Cross cultural issues in International Business.
Steiff in China

Sommaire Introduction 3 I. Cultures 4 a. Home culture 4 - German culture: 4 - Corporate culture 6 b. New company culture 7 - Chinese culture: 7 II. Issues and solutions 8 a. Implicit VS Explicit 8 b. Structure VS relationship 9 c. Different view of a good employer 9 d. Differences of power distance 10 e. Different criteria of quality 10 f. Conclusion of issues and solutions 11 Conclusion 11 Experience of working in an international team 12 I. Work organization 12 II. Chinese culture 13 III. German culture 13 IV. My experience 13 References: 14

Introduction

This assignment is going to deal with the establishment of the German SME Steiff in China in 2004. To understand all the issues of this analysis, it’s important to know that this society had a very high quality of products and was appreciated for that, since 1880. They had relocated 10% of their production sites to China in order to reduce high production costs. Indeed, Chinese labor cost is much cheaper than the German which is one of the most expensive workforces in the world (7th highest labor costs in Europe). This relocation did not go as planned and was a failure. Today Steiff has brought back his production in Germany for many reasons. They were losing their brand image because quality wasn’t good enough (and very irregular) and goods transportation was too long (3 months). This relocation plan is particularly interesting because German and Chinese cultures are very different in many points. We can particularly see it on their management, relationship between employees and employers, and consumption habits. Indeed, German and Chinese have different notions of quality. They don’t use same way of communication between employees and employers. Another important point is that soft toys like teddy bears are not really present in Chinese culture. This can be a problem, because