Communicating through networks: Chinese business people's views on engaging in business with foreign firms.

To open a shop is easy; to keep it open is an art.--Chinese Proverb proverb, short statement of wisdom or advice that has passed into general use. More homely than aphorisms, proverbs generally refer to common experience and are often expressed in metaphor, alliteration, or rhyme, e.g. Introduction

China is a country in which the forces of globalization globalization Process by which the experience of everyday life, marked by the diffusion of commodities and ideas, is becoming standardized around the world. Factors that have contributed to globalization include increasingly sophisticated communications and transportation have altered its economic fabric noticeably and have projected it into an era of unprecedented growth and prosperity. With a growth rate of approximately 8% in the 2009-2010 fiscal year, China is amongst the fastest growing economies in Asia and forecasted to be the eighth fastest growing economy worldwide in 2010 (The 12 fastest growing economies, 2010). As a result of the globalization of production and of markets, China is engaging in economic integration with the rest of the world and its capacity to harness resources is positioning China to potentially become the world's largest economy during this century. The growing Chinese economy has attracted foreign ventures from around the globe to engage in business partnerships with Chinese firms. This can be seen in the increasing tendency of foreign firms to move their offshore manufacturing activities into China, in order to capture the advantages of its skilled workforce and the burgeoning Chinese market (Doh doh or do Noun Music (in tonic sol-fa) the first note of any ascending major scale Noun 1. doh - the syllable naming the first (tonic) note of any major scale in solmization do, ut, 2005).

Despite the enormous opportunities for business engagement in China, many foreign ventures have experienced setbacks because they have

expanded their scales of operation in China without fully understanding the Chinese business culture in the localities in which they are operating. Lack of culture-based knowledge prevents them from communicating effectively and efficiently with Chinese business partners. Some foreign companies have come to realize that China's market is one that they cannot afford to stay in, rather than one that they cannot afford to stay away from (Business infatuation, 1999). Thus, the challenge for foreign businesses is a good understanding of the social and cultural environment which is crucial to effective communication between foreign businesses and their Chinese business partners. Such understanding sheds light on how foreign businesses can be competitive and sustainable in the Chinese market. An understanding of Chinese business norms and practices will enable foreign ventures to effectively communicate with Chinese partners and manage business relationships with them, minimize the liability of foreignness, and maximize the sustainability of these relationships (Zhou, Barnes, & Lu, 2010). This is essential as substantial establishment costs are incurred in winning entry to markets, particularly markets that are culturally distant (Brewer, 2007).

This paper reports a study on how varied social and cultural factors influence Chinese business people's communication with foreign firms and their decisions to engage in business partnerships with Australian firms. Australia and China enjoy a long-term international trade relationship. China is now Australia's largest source of imports and its second largest export market, and Australia is China's ninth largest trade partner (Austrade Media Release, 2010). In the long-run, the fundamental drivers of urbanization, industrialization industrialization Process of converting to a socioeconomic order in which industry is dominant. The changes that took place in Britain during the Industrial Revolution of the late 18th and 19th century led the way for the early industrializing nations of western Europe and, and population growth should continue to stimulate China's demand for Australian resources as China continues to develop as the world's manufacturing "factory"(Fredriksson & Jonsson, 2009).

Chinese Perspectives on Business Relationship Development

The debate over the differences in approaches to business exchange and business relationships between Eastern and Western cultures is not new. Scholars have been examining differences in Chinese negotiation styles and personal characteristics that influence business relationships for the past two decades. For example, based on their 20-year research on business relationships between the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and China, Graham and Lam (2003) claim that Western business people tend to be task-oriented and use direct communication styles, whereas Chinese business people are relationship-oriented and prefer indirect communication styles. Differences in communication styles have been found to be the root cause for a breakdown of a long-term business relationship between Chinese and their US business partners. Although the integration of China into the modern world economy since the economic reform has brought the Chinese ways of doing business more in line with their Western counterparts, the fundamental cultural belief in Chinese relationship development (e.g., reliance on guanxi) remains and is still reflected in international business exchange even today. Moreover, the increasing globalization of markets and the development of international business partnerships driven by strong economic growth in China, Japan and Taiwan have reinvigorated re·in·vig·o·rate tr.v. re·in·vig·o·rat·ed, re·in·vig·o·rat·ing, re·in·vig·o·rates To give new life or energy to.

re the examination of culture-related factors that differentiate Eastern and Western businesses in their approaches to successful business partnerships.

