Analysis of Chinese Culture on the Basis of Hofstede’s Culture Model and Practical Examples

FOM Hochschule fur Oekonomie & Management Essen FOM University of Applied Sciences Essen Term paper About Analysis of Chinese Culture on the Basis of Hofstede’s Culture Model and Practical Examples Course: Instructor: Intercultural Competence Prof. Dr. Ingrid Eumann Author: Alexander Kerst Lutgendortmunder Str. 30, 44388 Dortmund Phone: +49 175 417 5850 | E-Mail: [email protected] de Student-ID: Study programme: Degree: 216269 International Management Bachelor of Arts (B. A. ) August 2010 I Contents List of Figures …………………………………………………………………………………………………..

II List of Abbreviations ……………………………………………………………………………………….. II 1 2 Introduction……………………………………………………………………………………………….. 1 Hofstede’s Culture Study ……………………………………………………………………………. 1 2. 1 2. 2 2. 3 2. 4 2. 5 3 Power Distance (PDI) …………………………………………………………………………….. Individualism (IDV) ………………………………………………………………………………. 2 Masculinity (MAS) ………………………………………………………………………………… 3 Uncertainty Avoidance (UAI) …………………………………………………………………. 4 Long-Term Orientation (LTO) ………………………………………………………………… 4 The Chinese Culture Applied to Hofstede’s Culture Model ………………………….. 5 3. 1 3. 2 3. 3 3. 3. 5 Power Distance Index (PDI) ……………………………………………………………………. 7 Individualism (IDV) ………………………………………………………………………………. 7 Masculinity (MAS) ………………………………………………………………………………… 8 Uncertainty Avoidance Index (UAI) ………………………………………………………… 9 Long-Term Orientation (LTO) ………………………………………………………………… 9 4

Summary………………………………………………………………………………………………….. 10 References ………………………………………………………………………………………………………. 11 II List of Figures Figure 1: Individualism vs. Collectivism (source: author according to Reisach et al. (2003, p. 348) …………………………………………………………………………………………………….. 2 Figure 2: Chinese scores compared to Germany (Hofstede n. d. , p. 1 of 3) ………………… 6

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List of Abbreviations PDI IDV UAI MAS LTO CVS Power Distance Index Individualism Index Uncertainty Avoidance Index Masculinity Index Long-TermOrientation Chinese Value Survey 1 1 Introduction In a globalized world transnational companies and everyone who faces different cultures, it is a big challenge to understand and step across cultural differences. China is experiencing the rise from an agricultural emerging nation to one of the world’s biggest national economies. The change and growth of China was triggered by a economical reforms of the communist Chinese government in the late 1970s.

Today, China is a communist country with a market economy. Many manufactures are made in China being evidence of the rise of China. Thus many business men explore the opportunity to do business in China. But the risk is that a lack of understanding for Chinese culture can often result in failure and the waste of money, while a good knowledge opens doors to succeed in China. The paper proceeds as follows. First, it outlines the cultural model developed by the Dutch scholar Geert Hofstede before applying it to the Chinese culture using examples from everyday and business life. 2

Hofstede’s Culture Study Hofstede (2006, p. 3) defines culture as ‘software of the mind’. It provides each human being a pattern of behaviour and is determined by the social environment it grew up in. The ‘mental software’ indicates the probability of certain actions and behaviours and explains them. This is called culture. In order to classify different cultures, Hofstede conducted a study from 1969 to 1973 surveying 116,000 IBM employees in 60 countries (Rothlauf 2006, p. 29). Hofstede (2006, p. 29) states that the study reveals that all societies are confronted with the same basic problems.

