Free essay about effect of cultural difference on the cost of doing business in each country


Culture refers to the values and lifestyle adapted by a society. Culture is the system of shared beliefs, values, norms and expectations that develops within a country or community and governs the behavior of the employees, their approach towards work and interpersonal communications (Hofstede, 1980). For the assignment, the two countries with distinct cultures that are selected are China and US. The paper compare the cultures of these countries and discusses the ways in which cultural differences would affect the cost of doing business in each country.

Analysis of the cultures of these countries

The traditional root of Chinese culture is Confucianism. Confucianism focuses on long term orientation, thrift and perseverance. China for long has maintained cultural exclusivity, but it has proven to be detrimental for the country in the era of globalization. The Chinese are comparatively more employer oriented and the employee retention rate in China’s higher in comparison to other countries. The Chinese are socially inclined. The culture of China is relationship driven. This means that the corporate entering in China needs to develop a relationship before doing business, unlike back home where businesses first do transaction and then build relationships. The relationships need to be reciprocal in nature and hierarchy needs to be maintained (Country Profile: China 2008). The Chinese are hesitant to express their opinion as they respect hierarchy the most. As a result, the people from US feel that the Chinese are less confident and on the other hand, the Chinese people find the US people rude and inconsiderate (Seligson, 2009). Another interesting aspect of Chinese is that attention is paid to certain colours and number. For example, red is considered a lucky colour. The Chinese prefer to hold on to their old traditions and maintain their heritage. Whereas, in the US, people have moved beyond traditions and is the forerunner of modernisation of the world. The culture is shared and it is assumed that the children will take care of the parents when they grow old. Diversity marks the culture of China as the population of China is comprised of different ethnic groups (Boontanapibul, 2010). Unlike the US, China does not have common cultural values shared across the population that makes it difficult to standardise their marketing communication. People in the US are more exposed to free market thank the Chinese. In the US people strictly adhere to the time (Seligson, 2009). But in China work is not completed quickly and people of US need to be more patient and understand the ways of working in China.

There is a wide gap between personnel costs in India and that of the US. This pricing flexibility allows companies the freedom and creativity in managing their budget and helps them reap large profits. The cost of doing business is influenced by a number of cultural aspects like importance of time, efforts in relationship building, willingness to accept change. This is because the entry mode of businesses is a cost consuming aspect of international businesses. Cultural factors influence the entry mode, the ways to promote the company and the efforts to be taken by the company to gain market share. For instance, the people of China are less receptive to free market. So any new company entering the market has to put in extra efforts to ensure gain acceptance of the local people. Also China has diverse cultures. So a standardised communication or advertising strategy cannot be implemented. For this reason the companies have to invest t more in communication efforts in order to ensure that its message is effectively conveyed to the target market.


Boontanapibul, Churinthorn. Doing Business in China: Cultural Factors, Start-up Concerns, and Professional Development. Executive journal, 2010. Web. 07 February 2013.
Country Profile: China. Federal research division, Library of Congress, 2008. Web. 07
Hofstede, G. Culture’s consequences: International differences in work-related values.
Beverly Hills, Sage, CA, 1980. Print.
Seligson, H. For American Workers in China, a Culture Clash. The New York Times, 2009. Web. 07 February 2013.