In her seminal seminal /sem·i·nal/ (sem´i-n'l) pertaining to semen or to a seed. sem·i·nal adj. Of, relating to, containing, or conveying semen or seed. article on differences between East Asia East Asia

A region of Asia coextensive with the Far East.

East Asian adj. & n. and the US on interpersonal relations, Yum (1988) argues that the overlapping of public and private relations characterizes East Asian perspectives on interpersonal relationships. In the business context, this is translated into the Chinese placing emphasis on establishing personal connections with their business partners--Guanxi - the relationship capital upon which an individual can draw to secure access to resources or advantages when doing business, as well as in the course of social life (Gu, Hung, & Tse, 2008). Guanxi rests on the notion of a continuing reciprocal relationship over an indefinite time period and extends beyond the relationship between two parties to include other parties within the social network. Chinese business relations are frequently developed and nurtured via personal connections, relationships, obligations, and influence, which parties can use to obtain access to resources through continual cooperation and the exchange of favors (Wang, Piron, & Xuan, 2001). Developing networks of mutual dependence and creating a sense of obligation and indebtedness often serve as a "lubricant Lubricant A gas, liquid, or solid used to prevent contact of parts in relative motion, and thereby reduce friction and wear. In many machines, cooling by the lubricant is equally important. " for successful business and business relations.

Although the term guanxi has been used in the Western business literature, it is difficult for Westerners to capture fully its operational dynamics in the Chinese context, and, as a result, it has triggered a plethora plethora /pleth·o·ra/ (pleth´ah-rah) 1. an excess of blood. 2. by extension, a red florid complexion.pletho´ric

pleth·o·ra n. 1. of research. Kiong and Kee (1998) conducted a study on the social functions of guanxi in Chinese business firms, focusing on the inclination to incorporate personal relationships in decision

making. The findings showed that a key aspect of personalism per·son·al·ism n. 1. The quality of being characterized by purely personal modes of expression or behavior; idiosyncrasy. 2. was personal control effected largely through depending on people whom an individual personally trusts, as this reduces risks in exchange via broaching broaching: see quarrying. information asymmetries and facilitates better business control. The key conclusion is that economic decisions in China are not based solely on market considerations but rather are embedded Inserted into. See embedded system. in the context of larger social relations and institutional forces. Similarly, Law and his colleagues (2000) examined the role of building and maintaining good guanxi in the successful management of Chinese subordinates by collecting data from 189 supervisor-subordinate dyads in an organization in China. The findings revealed that supervisor-subordinate guanxi was a strong predictor of relationship quality. Although previous studies were conducted in different contexts, one key element that consistently plays an important part in establishing guanxi is trust.

Communicating trust in Chinese Businesses

Trust is present when one party has confidence in an exchange partner's reliability and integrity, such that there is a generalized expectancy held by an individual that the word of the other person can be relied on (Rotter, 1967). In a business setting, trust can be defined as one company's belief that another company will perform actions that will result in positive outcomes for the mutual business and will not take unexpected actions that could lead to negative outcomes for the business (Anderson & Narus, 1990). Through trust, the parties involved in a relationship can develop confidence that allows any short-term inequities to be balanced and long-term benefits to be yielded. Long-term business relationships are based on the assumption that the stability and longevity of the relationship will result in both parties achieving mutual benefits. Research has consistently identified trust as an important factor in the development of long-term business relationships (Das & Tend, 2004), a trend that

has been identified in China (Wang, Siu, & Barnes, 2008).

