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In SME marketing literature, there is not much previous research on social-cultural influences on SME marketing in China, but only a few researchers have conducted such research (e.g. Siu and Kirby, 1995, 1999b; Siu, 2000a; Fang et aL, 2004; Siu et aL, 2004; Siu and Liu, 2005; Siu, 2005; Tang et aL, 2007; Siu, 2008). Siu is probably the most active and productive researcher in the field of the SME marketing in China so far.

One of the most relevant studies is Siu’s (2000a) study on marketing philosophy and company performance of Chinese small firms in Hong Kong (HK). Siu (2000a) based his study on the traditional Chinese cultural value model developed by Yau (1994) and selected three dimensions of Chinese cultural values which are possibly linked with marketing activities from a management view, namely interdependence, group orientation and harmony with others. Siu (2000a) expended three dimensions into two levels of sub-dimensions: attitudes and beliefs of Chinese owner-managers, and possible marketing activities of Chinese small firms. Siu (2000a) used the framework to examine marketing of Chinese small firms in HK through in-depth personal interviews with 26 respondents. The research results indicate that the Chinese cultural and business environments of Hong Kong influence the marketing practices of those Chinese small firms to a great extent. The small firms’ marketing practices are subject to the influence of needing to be in harmony with other orientations. Chinese owner-managers think with greater immediacy and pragmatism. The group orientation and the interdependence principle encourage Chinese owner-managers to perceive that business success will not be solely influenced by marketing, but by doing favours for others and establishing trust, creditworthiness, and social networks. The research evidence of Siu (2000a) indicates that the business philosophy of Chinese small firms in Hong Kong is sales or production oriented according to traditional Western marketing. This is a study with owner-manager attitude focus as opposed to Yau’s (1988, 1994) study that is more consumer focused. It is a meaningful attempt to study the influence of cultural values on management behaviour. However, this study’s explanatory power is limited because the samples were taken in Hong Kong, which, even though it has been influenced by Chinese culture, was also influenced by British

G. Ma 2013...Chapter2 Literature review

culture for a long time for historic reasons. Its representativeness is questionable and it has not been empirically tested yet.

In their study examining the differences between marketing practices in small firms in Hong Kong and the UK or USA, Siu and Kirby (1999b) found that the philosophy of Chinese small firms (HK) is sale and production oriented, whereas small American and British firms are customer oriented, and Chinese small firms do little strategic marketing planning. However, Chinese small firms put much effort into establishing close and good relationships with buyers and government officials. Business success is not determined solely by marketing, but by product quality, personal networks, relations with government officials, and company or brand reputation (Siu, 2001). Furthermore, in a comparative study of the marketing practices of Chinese small firms in Hong Kong and the UK, Siu and Kirby (2003) argued that most of the marketing literature has failed to recognise the impact of indigenous and exogenous factors affecting organisations and their impact on marketing activities. They suggest that social-cultural influences should be considered when attempting to understand the marketing practices of Chinese small firms in general, as should the macro-economic environment. In fact, the studies of Siu and Kirby (1999b, 2003) provide some evidence of the differences in marketing practices between small firms of Hong Kong and of the UK and USA, but do not indicate what factors influence the marketing practices.

Siu (2000b) used Brooksbank’s (1991) model to conduct a preliminary study on marketing and performance of Chinese small firms in several South-Eastern coastal cities of Guangdong province in Mainland China. His research findings suggest that the broad small firm marketing principles, though specifically generated from Western countries, contribute to the success of small firms in China. He compared his research findings to the results of Brooksbank et a l (1992) and found that some specific marketing practices of Chinese small firms are different from those of their British counterparts, for example, British firms give higher priority to marketing than other functions, while Chinese small firms give a leading role to product quality and personal networking. Higher performance Chinese small firms are customer orientated, they conduct situation analysis and have knowledge or use of

G. Ma 2013...Chapter! Literature review

marketing planning tools, but do little in-house market research. Again, this research does not explain what factors influence these firms’ marketing practices.

Siu et al. (2004) studied strategic marketing practices and performances of Chinese SMEs in Taiwan by using the model of Brooksbank et al. (1992a) and compared these with the marketing practices of British SMEs which were presented by Brooksbank et al. (1992a). Some similarities and differences were found between marketing practices of Taiwan SMEs and British SMEs. For example, Siu et al. (2004) found that the higher performing Taiwanese SMEs give higher priority to marketing than to other business functions in corporate planning, but they are still sales or production oriented, while their British counterparts are market oriented. Based on their research findings, Siu et al. (2004) argued that the broad small firm marketing principles, specifically generated from countries in the West, to some extent contribute to the success of Taiwanese SMEs, but may not be fully suitable in some specific socio-cultural contexts, such as SMEs in Taiwan. In their study, Siu et al. (2004) also attempted to understand the differences of marketing practices between Taiwan SMEs and British SMEs from environment and cultural perspectives. They proposed a tentative model depicting the interplay amongst environmental factors (e.g. sub-contracting and original equipment manufacturing systems predominate), Chinese cultural values (e.g. long-term orientation, harmony with others’ orientation, fragmented financial systems, social capital, relational orientation, and face) and marketing practices of the higher performing Taiwanese SMEs. This research is a meaningful attempt to understand SME marketing in a different culture and business context which is helpful and enlightens the author in this current study. However, in this study, the socio-cultural effect on marketing practice has not been examined empirically and cross-cultural issues have not been discussed. Moreover, it only focused on SME marketing in Taiwan and Britain, not mainland China. Even though Taiwan and mainland China have the same cultural roots, their political and economic systems are very different, and the previous research evidence show that economic development, marketing environment and business systems do determine the differences in marketing practices (Siu and Liu, 2005). So, environmental and socio-cultural influence on SME marketing in China still remains unclear.

G. Ma 2013... Chapter2 Literature review

Besides discussing the influence of indigenous factors on marketing practices, such as the influence of cultural values on small firm marketing, the research by Siu (2005) attempts to probe the influences of institutional environment factors ( government intervention) on small firm marketing in Greater China from the exogenous perspective. It is an attempt to investigate marketing by small firms with the same cultural roots but operating in different market settings. The research findings suggest that there is interplay between environment and culture as they impact on marketing practices of SMEs in China, and more studies are needed. It is quite similar to the study of Siu and Liu (2005), where the differences of marketing practices of Chinese SMEs in Hong Kong and mainland China were examined. Again it uses the model of Brooksbank et al. (1992a). This study provides more evidence of the differences between marketing practices even in same root of culture but in different economic systems. However, it just revealed “what” the differences but did not address

“why ” o f the differences. The reasons behind the differences need to pay more attention.

Tang et al. (2007) examined the association of business environment with construction SMEs’ business performance in Sichuan, China. Two business environment variables are used, namely government policy towards SMEs and services quality and availability to SMEs, and the satisfaction levels of these two were examined. Their research results show there is no association between these two variables and the business performance in their sample firms. They suggest that future research should pay more attention to theory development in the context of the business environment in China.