Cross-Cultural Differences

Diplomarbeit von Veronica Wellein

Introduction:

We are living in an internationalized world; global trade keeps increasing and more companies from many countries around the world are going national at an astounding rate. This is a reflection of strong economic growth around the world and the globalization of the economy and corporations. Offices are spread from one continent to another and travel is essential to business. This is the reason why „business travel is increasing,” states Hubert Joly, president and chief executive officer of CWT.

In today’s business world, you might well find yourself as an international manager in a foreign subsidiary of an American firm, facing on a daily basis all aspects of international management. Or you could end up at the home office in Germany coordinating operations with foreign affiliates. Or you could travel to countries like Japan or China, negotiating export sales or dealing with suppliers, customers, or franchise parties. Many different kinds of positions are available in the global arena, and training in international and cross-cultural management and negotiation styles is becoming a critical ingredient in moving up to high-level positions in global organizations.

„In 2006, a record 30.1 million U.S. travelers visited overseas markets, an increase of five percent from 2005.” One of the top five overseas markets visited by U.S. travelers in 2006 was Germany. China (if combining travel the PRC and Hong Kong) would have tied as second. Contributing to the new record for outbound travel, seven of the top 20 U.S. outbound destination markets posted records in 2006, including Japan and China.

Hundreds of thousands of jobs in the Germany owe their existence and sustainment to business travel. In Germany, the effects of a growing European Union and worldwide business travel create a stable demand for modern transport infrastructures and services. The USA is one of the two most important business travel destinations for the German economy, closely followed by China. Two markets will dominate travel interests in the future: the USA and China. No other countries will be as important for business trips as these two different giants.

China's economy still enjoys a huge growing potential although its gross domestic product (GDP) has maintained a double-digit growth for four straight years and hit a new high of 10.7 in the first three quarters of 2006.

The growth rate of China's labor productivity stood at 9.5 percent last year, beating all other countries across the world. Since undergoing reform and being made more open, however, the speed of economic development has increased by an average of about 10% each year for the past twenty years.

The challenge is that even with all the good will in the world, miscommunication is likely to happen, especially when there are significant cultural differences between communicators, such as from the United States, Germany, China and Japan. Whatever the size or nature of a firm, it is clear that an increasing number of managers around the world will be involved in international business. That involvement will include both foreign and/or domestic assignments requiring interactions with people and firms from other countries.

The objective of this thesis is to understand and improve the interaction of businessmen from the four largest economies of the world - the United States, Japan, Germany and China.

Furthermore it is tried to explain, describe, and compare cultural differences, identify culturally communication and negotiation practices, and to use effective cross-cultural negotiation techniques and strategies within countries and cultures in international business settings. Knowing how even small differences in culture might cause huge misunderstandings in everyday business life, we can foresee them, and hopefully make better communication and negotiation with our business relations in other cultures.

Table of Contents:

Text Sample:

Chapter 3.3, Working Times: The working times and ethics of the four countries Japan, Germany, the United States and China differ greatly.

In big Japanese cities, long working days (12 hours is typical) and long careers (a lifetime in the same company) are common. They use time to build harmonious agreements and harmonious relationships with each other.

This means, effectively, putting people first. The Western visitor may think he is wasting yet more time on wining and dining after the official work day is over, while he is stuck between apparently inconclusive meetings and the final business decision.1 However, that time is everything but wasted. The kind of stiff patterns and conventions of Japanese office life fall away and the people can easier get in touch with each other. Japanese businessmen consider this also as a way to relieve business stress.

The German view of time is extremely integrated with careful scheduling. Delegation, although practiced with thoroughness, usually has strings attached. This organization can make innovative decisions painful, since the subordinate’s decision time with his boss is kept separate from his communication time with the business partner. The junior employee has full authority over an agreed and accorded range of decisions, but that range can never include the unexpected. If the employee takes the conservative way and blocks the upward progress of a surprise proposal of a foreign business partner, the answer they get to hear is always „I am not empowered to bring this matter to my boss’s attention,” the business negotiations are stuck. Even if German employees try the back door, and the boss likes the idea, he will be reluctant to overrule his subordinate. The economic emergency of the pas-war years when rules were frequently broken in order to get an urgent job done, was a long time ago. The German attitude to time is changing. Germans leave the office on time and keep themselves freehanded holidays.

