the Chinese company arranged a one-day tour in the city for the Germans, including bringing them to visit some historical sites. The day was ended up with another big dinner with some local government officials attended. On the third day, the Chinese company showed the Germans their project and indeed they did very well in their presentations and made their project impressive. However, at the end of the third day, the German people gave up the plan of investing in the project. They Germans thought that the Chinese company cost too much on the irrelevant activities of the project, such as hosting the big dinners and arranging the one-day tour. They thought the Chinese company merely wanted to get the investment fund from German side and did not care about the project itself. Therefore, they chose to terminate the business. The Chinese company was shocked when they know the Germans left with no deal. They actually did want to develop the project with the Germans. And they did not see any problems in their reception activities.
What can we learn from this story? In my understanding, the failure of the business was actually caused by ineffective intercultural communication. As we known, Chinese people always regard relationships among people as one of the most important aspect in their communication. Often they treat people more important than the business. In business, the extent they care about the business people can reflect how much they want to do the business with the person. However, this is quite different from the German’s opinion. The German people tend to take the business very seriously and are always much focused when dealing with business. In the example, when the Germans found the Chinese people do too much on building the relationship, they misinterpreted that the Chinese people did not care about the project at all. However, it was because the Chinese people cared about the project that they came up with such nice receptions.
(Similar examples, due to its well illustration on the importance of understanding intercultural custom, were collected as the classical examples in the MBA course in China. The insight is that: when doing business with people from western countries, focus more on the business will be better appreciated by them.)
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5 comments:
Chinese have a very different way of doing business compared to the Germans. In China, businesses are often discussed over a couple of "cigarettes and drinks". However in the Germans' eyes, dicussing businesses over "cigarettes and drinks" is informal and inappropriate. They probably feel that the Chinese should hold a meeting on the first day to discuss the project if they are really interested in the business.
In order for the Chinese and the Germans to work together on the project, I think that both parties need to do some "homework" about each other cultures beforehand. In this way, both parties know what to expect and won't get a culture shock.
I agree with you that the style of Chinese do things is very different form the German’s. the Chinese culture is considered as a high-context culture, and they think relating to people is more important at work. On the other hand, the German culture is low-context culture, and they tend to see finishing a business to be more important than relating to people. Culture barrier is indeed one that hinders intercultural communication. Like what I mentioned in my blog, the way American talks and thought more simply and directly, while Chinese likes to express themselves in a more implicit way with many innuendos.
I agree with siok hui, before two company from different culture have business, they should have done the homework. Understanding each others’ culture background can make the business more successful.
I agree that this differing form of intercultural practices has served to impede the communications, or rather, communicated but interpreted differently.
However, where does the responsibility lie? Should it be the Chinese who should adjust their reception or the Germans who should expect a different form of reception to what they are used to? Personally, I feel that it should be something more of a middle point and all parties involved should play a part. To promote effective communications, it is essential for all parties to take an interest in trying to understand the practices of each other and not just look only from their point of view. In this case, the Chinese company perhaps could have tried to understand from the Germans point of view of not overspending and the Germans could have tried to understand that it is the Chinese practice to demonstrate their strong interest in the business by holding such an elaborate reception.
Therefore, I feel that for effective communications to take place, it would require all who is within the communication circle to play a part.
Interesting. Here we can see that there is some very distinct differences between Germans and Chinese. First of all, Germans do not need a good relationship to start a business but Chinese focus more on building relationships to assist in starting a business. I think this was why the Germans viewed the two-day-trip before the presentation as unnecessary. In terms of business, Germans viewed business very seriously. They prefer a straight forward presentation of the business instead of having dinners and tours to build up better relationships before the presentation.
Through this story, we learn that to do some homework to know about other countries' culture is necessary especially dealing with international businesses to avoid misunderstandings and wasting of time and resources.
It is an interesting story, and the reason why the business failed at last is partly because of the intercultural difference between Chinese and Germans. Like what our classmates commented, if both parties learned more about each other’s culture, there would not be the misunderstanding. Well, I have another question: what will happen if the Germans learn Chinese culture and expect a “big” welcome but the Chinese focus only on the project because they learn the Germans culture? Will there be a misunderstanding again?
From my perspective, when the cultural difference reflects to business, people should focus on business first. In this case, the Chinese should settle the business deal with Germans before they give a “big” welcome to show their appreciation.
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