Trust is viewed as important in both Western and Chinese contexts, however, there are differences between the two perspectives. Empirical research Noun 1. empirical research - an empirical search for knowledge inquiry, research, enquiry - a search for knowledge; "their pottery deserves more research than it has received" suggests that Western and Eastern firms engaging in international business are simply looking for different indicators of business relationship success. In the West, trust is often related to the system or organization in order to reduce the reliance on personal integrity. Hence, when two business parties sign a written agreement, they place emphasis on the law to bind the contract. Western organizations rarely depend on personal trust or mutually agreed words in business transactions because these are not legally binding and they lack objectivity. Evidence from Western firms with foreign investment in China shows that they do not seek to extend personal trust to their Chinese joint venture counterparts to cover organizational risk or resource sharing (Luo, 1997), but are motivated to generate "system trust" within an organization, not trust in specific individuals. This "trust" is more impersonal im·per·son·al adj. 1. Lacking personality; not being a person: an impersonal force. 2. a. Showing no emotion or personality: an aloof, impersonal manner. and supposedly increases the legitimacy of a transaction by incorporating procedural documentation within the transaction.

In contrast, the Chinese emphasize personal trust instead of system trust in business interactions, partially due to the imperfections within China's legal system (Wong & Chan, 1999). Chinese commercial practices do rely on the legal system in part, but they are more dependent upon personal trust and personal relationships (guanxi) for operationalization. Members of collectivist col·lec·tiv·ism n. The principles or system of ownership and control of the means of production and distribution by the people collectively, usually under the supervision of a government. societies such as China place greater emphasis on dealing with specific people in relationships,

and personal networks of mutual assurance play a more prominent role. This general expectancy is normally associated with such qualities as consistency, honesty, fairness, responsibility, helpfulness, and benevolent be·nev·o·lent adj. 1. Characterized by or suggestive of doing good. 2. Of, concerned with, or organized for the benefit of charity. behavior. Research conducted in China consistently indicates that the Chinese rely more on personal trust than contractual arm's length exchange to conduct business. Good business is conducted on the basis of honesty and integrity of individuals, a "gentleman's word" or "personal guarantee", rather than a legal contract between firms (Xu, 2006).

Consequently, Chinese business relationships are frequently long-term oriented, as members in the network are tied together through an invisible and unwritten LAW, UNWRITTEN, or lex non scripta. All the laws which do not come under the definition of written law; it is composed, principally, of the law of nature, the law of nations, the common law, and customs. code of reciprocity reciprocity In international trade, the granting of mutual concessions on tariffs, quotas, or other commercial restrictions. Reciprocity implies that these concessions are neither intended nor expected to be generalized to other countries with which the contracting parties, which extends indefinitely. While enjoying the benefits of a relationship, business partners are bound by a reciprocal obligation that must be "repaid" in the future. Disregarding this obligation can seriously damage one's social reputation and lead to loss of prestige or face (Yau, 1988). Long-term trading partnerships have become a preferred business arrangement between Chinese business people and their foreign counterparts in international business, as this form of exchange retains sufficient flexibility to adjust to contingencies, but yet retains the basis for the fundamental guanxi orientation (Phan, Styles, & Patterson, 2005). Therefore, as the world turns increasingly to international trade to support economic growth, an understanding of the factors that affect long-term trading and business partnerships becomes an ever more valuable endeavour. It is important for foreign firms seeking to enter the Chinese market to have a clear understanding of the dynamics of trust and guanxi in business exchange. To this end, we conducted field research to elicit e·lic·it

tr.v. e·lic·it·ed, e·lic·it·ing, e·lic·its 1. a. To bring or draw out (something latent); educe. b. To arrive at (a truth, for example) by logic. 2. Chinese business people's views on the social, cultural and institutional factors underpinning un·der·pin·ning n. 1. Material or masonry used to support a structure, such as a wall. 2. A support or foundation. Often used in the plural. 3. Informal The human legs. Often used in the plural. their decisions to engage in international business with Australian firms.

The Present Study

The present study was conducted in two phases. In Phase 1, in-depth interviews were conducted with six Chinese business people, who held senior management positions in China. Phase 1 functioned as a pilot study to solicit attitudes and opinions of Chinese senior managers in regard to their international business experience, intentions to engage in business with Australian firms and the potential factors that might influence their business decisions. Data obtained from Phase 1 informed the design of the questionnaire for Phase 2 of the study.

