Hong Kong vs Uk Business Norms Essay

This paper will introduce the audience to the historical background of Hong Kong; business dos and don’ts comparing Hong Kong to the UK; financial, economic, political and social climate of Hong Kong. The aim is to provide fundamental data to assist a professional when conducting business in Hong Kong effectively but also respectfully. Hong Kong Background Hong Kong can be found on China’s south coast region bordered by the Pearl River Delta and the South China Sea. Geographically, Hong Kong has a total area of 1,104 square kilometres which include 262 outlying islands (GovHK, 2012). The population is over 7 million, with the majority speaking Cantonese though English is still widely used. Hong Kong was acquired by the British Empire from the Qing Dynasty during the first opium war from 1839-1842 (Kan, 2010). After 150 years of British colonial rule, in 1997 China resumed sovereignty over Hong Kong (U.S. Department of State, 2012). Hong Kong is under Chinese rule and the Chinese government is responsible for Hong Kong’s security and foreign relations. Hong Kong, however, is recognized as Special Administration Region of the People’s Republic of China. This ensures that Hong Kong’s customs territory and economic entity are separate from the rest of China. This allows Hong Kong to enter into international agre ements on its own behalf in commercial and economic matters (U.S. Department of State, 2012). Government/ Politics The government of Hong Kong is noted to be economically liberal. Hong Kong is an autonomous special administrative region of the People’s Republic of China. The current government executed under Hong Kong’s basic law is secured in this autonomy for 50 years (GovHK, 2012). The governmental structure is directed by a chief executive and an executive council, accompanied with a two-tier system of a representative government and an independent judiciary. Economic & Financial Climate Based on rule of law, limited government, regulator efficiency, and open markets ranked by the Heritage foundation with a score of 89.3, Hong Kong is ranked as the freest global economy in 2012 and has successively kept this title for the past 19 years (Heritage Foundation, 2012). Hong Kong â€Å"is a Freeport with no barriers to trade; has simple procedures for starting enterprises, free entry of foreign capital and repatriation of earnings, and transparency; and operates under the rule of law (Heritage Foundation, 2012).† Hong Kong switched from an industrialized manufacturing economy to a service based economy in the 1980s (economywatch.com). Hong Kong’s free market economy is built on the harbour, investments and trade (Sociology for Change, 2007). Hong Kong is dependent on international trade and finance. 92.3% to the GDP in 2009 which was contributed from the service sector (economywatch.com). The major industries in Hong Kong are textile/garment, banking/financial services and tourism. Hong Kong is the third largest distributer of garments in the world. In 2008 Hong Kong exported $40 billion US dollars’ worth of textiles and garments which is 11% of the territory’s total exports (economywatch.com). In the financial sector, Hong Kong has the world’s 10th largest security exchange, with a market cap of $2.7 trillion (GovHK, 2012). At the end of 2012 there were 1,533 companies listed as trading on the Hong Kong stock exchange (SEHK). In 2009, 2010 and 2011 Hong Kong was listed as the highest ranking market for IPO’s (GovHK, 2012). Looking at Hong Kong’s banking industry at the end of 2012, there were 154 licensed banks, 20 restricted licence banks and 25 deposit-taking companies. These banks come from 34 countries and include 69 out of the 100 world’s largest banks (GovHK, 2012). Conducting Business Hong Kong vs. United Kingdom Introduction This section will inform the reader on both Hong Kong and the United Kingdom’s etiquette and protocol relating to business practices. I will concentrate on how business meetings are conducted, how business decisions are made and how negotiations are conducted in the business realm while integrating Hofstede’s cultural theory. I will conclude with possible challenges and pitfalls that should be considered if the â€Å"dos and don’ts† fall short or turn out to be limited. Hong Kong Pre-departure Info Working Practices Prior to flying over on a business trip to Hong Kong, it is suggested that one ought to understand the common business practices. Confucianism is entrenched within Chinese philosophy and plays a strong influence on the importance of social relations that Hong Kong’s people are known for. So when we look at â€Å"the degree of interdependence a society maintains among its members,† which defines the Individualism dimension, it’s not shocking to see Hong Kong as a collectivist culture, where people tend to think of the groups interests rather than their own personal objectives. In Hong Kong a large number of businesses are family owned and it’s normal for family members to work for the same companies (cummunicaid.com). Hong Kong’s daily business hours are from 9am to 5pm with a lunch break from 12noon to 2pm (communicaid.com). When scheduling a business trip to Hong Kong you should avoid the holidays. Vacations are usually scheduled around the weeks surrounding