Dr. Jung is associate professor of fashion and apparel studies and member of international textile and apparel association (ITAA). She has done extensive research in cross-cultural studies in consumer behavioral/social psychological/marketing aspects of clothing and taught courses with international/global themes, including Textiles and Apparel in the Global Economy, Global Patterns and Issues in Textiles and Apparel Trade, and Global Sourcing. In a newly developed course, apparel brand management and marketing, students learn to identify international business practices for global branding issues. She is currently serving on the International Affairs Committee and Graduate Education Committee (Chair) of the ITAA. She was recipient of the 2005 Fairchild Publications Faculty Award for her proposed idea for a new travel study to Asia, which was implemented first time during January 2006 and offered again in January 2008. In addition, she has published and presented papers on internationalizing curriculum through international conferences.

When I visited China with a group of students as part of a study trip to Asia in January 2008, the students, as first time visitors to Asia, were surprised by the number of American branded businesses. For example, there are currently 960 McDonald’s restaurants in China serving more than 1.3 billion customers every day in a nation that takes pride in the delicacy and diversity of a cuisine that dates back thousands of years. As the world’s largest and best-known fast-food company, McDonald’s, whose menu includes red bean pies in China, exemplifies how companies can successfully adapt to local culture and become global. In a similar way, apparel companies adapt to consumers around the world in all aspects from product development (e.g., color and style, size and fit, and fabric) to sourcing, manufacturing, and marketing of apparel products to meet consumer demands and lifestyles.

Due to the fragmented nature of the apparel business, it is common for apparel industry personnel to travel overseas for business deals and negotiations. Deals and negotiations are significant activities for the companies involved, requiring understanding beyond the basics about the culture such as “how to greet.” Business people from foreign companies may not realize until they learn it the hard way that it is essential to understand and to some extent adapt to the local ways of life in order to establish and sustain successful business relationships with local companies. In Korea and Japan, the most common greeting or expression of thanks is not a handshake or smile, but a bow. Even though the bow is commonly used in both countries, the bow is long and deep in Japan while it is short and quick in Korea. Knowledge of the basics of etiquette in different countries helps in making favorable first impressions, but a deeper understanding of the culture is necessary when building long-term business relationships with Asian partners. Understanding the religious and philosophical foundations of a culture will be useful, since business practices reflect the religion and philosophy of a local culture; this is believed to be especially true for China due to its rich cultural heritage.

Eastern vs. Western World Views and Mannerisms

There are many differences between Eastern cultures (Chinese and most Asian cultures) and Western cultures (America and most European cultures), ranging from the type of logic that is used for self-expression to the sense of time during meetings. Western cultures use a linear type of logic, while Eastern cultures have a spiral type of logic for thought processes and self-expression. In China this is attributed to the pictorial characters of Chinese language, because, words are pictures rather than the sequences of letters found in Western languages. Chinese thinking tends to be more holistic than the linear processing of information. Members of Eastern cultures have a more subtle form of self-expression which is often nonverbal, while members of Western cultures use direct language and are told to “speak their mind.”

Eastern cultures are “we/us”–oriented and collectivistic, while Western cultures are “I/me”–oriented and individualistic. As a result, collectivistic societies value the goals and success of groups over those of individuals, which are typically more important in individualistic societies. For meetings in Eastern cultures, it is important that employees arrive prior to their employers or anyone in upper management. Eastern cultures are less concerned with time constraints, while Western cultures consider it very important to start and end appointments on time. One of the biggest mistakes Western businesses can make is rushing into a relationship with Eastern businesses. Eastern cultures take time in developing relationships, but once the relationship is developed, it is not broken. When Western businesses rush to make a deal with Eastern businesses, they usually fail because they did not invest the time to build a strong relationship.

A summary of contrasting world views between Eastern and Western cultures relevant to business practices is found in the table below.

World Views	Eastern Culture	Western Culture
Thinking Pattern	Spiral (holistic)	Linear
Communication	Implied and subtle	Explicit and direct
Goals/Success	We/us-oriented; meeting group goals and working   for group success	I/me-oriented; focusing on individual   achievement
Self-Expression	Subtle and nonverbal	Overt; people are asked to “speak   their mind”
Time Sense for Meetings	Appointments less driven by exact start and end times	Be on time and end on time
Business Relationship	Taking time to develop sound relationships; hard   to form but usually long-lasting	Written agreement is important; easy   to form but not long-lasting

There are many differences in cultural customs and mannerisms between Western and Eastern cultures as well. For example, people in Asia like to dress up on an everyday basis and seem to put much more thought into their clothing choices than many Americans do. I have not once see a pair of sweatpants, a sloppy sweatshirt, flip-flops, or a baseball cap hiding messy hair during my multiple trips to Asia, including several visits to China. Whether for a shopping trip or just walking around, clothing choice seems to be very well thought out and fashion forward by both men and women.