In Phase 2, a survey was administered to 49 Chinese business people, predominantly in managerial positions. This phase aimed to test the extent to which the views and factors identified in Phase 1 were representative of a more diverse sample. Similar to Phase 1, the survey covered areas such as business experience, intentions to engage in business with Australian firms, social, institutional and cultural factors that may potentially influence business engagement with foreign firms.

Phase 1: Participants and procedures

The six participants were selected through the researchers' personal contacts in China. Their ages ranged from 30 to over 50 years old; one participant was female. The six firms represented were located in Beijing, Tianjin, Guangzhou and Zhejiang province, covering industries including textile manufacturing, import and export trading, media and consumer research, and agricultural and food production. All six firms had foreign business partners in the USA, UK, EU nations and East Asian countries. Their reported annual sales ranged from US$670,000 to US$13 million.

The interview protocol consisted of 30 open-ended questions, canvassing topics related to participants' business experience (e.g., What do you see as major challenges and difficulties in doing business with foreign firms?), intentions to engage in business with Australian firms (e.g., Does your firm intend to do business with Australian firms in the near future?), attitudes to doing business with Australian firms (e.g., What do you see as the advantages of your engaging in business with Australian firms in the near future?), institutional environment (e.g., In your opinion, how important is the institutional environment for success in your business?) and cultural distance (e.g., Do you feel differences in language, business practices, and culture would affect your engaging in business with Australian firms? Why?). All in-depth interviews were conducted over the phone and were audio recorded with consent from the participants. On average, each interview lasted 40 minutes. The interviews were transcribed verbatim ver·ba·tim adj. Using exactly the same words; corresponding word for word: a verbatim report of the conversation. adv. before data analysis.

Phase 1: Findings

Intentions to do business with Australian firms

In general, all six participants expressed interest in doing business with Australian firms, should such opportunities arise in the near future. In relation to preferred types of business arrangement, long-term partnerships were most preferred (5 persons, 83%), followed by joint ventures (1 person, 17%). These two types of business arrangements were considered beneficial from the perspective of developing long-term trading because risk and profits can be borne by both parties (ITW ITW In The Wild (informatics, antivirus research) ITW Information Theory Workshop (IEEE) ITW Into Thy Word (religion) ITW Into the Woods 01, ITW02, ITW03, ITW04, ITW06). In addition, the long-term partnership was conducive to the building of trust between business partners, a concept which has been consistently identified as crucial in business engagement.

Factors influencing business decisions

The six business executives uniformly identified trust as the most important supporting factor in business engagement. The Chinese culture places great value on trust in developing interpersonal relationships including business partnerships. The Chinese rely more on personal trust and mutual assurance than contractual terms to conduct businesses. "Since you have chosen me to be your business partner, you should trust me. This means that you should not specify too many details and then monitor the procedures. As friends, we have shared understanding and mutual trust. Thus, there is no need to detail everything in a written contract" (ITW02). "Trust means quality in products or materials supplied" (ITW03). "Trust facilitates communication and lubricates business relationships. If there is a problem, it can be easily resolved through communication between trusting business partners" (ITW05). "Unless your clients trust you, they won't give you their market share" (ITW06).

Business networks were also identified by all interviewees as an important factor influencing business engagement with foreign firms.

business network ties were regarded as resource capital because they could enable a business to be set up within a short period of time. "If you don't have a good network, it will be difficult for you to open a market within a relatively short period of time. Thus, you must have sufficient financial capital. In this sense, business network is capital" (ITW02). Business network ties also referred to relationships with suppliers and clients, which was considered important for sustaining a business.

"Suppose you were to set up an enterprise in China, you must have access to three constituents of your business: supplier, labor resources, and transportation. This is business network. For example, if your textile factory was located in north China and your supplier was in the southern part of China, then your business would not be viable due to the cost of transportation of raw materials and time" (ITW01). business network ties included relationships with government bodies and financial institutions. Connections with government agencies were viewed as particularly important to certain businesses, such as import and export trading, because their daily operations involve dealing with many documents that government authorities require. Financial institutions were perceived as important for business start-ups (e.g., accessing bank loans) but less so once the firm has established its business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets (ITW05, ITW06). The ability to navigate through myriads of network ties is considered crucial by the interviewees for business operations in China.

