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What are the key cultural factors that Russian companies need to consider when cooperating with Chinese companies?

Cross-cultural differences issue is one of the most common topics of discussion because today there are more than 195 countries in the world with a large number of different nationalities, religions and languages. Russia and China also contain more than 30 different ethnic groups. With the development of international trade relations, the growth of tourist flow and a large flow of migration in the world, people realize that different cultures and traditions should live and work together (Tjosvold & Leung, 2016). Many large organizations report that it takes years to train, develop and manage an effective business team, provided that all are of the same nationality. Organizations with multicultural teams must consider their traditions and behaviours for effective managing. Nevertheless, companies collaborating and opening branches with/in other countries often face failure due to misunderstanding. The reason for this is a lack of knowledge and experience in relationships with another culture. For this, most companies train their managers in an intercultural relationship at the workplace. This report will examine the specifics of business cooperation between Russian companies and Chinese organizations in a systematic manner. First will be considered the impotence of the issue, then the report will provide the deep research of literature review and analysis. In the end, the research will reach a reasoned concluding recommendation for achieving successful cooperation between countries.

The global economy has been actively changing in recent years, considering all political and social factors. Today, China is actively seeking to take 1st place in the list of "Highest GDP Country" (World Population Review, 2019). China with GDP = 15.54 trillion is in the list second after America with GDP = 21.41 trillion. China is developing so fast due to large volumes of production with minimal costs to the company. For this reason, many countries are actively investing in China, including Russia. Over the past 5 years, Russia and China have been developing business in different industries, both at the level of private companies and at the interstate level. Cross-cultural interaction often creates negative relationships in the team due to a lack of understanding of the characteristics of national values among different cultures. Using G. Hofstede’s dimensions theory (1980), It can identify 2 main cultural differences between China and Russia. They are very different in Uncertainty Avoidance and Masculinity. However, they are similar in terms of power distance and long-term orientation.

(Hofstede Insights, 2019). All the problems mentioned indicate that it is necessary to analyse and consider all cross-cultural factors in order to avoid problems at the workplace.

In the international community, it is customary to perceive Russians as a united people, however, the merit of this cultural feature is the history of Russia, which has repeatedly tested people for strength. The closest examples are historical moments such as the Stalinist repressions, the Second World War and the difficult times after the collapse of the USSR. All these historical periods forced the Russian people to unite in different communities to support each other (Grachev, 2009). The consequences of the history of Russia were reflected in the Russian organizational culture, where the emphasis was on joint, group achievements, strategies and plans (Morozova, 2018). Nevertheless, Hofstede (1993) believes that individualism and collectivism in organizations are equally manifested in Russia because of the passive attitude towards the work of most of the Russian population. Nevertheless, Naumov and Puffer (2000) did not agree with this judgment, believing that the Russian organizational culture is characterized more by individualism, where in most cases organizational decisions are made by the leadership alone, without regard to the opinion of subordinates. Nevertheless, while in Russia history has a significant influence on the culture of the local population, in China religion has a significant influence.

The Chinese leadership style comes more from spiritual values, so the Chinese focus on hierarchies where power and obedience flourish (Lin, Ping, & Roelfsema, 2018). Moreover, the principle of Confucianism has a strong influence on interpersonal relations in the work environment, according to the principle of hierarchy. However, in recent years, Chinese culture has been changing the philosophy of socialism and communism, in which the governance structure focuses on equality (Dong & Liu, 2010). At all times in Russia, men were responsible for activities outside the home, from physical labour in the garden, ending with making money in the family, while women were most often householders responsible for home comfort and caring for children. This structure of the family institute has long been the basis for the distribution of roles of men and women. During the Stalinist repressions and World War II, the number of the male population declined sharply, for this reason, women had to take up positions in new industries for them, such as education and health. From that moment, men and women began to occupy equal positions in all industries, even political ones (Grachev, 2009). According to Morozova (2018) the organizational culture of Russia implies the absence of strong gender discrimination, the admission of women to high.

Leadership positions. Hofstede (1993) and Naumov and Puffer (2000) also confirm in their teachings that masculinity and femininity have manifested equally in Russia in recent decades. These indicators are a good opportunity for cooperation with Chinese culture because in China the level of masculinity is also estimated at 50% according to the theory of Hofstede (1993). Bond also agrees with this statement (Bond, 1996). In China, the principle of Yin-Yang hormones is directly related to the male and female principles, giving equal rights to both parties (Lin, Ping, & Roelfsema, 2018). Power distance is of particular importance in Russia. this indicator in the Hofstede's article (1993) is almost the maximum in the value of Russia = 90. In Russian culture, people often refuse to uphold their own position in order to prevent conflict. Disagreement with the position of the authorities is expressed extremely rarely (Morozova, 2018)This factor is determined by centralized power in Russia during its entire existence. Historically, people obey the instructions of people with a higher position. Nevertheless, Naumov and Puffer (2000) determined the power distance of Russia with a value of = 40 and explained this by the fact that with the founding of modern Russia and the distribution of state assets to private sectors, private business began to develop separately from state power. This indicator can have a significant impact on successful cooperation, as China also has a high indicator of 80 (Taylor & Zhou, 2019).

