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Culture Impact On International Business Cultural Studies Essay

Paper Type: Free Essay Subject: Cultural Studies
Wordcount: 3195 words Published: 1st Jan 2015

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Culture always makes a great impact on international trade. Although there are similarities between various cultures, but there are also obvious differences, the ever-present different cultural backgrounds affect international trade. Different cultural products in international trade will have the name, trademarks, advertisements, and verbal and written communication translation impact. Therefore, cultural factors should be taken into account in the international trade, in order to avoid misunderstandings which may result in economic losses.

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In international trade, cultural background, language and customs and other cultural differences become the invisible barriers as cross-cultural communication in international trade. To analysis the differences of language and cultural factors and their impact, the crucial element to open the international market and expand International trade successfully is implementing cross-cultural exchange effectively. Many powerful companies failed in international business, the main reason are not the shortage of capital or technology, but due to ignoring the cultural differences impact on trade and communication.

In the face of this, we should be aware of the importance of culture, find out the aspects of culture that impact on the international trade, and know how these points work.

Relevance of Culture

The impact on international trade of ubiquitous cultural factor is recessive and potential. Culture has the characteristic of group. As the common pattern of behaviour which accumulated in the history, people approve and follow their own culture they live with. Culture hybrid is the catalyst of economic development while culture conflict is the 'cancer cell' of economic cooperation.

2.1 Concept of Culture

Culture is the way in which a group of people solves problems and reconciles dilemmas. (Alfons Trompenaars, Charles Hampden-Turner, 1993, P6) Culture is formed by the ideas, concepts, behaviour, customs, habits, representatives of a group in a given period and the overall sense from this group out of all the activities.

2.2 Values of Culture

According to the importance of culture, it is necessary to know the culture well. When acquiring a language and know the accuracy meaning in the culture, we can communicate with others through it. By understanding the customs, we can anticipate how business partners and customers are likely to respond. By learning the partners or customers' culture values, we can distinguish between what is considered right or wrong, acceptable or offensive. To know the different ways of thinking in different culture, we can identify with other managers, provide knowledge to meet and negotiation with them.

2.3 Levels of Culture

As we learn from the lecture, we know there are at least three levels of culture:

National/Regional Culture-Culture within a country/regional

Corporate Culture-Culture within a specific organization

Professional Culture-Culture of particular functions within an organization

3.0 How does culture work

As we know, culture is a broad concept. So it can affect international trade in many ways both internal and external the enterprise.

3.1 National/Regional Culture

Language-- Cultural difference is an important factor that restricts the translation of the words. Because translation involves different using principle of two different languages. In the translation process, if you don't know the different culture very well, this often occurs that the meaning is quite the opposite with the real meaning which can lead to the misunderstanding.

For example, when the General Motors Corporation enters the market of Belgium, the slogan was 'Body in Belgium', but when translating the slogan into Flemish language, the meaning was 'corpse by Fisher'. The strange slogan led to embarrassment and the customers' confusion. Things followed were the dramatically slip of the sales volume until the administration became aware of this problem.

This situation shows the significance of understanding the language in the different culture background.

Custom-- Different countries have different customs, the tradition way of life, the hobby of people, the taboo, etc., all these show the culture diversity of the world.

A bitter case shows the consequences of disrespect of custom. Lawrence Stessin, the anthropologist, pointed this in his report. A business man from North California wanted to purchase a textile machines company from Birmingham in UK to open the European market. Not long after he took over the company, the manager from America want to rectify a problem about the British teatime. Lawrence said, in British, every worker had the teatime of half an hour. During the time, workers can taste some wine in the large ounce container on their own preferences. The manager proposed reducing the teatime to 10 minutes and union agreed. But a week later, the workers rioted in the factory. They broke the windows, destroyed the machines and hooted the administrators. The manager tried to redeem for the loss, he installed the vending machines with the low capacity cups instead of the large ounce containers. Based on the American custom, the rules requested more contribution and loyalty of the workers but disrespected the local custom, the company ended in bankruptcy.

Values-- As the result of the difference of countries' historical development, the formation of culture differs a lot in the long history. People also have different opinions and values on the same thing. In international trade activities, people with different culture background show the obvious differences on the concept of time, decision-making and conflict management approach.

Americans believe in free competition and individualism. Personal courage to assume responsibilities is a virtue in Americans' eyes and it's the positive performance. So in a negotiation, the representative wields the power to make his own decision within the authorized scope. On the contrary, Chinese people pay great attention on collective decision-making and emphasise the team wisdom. As the proverb says, 'Two heads are better than one'. Especially in Japan, a collective country, team interests are higher than everything at any time.

