Like Google, Starbucks has had its share of difficulties with cross-cultural
management. A number of incidents have been poorly received by the Chinese,
forcing the brand to take action. Take the 2007 incident involving the opening of
a Starbucks store in Beijing's Forbidden City. The Chinese were quick to voice
their dissatisfaction with the brand's actions, and demanded the closure of the
outlet, which was located in a place emblematic of Chinese culture .
Introduction
Today, we'll explore two cases of Western companies navigating the Chinese market: Google
and Starbucks. While Google faced significant challenges in its approach, Starbucks has
found success. Analyzing both cases reveals key intercultural competencies essential for
Western companies aiming to succeed in China.
Part 1: Google in China Google entered China with high ambitions, recognizing the potential
of the world’s largest internet market. However, their approach met challenges, primarily due
to cultural misalignment and conflicting values.
1. Cultural Misalignment: - Google valued transparency and rapid innovation, but these
clashed with China’s preference for controlled information and strategic patience. - The lack
of adaptation to high power distance and hierarchical respect in China’s corporate
environment created friction, as Google’s egalitarian approach conflicted with Chinese
formalities.
2. Communication and Decision-Making: - Google’s direct communication style often came
off as blunt in a culture that values indirect and respectful exchanges. Additionally, their
quick, data-driven decisions didn't align well with the consensus-driven, careful approach of
Chinese business culture. - These differences were most visible during the launch of Project
Dragonfly, a censored search engine. Despite Chinese demand for adaptation, internal and
public backlash ultimately halted the project.
3. Lessons Learnedb: - Google’s experience highlights the importance of relationship-
building, patience, and a more nuanced, interdisciplinary approach when entering a controlled
market like China.
Part 2: As a counter-example, we've chosen to look at the success of Starbucks as
the brand approached the Chinese market with a culturally sensitive and
adaptable strategy, successfully balancing its global identity with local values.
Even though the brand had also difficulties related to culture, like facing
controversy over opening a store in the forbidden city in Beijing in 2007. The
brand managed to overcome that crisis by closing the store and issuing an
apology. This move showed responsiveness to local concerns and respect to the
Chinese culture. Starbucks also adapted its strategy by opening new stores in
more appropriate areas and incorporating Chinese cultural elements into store
design.
As a counter-example, we have chosen to analyze the Starbucks company
Starbucks' success in China highlights its culturally sensitive and adaptable
strategy, which balanced its global identity with local values. Despite facing
challenges, like the 2007 controversy over opening a store in the Forbidden City,
the brand managed to resolve the issue by closing the store and apologizing,
demonstrating respect for local concerns. Starbucks also adjusted its strategy by
opening stores in more suitable locations and incorporating Chinese cultural
elements into its store designs, which helped strengthen its image with the
Chinese population.
1. Communication and Decision-Making:
Starbucks has successfully adapted to China's high power distance culture by
appointing local leaders, such as Belinda Wong, who understand the
importance of hierarchy in Chinese business. The company adopted a more
centralized decision-making structure, with senior executives making key
strategic choices. Starbucks also aligns with local expectations by ensuring
formal communication channels and empowering managers to provide clear,
directive leadership.
So as Success Factors of the brand in China we can say that by embracing
cultural flexibility and emphasizing relationship-building, Starbucks has
become one of the most successful Western brands in China, demonstrating
how critical adaptation and intercultural understanding are.
These two cases illustrate the importance of three intercultural management
competencies in the Chinese market: cultural sensitivity, relationship-focused
communication, and adaptability. Google’s struggles underscore the
challenges of disregarding these competencies, while Starbucks’ success
highlights their impact on long-term partnerships and market presence.
