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What’re the differences of business culture behind the “Trade War”?

Recently, the “trade war” between the US and China has become the biggest influencer to the market. From the political perspective, a trade war is a good way to balance both external and internal economic environment for the US. Moreover, the conflicts between the US and China in business isn’t just about the surplus that simple. There are also factors that are deeply driving two countries for their decisions and logic behind the business.

Onion Concept

Geert Hofstede, a well-known cross-cultural and management expert, compares culture to the onion and divides it into four levels. The outermost layer is the layer of physical culture or Symbols, which is the concrete and practical things that people can see and touch, such as clothing, food, housing, and transportation of people; the second layer is heroes. Heroes, in a culture, the character of the heroes that people worship represents the character of most people in the culture. Therefore, understanding the hero's character will, to a large extent, also understand the national character of the hero's culture. The third level is the behavioral culture layer or Rituals. Etiquette is the habit and method of people in the social interaction. It is the unique expression of people and nature in each culture. The innermost layer is the cultural layer of the mind. Including values, aesthetic interests, thinking modes, etc., this is the core part of the culture, and it is also the most profound and difficult part to understand in a culture.

Difference Between Eastern and Western Social Cultural

The traditional Chinese culture admires the collective spirit and selfless dedication. The understanding of individualism in Chinese culture is egoism, and it is a derogatory term as opposed to collectivism. American culture emphasizes individuals. Individual independence, freedom, and equality constitute the basic connotation of American individualism. China is the national standard, and the United States is the human standard. Chinese culture is, by its very nature, a kind of affection culture. It focuses on the collective interests and honors. It cannot tolerate the individual's disengagement from the collective. This determines that the Chinese people attach great importance to “face” and pay attention to dignity. If you express your strong disagreement with Chinese business partners, make them embarrassed, criticize them publicly or show disrespect for them, all these can make them lose face. Allowing the other party to lose face can completely destroy an otherwise promising business negotiation. For this, American culture is different. Between “face” and “interests,” Americans will not hesitate to choose “interests.”

Overall, after knowing differences between these two countries will help us to analyze the implementation of their strategies better. Meanwhile, for the public to better understand the situation, the administration should also explain the situation under different cultures to avoid misunderstanding.