People's Republic of China: A Macro Description of the Country

1. Patat Ayuwathana Angela Farmer Chris Fishback Melinda Lobaugh People’s Republic of China

2. Macro Description of the Country

3. Population: 1,330,141,295 (Most in the world) • Birth rate 1.217%, Death rate: 0.689% • Growth rate: 0.528% • Falling steadily since the “One-Child Policy” (1978) • 1.06 male/1 female as of 2010 • 1.17 male/1 female under the age of 15 Demographics

4. 43% of Chinese population lives in urban area • Compared to 82% for the U.S. • 2.7% Annual rate of change • “Hukou system” • Natural resources: Coal, iron ore, petroleum, natural gas, mercury, tin, tungsten, antimony, manganese, mylebdenum, vanadium, magnetite, aluminum, lead, zinc, and uranium • Hydropower potential Demographics

5. 2009 GDP: $4.9 Trillion (Second highest in the world) • 8.7% growth from 2008 • Currency : Renminbi (RMB, Yuan) ¥ • 6.67rmb to $1 (11/27) • Under pressure from the world (U.S.) to deregulate its currency Economic Environment

6. Exports: $1.204 trillion (second largest) • Electrical machinery, apparel, textile, iron, steel, and medical equipment • Imports: $954 billion (fourth largest) • Oil, mineral fuels, electrical machinery, metal ores, plastics, organic chemicals • Stock markets: Shanghai, Shenzhen, Hong Kong, Hang Seng Index Economic Environment

7. Seven categories of tax system • Turnover taxes (VAT, Business taxes, custom duty) • Income taxes • Resource taxes • Property taxes • Behavior taxes (Vehicle usage tax, Vessel tonnage tax, deed tax, etc.) • Agricultural taxes • Special purpose taxes (city maintenance tax, construction tax, land appreciation tax, etc.) Economic Environment

8. Income tax table Economic Environment

9. Communist state • Established in 1949 • Mao Zedong • Key members • Chairman: HuJintao • VP: Xi Jinping • Premier of the State Council: WenJiabao • Capital: Beijing • Consisted of 23 provinces (including Taiwan), 5 autonomous regions, and 4 municipalities Political System

10. Freedom of speech • Article 35 • Journalists and citizens can be persecuted by the government for speaking out against them Political System

11. Also known as “The Great Firewall of China” Started by the government in 1994 Made official in November 2006 Monitors internet activities within and going in and out of China Little animated policeman The Golden Shield Project

12. The Golden Shield Project Websites • Wikipedia (partially) • Youtube • Twitter • Facebook • Blogspot • Plurk • Playboy Keywords • Chinese democracy • Censorship jail • Tibetan independence • Human rights • Tiananmen incident • Genocide • Red terror

13. Combination of traditional Chinese and Western laws • 1990s: Legal reform • Criminal laws and procedures were amended • Abolishment of “Counter-revolutionary” crime • 2004: Protection of human rights and private property • Mediation committee • 800,000 committee of Informed group of citizens • Resolved about 90% of civil disputes without going to court • 97.2% resolution rate in 2009 Legal System

14. Sociological Aspects

15. Father: educator-disciplinarian • Nurturing infants are almost exclusively the mother’s responsibility • The father is not expected to provide extensive care to infants or young children • When the child is old enough to be disciplined, the father’s role comes into place Parental Roles

16. Hierarchical family structure - children are expected to show loyalty and respect to older family members • Teachers heavily monitor children’s behaviorsin classroom • Comparing one child’s performance to another Child Rearing Practices

17. Intergeneration co-residence • Pride for elderly • Emotional support from family • Loyalty and respect from children • Married elderly couples • Educated elderly with previously high status careers • Death of one parent, health status of parent, number of children, education and income may influence a family’s living arrangement Living Arrangements

18. Class Structure

19. Middle class • Highly skilled professionals, managers • High influence in economic & political system • High income • Proletariat • Skilled or semi-skilled workers in urban area • Full-time jobs in the formal sector • Semi-proletariat • Unskilled workers in urban area • Part-time or unsecured jobs • “migrant workers” who travel between rural and urban areas • Engage in various commodity transactions or production • Peasants • Agricultural commodity producers living in rural area • Peasants become semi-proletariats when migrating to urban area and vice versa Categories