Some cultural differences come in the form of basic necessities that can often be taken for granted—in the way that Americans and Asians eat, for example. In China, chopsticks are essentially the only eating utensils that are used. They are used for every food except for soup; in this case, the bowl is picked up and the soup is drunk. In Asian cultures, it is not rude to bring the plate or bowl to one’s mouth, while in America doing so would definitely be frowned upon. Driving and crossing the streets in China can be frustrating to many Westerners since people in China seem to have less patience when it comes to driving, and they don’t typically yield to pedestrians.

Doing Business the Chinese Way

Since the Open Door Policy began at the end of the 1970s, China has evolved from an isolated, developing nation to one with considerable influence in the world’s global economy and trade. One of the most influential philosophical views is Confucianism, which was originated by the Chinese scholar Confucius and dates back to about 500 B.C. Confucian beliefs are widespread throughout Asia, in China’s neighboring countries in East Asia in particular (e.g., Korea and Japan). Thus, understanding this view would be useful for doing business in other Asian countries.

According to Tony Liu, director of external relations and international programs at Beijing University, Confucianism defines rules for interactions among people, as well as their roles and obligations to one another to maintain harmony among people who are not equal in power. To achieve social harmony, Confucius defined strictly hierarchical relationships between rulers (husbands, parents, and older brothers) and the ruled (wives, children, and younger brothers). These hierarchical relationships of obedience to one’s superiors explain why the Chinese people respect authority and why business negotiations require top-level management of foreign counterparts. Similarly, the casualness of “just call me James” when introducing yourself will not work in China where formality is embedded in business practices through Confucian values.

Social status (Shehui Dengji) is another important aspect in understanding the formality of Chinese society. According to an interview with Tom Doctoroff, the CEO of J. Walter Thompson Greater China featured in Marketing News (03/01/2008), “Consumers in China will pay a much steeper price premium for goods that other people see you use, so people are much more willing to go outside their comfort zones, in everything from restaurants to leisure to fashion if it has a public payoff.”

Indeed, I noticed on several occasions that many of the upscale European (e.g., Dior, Gucci, Louis Vitton) and American brands (e.g., Coach, Tommy Hilfiger, Nike) are very popular in China. Chinese consumers would definitely prefer to purchase a product with a well-known brand name that can vouch for the quality of the product. An industry insider from China mentioned that Victoria’s Secret, an American intimate brand, is having a hard time reaching Chinese consumers because of their desire for outer wear that is seen publicly, over inner wear that is not seen publicly.

Because social status is important to Chinese people, like many other Asian consumers, they look up to celebrities. Seeing their favorite celebrities on television or in a magazine tempts Chinese consumers to buy what the high social status influentials are wearing. Celebrity endorsement is a common method of marketing fashion products, and many of the global companies choose internationally known celebrities to appeal to local consumers around the world. This has been an important marketing strategy in China due to the importance of social status.

Finally, but not least importantly, connections and personal relationships are critical in China, and this is exemplified by the word Guanxi. According to research entitled, “Guanxi versus the market: ethics and efficiency” by Lovett and his colleagues published in the Journal of International Business Studies in 1999, Guanxi describes personal relationship networks of informal social bonds such that individuals carry expectations and obligations to facilitate the exchange of favors. According to Yang who wrote “Chinese social orientation: an integrative analysis” for Psychotherapy for the Chinese published in 1993, Chinese classify human beings into three categories with a predisposition of closeness in mind: 1) family people (jiaren); 2) insiders or familiar people (shou ren); and 3) outsiders or strangers (sheng ren).

To obtain favoritism it may be in the best interest of foreign businesses to utilize Guanxi to become insiders or familiar people, rather than being considered outsiders or strangers. Establishing personal relationships with their Chinese counterparts through the friendship bonding practices of Guanxi, including informal meetings while dining, will facilitate exchange of favors and favorable business deals. Exchange of favors may sound somewhat unethical to Western business people, but Guanxi arises from genuine social bonding through openness of hearts. Guanxi goes beyond an agreement between the two parties when a business deal is made and often leads to favorable long-term business relationships.