Cultural barriers

When we asked the interviewees about the influence of cultural differences in business engagement, interestingly, foreign language proficiency Language proficiency or linguistic proficiency is the ability of an individual to speak or perform in an acquired language. As theories vary among pedagogues as to what constitutes proficiency[1], there is little consistency as to how different organisations (e.g., the ability to speak English or Chinese) was not considered as important as we had expected. Instead, norms of business

practices were regarded as most likely to influence business cooperation. These differences were often reflected in different attitudes to contracts. The Chinese preferred contract terms to be more general, whereas Westerners would like to specify every detail in the contract. "When we communicate with the British or Swiss business people, we feel they sometimes make a very simple matter sound complicated. They use paragraphs to describe what could be explained in one or two sentences. Of course, this could reflect their cautious attitude to business, but sometimes we feel there is no such need" (ITW02).

Another cultural barrier was overlap between business and interpersonal relations. The Chinese placed values on interpersonal relationship This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since September 2007. development, as business partnerships tend to be perceived as long-term. For example, it is customary for the Chinese to host formal dinners for their foreign business partners. Accepting such invitations gives face to the Chinese partners who pride themselves on extending hospitality and friendship to their foreign guests. Understandably, the Chinese would feel uncomfortable when their American partners each carried a lunch bag to a business meeting. One interviewee related an experience, "We arranged a business meeting with our American partners in Ningbo and planned for dinner after the meeting. However, the Americans each carried a bag of KFC KFC Kentucky Fried Chicken (restaurant chain) KFC Kenya Flower Council KFC Kitchen Fresh Chicken (Kentucky Fried Chicken motto) KFC Kung Fu Cult (Cinema) KFC Kitchen Fixed Charge meal and were eating KFC food while attending the meeting. We felt a bit uncomfortable because the Chinese would not do such a thing" (ITW06).


Findings from Phase 1 consistently shows trust, business network

ties, government support and personal contacts as important factors in influencing business exchange. The Chinese business executives prefer long-term business partnerships and placed emphasis on trust. Integrity, credibility, trustworthiness trustworthiness Ethics A principle in which a person both deserves the trust of others and does not violate that trust, and the reputation and character of a person encapsulate en·cap·su·late v. 1. To form a capsule or sheath around. 2. To become encapsulated.

en·cap trust. Trust is effected largely through depending on people whom an individual personally knows well and such personal trust is believed to reduce risks in business exchange and facilitate business control. Economic decisions in China are not based solely on market considerations, but rather are embedded in the context of larger social relations and institutional forces, including government bodies and financial institutions. To test the extent to which the views and factors identified in Phase 1 are representative of a more diverse sample, we conducted a survey in Phase 2.

Phase 2: Participants and procedures

Forty-nine business people (63% male) from different cities in China China is a geographical area encompassing multiple territories, under two states. You may be looking for: List of cities in the People's Republic of China List of cities and towns in Hong Kong , and with cross-industry variation, participated in an interview survey. The participants were recruited by using a combined method of website search and researcher contact. Most participants were highly educated, under 45 years of age (77%) and from the more developed regions (60% from Beijing and Shanghai; 26% from Tianjin and Guangzhou); others were from developing regions (14% from Hubei, Xinjiang, and Chengdu). All but one participant spoke English and 12% of the participants spoke a second foreign language including French, German or Japanese. Senior managers made up 44%, and middle to lower level mangers comprised 40% of the sample. The remainder were divided between professional staff, such as engineers and lawyers (8%) and administrative officers (8%). Business types included import/export

trade, manufacturing, technology and media communication, food and medicine, retail, education and consultancy firms. A significant proportion of the firms were Chinese-owned private companies (40%). The next most prevalent ownership structures were state-owned enterprises (22 %) and wholly foreign-owned subsidiaries (18%). Only 10% of the firms were joint ventures, with the remaining 10% being other structures, such as listed companies and partnerships.


