International and Cross-Cultural Current Issues in Business
Culture can be considered as a basic construct of the ideals and tendencies of people depending on where they come from and the circumstances to which they have been exposed. In business, culture determines not only the communication strategy and content, but also corporate culture for companies trying to establish operations outside their domestic country. Over the past few years, globalization has become a widely accepted phenomenon in the business world, thus, creating the need for cross cultural, multicultural and intercultural dimensions within businesses. This paper analyses the concept of culture with special focus on cross cultural issues that could face Revlon a US based corporation operating in China.
Elements of Culture
Seven major elements of culture include social organizations, customs and traditions, religion, language, arts and literature, forms of government and economic systems. These elements define a culture; where social organizations can be broken down to imply the patterns of family adopted by a given society as well as the existence and definitions of social classes within that particular society (Hwang & Kandampully 2012). The American definition of a family and a social class is thus largely different from, say, the Iraqi definition of the same thus drawing a line between the two cultures. Customs and traditions imply how the people within the given culture act, dress, eat or even think in terms of what they consider right or wrong. Religion is, on the other hand, mainly about how they find the answers to the complexities of life, where people believe in divine existence and others seek scientific explanations among other alternatives (Johnson & Tellis 2008). On language, it should be appreciated that while not every culture has a written dialect, they all have a spoken one and this is the most important given that the point of interest here is how they communicate with one another. Arts and literature as an element of culture is all about entertainment where the main question is how people engage each other in stories, painting, pottery, singing among other things with the purpose of entertaining and often educating one another. Government is then about exercising control and enforcing the society’s laws while economic systems seek to explain how the given society is organized in terms of the production as well as the distribution of goods and services within the society.
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Defining Intercultural, Cross-Cultural and Multi-Cultural
Intercultural is a situation in which different cultures mingle and understand each other on an equal basis, with each side learning and accepting the other culture without bias or judgment. This situation calls for the formation of deep connections that go beyond tolerance and cover more on embracing the new facets in order to address any imbalances and thus, creating a united cultural front. Cross cultural, on the other hand, implies a situation where two different cultures interact without the intention of undergoing a transformation (Kotabe & Helsen 2010). Under such circumstances, it is quite common to experience power differentials that remain untouched as both sides are only interested in learning the other culture for a specific purpose. This kind of interaction may bring about some level of change in the ‘inferior’ culture but the ‘superior’ culture is likely to remain untarnished by the new experience and knowledge except in cases where it is necessary. In a multicultural situation, numerous cultures co-exist separately and yet together (Lamb, Hair & McDaniel 2014). Each culture here acknowledges the existence of the other but do not engage in learning about them. The interaction is mainly for the purpose of tolerance and representation, and the power differentials remain unaddressed here.
The Cross-Cultural Business Issue
Revlon left the Chinese market after about three decades of operations there citing a steep decline in their sales, with the Chinese market now only accounting for 2% of the global sales in the company. This has brought questions of why a company like Revlon with its successful ventures in the US and other countries across the globe has been unable to replicate its success strategies in China (Bian & Forsythe 2012). The answer here lies in the cultural differences between China and every other market in the world. The way Revlon was marketing itself in the country is rather ineffective and can thus be blamed for the company’s failure. It should also be noted that Revlon is not the only American business that has left China in the recent times. In fact, L’Oreal and Avon are also struggling in this market whole other companies like Best Buy and eBay already left this otherwise lucrative market due to cultural differences that were not fully comprehended and capitalized on. The cross cultural business problem here is that the companies that are otherwise successful in the US and other cultures are performing very badly once they get into the Chinese market (Murray, Ju & Gao, 2012).
Effective business operations in a cross-cultural environment require a consideration of cultural dimensions in the formulation of a marketing strategy to ensure sustainable relevance to the potential consumers. The main challenge in the Chinese market is that upon entry, the market is often quite enthusiastic based on the society’s affiliation towards foreign products. Nevertheless, once the excitement subsides and people go back to being themselves, the foreign products become lackluster thus losing the initial grandiose with which it entered the market. This is evident in the way in which Revlon entered the Chinese market in the late 1970’s with such a huge customer base only to fall so hard in the recent past with not more than 2% of their global numbers coming from this overwhelming market (Bian & Forsythe 2012).
One way of looking at the shortcomings of Revlon in the Chinese market is by looking at the differences in relevant cultural dimensions in the US and China. This will enable a thorough understanding of the factors that should have been considered by Revlon to avoid the current embarrassment of having to leave such a huge market. Companies that are failing to realize their potential in China are not doing so because China is a bad market, but rather because they have been unable to understand the dynamics of the Chinese culture with respect to the products and services. Other companies, including Apple Inc. are continuing to reap the benefits of their Chinese ventures thus implying that it can be done, provided one has the right entry and sustainability strategy.
The Cultural Dimensions Involved
Borrowing from the Hofstede model of cultural differences where there are six dimensions within which cultures can be differentiated, it should be noted that power distance index, individualism, uncertainty avoidance index and long term orientation are the values that best describe the difference between these two countries as should be perceived by the international organizations seeking to venture abroad (Piron 2004). With respect to the power distance index, the people of China are more likely to accept the hierarchical system than those in the US. This means that in China, all it takes is to impress the ruling class and the rest would follow suit as they have been conditioned to follow their leaders without question (Lim, Ting, Khoo & Wong 2012). China’s lower score on individualism implies a stronger orientation towards collectivism and thus, the need to stick with family. Here, anything that an individual does must be approved by their family consequently the need to target the family as a whole in the marketing campaigns. The US also has higher uncertainty avoidance, implying that Americans are comfortable with regulatory restrictions whereas the Chinese are risk takers who are not afraid of change (Wang 2011). This could explain why Revlon has been consistent the US where people are not comfortable with change and would much rather stick to whatever it is they are familiar with. Finally, as expected, China has a much higher long term orientation than the US indicating that the Chinese are more likely to act based on the impacts of their actions in the future. Their pragmatic perspective implies the need for an end game seeing as they only indulge if it is likely to benefit them.
Solution and Conclusion
Rather than leaving a lucrative market such as China, American companies should consider restructuring their approach towards these consumers to become relevant and appealing. This will require following in the footsteps of Apple Inc. among other few companies that have managed to penetrate the Chinese market fairly well. In order to accomplish this, companies in question must be able to appreciate the differences between these two cultures and thus, embrace an inter-cultured concept in which they indulge the needs and expectations of the Chinese consumers regardless of how ambiguous they might see them. More often than not, the American companies failing to succeed in China are stated to do so because of ‘arrogance’ and an expectation of cultural imperialism, which, however, is not the case and especially, not in China. These companies must thus change their approach and seek a learning experience from their interaction with the Chinese market as opposed to their more common expectation of changing the Chinese population to become more westernized. The key solution here is accordingly interaction on the grounds of equality, without having the ideology that one culture is inferior to the other and must thus give way to a cultural hegemony. In China, the Chinese culture is the superior culture and the sooner the American companies appreciate this fact the easier it will be for them to appreciate and embrace the cultural differences for better business opportunities in this huge market.