Thus cultural differences are shown by different ways of looking at these problems. Hofstede identifies empiric dimensions of culture which represent the problems. Further, dimensions are an aspect of culture which can be compared to other cultures. As a result of the study the cultural dimensions are defined as follows: 1. Masculinity 2. Individualism 3. Masculinity 4. Uncertainty avoidance 2 5. Long-term orientation. The last dimension was added in a follow-up study in 1987 (Kutschker & Schmid 2002, p. 702). The study gives each country a score (index) in each dimension enabling the comparison of different cultures. . 1 Power Distance (PDI) Power distance is ‘[t]he extent to which less powerful members of institutions and organizations accept that power is distributed unequally’ (Hofstede 1983). According to Rothlauf (2006, pp. 29-30), characteristics of cultures with a high PDI in a business context are for example the acceptance of commands without protest or in general a tendency towards autocratic management culture. Countries in Africa, Asia and Latin America as well as France, Belgium, Italy and Spain have a high PDI score. A low PDI core implies highly qualified employees, flat hierarchies, control in terms of monitoring and a cooperative management style. The USA, Great Britain, Germany and Scandinavian countries count as small power distance cultures. 2. 2 Individualism (IDV) Figure 1: Individualism vs. Collectivism Source: own illustration based on Reisach et al. (2003, p. 348) 3 Hofstede (2006, pp. 100-101) asserts that most people live in a collectivist 1 society whereas the minority lives in an individualistic culture. It is defined as ‘the tendency of people to look after themselves and their immediate family only’ (Hofstede 1980, p. 19). In order to measure individualism, the IBM questionnaire aimed at two contrary groups of goals which the respondents had to choose to pursue: Free time, freedom 2 and challenging tasks represent individualistic goals, whereas continuing education, a good physical work environment and the opportunity to use their skills reflect the collectivist part (Hofstede 2006, p. 103). Genrally, rich countries tend to have a higher score of individualism than poor ones. It is obvious that those goals, which are part of the collectivist group, seem to be as a matter of course in developed, rich countries.

As a consequence, there is a shift towards ‘higher’ goals like free time, freedom and challenging tasks. These can be considered as self-actualization needs according to Maslows’s pyramid of needs. Figure 1 shows the difference between individualism and collectivism: individualistic cultures focus on individual needs while collectivist cultures encourage you to give priority to the group. It may be surprising that commonality obtains priority in individualism, but requesting individual freedom implies conceding freedom to the commonality (Reisach et al. 2003, p. 348) 2. 3 Masculinity (MAS)

The Masculinity Index gives an answer to the question ‘Do people work to live or live to work? ‘ Masculinity (high score on MAS) and femininity (low score) are the two poles of the MAS. A society which is performance driven, related to the success of each individual and self-confident is considered as masculine. Femininity is characterized by good interpersonal relationships, responsibility and compromises as an instrument for achieving goals (Rothlauf 2006, p. 31-32). 1 In this context, collectivism is not related to politics, but rather refers to the power of a group (Hofstede 2006, p. 100). in terms of deciding on their own how work is done 4 Similar to the different goals the respondents are asked after and which are related to individualism and collectivism, Hofstede (2006, p. 163-164) uses a high remuneration, acceptance, promotions and challenging tasks to indicate masculinity. A good relationship to colleagues and supervisors, a pleasant work environment and security of employment indicate femininity. Altogether, Hofstede (2006, p. 165) generalizes that roles of men and women are clearly different: men are hard, dominant and material oriented whereas women have to be more sensitive, moderate.

Femine cultures do not show this difference between men and women. 2. 4 Uncertainty Avoidance (UAI) Uncertainty avoidance relates to ‘the extent to which people feel threatened by ambiguous situations’ (Hofstede 1980, p. 418). It gives information about how people feel in situations which are either new or familiar to them. People and cultures with a high UAI have a strong need for written and unwritten rules, because uncertainty causes extreme anxiety. Technology, religion and law and order are ways to mitigate and deal with uncertainty.

At best, any uncertainty can be avoided completely. People are stressed due to the permament threat of something unexpected could happen. Uncertainty accepting cultures have fewer laws as there is no need for a strong control (Hofstede 2006, pp. 230-233, 244). Rothlauf (2006, p. 32) states that they are more willing to take risks and have a higher motivation. People who accept uncertainty are more open and tolerant towards different point of views. The given examples of uncertainty avoidance and acceptance are two extremes of one pole. Therefore, Hofstede (2006, p. 52) highlights that most countries lie somewhere within the scale and that there might be strong regional differences within the same country. 2. 5 Long-Term Orientation (LTO) In 1979, the Canadian scholar Michael Harris Bond conducted a study similar to Hofstede’s. His data based on students instead of IBM employees but surprisingly showed the same dimensions Hofstede had identified before. This fact showed both 5 Hofstede and Bond that researchers influenced the results as their own mindset and hence the questionnaires are coined by the western culture.

Therefore, Bond conducted another survey factoring Chinese values this time. This so called Chinese Value Study (CVS) was exerted in 23 countries. The CVS identified four dimensions: Except for uncertainty avoidance – it did not have any correspondent in the questionnaire – they were similar to Hofstede’s dimensions. The forth dimesion is long-term orientation which was adapted by Hofstede later on (Hofstede 2006, pp. 37-39). Long-term orientation means fostering future-oriented virtues, particularly with regard to insistency and thrift. It also implies pragmatism and willingness to serve a collective purpose.

