The Role of Punctuality and Hierarchy in German and Chinese Business Cultures

Geographic Location

China is located in Southeast Asia along the coastline of the Pacific Ocean, China is the world’s third largest country, after Russia and Canada. With an area of 9.6 million square kilometers and a coastline of 18,000 kilometers. Germany on the other hand is a country in west-central Europe, that stretches from the Alps, across the North European Plain to the North Sea. Germany has the second largest population in Europe, after the European part of Russia and is Seventh largest in area.

Capital Cities

Beijing is the capital city of People’s Republic of China and is the world’s most populous capital city. The city is located in Northern China and is governed by municipality. Beijing is an important world capital and one of the world’s leading centers for politics, economy and finance. Secondly the capital city of Germany is Berlin, which is actually also the largest city in the country. The population of Berlin makes it second most populous European city after London.  It is surrounded by the state of Brandenburg and continues with its capital, Potsdam.

Weather and Climate

According to World Travel Guide China has a great diversity of climates, but on the other hand being located entirely in the Northern Hemisphere means that is seasonal climate may be compared to other European countries (World Travel Guide, 2018). China is experiencing hot and dry summers and cold freezing winters. Germany’s climate is moderate and has generally no longer periods of cold or hot weather. Northwestern and coastal Germany have a climate which is characterized by warm summers and mild cloudy winters.

Types of Government, Head of State and Head of Government

The government of the People’s Republic of China is socialist republic run by a single party, the Communist Party of China is headed by General Secretary. State power within the People’s Republic of China is exercised through the Communist Party and the Central People’s Government. On the hand Germany is a democratic country, where the legislative power is held in the parliament of Germany and in the Germany’s regional states. It’s head of state is the Federal President and head of the government is the federal chancellor.

Size of National Population

China’s 2019 population is 1.42 billion, based on United Nations projections. Officially the People’s Republic of China, is the largest country in the world today according to the statistics. Germany is the second most populous country in the European Union with an estimated 2019 population of 82.44 million, which ranks 17th in the world.

GDP

According to Tradingeconomics.com the Gross Domestic Product (GDP) in China was worth 12237.70 billion US dollars in 2018, the GDP value of China represents 19.74 percent of the world economy (tradingeconomics.com, 2018). Secondly the Gross Domestic Product (GDP) in Germany was worth 3677.44 billion US dollars in 2018. The GDP value of Germany represents 5.93 percent of the world economy (tradingeconomics.com, 2018).

Germany

The values that characterize German culture include forward thinking (planning), thoroughness and punctuality. These qualities make Germans feel the most comfortable as they provide a highly organized world that can be compartmentalize into controllable units. The German mentality is reflected in their economic, social and legal structures, which greatly impact the cost of doing business in the country (Kim Ann Zimmermann, 2018). As such, the German legal system, which can be best described as very strict body of laws, highly regulates all aspects of business. The country’s laws, for example, highly regulate in a number of specific areas of employee-employer relationship, such as the transfer of intellectual property rights between employers and employees. Failure to comply with the strict German laws can result in severe financial/legal consequences for a company, be they financial or legal. (RadiusWorldwide, n.d.) Additional the German tax system was and continues to be influenced by the before mentioned national cultural values, such as forward thinking. An example of the above is so called “solidarity surcharge”, which is a tax which takes away additional 5.5 % of all taxable income for the purpose of developing the East Germany. (Steuerliches info-center, n.d.) This unique tax increases the cost of doing business in the country.

China

China is known by its hierarchical group orientated culture where you, as an individual, are defined by your relationship to the larger group. All of your actions, whether positive or negative, do not only reflect on yourself, but also on the group as a whole. Because of dominating collective mindset, modesty and humility are prized traits in the Chinese culture, and on the contrary bragging is frowned upon.

Modesty and humility ties into the concept of “face” (mianzi), which can be most closely defined as “dignity” or “prestige” in the eyes of one’s family and community. (Internations, n.d.) The comprehension of this concept can help people from other cultures to better understand many other aspects of the Chinese culture, which one has to take into consideration when calculating the cost of doing business in the country. For example, due to the hierarchical nature of the Chinese society, communication with local authorities can be very difficult. Getting a response from the authorities can be very time-consuming because of “red tape”, i.e. excessive adherence to official rules and formalities. This “needless time-consuming bureaucracy” can eventually result in high costs of doing business, as a result of the loss of vital productive hours might due to adherence to needless rules and formalities. (Radius Worldwide, n.d.)

Due to the concept of “face”, the Chinese workers can in practice be reluctant to point out the mistakes of others. Such a work environment, in which a breakdown in “bottom up” communication can occur, might lead to increases in the cost of doing business in the country. The reluctance to point out mistakes can result in problems not being fixed as soon as they happen.

