Stereotypes，ethnics distance and attitudes towards business with China and Chinese FDIs in the western Balkans

Authors: Matevž Rašković, Davor Vuchkovski, Boštjan Udovič

ABSTRACT: This paper highlights and analyses the importance of stereotypes, ethnic distance and attitudes towards business with China/the Chinese and particularly towards Chinese FDIs in the Western Balkans. We focus on the young generation, as future business and political leaders. Our results show that Slovenians display a much lower level of ethnic distance towards the Chinese and associate them with being hard working. Montenegrins display a higher level of ethnic distance and most frequently associate them with their physical features (height). Both Slovenians and Montenegrins would welcome stronger trade and investment cooperation between China and the Western Balkans, but are not well familiar with the 16+1 pragmatic cooperation platform. While Slovenians are relatively more welcoming to Chinese FDIs in their attitudes, they at the same time also feel the EU should control Chinese FDIs in Europe. Montenegrins on the other hand are less afraid of growing economic power of China in the world and feel less strongly that the EU should control Chinese FDIs in Europe. Chinese rank fourth after Germans, Americans and Russians in terms of preference in conducting business in the future, ahead of Serbs, Japanese/Koreans, Polish, Indians.

KEY WORDS: China, Western Balkans, Slovenia, Montenegro, Stereotypes, Attitudes, Ethnic distance, 16+1 pragmatic cooperation platform, One belt one road (OBOR) project, New Silk Road

1. INTRODUCTION

Following the first economic and trade forum held 2011 in Budapest (Hungary) between China and countries of Central and Eastern Europe (CEECs), the 16+1 pragmatic cooperation platform outlined by former Chinese prime minister Wen Jiabao in April 2012 in Warsaw (Poland) proposed 12 specific measures and a supporting 10 billion USD financing line to promote China-CEE cooperation in an attempt to boost trade and investment between China and the EU, as two of the world’s largest trading partners (Zuokui, 2013). As most western EU economies have struggled with economic growth in the wake of the 2008 global economic and financial crisis and have been dealing with a series of demographic, fiscal and other socio-economic challenges hindering their long-term economic growth prospects as well, China has recognized CEECs as the face of so called “New Europe” with untapped opportunity in trade and investment.

With over 467 billion EUR of cummulative trade in goods (exports and imports) in 2014 China and the EU remain the world’s largest trading partners with daily trade in goods exceeding 1.2 billion EUR (European Commission, 2015). Trade in services on the other hand represents only about 1/10 of cummulative trade in goods (European Commission, 2015). However, contrary to trade in goods the EU display a surplus in its service trade with China (European Commission, 2015).  

Yet, 90% of all China-EU trade takes place between Western EU markets and China, while trade with CEECs represents only about 10% of all China-EU trade (Zuokui, 2013; Zuokui, 2014). A similar structure also exists in terms of Chinese outward foreign direct investments (OFDIs) into the EU with FDIs into CEECs representing about 10% of all Chinese FDI into the EU (European Commission, 2015; Eurostat, 2015). More interestingly, Chinese FDIs to the EU have increased more than 30-fold in terms of inflows between 2009 and 2011 alone (Eurostat, 2013) making the EU one of the fastest rising destinations for Chinese OFDIs in the last decade (Clegg & Voss, 2012; CEED Institute, 2012). This trend has recently picked up even more in the service sector which has driven Chinese FDIs to double in 2014 compared to their dip in 2013. Since 2010 Chinese FDIs into the EU have recorded one of the fastest growth rates compared to that in other regions, with average annual inflows reaching over 8 billion EUR (Baker & Mackenzie, 2015).Interestingly, about 80% of Chinese FDIs into CEECs have so far been limited to Hungary (CEED Institute, 2012), which has been prior to CEECs’ 2004 accession to the EU historically China’s most important trading partner in CEE, to be  replaced by Poland on account of it being the largest CEE economy after 2004 (Xin, 2012).

The establishment of the so called New Silk Road Economic Belt proposed by president Xi in October 2013 in Kazakhstan, later on also popularly nicknamed the One Belt One Road (OBOR) project, shifted the momentum in China-CEE cooperation to be expanded from trade and investment facilitation towards promotion of “political, economic, trade and cultural” cooperation and dialogue between East Asia, Central Asia and Europe in which CEECs can play an important role (Zuokui, 2014, p. 1). While western EU markets will remain strategically important markets for China – not only in terms of trade and investment, but particularly in terms of technology access – the 16+1 pragmatic cooperation platform and the OBOR project have created an important “window of opportunity” to be seized by individual CEECs (Zuokui, 2013, p. 3). Yet, the historical, political, economic and cultural heterogeneity of the 16 CEECs offers varying opportunities for specific countries in this group which are also perceived differently by China (Zuokui, 2013).

