The two eastern developing countries: India and China are the lands with more than five thousand year-old civilisations as well as enriched cultural and traditional heritage. The geographical existence prevents the countries to interact since time immemorial. Still since ancient times, some scholars such as Fa Xian and Xuan Zang travelled to India from China, Buddhist monks, especially Bodhisattvas, travelled to China from India. Despite this restricted exchanges, cultural differences did not avert two peoples to interact their motives regarding their search for knowledge or spiritual search. From the beginning of modern age, the active phase of social contacts has started between India and China.
However, due to the rapid globalisation process, these two nations have come closer, and economics have unveiled a new horizon crossing the border. Both China and India are rising for their reform policies. By means of their conditions, both nations are compelled to promote their trade and commerce in mutual interests.
A precondition is at the root of these countries for their social, economic and political understanding with regard to their cross-cultural communications. China is aware of the crucial fact of India, a multilingual and multiethnic land, and its democracy with multiparty political system, independent judiciary representing pluralistic interests. China should predominantly mistake neither the unity in diversity of India nor its economic reforms initiated in early nineties and its course of transformation into the encouraging market of liberalisation and foreign direct investment. India has got a real growth which showed the positive side of India in its Gross Domestic Product (GDP) at an average of 8.6 per cent in the last few years. In the global domain of Information Technology (IT), Indian companies have proved their success. China should recognise India in regional and global sense as a rising power of Asia. India too needs to realise the unique political, economic, social and cultural conditions of China. Since its reformation in 1978, Chinese economic liberalisation adheres to a centrally planned economy, ‘socialist market economy’, by predominantly awarding the basic superiority to public ownership. The State-Owner undertakings (SOEs), has now been reformed and its plays a crucial role in the national economy. The output of SOE to the GDP of country is now 50 per cent against 70 per cent in 1985 while the corresponding share of the state sector in India was 14.1 per cent in 1990. The encouragement of Chinese entrepreneurship is undoubtedly at the highest point and the private sector too is booming. In the 15th Chinese Communist Party (CCP) Congress in 1997, China boosted privatisation and subsequently undertook a crucial practical measure in 2005 by introducing a share conversion pilot reform programme. The south-eastern coastal China having been open to the foreigners for a long time is ahead of other parts of the country in respect of growth in private sector market and cultural development.
In the field of politics, CCP is the all-in-all force in China as well as the state and the entire nation is submissive to the party. The CCP decides even the macroeconomic policies and as a result the State easily implements in the absence of any credible opposition, in contrast to the scenario in India. The party vets all senior appointments in business enterprises and its trade unions are operating within all the companies.
The Chinese economic model is based on the discipline and central control, while Indian economy is marked by chaos and decentralisation. Simultaneously, China has some weak areas to focus on. For instance, legal and banking infrastructures are considered by the foreigners as obstacles to their business operations.
Foreigners involving themselves with China should have in the back of their minds the idea about the unprecedented economic growth of China in recent times. Over the last 20 years, the country has registered an impressive 9.5 per cent growth every year. It has become the third largest economy (second in terms of PPP) in the world with its per capita GDP US$ 3260 in contrast to just US$ 50 in 1949, whereas on the basis of market exchange rates, India is the 12th largest economy in the world fourth largest in terms of PPP with its per capita GDP US$ 830. China could pull out 500 million people out of poverty in past few decades. The profile of China in international trade has gone up, with the volume now at US$ 2.6 trillion, a hundredfold rise from US$ 20.6 billion, 30 years ago. Three decades ago there was no Foreign Direct Investment (FDI) into China, but now it has reached the level of US$ 92.4 billion, first accomplishment among developing nations. The Chinese mass exodus has been very active in investing largely in China.
Undoubtedly, China is still a developing nation, and in terms of per capita GDP ranked 104th in the world. A balanced development is the main and major target of Beijing’s policy and a rise from its former GDP-centric growth model. China positioned its goal towards the tetrad of the 2000 GDP by 2020 to become a medium level advanced nation by 2050. However, China encounters big challenges: environmental questions, income disparities and ensuring of the efficacy of the government investment towards development.