The difference between Asian and Western values leads to the different understanding to some things, which sometimes results in the barriers in the trade and verbal communication.

Mode of thinking-- American linguist Robert B Kaplan(1966) proposed the Cultural thought patterns in inter-cultural education through the research of abroad students who speak different mother tongue. He believes that thinking is spiral Oriental while Western thinking is linear in.

Once an American corporation wanted to enter the market of south China, they sent a representative to deal with the business. Also, China side wants to enlarge its trade. Since both sides were satisfied with the deal, the negotiation should be favouring. But the process of negotiation was not so simple. It was problem here that the different thinking way. To show humility and amiable, the Chinese manager always used some fuzzy words, like 'maybe', 'perhaps', 'whatever', etc.. All these made the American manager doubted whether the Chinese manager were pure-hearted to make the deal. So they didn't sign the contract in China. To show the respect to others, the Chinese manager didn't express his will to deal. After going back to America, the manager wrote a letter to China and directly express that he wanted to cooperate with China. The Chinese are happy to accept and wrote back. But in the long letter, he put the key point in the end with the long-winded matting before. At last there was no transaction because of the misunderstanding which resulted from different mode of thinking.

3.2 Corporate Culture

The relationship between staff-Tom Peters, American writer on business management practices, said that the only real resource to the enterprise is human. Therefore, the harmonious atmosphere among staff is quite important to the development of enterprise.

It is quite normal for a transnational enterprise to hire talented persons. While unseemly ways of arranging employees led to a series of problem in an enterprise. To some extent, the appearance of these people leads to internal staff personnel psychological confrontation. This is a process of coordination and adjustment. But the administration ignored this serious point and just paid more attention to these talented persons. During this period, the spirit and morale of the old staff were affected. They became less loyal and negative and resulted in the decline in performance.

Another situation will lead to the discord among employees. As a Chinese, we are used to it while which may offend people in other countries. Suppose there are three employees, A, B and C. When A and B are talking about something, C comes and interrupts their conversation or joins their talking. It is normal in China and people can accept. In western, however, people think they were not respected or even offended. They can't accept this behaviour. So if this situation happens in an enterprise with employees from different countries, the harmonious atmosphere will be broken and lead to the performance.

The relationship between higher and lower levels-the relationship between boss and employee is interaction and help each other forward.

In the Chinese and Western culture, this relationship shows some difference:

Role difference-In China, the mainstream of Chinese culture emphasizes the group and social values. People pay more attention on the affiliation between individual and group. The actions and observation must be in accordance with the expectation of group.

In contrast, western people emphasize individual rights and independence. For example, to respect people's rights and freedom, the speaker always uses the phrasing like 'Would you…?' 'Could you….?' 'Shall I…?' etc. No matter how the relationship is between two persons.

This different position of role leads to the misunderstanding between boss and employee from different culture background.

Daily conversation-Because of the difference of different culture, a polite term in one culture may be considered as the impolite, inappropriate language in another culture.

In China, people used to show the respect only to eldership or higher authorities. Among the western people, they always call each other's first name, whether you are my eldership or boss or teacher. Instead of being impolite, they think it's the way to show intimate among people.

For example, in a transnational enterprise, the manager is a Chinese and the employee is a British. The manager will assign a task to the employee without the words like 'please' 'thank you' which may depresses the employee in some extent. The opposite situation, if the manager is a western people while the employee is a Chinese. It's normal when the manager call the name of the employee. As the junior employee, Chinese people always say 'it's too late, you'd better to go home' or something like that to show concerning. But the manager may feel being interfered because time to go home is his own right.

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Nonverbal communication-during the conversation, not only the express are different, but also the space distance in different culture background. In UK, people divided the distance into four types: intimate distance, personal distance, social distance, public distance. In France, people will hug and kiss the face. While in China, there is no definite distance in social intercourse. The type of body touch is shaking hands or hugging which mostly happens among the same gender. Expect lovers, the situation of kissing and hugging will never happen among the opposite gender. And females always go out hand in hand if they are good friends which may be misunderstood in western countries.

3.3 Professional Culture

Within an organization, both professional culture and organizational culture can shape the decisions, output and something else in it. The organisational culture is a system that has an impact on the whole organization. While the professional culture lays particular emphasis on individual effort. The coexistence of these two cultures can plan the development of organization much better.

