Examples of Lack of Cultural Sensitivity

"...failure to scale cross-cultural barriers can lead to misunderstandings, delays, lost opportunities and misaligned business strategies..."

Ernest Gundling, as quoted by Emma Connors, 2007

. An example of how the unconscious assumptions can cause problems in different cultures is often illustrated when Western managers supervise locals in Asian countries. The pragmatic Western traditions assume that solving a problem has the highest priority, while in Asia the cultural traditions give a higher priority to maintaining good relationships, and especially not embarrassing a superior, ie potential loss of "face". Thus the Asian will remain silent rather than inform the Westerner that the proposed solution is wrong, as it will embarrass his boss. When things go wrong and the Asian reports that he would do it differently, the Western manager asks why the Asian did not speak out earlier. This puts the Asian in an even more difficult position, because his answer will be a further embarrassment to his boss. At this stage, the Asian may even lie and state that the Westerner was right and only bad luck or some uncontrollable circumstances prevented the solution from succeeding.

"...from the point of view of the subordinate, the boss's behaviour is incomprehensible because it shows lack of self pride, possibly causing the subordinate to lose respect for that boss. To the boss, the subordinate's behaviour is equally incomprehensible. He cannot see any sensible explanation for the subordinate's behaviour that is not cynically coloured by the assumption that the subordinate at some level just does not care about effective performance......it never occurs to the boss that another assumption - such as "one never embarrasses a superior"- is operating, and that, to the subordinate, that assumption is even more powerful than "one gets the job done..."

Edgar Schein, 2004

. Microsoft's entry into China is a classical case of how a successful Western business model did not work in another culture. After entering China in 1992, Microsoft's business was not successful and cost them billions of dollars in lost revenue over the 15 years until they learned how to optimise their operations for the Chinese context. Almost all of the basic concepts that has led to success in USA and Europe did not make work in China. In China, Microsoft had to modify its approach by

"...pricing at rock bottom instead of charging hundreds of dollars for its Windows operating system and office application; abandoning the centerpiece of its public policy approach elsewhere, the protection of its intellectual property at all costs; and closely partnering with government instead of fighting as it has in the USA..."

David Kirkpatrick, 2007

Microsoft is selling product in China for around $US7 compared with $US100 to 200 in developed countries. Also, Microsoft had to learn how to tolerate piracy of its intellectual property and change the perception of its "antipiracy and suing people" image. On the other hand, the Chinese government is gradually legalizing the software used by its state-owned enterprises

In addition to China lacking the basic institutions that have been taken for granted in the West, such as the rule of law, respect for property rights, an independent judiciary and government accountability, Microsoft had other issues that needed handling, such as

- initially and misguidedly sending junior executives to China (senior executives were subsequently sent; using VIPs like former Secretary of State Henry Kissinger to advise Microsoft; employing successful Chinese business people such as Tim Chen. This improved the perception of Microsoft status in the "eyes" of the Chinese)

- initially focusing on selling product rather than developing relationships. To handle this Microsoft started to collaborate with the Chinese government by matching its company's strategy to the government's development agenda, such as beginning extensive training programs for teachers and software entrepreneurs; working with the Ministry of Education to finance 100 model computer classrooms in rural areas; inviting Chinese officials to help decide in which local software and outsourcing organisations Microsoft should be invest in. As Microsoft's Tim Chen observed there was synergy between the need of the Chinese economy to have local software capability and Microsoft's need for an ecosystem of companies around Microsoft using their technology and platforms

- had to handle the Chinese government's suspicions that Microsoft software might be a secret tool of the U.S. government. Thus Microsoft allowed the Chinese to look at the fundamental source code of its Windows operating system and allowed the Chinese to substitute certain portions of their own software (installed its own cryptography) - something Microsoft had never allowed in the past.

