Pharmaceutical Executive Europe - October 2007 - (Page 20) STRATEGIES IN TWO MARKETS RUNNING HEAD countries, ancient history and recent events meld together to influence the way business is done and the way the West is perceived. It is a complex mixture that Western countries simplify at their peril. Practical implications So what does this all mean in practice? Indian and Chinese cultures are built on different foundations than those of the Christian West. Further, neither country is a homogenous mass, and a deep understanding of either is a lifetime’s work. What lessons can a busy executive draw from this? At the risk of over-simplification, there are perhaps four key practical differences between dealing with Western companies and Indian and Chinese companies. Relationships In China, guanxi (good interpersonal relationships) are vital. The Chinese tend not to like doing business with companies they do not know personally and often prefer to use a trusted intermediary to initiate a collaboration. Business relationships are built after the Chinese feel they know you well, so it is important to be patient. Good guanxi involves giftgiving, but beware: your host may think anything too lavish is a bribe. In India, the caste system and status sensitivity have a huge impact on business practices. Seniority and hierarchy are highly important, so, as with China, it is important to maintain a formal level of social interaction. Indians have a strong sense of community and, as opposed to Western individualism, a sense of group orientation within which the family is the nucleus. to direct your questions to, and expect them to be answered by, senior-level people. The same Confucian values mean it is important to gain group consensus for a common goal. Similarly, Taoist values lead to meetings that are often long, with no clear decision at the end. In India, the influence of fatalism means negotiations are often longer and decisions cannot be rushed. As in China, showing respect to seniority is also important, as are interpersonal relationships and the avoidance of conflict. The relationship between boss and employee, however, can be very friendly. In both countries, the position of women (particularly those who continue to face discrimination and poverty linked to dowry traditions) in the workplace tends not to be comparable to that of their male counterparts. Western executives are well advised not to condemn these practices but to see them as artefacts of a deep and pervasive culture with which they must co-operate. their future. In both cases, Western executives need to recognise the origins of legal practice and avoid applying Western standards. Ethics Chinese ethics often perplex Westerners, who struggle to reconcile formal propriety with what they see as human rights abuse. Interestingly, classical Chinese does not have word for ‘rights.’ This is an idea imported by William Martin in 1864, who used the Chinese word quanli to describe the concept. Ironically, this word can also be translated as ‘power.’ In India, Hinduism incorporates a desire to be ethical in the journey for spiritual perfection: virtues such as honesty and integrity are highly valued. In both countries, however, individual ethics vary as much as they do in the West; European executives need to combine an appreciation of culturally driven ethics with a realism about human nature. Taken together, these four areas form a starting point for working in these giant countries. Whether competing, supplying, co-operating or buying, Western companies and executives need to be aware of the way that different cultural foundations make business practice very different from that in the West. Legal systems The Chinese legal system derives from Confucian beliefs that morality and self-discipline take precedence over law, and that change occurs by reformation through education. This can be baffling for Westerners, especially as regards intellectual property rights (IPR). The recent execution, for bribery, of Zheng Xiaoyu, the former head of the State Food and Drug Administration, is best understood as an example Confucian reformation of collective morality. By contrast, Indian legal tradition has its roots in British colonialism. Since 1947, this basis has been augmented with layers of bureaucracy and corruption that frustrate Western companies. Yet as with China, Indians see reformation of their legal systems as necessary to When, not if For some, the Indian and Chinese are an interesting aside, a diversion from the here-and-now battle for market share in the West. For those for whom these 2.4 billion people are an immediate interest, however, the lessons are clear. First, realise that culture runs deeps and is not just a set of quirky habits. Second, understanding that culture is very slow to change and adapting to it, rather than expecting it to adapt to Western standards, is the key to success in these markets. Appreciate that any culture is heterogeneous and complex and that any rules are, at best, guidelines. For all readers of this article, however, one final point is crucial: it is not a matter of if these huge eastern countries will matter to your business, but when. Working practices In China, showing respect to seniority is fundamental. At meetings, you need About the authors Dr Brian D. Smith is a visiting research fellow at Europe’s largest business school and runs PragMedic, a specialist strategy consultancy. Over 100 of his papers and articles can be found at www.pragmedic.com. He welcomes comments on this article at brian.smith@pragmedic.com Abigail W. Jones has a Masters in Social Anthropology from Manchester University (UK) and is a personal development coach and trainer. 20 OCTOBER 2007 PHARMACEUTICAL EXECUTIVE EUROPE http://www.pragmedic.com
Table of Contents Feed for the Digital Edition of Pharmaceutical Executive Europe - October 2007 Contents The Brand Exchange Focused and Flexible Making A Global Vision Work Leading the Way The OnlineConsumer Wired to the Future Co-ordinate Your Communications In the Public Interest Seek First to Understand Pharmaceutical Executive Europe - October 2007 Pharmaceutical Executive Europe - October 2007 - (Page 1) Pharmaceutical Executive Europe - October 2007 - Contents (Page 2) Pharmaceutical Executive Europe - October 2007 - Contents (Page 3) Pharmaceutical Executive Europe - October 2007 - The Brand Exchange (Page 4) Pharmaceutical Executive Europe - October 2007 - The Brand Exchange (Page 5) Pharmaceutical Executive Europe - October 2007 - Focused and Flexible (Page 6) Pharmaceutical Executive Europe - October 2007 - Focused and Flexible (Page 7) Pharmaceutical Executive Europe - October 2007 - Making A Global Vision Work (Page 8) Pharmaceutical Executive Europe - October 2007 - Making A Global Vision Work (Page 9) Pharmaceutical Executive Europe - October 2007 - Leading the Way (Page 10) Pharmaceutical Executive Europe - October 2007 - Leading the Way (Page 11) Pharmaceutical Executive Europe - October 2007 - The OnlineConsumer (Page 12) Pharmaceutical Executive Europe - October 2007 - The OnlineConsumer (Page 13) Pharmaceutical Executive Europe - October 2007 - Wired to the Future (Page 14) Pharmaceutical Executive Europe - October 2007 - Co-ordinate Your Communications (Page 15) Pharmaceutical Executive Europe - October 2007 - Co-ordinate Your Communications (Page 16) Pharmaceutical Executive Europe - October 2007 - In the Public Interest (Page 17) Pharmaceutical Executive Europe - October 2007 - In the Public Interest (Page 18) Pharmaceutical Executive Europe - October 2007 - Seek First to Understand (Page 19) Pharmaceutical Executive Europe - October 2007 - Seek First to Understand (Page 20)
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