In 2005 numerous public relationship crisis have haunted multinationals operating in China. Big brands such as P&G, Nestle, KFC, Johnson & Johnson, and Sony have suffered severe damage to their brands’ reputation. An analysis of the underlying reason for the problems encountered shows that they are due to a fundamental misunderstanding of the intricacies of Chinese cultural on business. This reaches far deeper than most people think.
Impact of Cultural on Business
It is a well known fact that personal and professional relationships are much more blurred in China than in the West. But this has a much deeper impact than most people coming to China understand. For example, many multinationals in China hire public relations firms to handle their public image. They adopt this policy because it is common practice in the West and assume that it is the same in China, especially if they don’t feel they have the in-house competency to do the work themselves. In China though, this might backfire if certain operational elements of this PR work are not changed to reflect cultural differences. For example, when potentially facing a crisis, a company should not ask their PR firm to deal with media directly. If they do so, the media will consider the company to be insincere or not to be ‘showing them face’. A better way is for the company to give the media information directly, for the press to then disseminate among its readers. This applies not just in times of crisis. A firm should never rely entirely on its PR agency. Ideally, the PR agency will build up a national network of media relationships, while senior management will cultivate a personal relationship with well-connected celebrities, Chinese executives, high-ranking government officials, etc. In times of crisis the latter connections, the ‘social capital’, will be much more important.
Mianzi
‘Mianzi’ (面子) means ‘face’, but in Chinese culture it stands for much more than appearance, it represents the social identity and standing of a person in the community. It has two underlying meanings:
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Lian (脸): related to the moral side of one’s face. The loss of Lian makes it impossible for one to function properly in the community.
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Mian (面): related to personal face, standing for a kind of prestige or reputation achieved through personal success.
Loss of Mianzi can bring shame or disgrace to the family or the organisations that the individual is associated with, as much as to the individual themselves. It applies to all levels of Chinese society and even applies on a national level. When a Chinese person feels that they have ‘lost face’, a series of actions will follow to regain it.
Example: Generally speaking, the Chinese are hesitated to take out a lawsuit. The customer from the Jianxi province who sued SK-II probably would not have taken this extreme step if she had not been deeply hurt emotionally by the SK-II representative. Equally, if the Sony China management team had responded earlier to the quality claim by the Zhejiang Industrial and Commercial Bureau, the government officials would not have felt loss of face. Again, the outcome would have been different and probably solved on a less public level.
Hierarchical Mindset
In China, behaviour still follows the Confucian principle of the ‘Five Social Roles’, creating a very hierarchical mindset. I.e.
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Ruler to Subject
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Father to Son
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Husband to Wife
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Elder Brother to Younger Brother
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Elder Friend to Younger Friend
Because of this China has a very hierarchical social structure and high ‘power distance’ dimension. Although Confucian values have become less important in modern China, their influence is still clearly visible in mentality of the people. So individuals who are high up in the social or political hierarchy, like celebrities and state government, still have a big influence on public opinion.
Example: Over 60 percent of Chinese television commercials, are endorsed by celebrities. A big part of the reason why the local media refused to co-operate with Sony was that the criticism had come from an important political body and very publicly too. This was the main reason why the media forced Sony to change its stand toward the claim of quality problem with its digital camera from denying to apologising. This eventually led to the products being removed from the shelves, causing the incident to escalate to a serious national public relations crisis.
Group Mentality
The root of Chinese culture lies in its farming society background. Chinese people are very much group-oriented and relationship-based. Chinese saying are a good way to understand some elements of its culture. For example the saying “Gun will kill the bird that sticks its head out”, vividly describes the group dynamic and peoples reluctance to stand out from the crowd. The opinions and reactions of society and the peer group are hugely important for the individuals decision making process and behaviour. This peer group consists of family members, trusted alliances, and close friends. This also means that the ‘snowball’ effect can happen faster in China, one negative opinion potentially having devastating effects for a company.
Example: With this in mind, employee incentive programmes in China should not simply be copied from headquarter prototypes. They need to be adapted to add certain elements that are able to motivate groups, not just individuals, in order to achieve ultimate organisation effectiveness.
Conclusion
All these elements and many more play into the daily reality of doing business in China. These hidden rules, so important for success, are difficult for western managers to understand. In today’s global business, technology is relatively easy to transfer across borders, but a successful business model is hard to duplicate into a foreign culture. In China, the biggest and most daunting challenge for western executives is to develop a new or innovative business model that is viable in the Chinese business environment. This is especially challenging for global players, where the company headquarters expects the new branch to adopt the corporate culture of the company’s world-wide corporate value system. The HQ must understand that this impossible to do in China. To be successful a company must integrate Chinese cultural aspects to successfully deal with and motivate staff, business partners, and customers. To do this, western managers must thoroughly understand basic Chinese cultural insights.
By Donny Huang
This article is published in 02/06 issue of Business Forum China(www.bfchina.cn)
The Business Forum China is the new name of the well known German Chinese Business Forum magazine. Even though the business forum has proven to be successful for many years the new name and renovated layout reflects the growing ambition of the magazine to cover not only German-Chinese business relations, but to lend itself as a comprehensive presentation of all business in China. The magazine is now completely published in English and targets an international readership.
