How Does Chinese Culture Affect Chinese Management?

Although hierarchy does play a major part within management it is said that humanism within Chinese management is identified as an important value of a good-natured manger. Confucius refers humanism to courtesy, good faith, diligence and kindness resulting in a relaxed and cordial atmosphere. Due to the Chinese emphasis on the family, management tends to mix family and business matters and often reflects the family hierarchy. It is not usually formalised but based on status and seniority. In general, there are few rules and job descriptions rather based upon “obedience, trust and trustworthiness” which, again, are Confucian values. On the downside to this, the sense of hierarchy is said to destroy the sense of participation because subordinates are reluctant to present new ideas and lack of clear roles can sometimes mean the overlapping of work.

Group orientation within management is attributed to a number of factors. In pre-revolutionary China, the relationship with the most importance was that of the family and due to the power differentiation within families, individuals were expected to help the other members if needs be. Particularly since 1949, the Communist party have tried to emphasise this group orientation and it is ever present within the workplace as individuals aim to work towards the benefit of the group as a whole rather than for individual gain. This is also highlighted within pay regimes (with the ‘iron wage’), since individual pay bonuses have only recently been introduced after the Cultural Revolution. It is group orientation and the reflection of familial hierarchy within the workplace that leads to the paternalistic style of management that is common in the PRC. Management are regarded, although at a lesser extent today, as providers of the subordinates welfare and lifetime employment (‘iron-bowl’ policy).

Together with money and power, face (‘mianzi’) is one of the three motivators that govern behaviour in China today. Face is “the recognition by others of one’s social standing and position’. Rescinding an order can mean a loss of face, which is why leaders sometimes cling to policies even when subsequent events prove irrelevant or misguided. Face is strongly tied in with Confucian values and it is far more important for a Chinese manager not to loose face, than it is for a Western one. So long as person follows the moral rules of Confucian, they are believed to have face, “propriety is the norm and confrontation and conflict are taboo”.

The downplaying of self and upgrading of relationships is highly valued to produce cohesiveness within the hierarchy. Chinese management is hinged upon the relationships within the organisation and again, ties in with the Confucian ideals that have been present in China for centuries. In regards to China’s history, one can speculate that importance of relationships has developed further from the agrarian background whereby the family acted as a self-sufficient function and relied upon relationships with other families for trade. It is certainly still of importance today considering it was recently found that three-quarters of a sample of Shanghai’s managers felt that written and oral agreements were of equal importance. The high level of trust incurred in these values has resulted in relationships being based on reciprocity whereby one trusts that another will always repay the favour.

The emphasis on relationships and reciprocity within Chinese ideals has given rise to ‘Guanxi’: a network of connections to gain a business advantage. Admittedly, there is a formal bureaucracy in place within organisations (which in part is derived from the need for hierarchy amongst the Chinese) but in practise it is one’s personal connections that gets you anywhere in business. Guanxi affects Chinese management in a number of ways in terms of enforcing direct involvement, a need to build business relations, business ethics and management of relationships.

It has been said that anyone who tries to do business in PRC will realise that to get something accomplished relies wholly on who you know and that you need the appropriate connections to get anywhere . The most ambitious people obtain the best positions by attaching themselves to superiors, which can breed loyalty but can also perpetuate inertia. Guanxi has been associated to the high degree of corruption since it can be used to build relationships with the regulatory officials and party members. Furthermore, guanxi encourages a strong preference for the Chinese to do business with old friends, which can be extremely inefficient at times.

A fifth element I would like to add is the Business Orientation and Ethic of Chinese management. A clear link to the agrarian background is that a business leader never gives up in whatever he does, exercising extreme endurance and working very long hours. Chinese management also has an emphasis on the virtue of thrift, diligence, responsibility, promptness, co-operation and learning which, again, stems from the need to be frugal in the use of limited resources and Confucian ideals. Since the family and the farm were the basic production components, businesses have harboured the values of egalitarianism, lack of division of labour and equal inheritance rights to all sons further encouraging filial obedience, a dedication to the land or workplace and the formation of conglomerates in the PRC. Unlike Westerners, management reflects a people orientation and negotiation style emphasises the means rather than the ends.

In sum, Chinese management is typified by highly centralised decision-making, low structuring of activities, paternalistic style of leadership, strong emphasis on collectivism and group behaviour, and strong family management and ownership and there is clear evidence that this has a sound cultural basis.

I am a firm believer that Chinese culture has influenced the management style however I agree with the comment that “in no way can culture be an exclusive explanation” particularly in regards to the recent political and economic reforms within the country. After the liberation in 1949, Chinese society became even more ideologically-driven under the new Communist regime, a wholly new management model was adopted; a hybrid of indigenous and Soviet inspired ‘Taylorist’ management with dual leadership between the party and management. Lifetime employment labelled as the iron-rice bowl was actually copied from the Soviet Union as well as the nationalised wage system used to encourage egalitarianism. However, the ‘cradle to grave employment’ system does seem to be far more reaching than the Soviet Union since it went way beyond production which may be explained by China’s cultural roots.

The Cultural Revolution threw the value system in China further into chaos. Since 1978, China has looked increasingly to the West and Japan for its management models. A significant reform by the government has been referred to as ‘breaking the three irons’ which has involved the removal of the iron wage, iron rice bowl and iron chair of position and the establishment of three new systems (iron face, iron guts and iron hands). This comes hand-in-hand with a conscious decision by the government to have a tougher attitude toward social responsibility and society itself with the introduction of a labour contract system, floating wage system and manager engagement system.

“For a relatively long period, some aspects of the Chinese management will continue to be heavily influenced by the Chinese cultural tradition” but what I have tried to emphasise here is that although the Culturalists have a very strong argument, as China develops, management models are becoming increasingly exogenous which is encouraged through government intervention. Today, China’s corporate culture is said to foster unprofessional managerial behaviour since it is associated with a lack of transparency, lack of separation between government and management control and lack of independent directors and, therefore, it is likely that increasingly the influence of Western and Japanese management models will continue to grow. This effect will be accelerated by the emergence of a more highly educated workforce who are believed to be more receptive to foreign values and may therefore be more willing to accept the Western approach to management. However, as has been pointed out, Chinese management follows a logic of its own within a cultural and economic context that cannot be equated with other countries, and therefore it is important that Chinese management models do not diverge too far from its cultural roots that have played such a significant role over the centuries.

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