Topic 6 - Culture and business in Asia

Question 1

Chupa Chups:

Answer 1

• 1994: creations of a joint venture – (67% with Tian Shan)
• 1998: purchase of a partner’s shares and enlarges facilities
• 2003: liquidation of the plant
• 2004: liquidation of the subsidiary, creation of a joint venture for distribution with local partner Tingyi. It keeps the right of acquiring of 50% Tingyi’s stake before 2008.
• 2006: Chupa Chups is sold to Prefetti Van Melle

Question 2

Mao – the communist revolution:

Answer 2

• Central planning
• Economic growth and structural change
• Drawbacks of the system

Question 3

After Mao – the journey towards capitalism:

Answer 3

• Modernisation and open - door policy
• Consequences of reforms
• Entry into WTO
• 2nd largest economy in the world since 2008.

Question 4

Dark – side to Chinese economy:

Answer 4

• Bureaucratic single party system
• State control over key industries
• Social inequality
• Large – scale corruption

Question 5

Entry modes to the Chinese market:

Answer 5

• Exports (direct vs indirect)
• Licenses (problems with intellectual property protection)
• Direct investment (joint venture or wholly owned subsidiary)

Question 6

Connections or relationships…

Answer 6

among individuals based on a system of an exchange of favours.

Question 7

Main differences between Europe and China:

Answer 7

• EU = deal focused / China = relationship focused
• EU = direct language / China = indirect language
• EU = equal treatment / China = very hierarchical
• EU = Monochronic time / China = more reserved
• EU = short – term orientation / China = long – term orientation

Question 8

Deal Focus (EU) vs Relationship Focus (China):

Answer 8

• Open to do business with foreigners / Less open to do business with foreigners.
• Direct contact / Indirect contact
• Get to the point quickly / Negotiations take time
• Less face to face contact / Frequent face to face contact
• Contracts mean the end of negotiations / Contracts can be renegotiated

Question 9

Equality (EU) vs Hierarchy (China):

Answer 9

• Low difference in status / Status assigned

* Status achieved / Showing respect is VITAL

Question 10

Low context (EU) vs High context (China):

Answer 10

• Language direct / Language is often indirect

Question 11

Inappropriate gestures in China:

Answer 11

• Beckoning people with hand or fingers
• Touching another person’s head
• Giving gifts with one hand

Question 12

Japan has the…

Answer 12

• 3rd largest economy in the world

Question 13

Business culture:

Answer 13

• Homogenisation – Japan share same cultures & traditions, as well as education system; common code of conduct
• Hierarchy – language varies when addressing people of different ranks, hierarchical status apply even for relationships among firms and negotiations are usually between people of the same rank and age.
• Men prevail over women in the workplace
• Collectivism, team spirit
• Harmony, need to avoid conflicts and confrontations
• Modesty
• Use of time is absolutely RIGID
• Info must be detailed and error free
• Personal relationships are very important
• Language is AMBIGUOUS
• FORMAL behaviour

Question 14

South Korea:

Answer 14

PD – 60, AI – 85, IDV – 18, MAS – 39
• Characteristics of Chaebols, large conglomerate groups controlled by a small number of shareholders
• Diversified into a wide range of industries
• Expansionist policy and development of foreign markets
• Greater appetite for risk, growth and entry into foreign markets

Question 15

Main differences between Chaebol and Keiretsu:

Answer 15

• Management of Chaebols has been more professionally managed since 1997 crisis
• Chaebol – activities are more diversified
• Chaebol – react faster when making changes and adapt short – term strategies
• The big five chaebols: Samsung, Hyundai, LG, SK and Hanhwa

Question 16

Common features with Japan and China (Confucianism):

Answer 16

Authoritarianism:
• Father superior over the mother
• Managers have the authority over subordinates
• Social class divisions are strong
Family:
• Importance of social and class relations
Education:
• Strict educational system based on values
STONG COLLECTIVISM

Question 17

Differences between Korea and Japan:

Answer 17

• Quicker strategies in Chaebol – quicker decision – making
• ST orientation – both in companies and government economic policy
• Religion: Christian influence
• Increased expression of feelings

Question 18

Japanese Negotiations:

Answer 18

• Tend to be more direct and less ambiguous
• Save the most important part of the negotiations until the end
• Need to be concise and practical when negotiating
• Hierarchy influences negotiations

Question 19

Indian Decision Making Styles

Answer 19

• Decisions are made SLOWLY

* Decisions are made at the TOP of the hierarchy

Question 20

Conversation topics:

Answer 20

• To establish a business relationship, you must talk about family and friends
• Like to talk about religion and politics – must know the topic well

Question 21

Distinctive cultural attributes:

Answer 21

Values of the state:
• Tendency to engage in unethical practices
• Corruption considered an alternative and accepted institution
Values of work:
• Emphasis on Hindu ideology of Karma
Values of Hedonism:
• Power, status and money are valued
• Rich people considered superior
Values of life satisfaction:
• Focus on maintaining relationships within group members and helping others considered satisfying.
Values of goal formulation:
• Autonomy and success considered important.
• Importance given to upholding the prestige and social status of the family in formulating goals

Question 22

Kazakhstan:

Answer 22

• 17 million – more than 120 nationalities – only 63% Kazakh origin
• Important influence of Russian colonialism and soviet rules
• Holds many important resources – oil and minerals count for 80% of exports
• High UA and PD