- open a research center in Beijing (1998) that was pivotal as it accumulated an impressive record of academic publications, helped attract back smart emigre scientists and made significant contributions to globally-released products like the Vista operating system

- made Shanghai a global center for responding to customers' e-mails

. A similar story to Microsoft's initially misguided approach to entering the Chinese market is Rupert Murdoch's misadventures in an attempt to enter the Chinese media industry. Murdoch and his News Corporation continually made mistake after mistake as they followed an inappropriate mindset and business plan for understanding the way the Chinese do business. For example,

- Murdoch's public remarks upset the Chinese leadership and demonstrated his lack of understanding of the Chinese approach. Some examples

i) his rhetorical question at a casual dinner for foreign correspondents in Beijing (1997)- "Isn't the Chinese Communist Party really just the world's largest Chamber of Commerce?" This comment suggested that commercialism was the driving force of the Chinese Communist Party and ignored the powerful grip the Communist Party has on power. One way the party uses its power is to censor any international criticism of China in Chinese domestic media and to limit the access of the average Chinese to international media.

ii) his remarks made in London about the impact of advances of technology on telecommunications upset the Chinese leadership. He said,

"...Advances in the technology of telecommunications has proved an unambiguous threat to totalitarian regimes everywhere. Fax machines enable dissenters to bypass state-controlled print media. Direct-dial telephony makes it difficult for a state to control interpersonal voice communications. And satellite broadcasting makes it possible for information-hungry residents in many closed societies to bypass state-controlled television channels..."

Rupert Murdoch as quoted by Bruce Dover, 2007

- Murdoch's desire to repeat his success in the Western World and elsewhere by breaking into the Chinese media market in a substantial way. This desire failed to understand that the media in China is not regarded a business. For the Chinese Communist Party, the media is like a sacred jewel; it was excluded in the conditions for China's joining the World Trade Organisation (2001). The Chinese have allowed very limited media access to Westerners; for most part it is off-limits to foreigners.

- Murdoch's self belief that he could be different and prove the naysayers wrong, ie he could breach the wall of China. It became a personal obsession and blinded his approach for 2 decades.

- Murdoch failed to understand that China is not a western democracy. The Chinese Communist Party does not need a media owner's support to attract votes from the electorate. Furthermore, the Chinese leaders are already the media owners as all newspapers and television channels a state-owned.

- Murdoch was slow in recognizing the change in leadership from Deng Xiaoping to Jaing Zemin and how the power structure in the Chinese bureaucracy works (including introducing new regulations without warning that can destroy profit over night). For example, Murdoch incorrectly assumed that in relation to television media China Central Television was the ultimate authority; later on he learnt that it was the Communist Party itself via the State Council Information Office and the Propaganda Department

- News Limited made some inappropriate staff appointments, eg appointing overseas-born Chinese who did not understand how the Chinese Communists functioned

Over a 20 year period Rupert Murdoch tried to obtain broadcast rights in China through Star China TV but was never successful. This is despite pulping a book written by former Hong Kong governor Chris Patten, in which he was critical of the Chinese government. Standing in Murdoch's way were earlier mistakes in the approaches he adopted in handling the Chinese, included being critical of the Chinese government (see above). Also, he was continually frustrated by Chinese censorship and the limits on foreign investment. As a result, 21st century Fox sold its minority stake in Star China TV early in 2014.

Similar stories for Walmart and Tesco when they ventured into a different cultures/countries. Walmart, the largest worldwide retailer, whose home base is in USA, was not successful in Germany; Tesco failed in its attempt to get into USA market.
 
Another example occurred when an American company made some underground cables for its Japanese customer. The Americans carefully checked that the specifications were met before shipping. Thus they were surprised when the cables were rejected by the Japanese firm on the grounds of beauty, especially as the cables were to be buried underground and beauty was not in the specifications. But beauty is a symbol of quality and soul to the Japanese. To the Japanese the ugliness of the cables indicated how little soul the American firm had!!!!

(sources: Geert Hofstede, 1991; Geoff Kitney, 2005; Edward deBono, 2004; Edgar Schein, 2004; Sheridan Winn, 2006; Fiona Smith, 2006g; Dianne Coute, 2006; Fiona Carruthers, 2006; David Kirkpatrick, 2007; Emma Connors, 2007; Howard Gardner, 2006a; Geoff Kitney, 2005; Catherine Fox, 2008; Bruce Dover, 2007; Katrina Nicholas, 2008; Malcolm Gladwell, 2008; Narelle Hooper, 2008b; Rose-Anne Manns, 2008d;Brook Turner, 2010; Mathew Hutson, 2013)

 

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