Except for Serbia, which is seen together with Hungary as an “old friend”, the rest of the Western Balkan countries have been seen mostly seen so far as peripheral in the 16 CEEC group, on the account of their small(er) size, high-level of EU dependence, strong EU and/or US political influence, issues of competitiveness, complex institutional environments, limited resources and independent development capabilities (Zuokui, 2013). However, following the December 2014 high-level meeting of premier Li in Belgrade, the first such high-level China-CEE meeting to be held in the Western Balkans, the importance of the Balkan Peninsula was highlighted in the context of the OBOR project and the so called maritime leg of the 21^st century New Silk Road connecting Guangdong with Western EU through Greece and the Western Balkan corridor, which would save about 7-10 days of transportation and decrease transportation costs (Zuokui, 2014).  

Past experience of Chinese FDIs in the EU has highlighted the need for a higher level of understanding and adaptation not only to the laws, standards and practices in host European countries, but also for greater sensitivity to cultural and psychic differences and a better understanding of intra-regional differences as well (Clegg & Voss, 2012). As an EU member, Eurozone member, Schengen member, OECD and NATO member, Slovenia may be particularly attractive on account of its geostrategic position and sea access through the port of Koper, the largest transit freight port on the Adriatic Sea. Yet, Slovenia remains one of the most closed EU markets (not just CEE markets) in terms of any FDIs; not just the Chinese (IMAD, Development report, 2015). Understanding public opinion and attitudes towards FDIs, as well as potential stereotypes regarding specific foreign investors in terms of their nationality remains essential for any foreign investor seeking to tap into Slovenia’s investment potential.  Further, as previous research has shown cultural differences and so called psychic distance remains an important determinant of FDIs (Dow & Ferencikova, 2010; 5. Dow & Karunaratna); this is also the case for Chinese OFDIs (Blomkvist & Drogendijk; 2013).

The purpose of this paper is to highlight and analyse the importance of stereotypes, ethnic distance and attitudes towards business with China/the Chinese and particularly attitudes towards Chinese FDIs in the Western Balkans. We focus on the young generation, as future business and political leaders which will shape CEE-China and EU-China economic and political relations in the forthcoming decades. As so called global citizens, this generation is believed to be not only more cosmopolitan (Thompson, & Tambyah, 1999) and culturally open (Kjelgaard, & Askegaard, 2006), but also “at the forefront of globalization” (Strizhakova et al., 2012, p. 43). This may significantly influence their attitudes, stereotypes and propensity towards doing business with China and the Chinese (Rašković et al., 2014). In doing so, we compare Slovenia and Montenegro, two smaller Western Balkan “sparrows”, which can be potentially attractive within the Balkan Peninsula maritime corridor of the OBOR project due to their sea access. They can also be viewed as good representatives of two different groups of Western Balkan countries, with Slovenia already an EU, OECD, NATO, Schengen and Eurozone member; while Montenegro is still in the EU negotiations stage. Further, from a socio-cultural perspective, while Slovenia can be more closely linked to the German, Austrian and even Hungarian cluster on the account of its history within the Austro-Hungarian Empire, Montenegro’s socio-cultural background is closer to the Serbo-Turkish cluster.

2. SLOVENIA AND MONTENEGRO: TWO WESTERN BALKAN “SPARROWS”

A popular Chinese saying goes that “a sparrow might be small, but it has all the parts for flying”. This best illustrates the nature of Slovenia and Montenegro, as two small and open economies in the Western Balkans which have been prior to the OBOR project mostly overlooked by China within the 16+1 cooperation platform on account of their small size. Within the maritime leg of the 21^st century New Silk Road, these two sparrows may however capitalize on the window of opportunity offered by the OBOR initiative on account of their access to the Adriatic Sea and, in the case of Slovenia, important geostrategic location.  

Table 1 summarizes some of the key size and development characteristics of the two countries. As we can see, the cummulative population in both countries is below 3 million inhabitants. Annual GDP growth was positive, but moderate.

Table 1: Selected indicators for Slovenia and Montenegro

Data Sources: World Bank, Development Indicators, 2015; Trading Economies Database, 2015; Izvozno okno, 2015; CIA, World Factbook, 2015; WEF, Global Competitiveness Report, 2014-2015; Statistical Office of Slovenia, 2015; Statistical office of Montenegro, 2015; Coface, Country Risk database, 2015.