With growing business opportunities in China, it is important to understand Chinese cultural values and mannerisms. More Americans are beginning to understand that it takes patience to get to know a culture, and understanding of the culture is more than strong technical and negotiating skills. After hosting the 2008 Beijing Olympics, the Chinese people are even more proud of their cultural heritage and may expect more respectful manners from foreigners than before. Appreciation and understanding of their way of life can be a tremendous asset to Westerners who are looking for business opportunities in China; many apparel businesses have yet to take advantage of growing consumer power in China.

References

1. Denslow, L. 2006. World Wise. Fairchild Publications, Inc.: New York, NY.

2. Harvard Business Review on Doing Business in China. 2004. Harvard Business School Press: Boston, MA.

3. Honigman, D. B. 2008. Big trouble in not-so-little China. Marketing News, pp. 13–15.

4. Lovett, S., C. S. Lee, and K. Raja. 1999. Guanxi versus the market: Ethics and efficiency. Journal of International Business Studies, 30:231–248.

5. Yang, K. S. 1993. Chinese social orientation: An integrative analysis. L. Y. Cheng, F. M. Cheung, and C. N. Chen, (eds.), Psychotherapy for the Chinese, The Chinese University of Hong Kong, Hong Kong, pp. 19–56.

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Don Shen is an associate professor in the Department of Family and Consumer Sciences at California State University in Sacramento. Her research interests include cross-cultural studies of consumer behavior and consumer psychology, textile and clothing imports and exports, and Internet shopping. She teaches fashion retailing and marketing and textile and apparel in the global economy. Among her honors, Dr. Shen is a member of Phi Beta Delta, the honor society for international scholars. She received the Lois Dicky Award from the International Textile and Apparel Association in 1998, and Research and Creative awards from the California State University in 2004 and 2007 and the university's Pedagogy Enhancement Award in 2002. She is a member of the International Textile and Apparel Association and the Society of Consumer Psychology.

In the global textile and clothing market, China has been a major player for almost two decades. Since becoming a member of the World Trade Organization, China’s textile and clothing manufacturing and sales have increased dramatically, largely due to increased business from the West. In order to inform foreign businesses about current practices in trade with Chinese textile and clothing companies, a study was conducted examining major changes in China’s textile and clothing industries over the last two decades. Specifically, this study intended to provide an overview of China’s textile and clothing industries to foreign companies interested in doing business in China.

Interviews were conducted in the greater Beijing and Shanghai regions with government officials representing different regional levels (country, province, region, and city), owners or general managers of import/export companies, state-owned manufacturers, joint-venture enterprises, foreign direct investors, and private enterprises.

Know Your Business Partners

Before 1992, under the planned economic system, state-owned enterprises enjoyed preferential treatment by the Chinese government. However, with the transition to a market economy, most state-owned enterprises have not only lost government protection, but are facing a huge financial burden: the obligation to support an increasing number of retired and laid-off employees. On the other hand, because of past support, many state-owned enterprises have a solid foundation in technology and equipment, enabling them to offer quality products. At the same time, their managerial systems and market adaptability tend to be dated.

Joint-venture enterprises were the first group of enterprises to emerge after economic reform in China. Originally, most of these companies were state-owned enterprises. When these companies changed ownership from state-owned to joint-venture with incoming foreign investment, money was paid to the government by the foreign investor to settle their obligations (e.g., provide support for retired and laid-off employees). By doing so, joint-venture companies were able to have a fresh start without any long-term financial burden related to their former state-owned enterprises. As a result, joint-venture companies are in a more advantageous situation than state-owned enterprises because they possess a good technical and production foundation developed when they were state-owned companies and, at the same time, more capital and support from their more recent foreign investors allowing them to be more flexible, efficient, and competitive.

For foreign direct investor companies (referred to as FDIs), the advantages of doing business in China are somewhere in between joint-venture companies and state-owned enterprises. The government requires all company types to follow the local business laws and regulations, which includes paying employees’ monthly salary, retirement benefits, social security benefits, and health insurance. Also, state-owned enterprises and joint-venture companies have some advantages left from their lives as state-owned enterprises (e.g., more display space and lower rent at trade shows), while the FDIs have no such advantages from the government. Also, FDIs may face an unfamiliar business, cultural, and social environment, thus encountering many obstacles to doing business in China. However, since many FDIs have the best and latest equipment and technology, and they often share marketing concepts, managerial models, and business operational traditions with other foreign companies, doing business with other foreign companies comes more naturally.

