The term 'racism' seems most appropriate when one group is mistreating another group and the two groups don't look much alike. This is somewhat relative: to Europeans, the Koreans and Japanese seem to be the same, but mistreatment there would be translated as 'racism'.
But between groups that are only culturally different, say between Germans and Swedes, the difference is 'ethnic' and favoring one over the other is 'ethnocentrism'. There's no word that captures exactly the same venom as racism; "You're so ethnocentric" doesn't have much bite to it.
Again this is very relative; to an American, the English, Scots, Irish, and Welsh all seem laughably indistinguishable, but in England, abusing the difference is considered serious ethnocentrism. Maybe even serious enough to label it racism, even though appearances may not be involved.