Trials and Tribulations of Doing Business IN and WITH China

The most common difficulties regarding business in China ultimately relate to differences between American and Chinese cultures as well as applications of business philosophy (US capitalism vs. the work environment of China’s State-Owned Enterprises).

Of all the issues that arise, none is more important than cultural differences. These impact 100% of your interactions. Here are a few quick examples of culture clashes with the Chinese:

Talent workplace deficiencies, Two separate business styles are bound to clash: China’s 5000 years of Confucian philosophy and top-down management which dictates instructions to employees versus U.S. individual-based accountability and a management style that engages and works with employees. One of our China clients did not allow for a one-week paid leave for an employee to attend a family gathering in a city far away. Such attendance is normal practice in China with its emphasis on the family and multi-generational, rather than nuclear, family units. The entire line of fellow employees working with that one leave-denied employee all quit with no notice.

That was a huge cultural issue the American employer should have understood. Instead of emphasizing individualism, in China, collectivism and family importance are ingrained in the culture and must be understood.

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Expanding Your Business Into Germany

Quick! What descriptions come to mind spontaneously when you think about the entrepreneurial environment in Germany?

Here are the most common answers when I do presentations:

  • High Taxes
  • Rigid Employment Laws.

These assumptions, however, are no longer valid.

For over a decade, Germany has made many efforts to become far more competitive. Among those measures is the fact that the overall tax rate for a GmbH, an entity like a Corporation, has dropped down to around 30% – 32%, depending on the municipality or city where the company is located. The above quoted rate includes corporate (Federal) and trade (local) tax.

Regarding employment laws and while exceptions may apply, a new hire’s employment can be terminated within four weeks to the 15th or end of the month, as long as the firm employs not more than ten full-time persons. However, for all German firms termination time increases the longer an individual is with the company, i.e., after two years it is one month to the end of month, after five years it is two months to the end of a month.

Another important fact is that normally every employment agreement has a probation clause.

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