On the contrary, short-term orientation implies a high preference in presence. Efforts have to show immediate effect and Tradition and saving face are important (Hofstede 2006, p. 295). In general, Asian countries are the most long-term oriented countries. European countries are on a medium scale place whereas the UK, Australia and North America appear to be short-term oriented. 3 The Chinese Culture Applied to Hofstede’s Culture Model Mr. Johnen, a German business man, is being sent to China in order to sell the products of his company.

The prospective customer – a Chinese company – wants to become acquainted with the product and might sign a lucrative contract. Mr. Johnen feels irritated because people come and go during his presentation. He is afraid that the Chinese delegation has lost interest in his products. He is increasingly frustrated and harsh. A few days later, the result is the breakdown in negotiations after the Chinese negotiators were not willing to sign a contract. A better understanding of cultural differences would have led to a different interpretation of the behaviour of the Chinese delegation.

Chinese being part of a highly collectivist society consider sending many people to negotiations, though some might temporarily leave the room due to important reasons, more polite than to only put up a small team (Reisach et al. , pp. 349-350) Chinese culture is largely based on and influenced by Confucianism. 6 With over 1. 33 billion inhabitants, China is the most populated country in the world and therefore consists of many different ethnic groups (Han, Zhuang, Manchu to name some of them). Despite this fact Chinese culture can be examined in a holistic way because 91. % of the population are Han Chinese (Central Intelligence Agency (CIA) 2010, pp. 3-4 of 15). The CIA (2010, p. 7 of 15) points out: ‘China’s economy during the past 30 years has changed from a centrally planned system that was largely closed to international trade to a more market-oriented economy that has a rapidly growing private sector and is a major player in the global economy. ‘ The fast-paced growth of China’s economy becomes evident while looking at worldwide export volumes: China has get ahead of Germany as the world’s leading export country (apart from the European Union as a single state) (CIA 2010, p. 1 of 15). For those companies and people who have to or want to deal with Chinese partners, a distinct knowledge of Chinese culture is essential. Figure 1 displays big differences of four of Hofstede’s dimensions between German und Chinese culture. Negotiating with Chinese partners without being aware of these differences probably will not lead to a successful negotiation. Figure 2: Chinese scores compared to Germany Source: Hofstede n. d. , p. 1 of 3 7 3. 1 Power Distance Index (PDI) China scores an 80 on the PDI (rank twelve out of 74) and hence it is a country with a heavy power distance.

An example for power distance in China is the differentiated salutations for relatives. Chinese are encouraged to respect the hierarchy of the family from childhood on. The hierarchy is determined mainly through the age of the family members. This is reflected in the Chinese language, where there are differentiated expressions for each family member. Different to the West, these expressions are the way how family members are called. Especially when addressing relatives who are on a higher rank in the hierarchy Chinese are encouraged to address them using the special expression for the certain degree of relationship.

For example the eldest brother is called ‘?? ‘ among his siblings, in which the first character ‘? ‘ means ‘big’ and the second character ‘? ‘ means ‘older brother’. Both characters together form the expression for the eldest brother and only he is called this way in the family3. The existence of a family hierarchy and the detailed expressions – depending on who is addressing who within the family – clearly shows that a power distance is existent and accepted in Chinese culture. According to Hofstede (2006, p. 77), power in high power distance country often lies in the hand of the government and power differences are taken as a given.

The Chinese government exerts power towards its citizens often not following the laws of a constitutional state and violating personal rights. The Communist Party of China does not tolerate any public criticism nor calls for more democracy (Auswartiges Amt n. d. , p. 341). The government exerting power (one child policy, censorship etc. ) on the population is another evidence for China’s high PDI rank. 3. 2 Individualism (IDV) China has a low IDV rank of 20. This score indicates the Chinese society is collectivist as compared to individualist. 3 Personal observation 8

Though individualism does not correlate with power distance, the example of the importance of addressing relatives correctly and respectfully is equal to the significance of ‘interpersonal relationships’ in Chinese culture. In fact, Confucian teachings emphasize five ‘cardinal relationships’ between ruler and minister, father and son, husband and wife, elder and younger brothers and between friends as stated by Tian (2003, p. 56). The relationships are two-way, meaning that, for instance, the younger brother respects the elder, while the elder cares about the younger. These Confucian teachings (… ) have become the most influential moral principles in China’ (ibid. ) and emphasize the importance of groups explaining the low score on the IDV scale. In this context, guanxi (?? ), which – literally translated – means relationship, plays a large role. It often is the basis for business and implies reciprocal favours. In practice, it is a kind of networking in order to achieve certain goals and maintaining or building good interpersonal relationships. Business is not done between companies but between persons. 3. 3 Masculinity (MAS)

