#80 Chinese Smorgarsboard
Who would have ever thought? Not only is Volvo in Chinese hands, now Saab is, too! Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co. of China have announced that they will purchase insolvent Saab for approximately 100 million Euros. What remains to be seen are two things – first, if the Chinese will really be able to pull off the deal. Not too long ago, another Chinese carmaker’s plans to take acquire Hummer from General Motors have been barred by Chinese authorities. Second, if the deal comes through, will Swedish and Chinese cultures be compatible with each other?
November 2, 2011 @ 8:44 pm
These two cultures are different in many ways. If we approach analyzing these two cultures through Hofstede’s cultural differences, we would immediately see a huge difference. Starting with Chinese cultures, power distance is really high. Meaning that Chinese cultures have longer, more drawn out hierarchies which allows a huge separation of top executives from the working core. The power is not necessarily drawn out equally for Chinese cultures. When looking at power distance for Swedish cultures, the power distance is lower than Chinese cultures. This means the exact opposite of Chinese cultures; Swedish cultures are more prone to speak with higher level executives and the barrier of power is lessened throughout the organization. Swedish cultures do not have as tall of a hierarchy compared to Chinese cultures.
Analyzing these cultures based on individualistic and collectivism, both countries are again, opposite. Chinese cultures are very collectivistic whereas Swedish cultures are very individualistic. If these two cultures were to join, many problems would surface due to collaborations within the workplace and personal goals and motivations. Chinese cultures work in groups more than on an individual basis, whereas Swedish cultures work more on an individual basis rather than groups.
Chinese cultures are very masculine whereas Swedish cultures are very feminine. Chinese cultures tend to have male dominance in authority where social roles are separated based off of male and female roles. Chinese cultures rarely show emotion, affection, and may come off as if they don’t care. Swedish cultures tend to have gender roles that overlap, where both men and women have authority, men are more affectionate, caring, and show their feelings.
Uncertainty avoidance is somewhat similar in these two cultures. Although Chinese cultures have a bit higher uncertainty avoidance, Swedish cultures are around the same area. These cultures have high uncertainty avoidance, meaning that they do not like when there is any doubt. This means that these two cultures have more laws, rules, measures to outweigh the uncertainty. Surprises and the unknown are not integrated very well within these two cultures.
From this analysis, we can see that these two cultures are extremely different. In order for this merge to be successful, a lot of homework needs to be done. Each company needs to figure out their similarities and differences first and then implement ways that these two cultures can join together smoothly. Without a clear understanding of each culture, problems are going to arise that could potentially ruin the success of these two companies.
November 11, 2011 @ 8:53 pm
I think Saab really need to consider about the cultural difference and increase the image of this brand.
About the cultural difference, as the Hofstede’s model mentions, China has a high power distance culture and high collectivism. However, Sweden is a culture with low power distance and high individualism. It is hard for them to use their original management method to manage China company. Therefore, I think they can give some opportunities for the China employees who will work for Saab in China to investigate or practice in corporation in Sweden. After they are more familiar with the culture of this company. They can bring this experiences back and share it with local employees. Make the culture experiences flow more easily.
The other thing is they also should focus on how to keep their brand image and product quality. Saab can set up the quality management and QCC to control their quality. And also by using random sampling to check their product and set up well after-sales service to increase customers’ confidence of this brand.
December 31, 2011 @ 1:17 am
So, we are dealing with another very interesting movement in the automotive market. What makes this specific takeover of the Swedish brand Saab that interesting is the question how the top management of the Chinese companies will handle the cultural differences between Sweden and China. As it is well known, even high potential mergers can lead to a massive disaster due to a mismanagement of intercultural aspects (f.e. Daimler-Chrysler)
Therefore one of the most important challenges of this take over is to find the right balance between the two massively different cultures. To better describe those differences I would like to go on with the cultural dimensions developed by Geert Hofstede. In that case, if you compare the Swedish and the Chinese cultures on these parameters, it provides a helpful tool to evaluate this specific challenge.
For example, the power distance in Sweden is considered to be at a low level. As a consequence the Swedish culture is based in equality, low hierarchies and an informal business relationship between employees and their superiors. In contrary the Chinese cultures is based on a high power distance, which means tall organization hierarchies, clear roles in business live and a power shift to the top management. Regarding the takeover of Saab, this could lead to possible unexpected problems in the daily business life. So, should the Chinese management try to overrule the Swedish workers of Saab with the organizational structural and management style of Zhejiang Youngman Lotus Automobile Co. and Pang Da Automobile Trade Co.? Or should the company try to adapt their way to do business to the Swedish culture?
