Company A produces engine components that undergo an extra heat-hardening process that provides extended life for engines from heavy-duty trucks, and it provides specialized machine engine components to all major U.S. truck and automobile manufacturers.
The company would like to expand its market to China. This paper looks into major cross-cultural issues that company A will face as a new entrant in Chinese market.
Societal culture defines issues and expected response to them. It is worth saying that the culture is not written down somewhere but it exists and controls the behavior of the community that it exists in. Understanding culture of the target population will assist a company in making strategic decisions regarding marketing, sales, and the products it will manufacture. There are different issues that China does not share with United States; they include language, perception, ethnic cultural background, racism, and religion. Although the country has become an international market known for its cheap products, it uses Chinese as its national language.
Secondly, since the company is highly developed in terms of technology, the population of the country perceives imported goods as inferior than their own. This will affect the company’s penetration in the market. In the country, there is freedom to worship and thus this will not be a great problem to the company. China has some elements of racisms where the local people discriminate against foreigners. This is likely to act to the disadvantage of the company since marketing in such an environment is a hard task (Zheng, 2009). United States natives are not dominant but the society can be seen to have been deepening in slavery. The black Americans are highly regarded as racists among other people though they are also discriminated by their counterpart white Americans. In China, the natives are still the dominant population; they are the ones who make the largest population.
However, they have a tendency of looking down at Americans probably because of the economic battle that the two countries have. They are likely not to be very okay with American goods, however when they realize that the goods from an American company have higher utility, they are likely to embrace them.
Communication is the only process that a marketer can sell his products to the target market. When doing segmentation it is important to ensure that the marketers and target customers understand each other.
There are different forms of business communication, which are formal and informal. When all parties to a communication understand the message conveyed, then an efficient communication is said to have occurred. Business communication takes two angles: Internal communication and external communication Internal communication is how the inner customer (staff) communicates with each other and the management. They should be facilitated to air their views out. This is the way that issues can be solved with innovation and creativity enhanced (Gsene, 2002). External communication is how a business communicates with the outside world. This is in the efforts of marketing or complying with government policies.
In external communication, there are also social corporate responsibilities that a company embarks on (Reuvid & Li 2005).
China is a Middle East country that has undergone rapid economic growth rate in the recent past. The economic growth is a major determinant in making decision on whether to make an investment in the country. China is the world largest economy after United States of America; the country economic growth rate is expected on average to be 8% in the year 2010.
In the second Quarter of year 2010, the country had a growth rate of 11.6%. The country has the highest population in the world and thus offers a good market to expand company A’s business (Stephanie & Cherian, 2010).
According to economic survey conducted in 2009 and released in August 2010, China has had a continuous economic growth rate to a point that it surpassed Japan to be the second largest economy in the world. Another example that makes China a dominant market is that there are other companies that are tapping Chinese market making it have an increased economic growth such companies include Nokia Phone Company. The world is recovering from financial crisis which started in the year 2007. China is one of the country that was least affected by the crisis and thus its suitability for a business venture is increased.
The banking sector though was affected marginally remained strong to the economic waves. Chinese after the crisis are assisting many countries to recover; the focus is mostly on developing countries that are depending on grants and donations. For example, Chinese products are seen as cheap and substandard, this notion is believed to have made them cheaper in the international market as the country try to outdo the other manufacturers. Under marketing mix, is of great importance so when the company is forced to produce lower quality to be competitive, it affects its businesss. Evaluate the impact of cross-cultural ethical differences in marketing strategies between the United States and the Eastern Asian country you identified in part A as Company A enters the China.
Language will offer a problem to communication both to staffs who will be mostly Chinese and to the customers. This will though be in short term since the company will devise measures that will ensure that its management understands the language for effective communication. Under the 4Ps of marketing, there is need to have promotional and prices, to be able to be sure of the location and the communication strategy to use for the particular market; the language to be used will give problems. For example, when bargaining by either the customer or the company, there will be issues of understanding each other and one party may feel not satisfied. The company will have top management as Americans. China and U.
S are competing with each other and thus they are having negative perception towards each other. This is likely to affect sales from the company. The way out is for the company to prove its better through offering quality products. Religion and ethnic background will not have much effect on the company however; there will be need to understand the country’s culture since it will assist the company to know the persuasion methods to use. Chinese are also known to copy one’s technology and manipulate it slightly to produce similar products, if this happens, then the demand for the company’s items will reduce. To ensure that the company ventures in the Chinese market effectively, then there is need to nurture the marketing team.
They should be taught on the culture and language that is used in the country. The use of mentors is another process that the company can adopt to ensure that they have the correct attitude and understand the market effectively. How well the marketer adjusts in the market will determine the success of the company.
China is the world second largest economy with the greatest population; it is also referred to “world’s factory” because of the many manufacturing processes in the country. Company A would like to venture in Chinese market but it will be affected by Cross-cultural ethnical differences, which include language of communication, perception, technology copying, and religion. To cope with the danger posed by these differences, there is need to study the market and conduct an external audit.
Gsene, M. (2002). China in the World Market. Cambridge: Cambridge university press.
Reuvid, J. and Li, Y. (2005).
Doing Business with China. London: GMB Publishing Ltd. Stephanie, P.
and Cherian, T. (2010). China Overtakes Japan as World’s Second-Biggest Economy.
Retrieved from http://www.bloomberg.com/news/2010-08-16/china-economy-passes-japan-s-in-second-quarter-capping-three-decade-rise.html Zheng, Y. (2009). China Opening Society. London: Routledge.