GDP per capita is about 3 times higher in Slovenia than in Montenegro and about 70% higher in PPP terms. While Slovenia can be considered as a very open economy, with exports in goods and services representing 77% of GDP, Montenegro’s economy is more closed; with exports in goods and services representing some 40% of GDP. Both countries rank similarly in WEF’s competitiveness rankings.  Gross added value per employee is about 2.3-times higher in Slovenia than in Montenegro mirroring differences in productivity. Due to better macroeconomic environment, as well as EU, Eurozone and OECD membership, Slovenia’s country risk is with A4 risk rating considerably better than that of Montenegro (C risk rating). Table 2 presents key competitiveness indicators according to the WEF’s Global competitiveness methodology. As we can see, Slovenia and Montenegro score similarly on several institutional indicators, with the exception of business costs related to terrorism, crime and violence where Slovenia scores significantly better, while Montenegro scores much better in terms of government favoritism.

Table 2: Selected competitiveness indicators for Slovenia and Montenegro

Data Source: WEF, Global Competitiveness Report 2014-2015. Scores measured on 7-point ordinal scales.

With regards to the labor market, Slovenia displays a much more rigid labor market, with stringent hiring and firing rules, and a less favorable pay and productivity ratio on account of high taxation of labor. In terms of technology availability and firm-level technology absorption Slovenia scores significantly better than Montenegro, however it scores significantly worse when it comes to FDI and technology transfer due to a generally low level of FDIs. Local supplier quantity and quality are much better in Slovenia than in Montenegro, while the two countries scores similarly low when it comes to buyer sophistication. In terms of capacity to innovate and the quality of research institutions Slovenia scores significantly better than Montenegro, while government procurement of advanced technology products is significantly higher in Montenegro.

Table 3 counties with presenting key characteristic of the business environments in Slovenia and Montenegro according to the World Bank’s Doing business survey. Generally, Montenegro displays a more favorable business environment with an overall ranking on the ease of business of 36 out of 189 countries, compared to Slovenia’s ranking of 51. However, Slovenia scores better when it comes to starting a business, dealing with construction permits and paying taxes, while Montenegro ranks better when it comes to getting credit and resolving insolvency. Both countries rank at the bottom when it comes to enforcing contracts.

Table 3: Selected business environment indicators for Slovenia and Montenegro

Data Source: World Bank, Doing Business Survey, 2015.

In terms of the most problematic factors for doing business according to the WEF’s Global competitiveness survey, Table 4 summarizes the specific impediments to business in the two respective countries. As we can see access to financing is seen as the biggest impediment to business in both countries, despite Slovenia scoring considerably lower when it comes to the soundness of its banking system (WEF), or ease of access to loans (World Bank). Corruption is seen as a much more prevalent issue in Montenegro than in Slovenia, as is the poor work ethic of national labor force. On the other hand inefficient government bureaucracy is a much more problematic factor in Slovenia than in Montenegro. Particularly important issues are also tax rates and tax regulation in the case of Slovenia.  

Table 4: Most problematic factors for doing business in Slovenia and Montenegro

Data Source: WEF, Global Competitiveness Report 2014-2015.

Lastly, Table 5 summarizes some of the key indicators relevant for trade with China and openness to FDIs in the two respective countries. Both countries display large trade deficits with China. The ratio between imports and exports is 4.5 to 1 in the case of Slovenia and a staggering 51.8 to 1 in the case of Montenegro. Combined Cummulative trade (exports and imports) of both countries with China is about 900 million EUR. FDI levels between China, Slovenia and Montenegro remain negligible. Thus, in the 2000-2014 period, the value of cummulative Chinese FDI in Slovenia reached a meager 8 million EUR (Hanemann & Huotari, 2015), while Chinese investment into Montenegro in the 2006-2014 period was valued at about 7.8 million EUR (Government of Montenegro, 2015). FDIs into China remain quite small in the case of Slovenia and virtually non-existent in the case of Montenegro.

Table 5: Selected trade with China and general FDI indicators for Slovenia and Montenegro

Data Sources: WEF, Global Competitiveness Report 2014-2015; Statistical Offices in both countries, 2015. Scores measured on 7-point ordinal scales.

Having presented a short overview of Slovenia and Montenegro and their trade and investment relationships with China, we continue with the theoretical framework regarding stereotypes, ethnic distance and attitudes towards FDIs.