According to a senior manager of a German car firm: „Japanese competition is really unfair. We work efficiently; they work efficiently and long.” Flexibility, enthusiasm, and teamwork are very important in the U.S. workplace. In general, Americans consider working and being productive very important and being busy as well as working extensively may also serve as their way of obtaining self-esteem. Speed in decision-making is in opposite proportion to bureaucracy. „North American industry is often hung on top-down decision-making systems; „why change a winning formula?” is a rhetorical question most frequently asked by the man at the top who invented the formula. For all their protestations about time being money, American middle managers frequently disappoint by their hesitations and procrastination.” The decision making process of Chinese businessmen is slow. Foreigners should not expect to conclude their business quickly. Many Chinese will want to refer to the stars or wait for a lucky day before they make a decision. Basically nothing is possible without „guanxi” in China. „Guanxi” means „relations” and it stands for connections defined by reciprocity and mutual obligations.” The basis of a contact varies. New relations must be raised intensively and carefully--for example, with invitations for dinners and with small favors or presents, as these will keep the relationship going.

All business is personal: it is essential for success or failure to have „guanxi” and belong to a social network. The Chinese separate people into two groups: we and the others, no matter how it is in business life or in private life. Everything is based on reciprocal trust and accomplishment. The time it takes to establish such „guanxi” relationships is often underrated. Westerners should allow for adequate time in their business travels to establish and nurture their relations. Time spent by Western businessmen in building relationships is honored by the Chinese side. „The more time one invests in establishing good relations with business partners, the more important the partners feel and consequently the more face you give them.” It is very difficult to compare the actual hours worked, because of a lack of uniform statistics. A major problem is that in some cases national figures distinguish between full- and part-time workers and in others they do not. Possibly, the best way of comparing working time among businessmen from Germany, Japan and the USA, is to look at annual working hours. The Japan Institute of Labor (JIL), based on several national figures, has produced estimates for annual total hours actually worked for Japan, the USA and Germany.

The annual number of hours actually worked was 1,970 in Japan in 2000, which was virtually on par with the USA at 1,986 hours. Germany was far behind with 1,525 hours (1999). Therefore the average American worked about 450 hours more than the average German.

Figures for average collectively agreed annual working hours are available from the European Industrial Relations Observatory (EIRO) for eight European Union (EU) countries where working time is measured on this basis, while JIL has produced figures for „scheduled” annual working hours in Japan and the USA. Allowing for differences in calculation methods, the Table 6 shows that the differences among the EU countries, Japan and the USA are generally far less when considering normal/scheduled hours than for actual hours. This indicates that the differences between Germany, Japan and the USA lie more in the overtime and additional hours worked.

Chapter 3.4, Paid Annual Leave: The amount of paid annual leave to which workers are entitled is another important aspect of working time (a factor which obviously influences the annual duration of working time). In the EU, figures are available from EIRO for the average number of days of collective agreed annual leave. These show an average annual leave entitlement in 2001 of 25.7 days. Germans have a 30-day average.

For Japan, figures are available from JIL on the average paid holiday entitlement, which were 18.0 days in 2000. Nevertheless, entitled holidays in Japan are actually not taken. In 2000, only 49.5% of annual leave entitlement (8.9 days) was taken on average.

The latest figures available for the USA from the U.S. Department of Labor are the Bureau of Labor Statistics (BLS). They refer to 2001 and cover „average vacation days” in the medium and large private sector. No total figure is available for all workers, but separate ones for varying lengths of service. Therefore, annual vacation days stood at 9.6 days at one year's service, 13.8 days at five years' service, 16.9 days at 10 years' service and 20.3 days at 20 years' service.

Special attention has been given to the issue of extensive working hours in China, but the extent and nature of the situation has never been fully understood. There has not been much information provided on exactly what feelings the Chinese workers have towards their working time. Also, depending on the length of the service, the annual paid leave varies between 5 and 15 days. The standard of annual working hours has been estimated to be set as 2,000 hours. The weekly working hours of employees with local urban household registration were found to be 44.2 hours, making it the shortest working time. Employees with rural household registration had the longest weekly working time which was 48.4 hours.

The variable time is much more complex than it is possible to convey. It influences the course of communications, and can be responsible for conflict or the escalation of conflict when it leads to miscommunication or misinterpretation. A culturally-fluent approach to conflict means working over time to understand these and other ways communication varies across cultures, and applying these understandings in order to enhance business relationships among those from different countries.