China has a communist political structure, which managed to instil in people submission to the central government, so the Chinese mentality absorbed this feature. Today, in the business industry, decisions are made by the dominant member of the team (Dong & Liu, 2010)The lower-ranking Chinese employee will never dispute the decisions of his superior. Performance orientation is an important aspect to consider when managing an organization with a large variety of nations. In China and Russia, the attitude towards labour productivity and achieving goals is very different, nevertheless, it has a number of features. In China, the orientation of labour is strongly tied to high collectivism, which in China is also very significant (Hofstede, 1993). It was found that with paternalistic relations in the team, great gratitude and rewards to the leader for achieving high results on behalf of the team are strongly manifested (Cheng, Chou, Wu, Huang, & Farh, 2004). Early (1989) also confirms that this reaction from work partners favourably motivates managers to achieve great results.

Moreover, this way of relationships in the team encourages managers to share their experience and knowledge with their employees. All team members are also trying to get positive feedback from colleagues for achieving great labour results, which is reflected in the

positive results of the team (Dong & Liu, 2010). This attitude to teamwork is also manifested in educational institutions, when students are active in achieving team results. In Russian management, things are quite different and this again shows the influence of historical events in Russia. The Soviet government demanded the implementation of the plan and sometimes more than planned. For achieving high results, employees of organizations or enterprise managers were not physically rewarded, there were no monetary rewards, but they were symbolically rewarded with public recognition. In the early years of modern Russia, there was also a lack of desire to profit from enterprises, managers of various organizations, instead of motivating their employees and being motivated by themselves, were looking for ways to make money in barter fraud due to their managerial capabilities (Grachev, 2009). However, with the opening of borders with other countries and the ability to contact international enterprises, they have given a new understanding of productivity efficiency. Today, Russian people are very important feedback, reaction to the work they have done. Moreover, people think that all efforts must be rewarded. (Morozova, 2018). Long-term cooperation between China and Russia is one of the most important areas of international activity today. In this case, both countries should consider all possible cross-cultural differences in the meaning of uncertainty avoidance and future orientation (Bulatova, 2017). After all, people with long-term interests rely on making profits after a certain period of time, while a person with short-term interests expects to receive profit in the near future. This may create a conflict of interest between Chinese and Russian companies (Taylor & Zhou, 2019). 

For decades, people in Russia believed in improving the political and social situation in the country, but due to constant political instability and frequent amendments to the legislation, people began to have anxiety and distrust of the country's future. Thus, people have learned to rely only on themselves without relying on long-term ideas (Grachev, 2009). While the Chinese are focused on long-term business goals. This difference is reflected in the negotiations between the Russians and the Chinese. The Russians do not set goals for the distant future, but immediately calculate the profit from the transaction (Kets de Vries, 2001) This is explained by the fact that Russia has a transition economy from the USSR to modern Russia, when the USSR economy was destroyed and the modern one was not yet fully formed (Kuznetsov & Kuznetsova, 2005). According to Morozova (2018), people in Russia tend to view time as something consistent. For representatives of Russian culture, it’s customary to set specific deadlines for achieving their goals. Because of the desire of the Chinese to become new a superpower, the Chinese strive to think with a future perspective.

However, the Chinese can also successfully cope with short-term goals, as an example of holding an Olympia games in the country (Taylor & Zhou, 2019). Future orientation is also closely connected with uncertainty avoidance, where China has an indicator = 60 and Russia with the indicator = 90 have strong differences (Hofstede, 1993). Hofstede (1993)considers Russian managers trying to be prepared for all situations and follow both vowel and unspoken rules. However, Naumov and Puffer (2000) believe that the figure of 90 is overstated and does not consider the transition to a market economy in the country. An indicator of 68 means that Russians, after a moderate life in Soviet times, when people were guaranteed a job, have to make decisions on their own. According to Morozova (2018), management and employees in Russia, being very pragmatic, have a happy ability to adapt to changes in the world, capturing current trends and anticipating consumers' desires.