China is also leading an active military modernisation programme raising concerns in the region. It badly needs foreign resources for its development but it hunts energy in global sphere. Apparently, China is utilising its economic strength to accomplishing a political influence in the global domain and its outlooks have become crucial for decision-making by world powers. A rising China has naturally drawn attention of the world business community along with India to trade with and invest in its territory. The major countries of the world are more and more establishing joint ventures or wholly self-owned enterprises in China to produce goods for the Chinese market or export to other countries. The neighbouring country, India is not exception in this regard, its trade and investment relations with China are gradually on the pick. By 2010, India-China trade almost touched US$ 60 billion. China has proved to be India’s largest trade partner.
The cross-cultural management calls for a holistic approach from India and China. Indians and Chinese are in search of a way-out to resolute the problem of transcending the cultural barriers. The task will be easy the moment they know each other in respect to the traditions and culture of their nations. The base of Chinese culture: Its rich language and literature, spirituality, its culture of clothing, health and hygiene, and food habits. The knowledge of Chinese language will be important to foreigners for communicating effectively with the Chinese as English has not yet spread widely in China as a link language. Chinese too has an opportunity to be acquainted with the unique characteristics of the Indian civilisation, philosophy as well as democracy.
The following are some of the ideas helpful to the Indian businessmen interested to deal with China:
i. The Chinese have a traditional mindset of a ‘Middle Kingdom’ with the belief of their country being the ‘Centre of Universe’. During the Ming (1368–1644) and Qing (1644–1911) dynasties, there was the system of tribute. The dynasties of Korea, Burma, Siam (present day Thailand) and North Vietnam used to convey their tributes to the Chinese emperors, when the latter favoured them. In this way, Chinese assumed their cultural superiority and even in this present context the mindset is common among the Chinese.
ii. Business community of China, especially the younger generation, does not think the Sino-Indian territorial conflict of 1962 to be a hindrance in their business relation with India. Simultaneously, the Sino-Indian conflict may still have influenced the Chinese traditions of territory as in the Chinese concept of ‘Under the Heaven’ (Tianxia), i.e. all territories belong to the emperor, the Son of God, the term ‘territory’ has no importance. However, the Chinese now demand that this age-old concept is out of vogue. In relation to this, there is another point that the two nations are rivals in the political as well as territorial positions, and it will certainly ward off promoting their business relations.
iii. The Chinese are not interested to give equal status to stability as well as reforms because of their firm belief in stability. Their past was guaranteed with stability by the leaders, Mao Zedong as well as Deng Xiaoping and in future they look for the same by the Chinese Communist Party as the civil society supports the government In this regard. Therefore, the Chinese business concept hardly has any intention of being involved in bureaucratic terms because of the importance of the government’s charter in the country’s economy. Hence, Indian businessmen should establish dealings with the Chinese governments as well as their sponsored enterprises simultaneously; China should think of the contributions of Indian ventures for the development of China.
iv. Indian executives familiar with the business climate of China are keen to select local Chinese partners and employ more Chinese at senior and middle management levels in the staff of their companies with a view to entering the local markets.
v. The CCP has great influence over business of China and it distinguishes China from India in par lance of the prevailing conditions in both countries. That is the question for the Indian businessmen.
vi. The staff of the Indian companies should be trained in Chinese language, social and culture conditions in this way the West establish their markets.
The Chinese too in India face cultural barriers such as the cases of governance, language and infrastructure problems. The following are some of the crucial ones:
• As per the reports from the observers, the Chinese construction companies confront indignation of the unemployed engineers of India.
• India is not willing to allow Chinese entrepreneurs in the sensitive sectors like telecommunication and port projects because of security reasons. The Chinese companies better be familiar with Indian compulsions for better business opportunities.
The Chinese companies interested to deal with India should understand the legal system of India functioning in the foundation of a democracy. For instance, the case of the Chimney collapse, in Central Chhattisgarh causing death of 41 persons, subsequently 80 Chinese workers were not allowed to return China until the enquiry was completed by the authorities. It is, at last, clear that the fundamental systems of India and China differ and it may influence their business relations. Indian system is chaotic and prone to communal as well as ethnic conflicts and decentralised in decision-making, flexibility oriented and resilient preventive social pressures for the country’s overall stability, whereas the Chinese system is disciplined and people oriented and centrally controlled. The growth and success of the India-China crosscultural management largely depends on the cooperation of the two to harmonise their strengths as well as weaknesses for the betterment of their business understandings