Investments in China: the importance of culture and language

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A direct testimony of a Spanish manager doing business in China: “no one could understand the Chinese culture without studying  their traditions”.

Everybody knows that culture and language affect the way we do business and the way we consider our investments, even inside the same country, like Spain (for example, the Catalans  and  the Andalusians) but this is very obvious in China.

China – and the Chinese world – has a culture with an enormous tradition that has developed in an almost independent way from ours in the West. China has been in contact with several cultures  in Asia, like Persia and other Southeast Asian countries but especially with India from where they received a big influence in the fourth century through Buddhism. The other major influence has been the West specially in the 19th Century.

So this Chinese civilization, that has been developed independently (in a certain way)  from our civilization, has a very original language. I think that this is a very important aspect because the language is the most important vehicle to express oneself.  So, there are many aspects in this culture that will be presented in a very special and different way and of course  in today´s world this will also affect the investments we make.

The well known French sinologist Marcel Granet  tried once to explain to some Chinese students coming to France (in the 1940´s) “Discourse de la Methode”,  is a very neutral text with quite simple and general human ideas. But he discovered that after a few minutes of explanation, the Chinese where completely lost, it was a completely foreign domain for them.

But it works both ways, meaning that no one could understand European culture without studying  our philosophy and traditions going back to the Greek philosophers and no one could understand the Chinese culture without studying  their traditions, philosophy and way of thinking  going back to several centuries before our era.

So that means that our historic trajectories, our references, our socio-political realities are different and therefore, everything that might look identical in European and Chinese cultures turns out to be very different when we analyse it more deeply.

The importance of knowledge, its history and the way we acquired it in our lives is very important in every civilization.

In China for instance, Confucianist ideology has been transformed continuously, especially after the 12th century into what has been called  the NeoConfucianism  and this transformation is related very closely to all aspects of society, politics and history. In this sense, concepts have changed continually since they first arose throughout all the dynasties but especially during the period of Western influence  in the 19th  and 20th centuries.

There are many concepts in Chinese language and culture that are different from the way we know them in the West. As I already commented to you once, terms and notions about justice, morality, humanity, individual rights, agreements, etc… are not the same. For instance the word  “politics” which comes from the Greek polis and in the West carries the idea of all citizens being represented as aiming for the best way to administrate the city,  in the Chinese language, the term politics ( 政治 ) means “Administration Control”, so the semantics are very different.

So when the leaders of China and the EU meet and talk about politics, most of the time they are talking about their own concept of politics. So this causes many contradictions and misunderstandings. The same goes for business and investments.

All this is to say that we still have a long way to go, especially now that the government of China is trying to expand the “silk road” all over the world and specially to the EU and organizing seminars and forums to invest.

To build a railway from Hong Kong to Lisbon or build a new Euro Asia market is not possible if there is no mutual recognition and harmonisation of regulations, or if we do not have a new approach to standards for unimpeded trade and investment. We need to rely on international standards and semantic concepts: cooperation between companies will only be possible if they can refer to the same standards.

To sum up, investing abroad, building factories and infrastructures is the easy part of connecting China and the EU, but the “software” is where the difficulty lies and language and its semantics  play a very important role.

Jesus Castillo Abascal

Business Development Manager at Solarig Holding S.L.. (see the table below)

Beijing, China

jcastillo@sina.cn

Case studies: European green tech FDI to China

 

  Beijing Boon Edam
Entrance Technology Co., Ltd.
Exprivia IT Solutions (Shanghai) Co., Ltd. ISG Heating Equipment Co., Ltd. Hamon Thermal (Tianjin) Co., Ltd. Solarig Holding S.L. Alstom Grid China Technology Center Co., Ltd.
Year of establishment 2001 2014 2013 2009 2006 2009
Respondents’ position and nationality Ambassador, Dutch CEO, Italy General Manager, Turkish Sales and Projects Manager (China), Belgian Asia Executive Director, Spanish General Manager, Chinese
FDI entry mode Joint venture Merger & acquisition WOFE Branch JV

(25% Spain-75% Chinese)

WOFE
Turnover  in China (USD) 48,000,000 113,000 3,800,000 90,000,000 55,000,000 N/A[i]
Core business Manuf.
revolving doors
Service: consultancy,
service, information and communication
Manuf.
heating business
Manuf. and services: turnkey
projects, engineering
Manuf. and service: energy plant developer, engineering and operation R&D: applied research, product development, engineering support
Headquarter location Netherlands Italy United Kingdom Belgium Spain France
Chinese location Beijing Shanghai Shanghai Beijing Beijing Shanghai

Source: Vaccarini, Spigarelli and Tavoletti, 2015.

[i] As about the turnover, our respondent representing Alstom Grid China Technology Center Co., Ltd. mentioned the following statement: “Since we are the cost center and focus on R&D activity only, so number is sensitive and it is not allowed to be disclosed”.

Reference

Vaccarini, K., Spigarelli, F. and Tavoletti, E. (2015), “European green tech FDI in China: The role of culture”, c.MET Working Papers 1507, c.MET-05 – Centro Interuniversitario di Economia Applicata alle Politiche per L’industria, lo Sviluppo locale e l’Internazionalizzazione, https://socionet.ru/publication.xml?h=repec:cme:wpaper:1507&l=en.