Business development in China: a cross-cultural perspective
China, with its fast-paced development and vast market, offers attractive opportunities to Swiss firms seeking growth in international markets. Yet, penetrating into the large Chinese market can be challenging. We investigated business development of Swiss SMEs in China from a cross-cultural perspective with the aim of generating actionable knowledge by uncovering how Swiss firms develop their business in China and the actions they take to overcome disadvantages of foreignness during market exploration and subsequently market penetration. We examined how Swiss firms draw from their multiple cultural identities in the process of developing their business in China as well as the role of home country institutions in this process.
We have been conducting interviews with co-founders, engineers and senior managers as well as with the intermediaries (advisors, consultants, service providers) who are knowledgeable about the establishment of Swiss firms in China. We asked about the trajectory of exploration and entry into the Chinese market, the problems encountered and how the firms/ entrepreneurs sought to gain the acceptance of influential stakeholders (such as customers, local partners, investors and government officials). Moreover, we examined why and how Swiss firms leverage (or not) ‘Swissness’ in their efforts to gain acceptance and to overcome foreignness.
Our applied research reveals how “culture” matters for the business development of Swiss firms in China and provides insight on the following five areas:
- Cross-cultural obstacles for Swiss firms in China
- China market characteristics and Swiss firms’ liability of foreignness
- Actions during market exploration to mitigate the liabilities of foreignness
- China market mindset in the market penetration
- Sino-Swiss collaboration toolbox
China Market Minset
Becoming established in China is a resource intensive effort. In addition to a certain level of financial strength, access, integration and use of a sufficient spectrum of market knowledge is needed to develop adequate commercial capabilities. Although the Swiss firms that we have interviewed report similar challenges, they addressed them differently as a function of their “China Market Mindset”. We observe that Swiss firms, fall into four different “China Market Mindsets” depending on the level of integration and adaptation sought in the market. Each mindset has distinctive China business development behaviours that are pursued in the market penetration phase. Finally, our study points to the three behavioural pillars of the Sino-Swiss collaboration for success in China.