The questionnaire consisted of 41 closed and open questions about their business experience (e.g., How would you rate the importance of the following factors for doing business with overseas firms?); intentions to engage in business with Australian firms (e.g., Does your firm intend to do business with Australian firms in the near future?); and factors that may potentially influence their business engagement with Australian firms (e.g., How would you rate the importance of business network ties in doing business with Australian firms?). In light of evidence that Chinese respondents may overuse overuse Health care The common use of a particular intervention even when the benefits of the intervention don't justify the potential harm or cost–eg, prescribing antibiotics for a probable viral URI. Cf Misuse, Underuse. the neutral mid-point of scales (Lee, 2000), a six-point scale, rather than the traditional 7-point scale was used. The survey was conducted via either face-to-face or over the telephone interviews.

Phase 2: Findings

Intentions to engage in business with Australian firms, preferred channels and business type

On a 6-point Likert scale Likert scale A subjective scoring system that allows a person being surveyed to quantify likes and preferences on a 5-point scale, with 1 being the least important, relevant, interesting, most ho-hum, or other, and 5 being most excellent, yeehah important, etc where 1 stands for "definitely no" and 6 "definitely yes", 46% of the participants indicated that they were likely to engage in business with Australian

firms. The mean score for their ratings on the six-point scale was 4.27, suggesting a level of reasonable likelihood of future business engagement with Australian firms (see Figure 1).

When we asked participants about the channels through which they would choose to communicate business intentions, over half of the participants (55%) identified "personal contacts" as the preferred channel of business engagement, whereas 45% of them did not identify it as their preference. The next preferred channel was "professional associations" (43% yes; 57% no) and "Chinese government Ever since Republic of China founded in January 1st, 1912, China has had several regional and national governments. List Chinese Soviet Republic Provisional Government of the Republic of China Reformed Government of the Republic of China bodies" (32% yes; 68% no). A few participants (9%) nominated "trade exhibitions" as a preferred channel of initiating business relations. In relation to the preferred types of business arrangement, most participants indicated "long-term trading partnership" (69%), followed by "one time contract" (18%). Neither "joint ventures" nor "wholly-owned subsidiary" were popular business arrangements.

Firm-related factors influencing doing business with foreign ventures

Participants rated "precise terms for formal contract" and "common understanding of business norms" as two highly important factors in doing business with foreign firms. Factors, such as "English language English language, member of the West Germanic group of the Germanic subfamily of the Indo-European family of languages (see Germanic languages). Spoken by about 470 million people throughout the world, English is the official language of about 45 nations. proficiency pro·fi·cien·cy n. pl. pro·fi·cien·cies The state or quality of being proficient; competence. Noun 1. proficiency - the quality of having great facility and competence of Chinese business people", "close interpersonal relationships" and "familiarity of each other's culture", were considered fairly important by

participants (see Table 1).

In Table 1, those who had experience doing business with Australian firms (n =18) consistently showed higher mean scores, compared with those who did not have such experience, but who did have experience in international business beyond Australia (n = 27). However, when we compared the differences on the ratings statistically, results from independent sample t-tests did not reveal statistically significant difference between the two groups. We next asked participants to rate the importance of a number of factors for entering into business with Australian firms. Overall, having "trusting business relations" was rated as most important, while "international marketing experience" and "human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. " were also rated as important (see Table 2).

The results indicated higher ratings by those who had Australian experience across all factors. We then conducted t-test to compare the mean scores for participants whose firms had business experience with an Australian firm (n =18), with those from participants whose companies did not have Australian experience (n =29). However, only the difference in ratings on "human resources" (i.e. the firm's employees with relevant expertise) reached statistical significance (p <.05). Having the employees with necessary expertise was considered more important by participants whose companies had engaged in business with an Australian firm, than participants whose companies did not have such experience.

