Hofstede’s framework: Dutch sociologist Geert Hofstede undertook a pioneering task between 1967 and 1973 in the field of organizational behavior. Working for IBM at the time, he collected and analyzed data from more than 116,000 individuals in 40 countries, who were mainly working for IBM and its subsidiaries, to develop his Cultural Dimensions model for analyzing variations among cultures. He found that managers and employees vary on five value dimensions of national culture. They are listed and defined as follows: i) Individualism (IDV) ii) Power distance Index (PDI) iii) Masculinity (MAS) v) Uncertainty Avoidance Index (UAI) v) Long-Term Orientation (LTO) With respect to the above dimensions we will be having a closer look at China vis-a-vis other countries such as Japan, Russia, India, Pakistan and the USA. We will also compare it with the findings for Asia and the World as a whole. On the basis of this study we will also explore the possibility of entering the processed food market in China. China and its socio-economic condition: The People’s Republic of China (PRC) was established on October 1, 1949. The population of china is the largest in the world with an approximate figure of 1. 7 billion. China has a single party government i. e. government of Communist party of China. Growth story of china is quite unique in the world. In 1930s, small industry revolution occurred in china but due to great depression and then internal and external troubles, China’s economic growth hampered very much. The great leap movement of 1958-1961 was the first movement for economic revolution in the country but it ended in very catastrophic manners. Afterwards 1966, Cultural Revolution was carried out in china which was fundamentally aimed at restoring socialism in china by removing/prosecuting capitalist elements.
But the economic situation of masses remained same there since 1030s to 1970s. From 1978, economic reforms were carried out in the china. Since then, it has been on the path of transformation from soviet style socialism to state capitalism. The Initial reforms were carried out in the field of agriculture. These reforms helped in uplifting of lives of farmers there. In 1997-1998, large scale privatization happened and most of the state enterprises had been liquidated. According to Central intelligence agency of US, China’s Gross Domestic Production in terms of purchasing power parity was $10. 9 trillion in 2010. According to some estimates, ‘Socialist market economy’ of china is supposed to supersede USA before 2040. It is not a harangue to say china as the engine of world growth today. However China still remains country having high power distances and lots of restrictions on the rights of its population. INDIVIDUALISM versus COLLECTIVISM: Individualism is the degree to which people in a country prefer to act as individuals rather than as members of groups. Collectivism is the equivalent of low individualism.
The Individualism (IDV) Dimension for China had a score which was much below the score for Americaand lower than the world average. At the same time comparing with its neighbors in Asia it is comparable with its close ally Pakistan while it’s much lower than India, Russia and Japan which shows why China’s orientation is different. | China | World| Asia| India| Japan| Pakistan| Russia | United States| IDV| 10| 43| 20| 48| 46| 14| 39| 91| This low score on the dimension of individualism is indication that the society places great emphasis on interpersonal relationships.
These relationships manifest themselves in the form of family and work teams. The Chinese people value loyalty in relationships and strive for building strong relationships This characteristic of their culture has some important implications for anyone trying to set up a business there. People tend to stick to the same people (e. g. ) for doing business. POWER DISTANCE: The degree to which people in a country accept that power in institutions and organizations is distributed unequally. Ranges from relatively equal (low power distance) to extremely unequal (high power distance).
A high ranking on this dimension implies the inherent inequalities in terms of power and wealth in a society. While we have a more or less equitable distribution of power and wealth in the West, the disparities are great in China which has a high power distance index implying great inequalities between people. This is partly because of the political and economic status in the country and has become accepted in the society as a given. | China | World| Asia| India| Japan| Pakistan| Russia | United States| PDI| 80| 55| 60| 77| 54| 55| 93| 40|
Anyone setting up a venture should be aware of this structured pattern that exists in the organizations and society at large. Hence the freedom to do business is affected and government interference can be there in many aspects of the business, which can even be attributed as the cause of corruption in the countries with high PDI. MASCULINITY versus FEMINITY: The Masculinity (MAS) Dimension tries to gauge as to how far the society attaches significance to the male role model in various spheres of life. The more a country places emphasis on masculinity, the more the gender bias in the society.