China with an MAS score of 66 ranks eleventh (out of 74) and is as masculine as Germany and the UK. Though there is sexual equality by law, China is a patriarchal and men-dominated society. Assertiveness and performance are valued characteristics and career is for most Chinese of high significance. Looking at the sex ratio at birth, which is 1. 14 in favour of males (CIA 2010, p. 3 of 15) and taking China’s one child policy into account, it is likely to believe that male descendants are preferred. The education system is another indicator for the high MAS score.

Chinese pupils often hardly have any free time as there is an immense pressure to perform rooted in both the system itself and parental education. On the hand, school grades determine which schools a pupil may attend and insufficiently good marks can lead to exclusion from school. On the other hand, parents are only allowed to have one child and thus encourage their child to work hard from childhood on in order to achieve material 9 prosperity. This clearly asserts China of being a performance driven, masculine society (FOCUS Online 2010, p. 1 of 2). 3. 4 Uncertainty Avoidance Index (UAI)

According to Hofstede’s studies, China has a low UAI (score of 30). This implies that Chinese rather dislike verbal and written agreements or contracts. Renegotiating agreements which have been made before is not unusual, while Germans are accustomed to the validity of contracts (Rothlauf 2006, p. 346). Assuming that Mr. Johnen (see p. 5) had known Chinese culture better he would have also realized that contracts are not carved in stone. Even worse his desire for the Chinese to sign a contract send out the signal that written words and contents are of greater value than a good interpersonal relationship (guanxi) to him (Reisach et al. 003). 3. 5 Long-Term Orientation (LTO) China is the highest ranking country regarding long-term orientation having an exceptionally high score of 118 (average 44), while Germany with a score of 31 can be considered short-term oriented. Chinese prefer long-term oriented patterns of thought and focus their actions on this paradigm. Apparent detours on the way to achieving a goal are considered to be leading towards the goal better than the apparent shortest, linear way (Rothlauf 2006, p. 347). A good example for the long-term orientation in Chinese culture is the Chinese language.

Words are not ‘composed of sequences of letters’ (Tian 2007, p. 129). The Chinese character meaning ‘male’ (? ) consists of two parts: the upper part (? ) means farmland while the lower part (? ) means energy. This completely different structure of language goes along with a different mind-set as pointed out by Tian (ibid. ): ‘In other words, the Chinese are used to looking at the whole frame frist and then moving on to the details, while Western people are accustomed to assembling the details first and then drawing the whole picture. This holistic way of thinking fits perfectly to the high degree of long-term orientation in terms of looking at the bigger picture as revealed in Hofstede’s studies. 10 Insistency and thrift are also characteristic values for a high long-term orientation (see p. 4) and can be found in Chinese culture. China still has a large agrarian population and even those who live in cities still continue to have an agrarian mindset to which insistency, endurance and thrift are highly important (Tian 2007, p. 28). 4 Summary It is clear that business and any other interpersonal relationships are more likely to succeed if both counterparts are either accustomed to the same culture or at least are aware of cultural differences. But although Hofstede made a valuable contribution to cross-cultural communication and understanding, the software of the mind does not rule or explain actual behaviours. Chinese characterized as long-term oriented can also act short-term oriented.

A joint venture between Germans und Chinese, for instance, may reveal that Chinese act shortterm oriented in terms of acquiring German know-how quickly. On the other hand, the German counterpart, who is presumed to be short-term oriented, can proof long-term orientation through a strategic partnership with a Chinese company being aware of the opportunity to enter the Chinese market on the long-haul (Nippa 2004, p. 64) Do nations have cultures? The world does not consist of separated nations and cultures but is more likely to become a big melting pot of cultures and society.

Culture has always been dynamic, solely the speed of cultural evolution has increased due to an increasing worldwide mobility and a high communication speed. Chinese might be more accustomed to Western culture over the years and vice versa. In light of this, it will be interesting to see in which directions cultures will evolve – both in terms of merging and changing. 11 References Auswartiges Amt (German Department for Foreign Affairs) n. d. , Siebter Bericht der Bundesregierung uber ihre Menschenrechtspolitik in den auwartigen Beziehungen und in anderen Politikbereichen, Berlin. Central