Faculty

Cultural Intelligence: How Ready is China to Take on the International Business World?

 

Bruce W. Stening 
Vlerick International Dean to BiMBA 

China is at an economic turning point – the internationalization of many of its corporations and full participation in the global economy. The question is whether this will be just another phase of high economic growth or the beginning of a truly golden era in China’s economic history.


The answer will depend on many factors, not least, the capability of Chinese corporations to meet the challenges of operating successfully in a globalized economy. Fundamentally, that means that there is a need for a very large number of Chinese managers who have a global outlook and who can handle international management situations comfortably and successfully. In short, the realization of a new golden era in China depends to a significant extent on the cross-cultural management skills of tens of thousands of Chinese managers.


Just as it is now clear that EQ – emotional intelligence – is just as important as IQ in predicting a person’s success as a manager, so CQ – cultural intelligence and cross-cultural skills – is critical to managers engaged in international business. CQ essentially comprises three components: 
• The capacity to understand differences in cultures and some fundamental principles of cross-cultural interaction. 
• An ability to understand what is going on in complex, dynamic, culturally-confusing situations. 
• Having a repertoire of behaviors which are appropriate for different intercultural situations – and knowing when and how to use them. 

CQ has been of very obvious importance when, for example: seeking to do business with foreign clients; negotiating with a potential joint venture partner; dealing with relationships between expatriate and local colleagues; motivating local colleagues; and resolving intercultural disputes. 
CQ has been of somewhat obvious importance when, for example: dealing with government authorities and bureaucrats; confronting and resolving ethical dilemmas; designing training and development programs for locals; and developing policies and strategic plans in respect of expatriates and localization. 

However, CQ has often not been well understood in relation to: creating effective global virtual teams; building truly global organizations out of country-level operations that have local relevance; developing global mindsets in key managers; and accessing and effectively using ‘embedded’ information from scattered sources across many countries. 

The cultural challenges for all corporations, from whatever country, doing business internationally are considerable – and arguably are becoming greater, not less, particularly as the scale of global competition increases significantly. 

The challenges for Chinese enterprises are, I would claim, even more imposing. Many of them have had limited exposure to, and gained insufficient knowledge of, the cultures of those with which they are now seeking to do business. Their cultural skill base is often inadequate in relation to their international competitors and insufficient to deal adequately with the very difficult issues – cultural, economic and political – with which they are confronted. 
Chinese enterprises need to increase significantly and rapidly their stock of globally competent managers, individuals who, among other things: 
• Understand the international business environment from a global perspective. 
• Have an understanding of a multitude of countries and cultures (not just a few). 
• Can mix and work easily with people from many different cultures simultaneously. 
• Have the capacity to live and work successfully in foreign cultures, not as marginal actors but as members of international communities. 
• Are focused on meeting the goals of their local (Chinese) organization but who sufficiently cosmopolitan and global in their thinking about key issues. 
As some notable failures of Chinese enterprises venturing abroad has reinforced, globally competent managers are just as critical as financial resources, technology, home government support or economic policies in ensuring international business success.


To meet the challenges they face, at the organization level Chinese enterprises need to pay increased attention to what they need to do in relation to issues of organizational culture, top management leadership, organization structure and design and organizational processes. 
At the level of individuals, careful thought needs to be given to how globally-competent managers with high levels of CQ can be acquired and developed, considerations that go to issues such as recruitment processes, career development and training, performance management and compensation, and retention processes.


The bottom line here is simple – all managers in senior positions in enterprises around the world – including China – need to begin (or continue) the process of improving their CQ. And it is clear – there is no time to waste. 
BiMBA is committed to playing its part in the development of such men and women. 

Further reading: 
P. Christopher Earley et al., CQ: Developing Cultural Intelligence at Work (Stanford University Press). 
Bruce W. Stening, “Cultural Intelligence: Put it (High) on the Asian HRM Agenda”, Research and Practice in Human Resource Management. 
David C. Thomas and Kerr Inkson, Cultural Intelligence: People Skills for Global Business (Berrett-Koehler Publishers)