This is perhaps the dimension in which China is closest to the rest of the world. However, recent trends show that women are gaining some ground. We have many powerful business leaders who are women. | China | World| Asia| India| Japan| Pakistan| Russia | United States| MAS| 66| 50| 55| 56| 95| 50| 36| 62| UNCERTAINITY AVOIDANCE: The degree to which people in a country prefer structured over unstructured situations. In countries that score high on uncertainty avoidance, people have an increased level of anxiety, which manifests itself in greater nervousness, stress, and aggressiveness.
If a society scores low on this dimension then it implies that it is a society with fewer rules and gives allowance for various possible outcomes whereas a high score implies risk-averseness in the society. We see a low score in countries like America but China scores even low implying a liberal society. This is a result which can deceive us. In the Uncertainty Avoidance index (UAI), the USA scored just 46, indicating that it’s a society with fewer rules and does not attempt to control all outcomes and results. It also has a greater level of tolerance for a variety of ideas, thoughts and beliefs.
In contrast, China scored lower, at just 30, indicating an even more liberal society. This score is deceiving. Though China may not place great emphasis on formal rules and regulations, there is an informal deterrence for breaking laws. This occurs by way of societal sanctions which are considered more disgraceful in this society. | China | World| Asia| India| Japan| Pakistan| Russia | United States| UAI| 30| 64| 60| 40| 92| 70| 95| 46| LONG-TERM versus SHORT-TERM ORIENTATION: People in cultures with long-term orientations tend to look to the future and value thrift and persistence.
A short-term orientation values the past and present, and emphasizes respect for tradition and fulfilling social obligations. China places a much higher preference for long term orientation as compared to other countries of the west. This higher emphasis implies that the people in the society have a long-term outlook on life rather than short-term. | China | World| Asia| India| Japan| Pakistan| Russia | United States| LTO| 118| 45| 85| 61| 80| 0| NA| 29| NA This gives a totally different perspective on time as held by Chinese.
The time taken to seal a deal in China is much more here than in the west as these people believe in investing time to build a sustainable relationship. This strategy is seen common with the east Asian countries like Japan and India. Our Business Plan (Processed food market): Even during the tight economy conditions of 2009, the processed food market in china had seen a double digit growth rate. According to reports of RNCOS agency, Compound annual growth rate for processed food industry in china would approach 33% during 2011-2013.
Reports have further found that change in the diet preference of Chinese people is the main driver behind this escalation of processed food industry. Growing prosperity in countryside and urban china is also one of the key factors which are making people more fitness conscious. Thus, at present Chinese are more health aware than ever before. The modern retail shops are also facilitating to the growth of processed food industry. Due to the retail market, more demand is being created for processed food. Now we analyze our HR policies taking into consideration Hofstede’s analysis: 1.
IDV – China scores high on collectiveness, therefore we expect our workers to have a strong trade union so we have to deal with it very efficiently. Also China is extremely parochial hence frequent change of suppliers will impact our relation with suppliers and they may choose to boycott us collectively. Therefore we have to be careful while choosing suppliers who will be permanent in nature. 2. PDI – There will be high power distances between our managers and workers which is not necessarily bad for the business as far as China is concerned.
Also we have to treat powerful (high status) and aged customers with extreme care. 3. MAS – This index is moderate and hence while recruiting people we should maintain a balanced gender ration. 4. UAI – It being a controlled economy so people do not expect a hire and fire policy and hence their UAI is low. Hence we will have to provide them with permanent employment considering their social thinking. 5. LTO – Because of very high LTO we have to give special care to our suppliers, clients and workers who are looking to build long term relations with us.
Also due to this long term commitment from them they will normally have a longer decision making time leading to time delays in making business deals. This will have to be understood while making important strategic decisions. References: PS —The definitions are taken from Organizational Behavior by Stephen P. Robbins http://www. geert-hofstede. com/hofstede_china. shtml http://www. international-business-center. com/geert-hofstede/index. shtml http://www. china. org. cn/business/node_1000031. htm http://english. gov. cn/index. htm http://www. nzcta. co. nz/chinanow-general/1000/processed-food-for-thought-chinas-food-processing-market/