As mentioned above, the German culture transposes itself into country’s economic, social and legal structures, which play a big part in influencing the likely future economic development of the country. The fact that the German culture is highly organized and thorough, eventually results in the country’s laws being very complex and clear, to a point where they leave no room for interpretation. This is a very attractive proposition for many foreign companies, as it makes the German laws easy to learn and operate in.

From the point of view of the economic structure, the forward thinking and thorough nature of the German culture facilitates the eventuality of Germans becoming aware of the importance of foreign investment for the economic development of their country. Thanks to this awareness, there are today very few barriers for foreign trade and investment in the country. Actually, the German government even sponsored incentives for new businesses, in order to attract more foreign investment. The thoroughness, punctuality and highly structured nature of German culture also contributes to the country’s having a highly skilled labor force, quality engineering, a first-class infrastructure and ultimately a high level of productivity. (RadiusWorldwide, n.d.) All the above mentioned points make the country very attractive for investors, which in turn means that the likely future economic development of Germany will be positive.

The nature of Chinese hierarchical group orientated culture, in conjunction with the country’s history and communist political system, greatly influences its likely future economic development. In particular, the country’s communist political system makes it difficult for foreigners to start a business in China. The only type of company that is not subjected to significant control/oversight by the Chinese government is the “wholly foreign owned enterprise” (WFOE). To get a permit for WFOE, the applicant is required to have a “reasonable” amount of capital. (Radius Worldwide, n.d.) However, the governmental oversight of the other types of companies, coupled with the unclarity regarding the actual required amount of capital needed to start a WFOE, is a substantial deterrent for foreign investors, which might negatively impact Chinas future economic development.

The Chinese concept of “face” is a factor that when assessing prospects of future economic development of the country can in general be viewed as positive. It is actually a plus because although the “face” concept makes establishing trust between businesses a time-consuming matter, it also diminishes the chance of being cheated as that could mean losing “face”. This type of culture-induced fraud prevention means that it is a lot safer doing business in China than some other countries. (Radius Worldwide, n.d.)

Germany is a nation that is strongly individualistic and where work and personal lives are rigidly divided. Business is viewed as being very serious; as such Germans do not appreciate humor in a business context. Business executives, who hope to do business in the country should keep in mind the following business practices:

punctuality is an important part of the German business practices. Time is managed carefully, and calendars, schedules and agendas must be upheld, as not doing so could result in great offence. Due to the preference for punctuality, it is common practice to be 5 to 10 minutes early for appointments.

business is viewed in Germany as a serious matter; Germans tend to concentrate much more on the actual business at hand and less on formalities and rituals associated with it. Gift giving in a business context is not a common occurrence in the country. However, if someone wants give a gift during a business meeting, then office equipment or a good quality pen with your company’s logo or perhaps liquor would be considered acceptable.

Due to the serious attitude towards business practiced in Germany, bribery and corruption are severely frowned upon. The result of the cultural dislike of bribery and corruption was introduction, German government promoted several anti-corruption initiatives and passed specific laws, such as tax reform legislation in 1999, which addressed the tax write-off of bribes in the country. (Businessculture, n.d.)

Chinese business culture is largely influenced by Confucianism, which built on an ancient religious foundation to establish the social values, institutions, and transcendent ideals of traditional Chinese society (Berling, n.d.). Pursuant to the Confucianist values, the Chinese people often seek to create long-term business relationships, rather than negotiate contracts. They are also very risk averse out of fear of losing “face” (concept described in 3.1). Business executives, who hope to do business in the country, should keep in mind the following business practices:

Chinese people value punctuality. When talking about meeting arrangements, unlike the Germans, Chinese people prefer meetings where the end of the appointment is not set in advance. This arrangement allows for longer meetings, during which the Chinese can build trust, which is essential for a long-term business relationships.

giving and receiving gifts is a common practice in Chinese business. The giving of gifts is usually associated with is the beginning a new business relationship. As the giving of the gift takes on a symbolic role (like a ring at a wedding), this practice, once again, ties into the Chinese people’s preference for long-term business relationships. The gift should not be expensive and should always be wrapped.

the concept of “face” heavily influences the communication part of Chinese business practices, by making the Chinese indirect communicators – this means that during business negotiations disagreements will be seldom expressed. An example of indirect answers that could be expected from Chinese businessman include ‘Yes, but it might be difficult’ and ‘Yes, probably’. These indirect answers are said so that one does not embarrassed himself by promising something that may not be deliverable. (Santandertrade, n.d.