Cross cultural issues in international business: steiff in china

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Cross cultural issues in International Business.
Steiff in China

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 powerdistance 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


This assignment is going to deal with the establishment of the German SME Steiff in China in 2004. Tounderstand 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 laborcosts 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 inmany 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, becausethe workforce is not used to produce this kind of product. This could also hinder a possible introduction of their products on the Chinese market.
The first part of my assignment is going to deal with two cultures: the company’s culture and the new one. The second part is going to show issues met by Steiff. Finally, I’m going to show you possible solutions they could use instead of movingback their production to Germany.ehehhhhhhhhhhhhhikiik

I. Cultures

Fives cultural dimensions (Hostefe)

a. Home culture

* German culture:
Employee’s behavior
German culture is centered on the individual and not the group. This is an individualistic culture (high IDV). They work for them even before working for the group, company or country. When they are looking for a job,they are focus on wages and carrier evolution. They expect their boss to reward them with bonuses and career advancement when they fulfill objectives.
They attach a big importance in respect of rules (High UAI). In their opinion, if everybody respects rules, the production will be better. Use a different way of work is more a weakness than an asset. Similarly, punctuality is very important inGermany, for both employees and employers. Lack of punctuality is perceived as a lack of respect, professionalism and efficiency.
German people use to communicate with a very explicit language. There is no room for random, they are very precise.

Organization of management
German employees can speak freely to the hierarchy about their feelings. This is an open hierarchy culture (Low PDI).If they disagree or have ideas they just have to tell it to managers. They respect hierarchy but have no fear or shame to start conversations with superiors. Employees expect from their managers to be very clear about objectives and instructions.
German people write reports on regular basis (ex: weekly reports). They like the idea to have written documents which keep track of their work,...