Christmas, Easter and the Chinese New Year; most business are typically closed during these periods (cummunicaid.com). After you plan your business trip in accordance to that criterion, it’s best to schedule appointments in accordance to their customs, noting that punctuality is important and that tardiness could be considered disrespectful. Taking that further, reputation also known as â€Å"concept of face† explained as the adherence to proper honourable ethical and social norms of a society in all situations and times is also something the Hong Kong society considers highly during business practices (cummunicaid.com).When making appointments they should be scheduled in advance to your arrival and in some cases one to two months’ notice is a courteous (cummunicaid.com). Organizational Hierarchy in Hong Kong Companies Hong Kong is a high power distance culture and we can point out that hierarchy is ingrained in the business culture. In Hong Kong, companies clearly define the line of authority with the distance between superiors and subordinates which are constantly maintained (cummunicaid.com). Men still dominate the workforce although in the recent years women are becoming more active. Some say this is because of the Western influence of equality (cummunicaid.com). In Hong Kong it’s imperative to maintain harmony and avoid conflict in a group atmosphere. In the public atmosphere of Hong Kong, the people always keep calm, show no emotion and refrain from criticising out in the open. This compliments Hong Kong’s slightly male dominated society. Hong Kong is a success oriented and driven society, where it is not uncommon for people to spend many hours at work. Conducting Business Standard business attire for men would be dark colored suits and for women dark colored suits with trousers or skirts (cummunicaid.com). When greetings take place, it’s traditional to both give a Chinese bow and a Western handshake. Keep in mind that you address them with their title and last name, if you’re in a group setting the most senior person should be greeted first (cummunicaid.com). Hong Kong people are keen on building relationships, so small talk should be expected and if you are offered an invitation to a social event you should never reject that opportunity (cummunicaid.com). Moving forward to the exchanging of business cards, one is expected to exchange business cards with two hands and accepting it also with two hands. It’s courtesy to examine the card for a few moments reading it to familiarize yourself with the name and the title, before placing the card in your pocket (cummunicaid.com). When negotiations take place one must expect for the deals to move at a slow pace and must avoid losing composure for this will damage ones reputation also known as â€Å"losing face† (kan, 2000). It’s not uncommon for an astrologer or a feng shui practitioner to determine a singing date if a contract is on the table (kan, 2000). Fred Kan also highlights that if a colleague sucks air through their teeth while you’re speaking, this signifies they are unhappy and its best to try and reiterate or adjust your position. After the business deal has been presented the decision usually arrives from a group consensus, but leaving the top of the company having the last to say (cummunicaid.com). Table Etiquette In Hong Kong it’s common for business transactions to take place or end up at the dinner table. If invited to dinner expect alcohol to be present. If your host decides to make a toast it’s customary for you to follow up with your own toast which should consist of good health and prosperity (cummunicaid.com). Meals are often served family-style and you are encouraged to try everything, but don’t take the last piece as this can be seen as selfish gesture. United Kingdom Pre-departure Info Working Practices Distinguished for its constitutional monarchy, rich history of the colonial empire and deeply ingrained traditions, the British Empire now known as the United Kingdom is a culturally and ethnically diverse nation that is made up of four countries. Northern Ireland, Wales, Scotland and England comprise the United Kingdom. The UK is a member of the European Union and currently is ranked fourth in trading within Europe. British culture is known for its indirectness, â€Å"stiff upper lip† and dry humour. It’s a common communication style in the UK that direct questions are often answered with indirect answers filled with ambiguous subtleties which forces one to pay close attention to tone of voice and facial expression to fully understand the response given (communicaid.com). Displays of emotion, positive or negative should be avoided in public space. The term â€Å"stiff upper lip† describes the British portrayal of reserve and restraint when faced with difficult s ituations (communicaid.com). Humour a key component to the culture of the British life style and is commonly used as a defence mechanism (communicaid.com). Organizational Hierarchy in British Companies In the work environment, the British are known to be formal. In the past, the British preferred to work with colleagues and companies they knew of, however the younger generation of business professionals do not require any form of relationship in order to begin business. Networking and building strategic relationships