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As Chinese and foreign enterprises co-operate more, the clash of corporate cultures from East and West is creating mounting challenges, experts said over the weekend.

The question of how to combine and strike a balance between the two management styles is crucial to the success of Sino-foreign partnerships, they told a China Research Institute of Corporate Culture seminar in Qingdao, East China's Shandong Province.

Both Chinese and foreign enterprises have to be flexible and adjust their corporate culture to changes in the business environment, said John Lombard, chief representative in China of New Leaders International Corp, an international consulting company.

Foreign companies that want to set up in China have to adopt more oriental values, such as respect for interpersonal relationships and uniformity, he said.

Chinese enterprises that have joint ventures with foreign companies or want to expand overseas should also learn from their Western counterparts, who favour diverse opinions and a willingness to change.

"These enterprises need to stand somewhere in the middle (of the two cultures). Normally it takes two to three years to implement cultural changes," Lombard said.

The concept of corporate culture, covering brand promotion, human resources, services, innovation and other management issues, was introduced to China two decades ago when the country began opening up to the world.

It has now been adopted by many domestic firms trying to build their brands and become more internationally competitive, especially in sectors like the globalized automobile industry.

Partnerships with foreign companies are not just about the introduction of capital, technology and expertise. They are also about the redesign of corporate culture, said Li Jirong, deputy secretary of the Party Committee of Shanghai Automotive Industry Corporation (Group). The corporation has 58 joint ventures that contribute 95 per cent of its sales and profits.

Changes in corporate cultures have also boosted economic development in pioneering cities like Qingdao. Qingdao is home to many major brands and firms such as Haier, Tsingtao Beer, Hisense and Aucma.

Teng Angong, deputy Party secretary of Tsingtao Brewery Co, one of China's biggest breweries, said an important part of the company's expansion is the integration of its corporate culture with that of the subsidiaries it has acquired from other companies across the country.

"One of our first jobs after the acquisition is to send special teams to the subsidiaries to express our core management values and listen to the opinions of the new members, so that the transition will be smooth," he said.

Tsingtao Beer has acquired more than 40 subsidiaries over the past decade. In the few acquisitions that did not work well, disparities in corporate culture were mostly to blame, Teng said.

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