For the Collective Good: How Collectivsm Affects Doing Business in China

China, a country that counts itself among the oldest cultures on earth, has had a reintroduction to the world economy in the last 30-40 years. In 1979 China began what would be a slow move towards more free-market policies. “Since opening up to foreign trade and investment and implementing free-market reforms in 1979, China has been among the world’s fastest-growing economies” (“China’s Economic Rise: History, Trends, Challenges, and Implications for the United States.” 2019). In the last twenty years China has leap frogged other leading world economies to become a world economic powerhouse. This rapid expansion has meant that the heads of international brands have seen a great opportunity for a new and ever expanding customer base in the emerging Chinese middle class. However, doing business in China is quite different than in the United States. First, it is difficult to overlook the regulatory and state control of much of China’s economy. However, beyond the regulatory red tape, the collectivist Chinese culture may bump against the individualistic nature of Americans, and in particular American businessmen, and should be considered when expanding into China.

Western countries, and the United States as an extreme, emphasize an entrepreneurial individualistic culture which values the the goals, needs, and desires of the individual over the collective. Chinese culture is more collectivist and puts an emphasis on the good of society often above the gain of the individual. This can cause a chasm between Americans trying to do business or run a factory in China, and their Chinese counterparts. While Americans may be used to ambitious employees working to gain influence and ascend in a formal power structure, a Chinese workplace by contrast puts the focus not on individual power, but rather each member working towards the common goal. “Chinese companies operate with one big important person at the top and a whole bunch equally less important people just below. This makes sure that everyone is working toward a common goal and that no individual has too much power, except, of course, the CEO, who establishes the vision for the company” (Hill, 2018).

Another issue to consider for American businesses expanding into China is how to market to a Chinese consumer base. The collectivist spirit of the Chinese public means that the messaging of “individual gain” of products and services may not sound the same to a Chinese consumer as it would to an American consumer. “Chinese consumers may respond better to ads that place an emphasis on families or relationships, rather than those that put more stake in personal pride and autonomy” (Lee, 2015). This message does not sound completely foreign to American ears. Thus, it would not be difficult to adjust the image of marketing for a Chinese audience. The point is that it is important to consider these changes before introducing a product or brand to the Chinese market.

Another way that marketers in particular must adjust themselves to the Chinese market is in how they try to study it. Marketing professionals and leaders cannot simply take their same methods f measuring sentiment of consumers and use it for a Chinese market. “In Western cultures people tend to move toward the extremes, while in Asian cultures people tend to stay away from extremes—they see extremes as undesirable”(Lee, 2015).

The Chinese economy in the last two decades has offered a massive new opportunity for businesses around the world to reach the rising middle class. However, should brands want to expand into China, they must do their due diligence in understanding the consumer market, and understanding how collectivism means that in China, the collective good takes precedent over the individual.

 

References

China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. (2015, June 25). Retrieved November 01, 2020, from https://fas.org/sgp/crs/row/RL33534.pdf

Hill, D. (2018, May 8). How Collectivism Manifests Itself in the Chinese Workplace. Retrieved November 01, 2020, from https://www.echinacities.com/career-advice/How-Collectivism-Manifests-Itself-in-the-Chinese-Workplace

Lee, A. (2015). What Chinese Consumers Want. Retrieved November 01, 2020, from https://insight.kellogg.northwestern.edu/article/what-chinese-consumers-want