Business in China

Topics: Management, China, Family Pages: 5 (1188 words) Published: May 6, 2012
Business in China

1. What challenges do foreign firms face when they seek to transfer their home management style to China? 2. Discuss the reform of Chinese state-owned enterprises and related government policy changes. Evaluate the impact within the state-owned businesses and the chinese society.

Chinese management

Doing business in China requires a throughout understanding of their management philosophy and practices. Their management style is different in many respects from mainstream Western Management and is characterized by a combination of a paternalistic approach and an intuitive, entrepreneurial, and fast-decision making style.

Challenges for foreign firms in China

MNEs generally start off with clear advantages in that they have better industry specific technology, know-how and innovation capabilities and also they have higher level of managerial competence in such functions.

There are many advantages of operating in China:
* Cheap factors of production, especially labour
* Benefit from tax breaks
* Operating in a low cost base for export to 3d countries * Secure access to market. China has reduced many of import quotas(максим количество импорта разрешенное для провоза в страну), but remain high in some sectors

‘Everything is possible, but nothing is easy’

* Disputes with Joint Ventures partners due to differences in management style. Family is hierarchical and extended. Family power distance is evident with most major business organizations. Chinese families retain administrative control and family members hold the top management positions. Western worker will need to balance his or her interdependence within the highly collectivist Chinese business and family structure. * Unfamiliar local HR practices

* Insufficient infrastructure (shortages of power and electricity) Many MNEs are equipped with sophisticated marketing and brand building skills. But in order to deploy their skills, MNEs need specialised inputs like detailed market research that is often poorly supplied in China. If they perform these function skills in-house, they often lack the required skills. * Difficulties in retaining skilled people

* Tortuous (извилистые) supply chains
Many MNEs rely on strong distribution channels to deliver their products reliably and also educate customers about more subtle advantages they offer. But efficient logistics are new concepts in China. MNEs cannot deploy their competitive advantage of supply chain management. They are confronted( сталкиваются) by a lack of component local suppliers. draw value chain * Communication barriers : culture and guanxi

Chinese management tend to rely on personalized relationship. These are divided in two groups: trust based relations( in- group) and strangers relations( out-group). Trust based relations are built on intimate and interpersonal trust. These groups are smaller and more family based. Strangers relations mean that it is very difficult for Chinese to build personalized relationships with people they by fate have to work with. Also, Chinese are used to be masters in their own house and will not accept if the expatriates will treat them as ‘employees=machines’. Moreover, in comparison to west, which tends to have more individualistic relationships, China relies on collectivism, where everyone takes responsibility for fellow members of the group.

The foreign firms may face difficulties due to different perception of relationships. For firms operating in Chinese society, understanding the role of guanxi is crucial and how it affects all the major dimensions of firms performance. Knowing and maintaining guanxi networks are essential for corporate success. The concept therefore contains implicit mutual obligation and governs Chinese social and business relationships.--> Russian BLAT is the equivalent. Guanxi bases are divided into blood bases, which is family members and...
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