The role of cultural differences in the dynamic of a relationship. The case of Italian and Chinese companies.

Giancarlo Nadin, Loretta Battaglia and Luca Gobbini

The paper was published at the 20th IMP-conference in Copenhagen, Denmark in 2004.

Intercultural differences have been identified as one of the main reasons of failure in business relationships with Chinese companies. Many international contributions explain these aspects of business relationship (Fang and Ghauri, 2001, Fang, 1999, Ambler et al, 1999, Buttery and Leung, 1998, Foster, 1992). Notwithstanding the authors focus on the existing differencesin cultures, a direct comparison between Chinese and Italian business culture has not been analysed yet. After China's entrance into the WTO, the interest of Italian entrepreneurs towardsChina has increased. Italy holds 2nd position in Europe as regards exports towards China. It holds a lower position when it comes to direct investments in the Country (ICE, ISTAT, 2003). According to our opinion, the low propensity to invest in China for medium size Italian companies, among other reasons, is related to communication problems and cultural differences among the two cultures. Risk perception, as an example, is also related to cultural differences. Objective of this work-in-progress (wip) paper is to deepen the understanding of the business relationship process among Italian and Chinese companies to ultimately define the do's and don?ts Italian companies should follow to establish long lasting relationships with Chinese ones. This understanding is related tocommunication, interaction and management aspects of the business relationship. This wip paper is made of two parts, a first one related to the theoretical approach, where we explain culture, communication and negotiation. A second part is relatedto the empirical research.