China and Hong Kong Cultural Differences. Guanxi Concept

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(Shuen Ka Wai, Amy STU 37661)

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CONTENT

CHAPTER 1: INTRODUCTION 5
1.1 Background to the Study 5
1.2 Statement of the Problem 6
1.3 Purpose and Scope of the Study 7
1.4 Research Objectives 8
1.5 The Research Structure 10

CHAPTER 2: LITERATURE REVIEW 12
2. 1 Introduction 12
2.2 Culture 12
2.3 Cultural Differences 13
2.4 Concept of Guanxi 15
2.5 Business Culture of Mainland China 17
2.6 Business Culture of Hong Kong 20
2.7 Comparison between Mainland China and Hong Kong in the Business World 22
2.8 Individualism and Collectivism 25
2.9 Conclusion

CHAPTER 3: METHODOLOGY 28
3.1 Introduction 28
3.2 Research Philosophies 28
3.3 Objectives 29
3.4 Research Design 30
3.5 Research Paradigms 31
3.6 Research Techniques and Bias 33
3.7 Sampling 34
3.8 Validity and Reliability 38
3.9 Research Ethics 40
3.10 Conclusion 41

CHAPTER 4: DATA ANALYSIS 42
4.1 Introduction 42
4.2 Data Analysis 43
4.3 Conclusion 62

CHAPTER 5: CONCLUSION AND RECOMMENDATIONS 64
The objectives of this research are achieved effectively with 64
5.1 Conclusion 64
5.2 How Guanxi improves business success 67
5.3 Effects of business culture in Hong Kong 71
5.4 Comparison between Mainland China and Hong Kong in the Business World 74
5.5 Recommendations 74

REFERENCES 79

CHAPTER 1: INTRODUCTION

Background to the Study

Cultural differences within the society and businesses are inevitable. Given the relevance and significance of the issue, there is need to have holistic analysis carried out in the society and business. Comprehending the impacts of the cultural differences helps to fulfil the goals and objectives in most of the organizations that work in cross cultures, (Reeves, 2010).Normally, most businesses operate closely to the culture of the society where they are in. Mainland China and Hong Kong share numerous similarities and have a couple of differences that must be addressed adequately to have smooth operations between the countries.

Even though it is widely acknowledged that Hong Kong and Mainland China have similar origins in terms of culture and common ancestry, their negotiation styles nonetheless have been largely impacted by the differences that they have in terms of the socio-political systems. Within the past few years, Mainland China has had a wide separation in political and economic dimension, a trend that has led to great influence on the development of business climate in each of the regions, (Belk, 2005,). Further, the increased and competing evaluations of the two areas are also indicative of influences in terms of culture and ethnicity while developing the business climates.

Often, the different countries and different regions that are in a given country harbour differences in cultures and this raises the need to understand the effect of the cultures on international communication. International communication often is critical in any business and the manner through which it is executed determines the overall productivity and the success of businesses. As captured by Killing (2012) shared organizational culture often ensure that there is management of international relationship. The managers are thus put in a position to understand the national cultural value and the traits of the concerned individuals.

Over time, most of the studies that have been done have tried to link up China and Hong Kong in business relationships without a clarity on the composition. This study explores and brings up a completely new dimension of the perceptions of customers and employees in regards to understanding Guanxi and the impact of Guanxi in the modern society. This new dimension is designed in a manner that the society is left with no choice but to appreciate the impact of Guanxi in China and Hong Kong and the growing business relationships that are in the region. The new construct adopted by the study then helps to address the long-time problem and issue of having or setting up favourable environments on both ends, (Whybark, 2007).

Statement of the Problem

Even though there is increased significance and challenges that are linked with managing businesses relationships globally, limited research has been done and little attention has been devoted to investigating business relationship between China and Hong Kong. Cultural differences have for a long time been identified as the main factor that challenges businesses across the national borders as compared to those done within the countrys borders and the reasons for the failure of cross-border relationship, (Treven, Mulej & Lynn 2008). Even as most studies note that culture is integral in the determination of relationship outcomes, little attention has been offered as far as relationship marketing is concerned.