Companies are actively investing in new formats and technologies, which allows them to remain leaders in their industries. The Chinese, with an indicator of 68 (Hofstede, 1993), prefer to have all the information related to their transactions so that they have time to think and make decisions. Spiritual culture in China also affects this indicator, since the Chinese do not want to lose face in front of their comrades and are making every effort to avoid setbacks and unforeseen situations (Taylor & Zhou, 2019). Humanity in the business environment in Russia is quite active, but with a bit of mistrust and suspicion. The fact is that a market economy has gone through difficult times in Russia and is still at a developmental stage. In the 90s after the collapse of the USSR, banditry and corruption in all fields of business were strongly developed, the weak remained deceived, the strong held all finances in their hands. From the founding of a market economy to the present day, Russians have gone through a stage from an aggressive and hostile nation to a humanely oriented nation (Grachev, 2009). This idea is also confirmed by Hofstede (1993), noting the Humane Orientation dimension =

 

10.  Naumov and Puffer (2000) argues that paternalism is flourishing in the country, to protect weak people in society with the help of more influential ones, which also refers to the formation of modern Russia. Moreover, paternalism manifests itself in Russian culture in times of crisis, not only in the meaning of the criminal period, but also in the period of economic instability, when people submit to leadership, as they have great power. These features of the transitional economic and political structure in Russia have formed the

“Russian Man” difficult for foreigners to understand (Grachev, 2009)

The Chinese need to consider some facts for a successful relationship. In Russia, personal relationships are valued more than formal rules; therefore, deviation from the latter is possible for individuals. In Russian culture, it is not customary to completely separate work and personal life. Relations with colleagues often go beyond the formal framework, so it is acceptable both to discuss personal problems at the workplace and to resolve business issues outside the office hours in an informal setting (Morozova, 2018). Russians like to use direct contact such as touch, gestures, and other forms of physical contact that are not welcomed in many cultures (Kets de Vries, 2001). The most difficult moment for foreign managers working with Russian employees and managers is the style of speech. In Russia, people like to use metaphors and sarcasm, as well as tell jokes. The root of this manifestation also goes back to Soviet times, when it was impossible to speak directly and people had to come up with workarounds (Brett, et al., 1998). Russians prefer to speak openly and bluntly, without waiting for others to understand (Valitova & Besson, 2018).

In Chinese organizational culture, there is a boundary between work and personal life, which is not often violated (Morozova, 2018). The Chinese do not always trust other nations and therefore prefer to trust only relatives and family. As the experience of overseas Chinese people shows, they like to unite in an ethnic group where they live (Dong & Liu, 2010). When interacting with Russian companies in China, it is imperative to consider the special relationship between team members called Guanxi. It is noted that this is a special type of relationship combining both obligations and reciprocity. The structure of this relationship is reciprocal help with a higher value received earlier. In this way, both parties benefit significantly in interacting with each other. Chinese with good Guanxi have the opportunity to get promoted to a better position than people with less Guanxi (Li, Xin, & Tsui, 1999). Shi and Chen (2009) concluded that the Chinese expect respect for their culture and distance of power.

In conclusion, relations between China and Russia are actively growing, and at the same time, the economy inside these countries is growing too. Cooperation both in the private sector and at the political level is more relevant than ever. There was a significant number of cultural aspects in each country. The history of Russia is strongly influenced by its history, beginning with the Revolution in 1905 and ending with Putin's irremovable power. In Russia, the economic, political and social areas have changed many times, and thus the mentality of the people in the country has changed. All this is observed in personnel management and

interaction with foreign partners. The Chinese have a culture of their relationships both outside the working environment and during working time is directly related to their spiritual values. These spiritual values were also subjected to numerous political and social events. Nevertheless, they manage to preserve the traditional culture and manifest it in management.

It is recommended that both countries consider and respect the peculiarities of the culture of another country, as well as try to maintain patience and a positive attitude. Moreover, partners from China and Russia need to initially identify and talk about their goals and tasks before concluding an agreement.

Bibliography

Bond, M. H. (1996). The Handbook of Chinese Psychology. International Journal of Cross Cultural Management.

Brett, J., Adair, W., Lempereur, A., Okumura, T., Shikhirev, P., Tinsley, C., & Lytle, A. (1998).Culture and Joint Gains in Negotiation”,. Negotiation Journal, 14(1), 61-85.

Bulatova, N. N. (2017). REGIONAL DEVELOPMENT PROSPECTS DURING THE FORMATION OF THE RUSSIA — CHINA — MONGOLIA ECONOMIC CORRIDOR. St. Petersburg State Polytechnic University Journal, 10(1), 90-98.

Cheng, B.‐S., Chou, L.-F., Wu, T.-Y., Huang, M.-P., & Farh, J.-L. (2004). Paternalistic leadership and subordinate responses: Establishing a leadership model in Chinese organizations. Asian Journal of Social Psychology, 7(1), 89-117.

Dong, K., & Liu, Y. (2010). Cross-cultural management in China. Cross Cultural Management:An International Journal, 17(3), 223-243.

Earley, P. (1989). Social loafing and collectivism: a comparison of the United States and the People’s Republic of China. Administrative Science Quarterly, 34, 565-581.

Grachev, M. V. (2009). Russia, Culture, and Leadership Cross-Cultural Comparisons of Managerial Values and Practices. Problems of Post-Communism, 56(1), 3-11.

Hofstede Insights. (2019). COUNTRY COMPARISON. Retrieved from Hofstede Insights:https://www.hofstede-insights.com/country-comparison/china,russia/



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