3. THEORETICAL FRAMEWORK

3.1 Stereotypes and attitudes in international business

People from different socio-cultural backgrounds often make conclusions about each other, which are quite often based on stereotypes and/or lack of actual experience. In this regard, stereotypes can be referred to as generalizations about a group of people (Zaidmand, 2000). In addition to cognitive processes – such as generalizing (Hill et al., 1990), priming (Sedikides & Skowronski, 1991), selective memorization (Rojahn & Pettigrew, 1992), and subconscious group membership-behavior interpretations (Mullen & Johnson, 1990) – and the assessment of motivation-based behavior, socio-cultural characteristics of individuals, like nationality, ethnicity, social status, gender etc. are often used to make generalizations about people and reduce so called cognitive dissonance connected to processing discrepant information and behavior (Festinger, 1957).

According to Madon et al. (2001) stereotypes shape social perception. They can bias impressions of individuals. They can also produce self-fulfilling prophecies and lead to harassment and discrimination. Some researchers have also suggested that stereotypes are a product of different learning processes, such as cultural transmission, acculturation, and socialization (Zaidmand, 2000). Schwartz (2008) connected the cultural diversity and the existence of stereotypes, because, by his words, stereotypes can also be represented as the perception of the central cultural tendencies and characteristics of individuals from a certain culture (Rašković & Svetličič, 2011).

According to Usunier & Lee (2005, p. 390) “stereotypes are often used to capture the silent traits of a “foreign” national character.” Some studies have shown that stereotypes tend to reflect national policy and historical events (Zaidmand, 2000). Research has shown that the content of national and ethnic stereotypes is sensitive to social context and may change over time and across generations (Poppe, 2001). Rašković & Svetličič (2011) indicated that national stereotypes are present in different public segments (economic, political) and are some kind of visible manifestation of the public opinion. Many studies suggested that the content of stereotypes changes with the changing political and economic relationships between groups, also when stereotypes are faced with changing external situations (Poppe, 2001).

In the international business field stereotypes also play an important role, since as Hofstede (1994, p. 1) puts it: “the business of international business is culture”. Katz (1995) pointed out that people use stereotypes to infer reasons for behavior and those inferences can be important determinants of judgments. National stereotypes are present in different public segments and have an important influence in international relations (Rašković & Svetličič, 2011). Zaidmand (2000) also highlights the large impact of stereotypes, particularly in the initial stages of business relations. Negative stereotypes can affect negatively on trust and commitment in relationships. His opinion is also shared by Rašković & Svetličič (2011) who said that stereotypes are present especially in the early stages of business relationships and may hinder the further development of the relationship. For business people an important implication of stereotypes can be a tendency for greater sensitivity and detection of information and evaluation of behavior that is consistent with stereotypes (Rašković & Svetličič, 2011). Such individuals often overestimate consequences and results of someone’s behavior if it is consistent with their stereotypes about some phenomenon (Rašković & Svetličič, 2011). They can also underestimate, especially at the beginning when expectations have not been met.

3.2 Ethnic distance

The concept of ethnic distance employed in our research can be derived from the concept of social distance. Seen today as a cornerstone concept of international sociology, the concept originates from Simmel’s (1908) concept of social distance described in his essay “The Stranger” in which the concept of distance had both metaphoric and geometric connotations; while Park (1924) saw social distance as an important “state of mind” influencing human interaction (which he saw as subject to social geometry).

While social distance can be viewed as different levels of willingness to interact with representatives of a social class, race, ethnicity, sexual orientation etc. (Bogardus, 1926), the concept of ethnic distance is a more narrow concept and refers to the issue of social distance regarding a specific ethnicity/nationality.

The concept of social distance was operationalized by Emory S. Bogardus in 1925 through a 7-point scale attempting to “reduce rationalizing as much as possible” (Bogardus, 1959, p. 30). After the first application of the scale in 1926 on a sample of 1,725 university students to test social distance of Euro-American students towards various races, the scale was modified (1933, 1966/1967). Bogardus’ approach to social distance belongs to the so called affective social distance approach measuring actual “willingness” or “sympathy” with a specific group and the corresponding degree of interaction with that group. It should be distinguished from normative social distance – corresponding to the norms of insider- vs. outsidership – or interactive social distance – relating to intensity and frequency of interaction between members of groups, not individuals (Kadushin, 1962).

3. DATA AND METHODOLOGY

3.1 Data

Data was collected in Slovenia and Montenegro using a matched sampling approach typical in such cross-cultural comparisons (Peterson, & Merunka, 2014; Van de Vijver, & Leung 1997). Student samples were chosen in the two studied countries, since they have been shown to be reasonable representations of young adults in behavioral studies (Xu, Shim, Lotz, & Almeida, 2004), as well as good proxies for values of managers in business research (Mihelič & Lipičnik, 2010). Matched young adult populations have also been employed in psychological cross-country studies of national characters by Terracciano et al. (2005).