Another interesting dimension is long-term orientation. While in Sweden this parameter is at a very low level, China has one of the highest scores regarding this dimension. So, on the one hand the Swedish culture is based on a certain impatience regarding time consuming decisions, tradition and benchmarking, the Chinese culture on the other hand is probably due to its historical background more focusing on long-term achievements and plans. Also this parameter could be very interesting in the automotive industry, especially regarding production plans or strategic decisions.
To summarize, the acquisition of Saab means a very big challenge for the Chinese companies to successfully manage the cultural differences. In my opinion the top management has to decide whether it is strategically wiser to adapt the organizational structure and management style for each country or to rely on one global process. I think, due to the tremendous differences, a certain level of adaption needs to be considered.
November 18, 2013 @ 3:10 pm
If this merger is successful there are huge opportunities for both of the countries. Therefor it is of highest importance for them to have the main cultural differences of Hofstede in mind when it comes to management and understanding each other. This is because these two countries have an extremely different culture and have to balance the management style to satisfy not only the costumers but also the Swedish employees to finally gain success.
The following dimensions are discussed:
power distance, individualism and uncertainty avoidance
Starting with power distance it is important mentioning that Chinese culture has a very high power distance (PD China 80), not like the Swedish culture where the power distance can be considered as low (PD Sweden 31). As a consequence there can be seen high differences in income in China (top management vs. employees) and the value of a worker/employee increases whit his age. Furthermore Chinese enterprise culture is very formal. Another picture can be seen in Sweden where only few differences in income is seen and so equality is more important than in China. Moreover the value of a worker in Sweden increases with a good performance and in general Swedish employees have a more informal relationship with their managers.
Another fact is, that Sweden is a rather individualistic country (I Sweden 71) as well as China is a collectivistic country (I China 20). So there can occur a lot of problems concerning the management style. In individualistic countries personal needs are most important for employees and so work is seen as necessary and important but they want to have best work conditions also concerning bonuses and holiday regulations and extra services. For Chinese workers this is not very important at all. Being confirm with the group and proudness of the whole enterprise is most important.
The next dimension I would like to mention is uncertainty avoidance. It is interesting to know that China and Sweden have nearly the same rank for uncertainty avoidance (UCA China 30 / Sweden 29). Countries with high uncertainty avoidance normally don’t want to take risks and responsibility. Here it is very interesting to see, that both countries take this risks of the merger.
Finally it can be said this merger is a great challenge for both of the countries which have a totally different culture. Understanding each other is the first step to be successful and further steps will be the decision in which extent they will adapt the Chinese management style to the Sweden one. In my opinion this is a really long process which has to be optimized constantly.
November 13, 2014 @ 8:46 pm
As I am very intrested in this topic I would like to comment it with the help of Hofstede.
Hofstede´s dimensions – China in comparison with Sweden
http://geert-hofstede.com/china.html
As it was already mentioned before SAAB is a company which hasn´t had so much fortune – of the economic point of view. What I want to mention is that now SAAB has been taken over by NEVS and this Chinese company is now producing the facelift of the model 9-3 and they are also producing a SAAB 9-3 electric vehicle but in Sweden. They will focus mainly on electric vehicles and they will sell the cars mainly in Sweden and in China.
As it was already mentioned before the cultural differences between Sweden and China are pretty huge. If we are talking about the power distance of Hofstede there is a very high difference between the countries as you could see if you choose China and Sweden at Hofstedes dimensions. This is because Chinese people tend to have strict hierarchies, so that the decision maker is the top manager. Sweden is the opposite of them. The country is characterized by the very flat hierarchy and close relationship to employees and managers. So this could be a problem when the Chinese people do business in Sweden. The may have problems with quite normal decisions. So if they do business in Sweden like in China this is forecasted to fail.
Concerning the individualism topic the chart shows that the Chinese people tend to work on their own without discussing business in groups. The Swedish are quite different. They love to take decisions in groups but the negative thing on it is that the decision making process will last very long. So the Chinese do not have to expect that the decision they are asking for is received immediately.
Another very huge difference is the cultural aspect of masculinity. Whereas china has a masculinity index of 66 %, Sweden has only 5 %. So everything indicates that China is a very masculinity country and Sweden is characterized by feminity. This also could be a point for the Chinese partners. They have to expect that they maybe have to do business with women and that the gender roles are also very different from the gender roles in China.
The next point to look at is Uncertainty avoidance. If you take a look at Hofstedes dimensions of China compared with Sweden you can see that China and Sweden are very similar, not like the tree mentioned points before. So that means that they both are willing to take risks for the merger.
So only looking at these 4 points the challenge of doing business between Sweden and China is very high. The Chinese people have to be very well prepared to the Swedish culture and not only to be prepared, they also have to be more open minded to try to understand their culture. So they have really to try to do their best and not to fail like e.g. Daimler-Chrysler.