20. Working class is politically and economically less organized  lower bargaining power in society • “Hukou system” – a system of residency registration, may effectively prevent those in the rural area permanently moving into urban cities • High tension between rural and urban citizens, with the urban residence looking down on rural residence • U.S. rural area v. Chinese rural area Class Barriers

21. 56 ethnic groups • Han Chinese > 91% • Major cultural differences in clothing, language, foods, religious practices, etc. Ethnic Groups

22. Many ethnic minorities who live in impoverished western border areas have not benefited from the recent economic development the Han Chinese in urban areas have been experiencing • Minorities live in more than 530 of 592 poor counties in China • Racial tension: minorities complain the Han Chinese take the best jobs when they move into a minority populated area Ethnic Issues

23. Constitution promotes gender equality • Preference of boys over girls • The government has considered international cooperation to determine new policies in order to promote women’s rights • The younger age groups, especially those who are educated, typically favor gender equality(ex. Chinese MBA student interviews) Gender Issues

24. Religion

25. Ancestor Worship • Necessities are burned or placed in coffin during funeral • Home altar to provide daily offerings (foods, wine, money, etc.) • Prayer • Chinese Buddhism and Taoism incorporated into prayer • Use of beads during prayer • Longevity • Aimed at gaining a long life or even immortality • Chinese Zodiac • 12 animal signs Rituals & Practices

26. It is impolite to wave to someone with an upturned finger when you want them to come your way. Instead, wave to them with your fingers turned down. • If you are just meeting someone for the first time and it begins to rain, it is bad luck to give them your umbrella and let them take it home. It represents that you will not see them again because the Chinese word for umbrella is “san,” which can also translate to mean to break apart. This is bad luck especially for newly dating couples. • Certain colors or gifts are associated with death and should not be given as gifts: • Clocks • Handkerchiefs • Straw sandals • Colors white, blue or black • A crane Taboos

27. Higher Education

28. LuoShu – Chinese Academy of Sciences Beijing, China • Song Qiuling – Central University of Finance and Economics, Beijing, China • Zhang Bo – University of International Business & Economics, Beijing, China • Ma Ke– University of International Business & Economics, Beijing, China Chinese MBA Students

29. The National College Entrance Exam is almost the sole determinant for college entrance in China Nine-hour long exam held only once a year! Nearly 10 million students competing for 6 million spots (2010) No age limit but must have high school diploma in order to take the exam Higher Education in China

30. Peking & Tsinghua University most prestigious Different university tiers require different score range Students list university preferences before OR after the exam University Admission Process

31. Government regulations to prevent cheating • Regulating internet • Shutting down internet cafes • Wireless earpieces, scanner-embed pens • Family pressure & influence • Promising luxury gifts to children • Internet scams to buy exam questions and answers • Physical Health • Physical illness • Suicides occur every year! Issues Within the Admission Process

32. Public institutions preferred over private institutions Students who score poorly on the National College Entrance Exam can attend private schools Public v. Private Universities

33. Wall Street Journal – China Daily newspaper reports: • Study of top 1,000 National College Entrance Exam scorers from 1977 – 2008 • None had outstanding success in any industry Accurate Predictor for Future Success?

34. Foreign language not required but highly encouraged, majority are familiar with a second language Work experience not required Curriculum: business culture, economics & business administration classes Professors focus on differences of U.S. and Chinese business model MBA Program in China

35. Majority of Chinese students do not feel like they are fully prepared for the job market. • One student says many students are not well prepared for handling basic situations in the professional environment. • Another student said they do not receive much practical knowledge, and although the quality of education is improving significantly each year, it is still comparatively low. Prepared for the Job Market?

36. Cultural Aspects

37. Cultural Groups • Han Chinese: largest ethnic group 91.5% (1.2 billion) • Zhuang: 1.2% (16.1 million) • Manchu: (10.6 million) • Hui (9.8 million) • Miao (8.9 million) • Uyghur (8.3 million) • Tujia (8 million) • Yi (7.7 million) • Mongol (5.8 million) • Tibetan (5.4 million) • Buyei (2.9 million) • Dong (2.9 million) • Yao (2.6 million) • Korean (1.9 million) • Bai (1.8 million) • Hani (1.4 million) • Kazakh (1.2 million) • Li (1.2 million) • Dai (1.1 million)