A paper-based questionnaire was administered in each country, following a translation-back translation procedure in the spring/summer semester of 2015 at a leading university in each of the country’s respective capitals (Ljubljana, Podgorica). Only students with a business, economics and/or international relations backgrounds were included in the research to further ensure matching across the two countries. Table 5 summarizes the key sample characteristics of the respondents.

Table 5: Sample characteristics across the two matched samples

Note: *The number in bracket corresponds to the average number of trips to China among respondents who have already travelled to China.

As we can see from the corresponding summary, the majority of respondents in both countries were females born in 1993 (Slovenia) and 1995 (Montenegro), who in (most cases) did not spend more than 3 months abroad and have in the vast majority of cases also never traveled to China. Only a small share of respondents in both samples has travelled previously to China.

3.2 Methodology

Stereotypes were measured as top-of-mind open end associations/characteristics according to the Katz & Braly (1993) and Madon et al. (2001) approaches to stereotype measurement. Each respondent was requested to recall a maximum of 5 open-end associations related to Chinese people in general. This was followed by measuring ethnic distance towards the Chinese using the Bogardus (1933) social distance scale instrument. Preference for doing business with the Chinese was further measured based on a rank-ordering method in comparison with doing business with the Americans, Russians, Germans, Japanese and Koreans. This was followed by a series of Likert-type statements related to perceived level of competitiveness of the Chinese economy relative to the host CEE economy (Slovenia and Montenegro), attitudes towards Chinese inward FDI into host economy, perceptions and concerns of growing economic power of China in the world and the region, as well as the overall familiarity with the 16+1 pragmatic platform and the OBOR project. Data was coded and analysed in SPSS

3.3 Limitations of the research and future research

This research has focused explicitly on the stereotypes, ethnic distance and attitudes of the so call young generation towards business with China/the Chinese and particularly Chinese FDIs in CEE. Due to the nature of our convenience sample, our results cannot be considered representative for the general populations in Slovenia and Montenegro. Further, while we have strived to show that Slovenia and Montenegro can be considered as good proxies, our results are in no way reflective of stereotypes, ethnic distance and attitudes towards business with China/the Chinese and Chinese FDIs in other Western Balkan countries. In particular, due to a fundamentally different nature and “quality” of the relationship between China and Serbia – as an “old friend of China” (Zuokui, 2013) – future research will replicate the study first in Serbia, followed by Croatia, Macedonia, and Bosnia and Herzegovina. Currently, data collection is also underway in Poland, which will be used as a “yardstick” for the comparison of our Western Balkan data, since Poland has become China’s key trading partner among CEECs (Xin, 2012).  

4. KEY RESULTS

4.1 Respondents’ experience with China

Figure 1 shows the level of interaction of respondents in Slovenia and Montenegro with Chinese people over the last 3 years (either abroad, or in their home country) measured on a 7-point ordinal scale corresponding to: 1-no interaction and 7-frequent (at least a few times per year) and deep interaction.

Figure 1: Levels of interaction with Chinese people over the last 3 years (abroad, or at home)

Note: 7-point scale corresponding to: 1-no interaction and 7-frequent (at least a few times per year) and deep interaction.

Respondents in both countries indicated very low levels of interaction with the Chinese at home or abroad within the last 3 years, with average scores on a 7-point scale ranging 2.27 for Montenegro and 2.14 for Slovenia. Thus, the corresponding stereotypes and attitudes towards the Chinese are generally not based on previous experience with the Chinese which should be taken into account in the interpretation of our results.

4.2 Stereotypes about the Chinese

Table 6 summarizes the most frequent stereotypes regarding the Chinese, measured as top-of-mind associations according to the Katz & Braly (1933) and Mavondo et al. (2001) approach. As we can see, the overwhelming majority of Slovenian respondents see the Chinese as extremely hard working, followed by being short, smart and resourceful, numerous, and kind.

Table 6: Most frequent stereotypes regarding the Chinese (measured as top-of-mind associations)

Note: Rankings based on most frequent associations for each of the five associations (places) separately. Frequencies displayed per each association place separately in brackets.

On the other hand, the majority of Montenegrin respondents see the Chinese as being primarily short, which has to do with the fact that people in Montenegro are very tall. Height is considered as a sort of status symbol among men in particular. This is followed by a perception of Chinese people being hard working, smiling and being always positive. A larger proportion of stereotypes among Montenegrin respondents were also connected to business – Chinese shops and boutiques, as well as the motorway project supported by the Chinese in Montenegro. This was not the case among Slovenian respondents.