Culture is known to be defined and unique for every individual as they shape the manner in which different persons perceive, think, and even behave. Research carried out lately indicates that the capability of firm to do away with the barriers in terms of culture and go ahead to forge strong partnerships leads to success of such an establishment in the international context (Ali & Alshawi, 2004). Therefore, the relationship that occurs between exporters and foreign importers can determine the success or failure of a firm within the overseas market. Further, it is noted that for proper understanding of the case to be done, the case to be presented in context.

In this paper, there is the adoption of interesting research context in need for further exploration. The relationship is in regards to the Mainland China and Hong Kong business links. Given the massive economic growth that has lately been witnessed in Hong Kong, there are prospects and indicators that Hong Kong has the capability of becoming a reckoning force within the business world. Nonetheless there are lot of studies and reports that have been shared that instigate that there are high chances that understanding lacks within the business culture of the two countries, a trait that if not addressed might lead to failure in business in future,(Ren, 2010 ).

Purpose and Scope of the StudyThe study examined the impact of cultural differences on the business relationship. In doing so, the study is limited within the confines of finding the effect of cultural differences such as language, the concept of punctuality, the concept of relationship, value of trust and social practices on businesses.

The study mainly targeted the employees and customers that are within the mainland China and Hong Kong. The individuals who formed part of the study had witnessed cross-cultural working experiences with both China and Hong Kong. The audiences selected were from a wide range of companies, from small-medium size companies to global listed enterprises. These audiences all possessed experiences in working with both Hong Kong and Mainland Chinese Companies and their views on the GUANXI element would be valuable for the research.

The study covered the consumers and employees who had considerable amount of experience working on the culture. Considerable amount of experience covered a period of not less than 1 year.

Research Objectives

Evaluation of the current literature on cross-cultural communication and the concept of GUANXI.

To analyse and evaluate the concept of Guanxi between Mainland Chinese and Hong Kong customers and employees

Make recommendations to enhance cross-cultural business relationship between Mainland China and Hong Kong

Research Questions

With much attention given to the research aims and objectives outlined in the previous sections, this study shall be guided by the question, How do the cultural differences that exist in China and Hong Kong affect the business relationship with regards to the concept of Guanxi? To find an answer to this question, answers from several questions exploring different aspects of cultural differences and the effects on business relationships shall be joined together to make a whole complete argument from which a credible conclusion can be validly drawn. These questions are:

What are the cultural differences that exist between China and Hong Kong?

What are the perceptions of employees and customers regarding the concept of Guanxi in both China and Hong Kong?

How significant is Guanxi?

How does incorporation of Guanxi concept affect different organizations?

Does the concept of Guanxi have an effect on business operations?

The outcome of this study will be instrumental to the managers, as they would use the various cultural explanations and differences given to act as a guide or help them work within a cross-cultural set up. Further, the managers will also find the study instrumental as the methods of minimizing the differences that might affect the business relationships are addressed.

Further, from the study, there is emergence of aspect of collaboration and the best way they can be developed and built to ensure strong ties among individuals. Through the created collaboration, there is harmony in the society, which fosters an environment through which businesses can proper. Often, the business environment is considered integral part where there are different dynamics. The dynamics are known to impact on the confidence of the investors and if not properly managed may reduce the effect on the environment.

The Research Structure

The research is structured with the introduction of the objectives, then followed by the

Literature review to evaluate current literature on cross-cultural business communications and focus on the concept of Guanxi, to explore how Guanxi perform when doing business with Mainland Chinese companies.

The research methodology is described in details and quantitative data are collected from the web-based survey which was sent to target population in both Hong Kong and Mainland China.

Findings from the survey are presented with descriptive statistics with various crosstab results to explore the culture of both Hong Kong and Mainland China companies and their concept on Guangxi.The conclusion and recommendations chapter pulls together all aspects of research to proof that businesses are related closely to the cultural differences in the modern society, and how the impact of Guanxi enables continuous business relationships. Finally, recommendations are made to promote Guanxi i...