Subsequently, the 18 participants (37%) with experience doing business with Australian firms were asked to rate the level of perceived differences between Australian and Chinese business partners. Compared to local Chinese companies Chinese owned companies can be defined as enterprises within mainland China, Hong Kong, Macau and the Republic of China (Taiwan): List of companies in the People's Republic of China List of companies in Hong Kong List of companies in Macau , Australian firms were seen as moderately "willing to adapt to Chinese way of doing business" (M = 3.2) and "sensitive to the difficulties Chinese firms encounter" (M

= 3.2). The extent to which Australian firms were aware of "how Chinese conduct business in China" received a relatively low rating (M = 2.6) as did "Australian companies understand how Chinese firms do business" (M = 2.7). Nevertheless, even the lowest ratings did not deviate from the neutral point. The overall findings suggest a certain level of confidence in Sino-Australian business partnerships (see Table 3).

Institution related factors influencing business engagement

In regard to the institutional environment, the Chinese business people rated "business network ties" as most important in doing business with Australian firms, followed by ties with "government agencies" and "financial institutions" (see Table 4).

In Table 4, those who did not have experience doing business with Australian firms tended to rate all factors, except one (trade associations), slightly lower in importance compared to those who had Australian business experience. Ratings from those without Australian experience were more likely to be based on assumptions, instead of actual experience. Our results confirmed the importance of establishing business network ties and building relationships with Chinese government agencies, when doing business with Australian firms.

We next asked the participants to rate the importance of a number of supporting factors for business engagement with Australian firms. Again, "trust" emerged as the most important factor in doing business with Australian firms, followed by "government support". Consistent with findings from Phase 1, connections with government agencies were viewed as especially important for import and export trade (see Table 5).

When we asked participants to rate the factors that might discourage them from doing business with Australian firms, they rated "differences in business practices" as most likely to

discourage them from entering into business partnerships. Interestingly, again "differences in language spoken", was less likely to discourage the Chinese from business collaboration with foreign firms. This finding suggests that language difference might not be as significant a barrier as it has been assumed by Western business executives who have positioned themselves to enter the Chinese market. Chinese business people are gradually familiarizing fa·mil·iar·ize tr.v. fa·mil·iar·ized, fa·mil·iar·iz·ing, fa·mil·iar·iz·es 1. To make known, recognized, or familiar. 2. To make acquainted with. themselves with Western business practices; it is also necessary for overseas firms to understand Chinese business culture (see Table 6).


The factors consistently perceived as important in influencing Chinese business people's intentions to engage in business with foreign firms are: trust, business network ties, government support and personal contacts. The findings from our study suggest that networking plays an important role in Chinese business engagement. Foreign ventures in the Chinese market may consider targeting more developed regions, where foreign businesses already exist, as a seeding process, for market entry to China. These existing foreign businesses and their Chinese partners can function to build networks and expand business operations in new regions. Word-of-mouth communication strategies and opinion leaders can be powerful tools for advertising products and businesses in collectivist cultures such as China.

The growth of private entrepreneurship and the spread of market relations form the primary condition for autonomous, vibrant business associations to occur. As yet, there has not been sufficient research conducted in this domain to make claims regarding any conclusive Determinative; beyond dispute or question. That which is conclusive is manifest, clear, or obvious. It is a legal inference made so peremptorily that it cannot be overthrown or contradicted. patterns of the business operations environment in China. Chinese business practices are moving increasingly away from a government-dominated model to one of marketization This article or section is in need of attention

from an expert on the subject. Please help recruit one or [ improve this article] yourself. See the talk page for details. and privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned. This shifting of control over the core business decisions to individual firms and their senior managers provides a fertile ground for foreign businesses to explore opportunities in China's enormous market. However, it is more difficult to manage operations in countries that are culturally different. The differences, expressed in social, cultural, institutional, and socio-economic aspects, constitute psychic distance The term &#8216;Psychic Distance&#8217; is a composite of the Greek word &#8216;Psychikos&#8217; referring to an individual&#8217;s mind and soul (Simpson & Weiner 1989) and &#8216;Distance&#8217; which is based on perceived cultural differences between a &#8216;home&#8217; country and a, which materializes as uncertainties in establishing international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. in China (Brewer, 2007). However, as foreign firms accumulate experience and learn more about Chinese business norms, acclimatization acclimatization Any of numerous gradual, long-term responses of an individual organism to changes in its environment. The responses are more or less habitual and reversible should conditions revert to an earlier state. to these uncertainties will occur and they will progressively become more competent and comfortable engaging in business with Chinese firms. Accounting for the Chinese business people's views on factors influencing their business communication and engagement with foreign firms will help foreign firms to minimize the liability of foreignness. In addition, as business people establish a greater shared understanding of the cultural factors underpinning business decisions, exchange relationships will have an enhanced prospect for sustainability. business engagement with China promises net benefits for all countries involved, but this will only be realized with culturally sensitive management.

