Strategies a Firm May Use to Overcome the Challenges in China
For successful interactions in the world’s oldest civilization expatriates in China need to be aware of the uniqueness of the culture by treating their counterparts with respect and adding value to their lives rather than just value enhancements on the firm level on way up the “value chain” ladder. This can be done by building up relationships to strengthen the “guanxi”.
It is evident that difficulties occur in a communist country where there is government interference, misallocation of resources and low freedom of doing business resulting in a high rate of corruption of 3.5 points in 2010 (Worldbank). There is not much to do about it but to be aware of it. It might seem like a paradox but Chinese consumers ...view middle of the document...
As already mentioned, there is a small proportion of dedicated employees. Nevertheless, this number is decreasing from 17% to 10% as employee’s age increases. It is about to motivate the young generation by offering them some form of continuing education, training and sufficient salary to get them more engaged in the company.
Prior entering the heterogeneous market and selecting an appropriate market strategy for each region the expatriate need to spend enough time on due diligence. Nevertheless, due diligence in China is not just about the western approach of “critical analysis that companies undertake prior to making business decisions, [which] is an attempt to provide business owners and managers with reliable and complete background information on proposed business deals” ( Encyclopedia of small businesses, online). Due diligence in China is an intensive & active process of gathering information. Businesses need to take into account that there is no reliance on the given statistics. If you have data of each of the different provinces and if you add them up, they may not match the national level (Business Monitor International,year). In order to get a proper evaluation of the in focused market agents need to gather reliable information.
Regarding the intellectual property rights, it must be said that there is a lack of a global law against intellectual property violation and inevitably there are no actual strategies to overcome those. Or to put it with Word of Bill Gates: “As long as they are going to steal software, we want them to steal ours.” (By Corey Grice and Sandeep Junnarkar,Staff Writers, CNET News, 1998).
To recapitulate, an expatriate in China has to be aware of the time that takes to build up relationships and adapt to the cultural and political structure since “Patience is a bitter plant, but it has sweet fruit.“