4.3 Ethnic distance towards the Chinese

Figure 2 presents the results of declared levels of ethnic distance on the 6-point Bogardus (1933) social distance scale among young adults in Slovenia and Montenegro. As can be seen, Slovenia respondents display a much smaller level of ethnic distance towards the Chinese compared to Montenegrins, with 63.3% willing to have the Chinese as friends and 14.8% as family members/spouses.

Figure 2: Declared levels of ethnic distance of Slovenia and Montenegrin young adults towards the Chinese (would you be willing to live/have a Chinese person as…)

Notes: Measured on the 6-point Bogardus (1933) social distance scale.

On the other hand, the majority of Montenegrins would accept a Chinese as a colleague/co-worker (30.1%), followed by a friend (25.7%). Having said this, we can generally say that the young generation in Slovenia displays a much lower level of ethnic distance towards the Chinese compared to that in Montenegro, since the average ethnic distance score was 4.6 for Slovenia and 3.2 for Montenegro (measured on a 6-point ordinal scale).

4.4 Preference towards doing business with the Chinese

Respondents were also asked to rank order with whom they would prefer to do business in the future in terms of 8 specified nationalities. Table 7 shows the results where the Chinese were compared to Americans, Germans, Russians, Indians, Japanese and Koreans, Serbs and the Polish. As we can see, the Chinese rank fourth among 8 nationalities in terms of preference to do business in the future. In both countries they rank ahead of Serbs, which rank in 5^th place, despite the fact Serbia is the largest market in the Western Balkans and is seen as an “old friend of China”. Chinese further rank ahead Japanese and Koreans (6^th place in both countries), as well as Indians (8^th place) in both countries.

Table 8: Preference for conducting business in the future for assigned nationalities (rank-order)

Notes: Respondents were asked to assign a 1-8 ranking indicating their preference for conducting business in the future with a specific nationality. 1^st place corresponds to the highest level of preference, while 8^th place corresponds to the lowest level of preference. Final results are shown in terms of cummulative points, where each 1^st place ranking was given a maximum of 8 points, while each 8^th place was given a minimum of 1 point.

4.5 Attitudes towards China, business with China and Chinese FDIs

Table 9 displays general attitudes towards China, business with China/The Chinese, Chinese FDIs and China-Western Balkan cooperation. As we can see, respondents in both countries most strongly agree (4.7) that Western Balkans should cooperate more with China in trade and FDIs. In Slovenia, this is followed by a warmer declared welcome towards Chinese FDIs (4.7), which would create additional jobs, while Montenegrins agree that China has already surpassed the USA as the world biggest economic superpower (4.6). While Slovenians also similarly agree with this (4.5), they at the same time also believe that the EU should control Chinese FDIs into Europe (4.5).

Table 9: Attitudes towards China, Chinese FDIs and cooperation with China (7-point scales)

Notes: Measured on 7-point scale (1-lowest level of agreement, 7-highest level of agreement). Standard deviations are shown in brackets.

On the other hand, Montenegrins are less afraid of growing economic power of China in the world (3.6), as well as feel less strongly that the EU should control Chinese FDIs into Europe (3.8). Respondents in both countries are also quite well aware that China is much more competitive than their respective economies (according to WEF’s competitiveness rankings).

4.6 Familiarity with the 16+1 cooperation platform and the New Silk Road

Lastly, Table 10 displays the familiarity of Slovenian and Montenegrin young generation with the 16+1 pragmatic cooperation platform and the New Silk Road (NSR) project. As we can see, there is greater awareness and familiarity with the New Silk Road project in both countries.

Table 10: Familiarity with the 16+1 and New Silk Road projects

Notes: 16+1= the 16+1 pragmatic cooperation platform; NSR=New Silk Road.

5. DISCUSSION AND SOME IMPLICATIONS

In the absence of concrete experience of traveling to China and quite limited interaction with the Chinese at home or abroad, the young generation in Slovenia and Montenegro display generally quite positive stereotypes about the Chinese. Particularly in Slovenia, where “working hard” is seen as a cornerstone value (Zupan et al., 2015) and an essential part of Slovenian national character (Terracciano et al., 2005). Thus, the association of Chinese people with hard work should be seen as an extremely positive ethnic stereotype in Slovenia.  In Montenegro, the most frequently recalled top-of-mind association of Chinese people being “short” should not be seen so much as a negative stereotype, but is more closely connected to Montenegrin people (males in particular) being very tall. In such a context, height of males in Montenegro is seen not only as a sign of physical strength, but also commands respect in personal and business dealings. A practical implication arising from this is that, in political and business dealings with Montenegrins, the Chinese side should pay stronger attention to selecting taller representatives and spokespeople, as this will command greater respect and facilitates trust building in dealings with the Montenegrins.