are the fundamental to long-term success in the UK. Superiority is respected, although colleagues gravitate to people at their own level to work with directly. This hierarchy can be notated as â€Å"flat† where the principal divide is between managers and other ranks (communicaid.com). The board of directors are the key decision making group and managers are understood to be the coaches creating a supportive working environment (communicaid.com). Conducting Business In the professional atmosphere men should be dressed in a dark colored suit and women should wear either a business suit or a conservative dress (communicaid.com). Upon the initial meeting it is common to shake hands with everyone upon arrival and maintain steady eye contact during the greeting. I must highlight that one should wait until given permission to move onto a first name basis. Under special circumstances if you’re in the presence of someone who have been knighted then they are to be called â€Å"Sir† followed by their first and surnames (communicaid.com). Also during the initial greeting it’s common for professionals to exchange business cards and may be placed into the pocket after having just a moment’s glance. There are no rituals when exchanging business cards in the UK. When a meeting is conducted, depending of the level and status of the people attending, it will dictate how the meeting will commence. A free flow meeting usually occurs when everyone is at the same level, if there is a senior ranking person in the room, then they will do most of the speaking. Meetings are usually formal with a set agenda identifying the purpose. In British culture it is suggested that, when presenting to a group, one must make sure to be prepared with facts; relying on facts is more stable than emotions (communicaid.com). After concluding the meeting it is customary to send a printed summary containing the next steps which are to be taken in a letter to the attendees. The British are known to follow established rules and practices which make the decision process a slow systematic one (communicaid.com). When dealing with the British in business negotiations patience will be required. Communication will also be one area to focus on. The British communicate in a controlled fashion and only rarely raise their voices to make a point (kats, 2008). The level of directness depends on the strength of the relationship, education and status. Vague statements that may be difficult to understand are common when communicating with the British. Lothar Kats explains it best when identifying the â€Å"British are masters of understatement and often use subtle irony† Contrast: Hong Kong vs. UK After reviewing both Hong Kong and UK there are a few similarities and a few differences. In Hong Kong traditional values of respect to hierarchy, the exchange of business cards and developing a personal relationship are cornerstones within their society. Whereas in the United Kingdom building personal relationships was once a tendency that no longer exists; the younger generations move forward and start the business process. When dealing with the British in business one must pay close attention to the conversation. The tone, eye contact, and understated response can commonly lead to a misunderstanding if one is not paying close attention. It is therefore best to not underestimate the importance of humour in the British business environment (communicaid.com). The hierarchy in Hong Kong is clearly defined with ample distinction between subordinates and superiors. Contrastingly, the UK is known for a â€Å"flat† structure where most business is usually dealt with by colleagues of the same level. Taking a glance into the integration of women in the work place we see the UK with comparable numbers men to women while in Hong Kong the introduction to women in the work place is a recent occurrence. Comparing the two nations in regards to how a professional is to book a business appointment we see in Hong Kong it’s common to make an appointment one to two months in advance unlike the United Kingdom its common for just giving several days’ notice. In conclusion, we can see that it is vital for one to do background research on the business norms prior to jumping on a plane to conduct business internationally. Cultural Intelligence Elisabeth Plum defines cultural intelligence as the ability to act in an appropriate way in multicultural situations coupled with the ability to have an open mind which admits new information and is curious about diversity. Cross-national work is an example of cultural intelligence, and when an organization needs to join forces and partner with other businesses in other countries to keep business efficient it important to prevent conflicts. As discussed earlier in this paper it’s important to understand the culture that you’re doing business with. In order to have successful negotiations in the international market place the smallest misunderstanding could have a negative outcome. Looking to Hong Kong, if a professional arrives dressed in white or in blue colors to a meeting and speaks out of turn that could essentially dissolve any hope of a business deal, as the Hong Kong society associates white and blue with mourning and speaking out of turn shows disrespect for the power structure.