'If the organization can recruit participants who have the characteristics it requires, it does not have to develop these characteristics through training and education.'(Amitai Etzioni, 1961)

If the organizational culture is fixed, the goals, the competitor, the position are definite, the organization has to recruit employees with the specific characteristics. Here, the professional culture does make sense.

As a collective country, Japanese employ own the high loyalty to their organization. The unique loyalty can be seen as the professional culture within an organization. The 'loyalty' plays a particular and significant role in the enterprise. The intrinsic motivation of the workers' loyalty originates from the trust mechanism. Therefore, the Japanese workers' loyalty is one of the most important reasons that the Japanese corporate achieve success.

A Chinese business man established a restaurant in Japan several years ago. In the first few years, he hired Chinese people because they are his compatriots. Before long, however, the employees were replaced by Japanese gradually. Some guests from China want to know the reason. He told them that Japanese are easy to manage. More importantly, the Japanese employees are always concerning more about the restaurant. Once he became the staff, he was a member of this team. The team grew better so that the staff got better.

A manager of human resource department in a Japanese transnational enterprise once said, 'as individuals, Chinese people have the excellent working capability. But as a member of the organization, they lack compatibility and sufficient responsibility'. This enterprise recruited 20 IT employees from China. And the administration wanted to inculcate a spirit of 'loyal to organization'. But too much emphasis on this point sometimes led to their negative mentality.

There is another phenomenon that we can only see in Japan. Some Chinese consultants had the business transactions with a Japanese newspaper office. They found strange that they could rarely see the boss himself appearing in the office during the several years. All the internal things were assigned to the manager. The boss was always staying at home by remote control. Everything was in perfect order. All the employees worked hard and dedicate without lazing. They all treated the enterprise and boss as their family because they know better the company was, much more money they could earn.

Once a Japanese manager was asked a question, 'Why don't you start your own business and be your own boss with your talent?' In that company, he deals with all the affairs. He can earn much more if he start his own business. But he said that he has been in the company for more than three decades from a staff to a manager. His growth can't be without the training and cultivate of the boss and enterprise. They are a big family. In Japan, employees are loyal to the company. Even if another company will pay more and provide better treatment, they won't change their minds easily.

How to measure an employee's loyalty? When buying things for the company, the staff never receive kickbacks; never use the company telephone to make personal international call; to be the first one to come, the last one to go back; meticulous, and so on. In the eyes of Japanese workers, these things are unalterable. The best way to show the employees' loyalty is the company of their choice, or "single-mindedness." And the boss defines the loyal staff as "actively perform the spirit of sacrifice."

Since the 90s from last century, Japan's bubble economy collapsed. The problem of employees' loyalty emerged. Japanese human resource instruction conducted a survey in 2002. Among Netherlands, Mexico, United States, Germany, Italy, Japan and some other countries, the employees' loyalty of the first three countries was 73%, 72%, 68% respectively. That of Japan was only 50%. They were shocked by the results. This result indicates that the positive influence of professional culture needs a steady surrounding.


In the East-West cooperation business process, cultural backgrounds, different cultural mentality, customs, are often overlooked by many people. While the cultural factor is the key factor that determines the success or failure of business activities. Quite different from the normal trade, the international trade within different culture background request more. Dealers should know each other's culture and custom very well. It's the guarantee of success.

In international business, we should pay more attention to differences in cross-cultural communication. Correctly deal with cultural differences and prevent the barriers that may be caused by cultural patterns and cultural prejudices. Among the staff, everyone should respect each other and treat equality.

The key to success in cross-culture communication is treating the culture difference properly; try to exclude cultural superiority, cultural patterns and cultural prejudices of the interference. This is the only way to carry out the international trade activities in cross-culture communication successfully. We can establish the international culture exchange centre; carry out the multi-level forms of culture display and exchange to eliminate the concept of custom, language and art appreciation and other aspects of trade barriers.

The formulation of foreign trade policy for the enterprises should be syncretised with that the local culture. We can't always challenge a culture if it's not suited to our 'system'. It is necessary to create the country's cultural products for sale, but also the manner and extent of pricing that people can accept, and try to find suitable local custom channels to purchase objects willing to accept the publicity. These links are indispensable, and only all of them are put together organically, the barriers can be broken.

In conclusion, we stress that culture is the primary factor in business trade, and the major barrier is the difference between historical cultures. Cultural factors are unavoidable. Cultural universals are dominant, and cultural differences can be bridged by international trade. Moreover, with the development of cultural interpenetration, the influence of cultural differences will become smaller. The cross-culture communication activity will become easier than before.


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