While both Slovenia and Montenegro remain relatively ethnically homogenous societies, with low levels of immigrants and ethnic minorities, we can nonetheless observe considerable differences in the declared ethnic distance towards the Chinese between Slovenian and Montenegrin young generation. Slovenians display a much lower level of ethnic distance towards the Chinese compared to the Montenegrins. We believe there may be two key underlying reasons for this. From the socio-cultural perspective, Slovenian national culture can be considered less conservative than Montenegrin when it comes to values (Schwartz, 2008). From an economic perspective, Slovenia is also a much more internationally open and export-oriented economy, with exports of goods and services representing 77% of GDP (only 40% in the case of Montenegro). It also has stronger trade relations with China, with the share of Slovenian exports to China increasing from 0.3% to 0.6% in the last couple of years (Statistical Office of Slovenia, 2015). Contrary to Montenegro, Slovenia also has at least some OFDIs to China, albeit the level if quite small.

An additional reason possibly explaining the difference in ethnic distance towards the Chinese between Slovenia and Montenegro specific to the young generation could also be a much higher level of internationalization of the Slovenian higher education system offered not only through the Erasmus student mobility network, but also the many bilateral exchange and cooperation agreement between Slovenia and China. In this regard, the role of Confucius Institutes should also not be neglected. While Montenegro received its first Confucius Institute only in 2015, the Confucius Institute in Ljubljana has already been running for more than 5 years and has in this period managed not only to extensively promote Chinese culture and language in Slovenia, but has successfully introduced a special course on “How to do business with China” at the Faculty of Economics in Ljubljana. It has also started a successful pilot project of introducing Chinese as a second foreign language through a network of five Confucius classrooms in selected kindergartens, primary and secondary schools, with more than 600 pupils learning Chinese as a second foreign language. All these activities have significantly changed the Slovenia public’ perception of China and the Chinese culture (Bao, 2013) and thus, in our opinion, also contributed to lower levels of ethnic and psychic distances between Slovenians and the Chinese; particularly among the young generation.  

The policy implications related to decreasing the ethnic distance towards the Chinese are quite clear in the context of our results. Promoting and supporting cross-cultural, people-to-people dialogue and student exchanges should be seen as an important tool for building a higher level of understanding and cross-cultural sensitivity, which in turns leads to a decrease in ethnic distance towards a specific nationality. The role of Confucius institutes in this aspect should also be strengthened and connected to the activities of the 16+1 pragmatic cooperation platform and the OBOR project. The uniqueness of the Ljubljana Confucius Institute, one of only 7 such select institutes to be located at a business school and also offering specialized courses on doing business with China, should be emphasized and highlighted as a best practice to be promoted throughout the Confucius institute network (in the Western Balkans). In this year’s third session of the 12th National People's Congress in March 2015, Chinese Prime Minister Li Keqiang emphasized a fundamental shift in China's future development model which will focus on increasing its human capital. Education will represents a key pillar in this transformation and should also be more strongly integrated into the 16+1 pragmatic cooperation platform and the OBOR project with clear supporting mechanisms.  

Given the strong economic relations between Slovenia and Germany (Germany is with a 20% share Slovenia’s most important trading partner) and their close historical and cultural connections, it is not surprising that Germans are seen as the most preferred nationality to conduct business in the future among 8 nationalities in Slovenia. Given the high level of Russian FDIs in Slovenia, close cultural and historical ties (going back to the times of Former Yugoslavia), and high inflows of Russian tourists to Slovenia, it is also not surprising that Russian rank third in terms of preferred nationalities to conduct business in the future in Slovenia.  In Montenegro, the ranking of Russians as second most preferred nationality to conduct business in the future after the Americans mirrors even more important economic, investment, religious and cultural ties between Montenegro and Russia, since Russia represents the largest foreign investor in Montenegrin tourism.

The Chinese ranking as the fourth most preferred nationality to conduct business in the future in Slovenia, as well as Montenegro, ahead of even Serbs, should be seen as an extremely positive attitude towards business with the Chinese among the young generation in both respective countries.

With regards to the general attitudes towards China, cooperation with China and Chinese FDIs in the Western Balkans, our results show that both Slovenians and Montenegrins would like to strengthen their cooperation with China, particularly in the areas of trade and investment. In order to achieve this, we believe stronger regional integration (Xin, 2012; Zuokui, 2014) and joint promotion is needed. One step towards this has already been achieved with Slovenia and Croatia jointly cooperating to attract Chinese tourists. In the future, stronger collaboration between individual Western Balkan countries (i.e. Slovenia and Montenegro) should be seen as the right step towards increasing the awareness of the Western Balkans in China, and highlighting the specific trade, investment and tourism opportunism between China and the Western Balkans. Joint appearances at trade, investment, tourism and even education fairs should be setup, as well as a closer coordination of the diplomatic network should be set forth.  

