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Smog Alert Red Alert As a result of record breaking smog levels, the Chinese population and leaders all over the world have placed increasing pressure on the Chinese government to reduce its toxic emissions. For the second time in two weeks, the government has issued a pollution red alert, restricting vehicle use, triggering the closure of factories and schools and halting all construction projects. Since November of last year, the particulate pollution in the air over much of northwest China has been measured at almost thirty times the level recommended by the World Health Organization. In response to international pressure, China has recently entered into a landmark climate change agreement and has begun making its way toward long-term improvements. Within China, the industrial sector is anxiously awaiting new emissions guidelines to come into effect, and manufacturing companies in particular are scrambling to determine how they will meet the new guidelines. One of these manufacturers, the Guangzhou Food Company Limited (GFCL), is a producer and supplier of flavour compounds and seasoning products used in bakery, snack and quick frozen foods, and is located in the city of Guangzhou in southwest China. The company is a large contributor to nitrogen oxide emissions in the atmosphere and has received warnings and fines in recent years for not meeting the country's emissions targets. To be proactive, GFCL put out a request for tender for its environmental needs. After a surprisingly rapid selection process, a Finnish company, Global Environmental Solutions (GES), was chosen to install its patented selective catalytic reduction (SCR) nitrogen oxide reduction system at all the Chinese company's manufacturing plants and to train GFCL employees in its operation and use. Headquartered in Helsinki, Finland, and with offices located around the world, GES is the world's largest producer of ammonia and nitrates. In addition to its environmental solution services, GES offers a number of essential products for industrial applications, such as crop fertilizer, dry ice and animal feed. International Market Entry Strategies Module - Intercultural Competence Cultural Missteps The international sales management team at GES submitted and negotiated the successful proposal and now the industrial emissions solutions team will begin working with GFCL. It will need to meet with the new client and determine how to best implement the SCR technology, as well as agree on timelines for system installation and employee training Johanna Laine is the GES project manager and Aleksi Salo is leading the implementation and training team. Prior to flying to Guangzhou, they were both introduced via email to the executives at GFCL, who seemed professional and friendly enough. They confirmed GFCL would take responsibility for bringing a Mandarin-English translator to the meetings, which was fine for the Finnish team, who regularly communicated with clients in English. They then arranged a car and driver for their arrival, booked accommodation for a two-week stay and purchased a few typical Finnish souvenirs they could give to the Chinese team at their first meeting, as a way of making the executives at GFCL feel relaxed. With their preparations complete, Johanna Aleksi and two others boarded the plane and settled in for the flight. None of the team had been to China before and all were excited to see the country and get to know the client a little better. After their first meeting at GFCL, the GES team members met at a local restaurant to review notes. Everyone agreed the meeting had gone very poorly. The atmosphere had been pleasant to begin with, but had become increasingly awkward and uncomfortable as the meeting progressed. In fact, at one point, the GFCL Vice President of Operations suggested that they may need to review the original contract to determine whether they would proceed with the current agreement. The Finnish team was horrified. What had gone so wrong? The first step they took was to call the GES international sales team and ask for its assistance. These colleagues had a great deal of experience working with international clients and had been the first ones to communicate with GFCL. After reviewing what had been said and done at the meeting, the sales team provided some insight. First, there had been a couple of errors that Aleksi needed to clarify with the architectural drawings provided by GFCL. It seems that in pointing out the errors on the drawings, Aleksi had accidentally caused the GFCL plant manager to lose face". In Chinese culture, the concept of face is extremely important and involves either bolstering (gaining face) or harming (losing face) a person's reputation. As the plant manager is the GFCL employee they will work most closely with this was a significant insult in the eyes of the Chinese clients. The second potential area where the GES team had gone wrong was in providing the GFCL executives with a detailed project plan for them to review and provide feedback on. In Chinese business culture, items you might agree on today can easily be changed tomorrow. By providing a fully completed project plan, Johanna had threatened GFCL's method of operating. The executives did not want to be held to a strict project plan. In retrospect, Johanna realized they had tried to voice their objection, but the language barrier made it challenging for the Chinese to express themselves clearly and for the Finnish team to understand what exactly the problem was. Now that they had an idea of what had gone wrong in the first meeting, the GES team members worked on a plan to correct the situation when they met with the clients the next day. FITT Righting a Wrong As the second meeting began, everyone in the room was fairly quiet and the atmosphere was still lacking friendliness. Throughout the meeting, Johanna and Aleksi were careful to compliment the premises and the comfortable meeting space. Aleksi made a point to explain to the attendees how the level of detail on the plant drawings would save them money because Aleksi could easily see where and how to implement the SCR system. This made the plant manager visibly warm to the discussion. Johanna brought the project plan back to the table and this time, the timelines were blank. She explained that they had wanted to provide an idea of how long each step of the process might take and that the Chinese team should take the plan back with them and work out how they would like to see the timelines happen. Johanna stressed the fact that they were flexible with timelines for implementation and training. As the Finnish team worked to repair the damage it had done to the new business relationship. the Chinese executives gradually warmed and began discussing important details once again. The meeting ended on a pleasant note. In their debrief at the hotel later, Aleksi, Johanna and their colleagues breathed a sigh of relief as they all agreed their actions in the second meeting had improved their interaction with the GFCL team. They began to plan their third meeting, hoping it would produce even better results. Learning Outcomes This case study relates to the following learning Outcomes from the module Intercultural Competence in the course International Market Entry Strategies: Describe how international trade practitioners can achieve intercultural competence. Build and sustain mutually beneficial business relationships with global suppliers, clients and associates Case Study Questions 1. What resources could GES have used to research Chinese culture prior to travelling to meet the client face to face? 2. Suggest three things GES could have done to begin building a relationship with the Chinese client prior to travelling to China. 3. What three things did Johanna and Aleksi do to begin repairing their relationship with the GFCL plant manager and the rest of the GFCL team? 4. Going forward, list four strategies the GES team could use to continue repairing and building the relationship with the Chinese client? Although based on research of actual events, organizations and/or individuals, this case study is fictional and is intended to support learning. Cases are not intended to serve as endorsements, sources of primary data or illustrations of effective or ineffective management