Compared to the above three types of enterprises, private enterprises are facing the least number of problems because they often have plenty of orders to keep their production running and have the lowest production cost making them the most common type of Chinese company with which foreign businesses interface. Since textile and clothing industries do not require much technology, investment in equipment is not a big factor. Private enterprises hire people on a more temporary basis without paying benefits, bringing down their operating costs. However, since most of their employees are temporary workers from rural agricultural areas and because retirement and social security plans are not transferable in China, a monthly cash salary is more important for temporary workers than are benefits. Also, since the economic reform in China, private enterprises have been allowed to compete with other types of enterprises to bid for the quotas they need.

Companies should develop different strategies when doing business with Chinese textile and clothing companies. In addition, when choosing business partners in China, companies need to consider their different strengths and weaknesses as well as advantages and disadvantages. Practicing the same business strategy across all Chinese business partners is unlikely to work well.

Finding Textile and Clothing Manufacturers in China: Where To Go

In the last ten years, Chinese textile and clothing industries have become concentrated along the east coast of China in five provinces, ShanDong Province, JiangSu Province, ZheJiang Province, FuJian Province, and GuangDong Province, and the city of Shanghai. These areas serve as China's textile and clothing centers and make up more than 80 percent of Chinese textile and clothing production and trade.

Recently, the origins of workers in Chinese textile and clothing industries have shifted from China’s east coast (five provinces and one city) to China’s midwest region. Workers from midwestern regions are migrating and taking jobs with the manufacturers along the east coast. This shift is mainly caused by the increase of local labor costs along east coast. U.S. companies should be mindful of both the benefit brought by this shift (e.g., possible lower production cost), as well as potential problems (e.g., inexperienced employees and unguaranteed product quality).

One interesting phenomenon in China is the development of Industrial Clusters. This model is very common in ZheJiang Province. A cluster of small textile and clothing manufacturers and supporting companies, which are often private enterprises, are located close to each other and form a production chain. For example, one manufacturer only produces greige goods; another manufacturer, located just across the street, only does dying and printing; another one nearby makes clothing. Those small-size private manufacturers rely on each other and form an Industrial Cluster, which makes every manufacturer more competitive because they are close to each other and can complete the whole production process. For example, a fabric dyeing and finishing mill can find a textile mill next door that can provide the greige goods, which can save shipping and insurance expenses and shorten lead time.

Another new format is the Textile Industry Park. While most Industrial Clusters are formed by small-size private enterprises, Textile Industry Parks are usually a group of manufacturers with a better systematic structure, more advanced methods, better developed management, and an overall operation on a larger scale. There are several of these kinds of parks near the cities of Nantong, Wuxi, and Changzhou.

Quotas Do Not Matter

What is the most effective strategy to limit China’s textile and clothing export to the global market? Many people believe it should be trade restrictions. That’s why the United States hurried into several rounds of negotiations in 2005 to put safeguards back onto several product categories, hoping to slow down the flood of Chinese textile and clothing products into the U.S. market. However, the interviews show that most Chinese textile and clothing enterprises are not worried about trade restrictions. Over the years, China’s textile and clothing industries have become adept at dealing with different forms of trade restrictions in the global market through different strategies. This has forced them to develop ways to either avoid trade restriction or obtain more quotas. China’s textile and clothing products will increasingly enter the global market regardless of the kind of trade restriction applied. Therefore, quotas or any other form of trade restriction may not be a big concern for U.S. companies when they do business with China.

So what is the biggest challenge for China’s textile and clothing industries? Many Chinese companies have been frustrated with the constant changes in the trading environment. Such changes make forecasting and long lead-time business harder. The changes include both bad and good changes, such as the government policy on exporting taxes, minimum wages, energy prices, and currency exchange rates. A stable trading environment is what most Chinese textile and clothing companies hope for, even if some part of the trading environment is not ideal for them.

In China, Quantity Is Giving Way to Quality

China’s textile and clothing companies, faced with increasing production costs, are starting to lose their economic advantage to such countries as Vietnam and Cambodia; thus, Chinese companies are beginning to change their focus from quantity to quality. If foreign companies need to produce complicated, high-quality goods, China remains a good choice. However, in situations where quantity at a very low cost is the primary goal, Southeast Asian countries may be the most economical choice.

With this new attention to quality, there has been a dramatic increase in the creation of Chinese labels featuring the work of Chinese designers. This trend opens up new opportunities for foreign companies to partner with Chinese designers and manufacturers in the development of new lines that cater to both Western and Chinese buyers.

This study provides first-hand information and the latest findings about China’s textile and clothing industries to the world using a variety of resources and perspectives. The findings from this study can help non-Chinese importers, distributors, and retailers better understand how to select and where to look for a business partner in China. Knowing about what their Chinese partners’ fears and worries are will enable foreign companies to better develop strategies to tackle those fears.

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