Specifically, with regards to FDIs, Slovenia remains much more closed to all FDIs, regardless of their country of origin (IMAD, Development report, 2015). Public opinion and institutional non-transparency remain two of the biggest reasons for this. While Slovenian respondents would generally welcome Chinese FDIs (4.7), Slovenia’s EU membership also mirrors in the attitude that the EU should control Chinese FDIs in Europe (4.5). Compared to Slovenia (-0.87% of GDP of FDI inflows in 2013), Montenegro’s economy is much more open to FDIs (+10.1% of GDP in 2013) which, however, remain targeted mainly to the tourism sector and come from Russia (CompareAllCountries, 2015). It is our opinion that due to a more favorable business environment and higher openness and flexibility of the government, Montenegro would be more open to Chinese FDIs, but is perhaps less attractive due to the structure and geographic location, as well as limited infrastructure. Nonetheless, the tourism sector could offer some interesting investment opportunities, which are however not connected to the OBOR project. Like with trade promotion, a joint coordination platform of specific national investment promotion agencies in the Western Balkans should be considered, which should be led by a clearer strategy of promoting investment opportunities in the Western Balkans and framing them more explicitly in terms of the so called Balkan Peninsula OBOR corridor.

Lastly, the awareness of the 16+1 pragmatic cooperation platform remains relatively low among the young generation in both Slovenia and Montenegro, with 82% of Slovenians and 70% of Montenegrins indicating non-familiarity with the topic. This may be somewhat surprising, since the high-level political meeting of Chinese premier Li with CEECs in December 2014 in Belgrade received extensive media coverage and generally increased the awareness of potential cooperation between China and CEECs. The young generation may have, however, been less attentive to follow this topic in the media. In this regard, a greater effort should be made to highlight not only the trade and investment aspects of China-CEE cooperation within the 16+1 platform, but also the possibilities for study exchanges, scholarships and language and cultural learning. It is important to note that the young generation includes the future business and political leaders, who will drive the momentum in China-CEE relations in the near future. Thus, more effort should be made to highlight the possible opportunities for China-CEE cooperation more appealing to this audience. On the other hand, the level of awareness of the OBOR project is considerably higher in both countries, with 40% of respondents in Slovenia and 37% of respondents in Montenegro indicating they have at least hear of it. This show that the young generation is able to recognize particularly the investment opportunities arising from the New Silk Road project, and should not be underestimated in this regard. As our data shows, the young generation more closely links FDIs to job creation and is thus particularly focused on employment and advancement opportunities (Zupan et al., 2015), and prospects which can come with Chinese FDIs, not only in terms of jobs created at home, but also abroad. More clearly communicating the potential employment and advancement opportunities coming from stronger China-CEE cooperation and Chinese FDIs in particular should be strongly emphasized in building stronger awareness and support among this public from the Chinese side.

6. CONCLUSION

The purpose of this paper was to highlight and analyse the importance of stereotypes, ethnic distance and attitudes towards business with China/the Chinese and particularly attitudes towards Chinese FDIs in the Western Balkans. We focus on the young generation, as future business and political leaders which will shape CEE-China and EU-China economic and political relations in the forthcoming decades. Our results have shown that the young generation in both countries generally displays quite positive stereotypes about the Chinese and favorable attitudes towards stronger cooperation between China and the Western Balkans. In terms of ethnic distance, our results indicate that a lower level of ethnic distance of Slovenians towards the Chinese may be connected to both socio-cultural characteristics, as well as a higher level of trade openness. Additionally, the important role of Confucius Institute Ljubljana should also be recognized and shows the potential the Confucius Institute network can play within the 16+1 pragmatic cooperation platform and even the OBOR project. Generally speaking, the young generation is moderately positively open to Chinese FDIs, which it sees as bringers of job and advancement opportunities. A relatively low level of awareness and understanding of the 16+1 pragmatic cooperation platform among the young generation in both countries should be changed by emphasizing the people-to-people and mobility aspects which the platform also offers. We have strived to outline also several policy implications which should be particularly directed towards the young generation as future business and political leaders shaping the nature of the relationship between China and CEECs, and help the countries of the Western Balkans jump on the China-CEE train in order to recognize and capitalize on all the opportunists this window of opportunity may offer.  

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From Huang Ping, Liu Zuokui, edited, Stakeholders in China-CEEC Cooperation, China Social Sciences Press, 2016.