Prof. Stenstadvold, a professor at the Norwegian School of Economics and Business Administration, as well as the Norsk Hydro ASA Corporate Controller, Environmental Technology & Product Development Manager, opened his speech that he mainly focuses on regional issues instead of global ones.

 

Prof. Stenstadvold’s speech is based on the case of a Chinese-Norwegian Joint Venture (JV), which was established by the Norsk Hydro ASA (Hydro) and Mr. Zhou, a successful local entrepreneur. Zhou’s main reasons for the JV were introduction of new technology and improved management. During the first several years, the JV was very successful; however, with the development of cooperation, it came across problems. “I am startled to find that it is difficult to talk future with Chinese managers, for they think it is unpredictable”, Prof. Stenstadvold said, “another problem is family business. From the western point, for such kind of local entrepreneur, it helps to avoid the loss of funds and to control the company by staffing the important positions with family members.”He owes these problems to a large extent to the differences in aspects of business cultures between Western and China. Furthermore, he mentioned: “In fact, most of the Chinese enterprises develop based on the Confucianism, and are organized in the way of family business. To say family business we mean the family in a broad sense instead of literal meaning. In Europe and the U.S., people have individual rights which are based on the western culture of individualism”. In addition, in terms of the flexibility of operation, Prof. Stenstadvold holds that even the written documents can be flexible. Some customers do not want to sign the contract of fixed price as sometimes the price is not fixed. Many businesses in China are done based on guanxi (relationship). Prof. Stenstadvold emphasizes: “Actually guanxi is equal to the bilateral agreement that is made by two parties, and is indispensible in business, which is what I have learned in China. We need to achieve the balanced relationship or good relationship. We should also have a good understanding on contract, which is a main force to drive the business in China.”

 

In his address, Prof. Stenstadvold makes a conclusion of the management features in China:

1.        Flexibility in all dimensions: Minimize written documents/ statements-contracts reduce flexibility; from one sector to another, upstream to downstream.

2.        Signed contract is negotiable, start of exploring opportunities; the Letter of Intent is more important than a Contract.

3.        Management style: over-communication, poor conceptualization; hands-on approach with low delegation; people oriented rather than task oriented.

 

Prof. Stenstadvold also points out that the failure of cooperation is not due to so called “same bed, different dreams”. On the contrary, the objections of both parties are the same. The failure is due to the difference in terms of cooperate cultures and ways to handle business. So it is critical to settle the cultural clashes.

 

In the end, Prof. Stenstadvold makes a conclusion of the failure based on this case:

1.        The conflicts during the cooperation are due to different business cultures and activities, not due to different objections.

2.        Some fundamental differences stem from a different cultural history, with Confucian philosophy and tradition being radically different from European social philosophy.

3.        The incomplete legal tradition and shortage of rule based on conflict resolution in China played an important part, and the inadequate communication exacerbated this conflicts.

 

More profound reasons for the conflicts can be traced from the cultural, social and political background. So the western enterprises need to know about the cultural and social characteristics before they establish cooperation with Chinese enterprises.

 

Based on his own experience, Prof. Stenstadvold made explicit explanations of differences in business cultures. He emphasized the importance of cultural differences in cooperation, which drive people to further review the issues that enterprises should improve during their cooperation.

 

Intern reporter: Yang Jingjing