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Cultural Awareness, a Form of Risk Management in International Business: Case Study of China

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  • Fadun Solomon Olajide

Abstract

Mutual awareness of cultural references is essential in international business as levels of formality vary greatly among cultures. The emergence of capitalism into China induces international firms' investment in the country. This resulted to creation of a production base to explore the inexpensive factors of production, particularly low-cost labour. The study examines cultural awareness as a form of risk management in international business, using China as a case study. The study uses ¡®XYZ International', with western cultural background, as a hypothetical international business that operates in China market. The study explores international trade and global organisations; considers barriers to international business; outlines cultural awareness as a form of risk management in international business; highlights Chinese business culture; outlines the impact of culture on negotiation; appraises Chinese businessman culture and its impact in the Chinese market; and justifies reasons to support conducting trade with China. The study findings indicate that mutual awareness of cultural references is essential in international business, and levels of formality vary greatly among cultures. The implication for practice is that culture induces each country societal prevailing life-styles because culture and life-style influence patterns of consumption, manufacturing, agriculture, service, distribution and investment.

Suggested Citation

  • Fadun Solomon Olajide, 2014. "Cultural Awareness, a Form of Risk Management in International Business: Case Study of China," Business and Economic Research, Macrothink Institute, vol. 4(1), pages 266-288, June.
    • Handle: RePEc:mth:ber888:v:4:y:2014:i:1:p:266-288
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    References listed on IDEAS

    as
    1. Kwok Leung & Rabi S Bhagat & Nancy R Buchan & Miriam Erez & Cristina B Gibson, 2005. "Culture and international business: recent advances and their implications for future research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 36(4), pages 357-378, July.
    2. Clem Tisdell, 2009. "Economic Reform and Openness in China: China’s Development Policies in the Last 30 Years," Economic Analysis and Policy, Elsevier, vol. 39(2), pages 271-294, September.
    3. Gregory C. Chow, 2004. "Economic Reform and Growth in China," Annals of Economics and Finance, Society for AEF, vol. 5(1), pages 127-152, May.
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    More about this item

    Keywords

    Risk Management; International business; International organisations; Culture; Cultural awareness; International trade barriers; China;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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