Acknowledgment acknowledgment, in law, formal declaration or admission by a person who executed an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment is made before a court, a notary public, or any other authorized person.

This research is supported by the Australian Research Council (LP0776272). We also acknowledge the support of our industry partners: Queensland Government--International Collaborations, The Chamber of Commerce & Industry of Queensland, and Middle Kingdom (Aust.) Pty Ltd PTY LTD Propriety Limited (company structure in Australia).


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Shuang Liu, University of Queensland The University of Queensland (UQ) is the longestestablished university in the state of Queensland, Australia, a member of Australia's Group of Eight, and the Sandstone Universities. It is also a founding member of the international Universitas 21 organisation. Peter, W. Liesch, University of Queensland

Joanne R. Smith, University of Exeter

Yi Ren, Macquarie University Location University publications and material indicate that its campus is located in the suburb of North Ryde, although the Geographical Names Board of NSW indicates it is located in the suburb of Macquarie Park. The University has its own postcode: 2109. Cindy Gallois, University of Queensland

Correspondence to:

Dr Shuang Liu, School of Journalism and Communication

The University of Queensland

Brisbane, QLD QLD or Qld Queensland 4072, Australia


Table 1. Importance of Firm-related Factors for Doing Business with Foreign Firms (Mean) Factors Experience with Experience with Australian firms other foreign (n = 18) firms (n = 27) 5.4 5.2 5.2 5.1

Precise terms in formal contract Common understanding of business norms English language proficiency of Chinese business people Close interpersonal relationships





Familiarity of each other's culture



Note: Six- point scale where 1 = unimportant and 6 = important. Table 2. Importance of Firm-related Factors for Doing Business with Australian Firms (Mean) Factors Experience with No Experience Australian firms with Australian (n = 18) firms (n = 29) 5.7 4.9 4.5 4.4 4.3 4.3

Trusting business relations 5.9 International marketing experience 5.2 Human resources 5.2 Financial resources 4.9 Legal resources 4.8 Government support 4.7

Note: Six- point scale where 1 = unimportant and 6 = important. Table 3. Chinese Business People's Perception of Australian Firms (n = 18) Australian firms... Mean

Are willing to adapt to Chinese way of doing business 3.2 Are sensitive to the difficulties Chinese firms encounter 3.2 Are easier to work with than Chinese firms 3.0 Understand how Chinese firms do business 2.7 Are aware of how Chinese conduct business in China. 2.6 Note: Six- point scale where 1 = Strongly disagree and 6 = Strongly agree Table 4. Institutional Network Ties in Doing business with Australian Firms (Mean) Institutional network ties Experience No Experience with Australian with Australian firms (n = 18) firms (n = 30)

business network ties Government agencies Financial institutions Law firms Universities Trade associations

5.1 5.0 4.6 3.9 3.8 3.6

4.6 4.2 4.1 3.7 3.4 3.8

Note: Six- point scale where 1 = unimportant and 6 = important. Table 5. Factors Influencing Doing Business with Australian Firms (Mean) Factor Experience with No experience Australian firms with Australian (n=18) firms (n=28) 5.7 4.3 4.2 4.0

Trust 5.9 Government support 5.0 Legal support 4.7 Official interpretation of rules 4.7

Note: Six- point scale where 1 = unimportant and 6 = important. Table 6. Factors that Might Discourage Doing business with Australian Firms (Mean) Factors Experience with No Experience Australian firms with Australian (n = 18) firms (n = 30) 3.6 3.0 3.0 2.5

Differences in business practices 4.1 Differences in culture 3.7 Differences in language spoken 3.5 Geographic distance 2.8

Note: Six- point scale where 1 = unlikely and 6 = likely.

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