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Doing Business in China: A Focus on Management

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Maria Hernandez-Norris

on 6 October 2014

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Transcript of Doing Business in China: A Focus on Management

Business Behavior
in China

Part II
In China

Five Challenges to
Doing Business in China
Part 1: Introduction
Doing Business in China: A Management Experience
Maria Hernandez Norris - 1159717
Laëtitia Dilly - 1188524
JiWoo Jeong - 1171806
Kevin Schoch - 1166966
November 12, 2013
The People's Republic of China: A Brief Overview
1. Understanding why you're doing business in China in the first place.
2. Learning how to deal with a lack of information.
3. Figuring out the "story behind the story."
4. Being aware of the role of the government.
5. Avoiding generalizations and acknowledging regional complexities

Part 5
Succesful multinationals in China
How to be succesful
in China ?

The successful story of KFC in China
In 1987, the fast-food operator opened its first outlet near Tiananmen Square in Beijing- Now more than 3800 restaurants in 800 cities

Key ingredients of this success :

: KFC arrived in the midst of sweeping economic reforms within the country

: Understanding of the Chinese consumer needs and wants at the local and cultural level => Localisation of the product
Emphasized staff and management training

Strategy :
"Go global, act Local"
Positioning as a native company
Creation of its own distribution system
Following of the Chinese strict foreign investment laws
The five
golden rules
Innovative strategy
Consulative leardership
Human competences
Network building
1. Salutation

Greet in Chinese will open hearts

2. The business cards
Give a business card very carefully holding it at the corners
of the card hand it over with respect

Receiving a business card with the same amount of respect
Analyzing them and line them up on the table vertically with
the most senior person on top

3. The Tea Lady
The “tea lady” is very important during the meeting

Like this nobody risks to lose his face by asking for tea

4. The main point of the meeting
The boss or the lead person must stand up to establish his authority and confidence

He should speak with his arms => body language very important to encourage his point of view

After a proposal or giving the goals you can ask for their feedback

Normally they choose to break for a while to discuss

Afterwards you collect your thoughts and give an official response, but it will never gonna be absolute

There are always good points and bad points

5. The discharge
You have to escort your business partners to the elevator

Never let them go by themselves !

Press the button and wait for the elevator with them

Good to know about Chinese people
Get to know each other first, do business later!

Don`t expect much eye contact

Smile, don`t look too serious

Avoid the color white, it`s the color of mourning

Many Chinese people are superstitious about numbers
- Avoid number 4 and 14, they rhyme with death and failure in Chinese
- But they love the numbers 3 and 8.

Don`t give a Chinese person a green hat, it means, his wife is unfaithful

Never give a Chinese person a clock
=> “to give a clock” means to attend someone’s funeral in Chinese
Be respectful, respect the Chinese way to do things and their whole different worldview

Chinese people want to feel safe and want to trust you

However, no real friendships!
- Things are pragmatic, but rooted in trust
- It`s a combination of hard and soft

Adopt the Confucian leadership approach
Classical virtues: respect, wisdom, virtuousness
Professionalism : conscientiousness, sense of honour
Humaneness, decency, lenience, righteousness
Select the right partner, supplier, reseller
Be democratic in discussions and
authoritarian in decision making

Select leaders with high general
management skills and integrity
Develop a comprehensive china strategy

Learn to Thrive in the local business

Find a suitable brand name
Case of failure

Multinational Companies From China Doing Business Worldwide
China's LENOVO buys from IBM
Some China firms expanding abroad

The extent and impacts of this internationalization of a "new breed" of MNE's are hotly debated.

When they do venture abroad, Chinese firms follow the same logic as other MNE's
Scale Scope & Speed of Growth
Capital: Beijing

Population: 1.351 billion (2012)

Currency: Renminbi

Total GDP : $13.374 trillion

Official language: Standard Mandarin
=> Never neglect Guanxi
In 2004, Ebay bought a local company, Eachnet
Two years later, they shut down their portal, leaving the Chinese auction market
A local competitor, Taobao, went on to take over 95 % of the market
Problem : no stimulation of Guanxi
In China, business is not just business. It's social.
48 % of foreign businesses, including leading multinational companies, fail and withdraw from the China market within 2 years of establishing operations here
The concept of drawing on connections
in order to secure favours in
personal relations
Adaptable structure
Internalize Chinese Cultural Values and
Ways of Thinking
Know the market and your customers
Flexibly adapt your organization to the task contingencies
Chinese translation / sound
Mercedes Benz
Quaker Oats

Treasure Horse (Bao Ma)
Make Headway, gallop (Ben-che)
Fast and time gaining (Bao Shi Jie)
Shanghai mass car (Shanghai Dazhong Qiche)
You drink, you laugh (Ke-Kou Ke-Le)
Gate to the west ( Xi-men-zi)
Gaining a subsidiary (Keda)
Old man (Lao ren)
Se-wa-shi ( no meaning but similar sound)
Coping different culture and conception
on organization behavior.
Value seekers
Sophisticated high earners
Loyal brand enjoyers
Pragmatic masses
Self indulging youth

The legal and regulatory system is vulnerable to political influence and Communist Party directives.

Direct control from the government of the particular resources and key industries to prohibit competition to the state- owned enterprises.

The government still has long-term plans for national economic and social development in its five year economy plans.
A Communist/ Socialist/
Single-Party State
The Role of Government
Thank you for your attention
Presentation : china-neilblakemanassoc-9-nov-2010 (1)
Part IV
Part V
International Business Management
Part III
Full transcript