38. Hong Kong • Mainly populated by Cantonese • Known for combination of Chinese Culture and British bureaucracy. • Taiwan (not really apart of the PRC) • Ruled by Nationalist Party • Emigrants from Fujian and Guangdong provinces • Mixture of Confucianism, Taoism, and Buddhism • Tibet • Highest Region in the World – The Himalayas • Home of the Dalai Lama Regional Subcultures

39. Individualism vs. Collectivism Small vs. Large Power Distance Cultural Dimensions – Hofstede’s • Masculinity vs. Femininity • Weak vs. Strong Uncertainty Avoidance

40. Long vs. Short Term Orientation Hofstede’s, Contd

41. 1) Universalism vs. particularism • (What is more important, rules or relationships?) RULES - Universalism • 2) Individualism vs. collectivism • (Do we function in a group or as individuals?) GROUP - Collectivism • 3) Neutral vs. emotional • (Do we display our emotions?) NOPE - Neutral • 4) Specific vs. diffuse • (How separate we keep our private and working lives) NOT VERY - Diffuse • 5) Achievement vs. ascription • (Do we have to prove ourselves to receive status or is it given to us?) GIVEN - Ascription • 6) Sequential vs. synchronic • (Do we do things one at a time or several things at once?) SEVERAL - Synchronic • 7) Internal vs. external control • (Do we control our environment or are we controlled by it?) CONTROLLED - External Trompenaar and Hampden Turner’s

42. The essential nature of people • Good/evil/mixed Basically Good • Relationship to nature • Dominant/Harmony/Subjugation Harmony • Relationship to other people • Hierarchy/Collateral/Individualist Hierarchy • Modality of human activity • Doing/Being/Containing Being • Temporal focus of human activity • Future/Present/Past Past Kluckhohn and Strodtbeck

43. Why these values? • Preference • China’s history • Consequences of non-conforming • Work Ethic • Attitude Towards Change Cultural Dimensions, contd

44. Greetings • Handshake (usually a ‘deadfish’ and longer than US) • Bowing to officials or elders is NOT a common practice. • Only standing is required when they enter a room. (Chinese MBA student) • Pat small children on the head • Business Gift Giving • Wine, cigarettes, souvenirs, fruit baskets, flowers, dinner, tea sets… • Bring something native to your region (wrapped in colorful colors) • Give w/ both hands • No duplication Customs

45. Key Holidays/Ceremonies • Chinese New Year (2010: Feb 14) • Zhonghe Festival • Eat Chinese pancakes and clean the house • Spirit Festival • Burn fake money to appease your ancestors and they won’t trouble the living. • Tipping – not a must, but greatly appreciated • Bellhops, waiters, and what not. • Basically the same as US Customs, contd

46. Chinese is spoken in just about every setting. • Overseas business is communicated in English • Business Etiquette • Friends first, businessmen second • Conservative suits w/ subtle colors • Women – avoid heels and short-sleeve blouses • Business cards – give individually and offer assistance • Nonverbal • Rude to point to someone • After Chinese MBA consultation, it’s rude NOT to make eye-contact. • Point to the floor instead of up if you want someone to come to you. • Personal Space • Not that important, “close-talkers” Communication

47. Conflict Management • Try to avoid: Harmony, not justice • Chinese people are indirect about conflict. They will just avoid the person they have a beef with. • Food Etiquette • Most important person sits furthest from the door • No one sits until the guest of honor does. • Chopsticks. Keep ‘em clean and they’re not toothpicks. • If you’re a guest, eat the food! It’s rude if you don’t. • Close your mouth. Communication, contd

48. What do you think about American companies? What about American business people in general? • Less small talk, quicker business transactions. • Close-minded, not open to outside advice • What kind of relationships do employers have with their employees? • Employees are not very loyal to boss. • Bosses are usually very unapproachable. Other Questions to Chinese Students

49. Are personal relationships at work important to you? • Yes, very. • What do you think about women in the business world? • More powerful than every before, just as important as men. Other Questions to Chinese Students

50. How does one person get promoted? • Thru merit and an open position. • Connections, sex, and sometimes hard work. • In general, what happens during a business meeting in China? • Many listen while a few talk. If its dining, Business isn’t discussed until after supper’s over. Also, the Chinese side of the business deal won’t outright say “no,” they’ll say “we’ll consider it” so the other side doesn’t lose face. Other Questions to Chinese Students