Lawrence Sterne, the Anglo-Irish author of the novel The Life and Opinions of Tristam Shandy, Gentleman, once observed that “to have respect for ourselves guides our morals; and to have deference for others governs our manners”.
The aphorism encapsulates recent scholarship on measuring “distance” in terms of culture, government, geography and economics of your corporate home country, relative to that of the target countries in which you are seeking to invest. The first you know very well, and the second you have all to learn about.
In the case of China, a huge and varied country, with different topographies and cuisines, as likely as not there will be plenty to learn about, especially if the investor comes from North America and Europe.
http://europe.chinadaily.com.cn/epaper/2012-02/03/content_14531393.htm
About Jonathan Story, Professor Emeritus, INSEAD
Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York.
He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer.
He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations.
He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
Writing about history, politics & economics 
Jonathan
Interesting!
In my own short experience carrying out interviews in Shanghai and befriending postgrad students, I have also come across incidents of ‘cultural dissonance’ such as you describe, when Chinese people react with laughter at some ‘innocent’ point I have raised.
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