Doing business in China for Western firms is still hard in 2015.
Difference of Education
This is a primary function of Western business education in China today as much as, or even more, strictly business. I wonder if Western management in China really think one of his main tasks is education. If it does not, it should – because for a Western organization, doing business in China requires that he spend a lot of time educating and developing local talent to work in sophisticated Western business processes – and it requires that Western managers and workers allow themselves to be educated in the flexibility of the Chinese market
A general impression now is that Western governments – for example, the US and European governments – focus on short-term issues: basically ‘fight against fires and of lurching from crisis to crisis with little or no clearly discernible and coherent long-term strategy for how to do, much less resolve, the various crises. Examples include the unrest in the Middle East and North Africa, the tide of refugees arriving in Europe, and the threat of global climate change.
Beware of Chinese companies dynamics
A common cause of losses in China is that foreign companies are so focused on market growth rates that they neglect the basics of competitive analysis. In the beer industry, for example, more than 20 foreign brewers recorded in the mid-1990s, each plan to capture an average of 15 percent of their market segment. In a market lacking clear differentiation, they also found themselves competing with nearly 600 local brewers, many of them subsidized by local governments. Some of these issues should disappear over time, but almost twenty years later, the fundamental situation has changed little. Many industries in China resemble the wine industry, overcapacity, high levels of fragmentation, subsidized local competition, and foreigners are willing to absorb the losses of their “strategic” investments. Learn Chinese is a very good way to understand the way Chinese Things and react explain the founder of Taylor Made School a Chinese training center based in Beijing and Shanghai.
Time has different value in China
Many companies want to get on the ground quickly. In one case, the Director General told his head of strategy for operations in China will within six months. Time pressure like this can create problems later. It tends to result in sloppy planning and analysis. It shifts attention to finding the right partner to find any partner, regardless of adjustment partner. It also weakens your hand in the negotiations. Your Chinese counterpart will be how to use your time constraints against you, and you walk away with a worse deal.
The Chinese government, on the other hand, left the impression that he has a vision very long term, for example, by creating the infrastructure of the Asian Investment Bank (AIIb), take action to calm Volatile stock markets, which begin to fight against pollution, health and food security, and so on. While the asymmetry between Chinese and Western governments – short-term and long-western Chinese term - is obvious, directions of activity seem to be the opposite.
In a series of interviews I conducted, Western leaders indicated that while their companies are looking to make long term investment decisions in China, their experience of their Chinese counterparts are executives and employees looking to make a ” making quick death” source Forbes
Chinese executives also identified the following strengths of the Western business: management, technology, clarity and stability of its processes, a history of technical innovation, standardization systems, R & D, global reach, and strong brands. They also highlighted the following weaknesses: lack of flexibility, high costs, slow decision making, slow responsiveness, rigidity, low business efficiency (as opposed to, it would seem, effective production process) shows a lack of flexible ways and innovative operating
However, Chinese leaders have also identified the following strengths of the Chinese company: flexibility, market knowledge, large market, low costs, aggression, large (and flexible) market Labour (practical and tactical) the business innovation (though not necessarily product innovation), fast, increasingly, a human touch, efficiency, and a general attitude of being willing to learn . The weaknesses of Chinese companies, as Chinese managers see them, include mismanagement, poor technology, short-term vision, poor governance, ineffective systems, a lack of professionalism, poor R&D, a lack of standardization , low brand recognition, and poor quality.
Interpersonal relationship called guanxi !
A common safeguard against opportunism is to build trust with the people who matter to your business. Unlike the West, the creation of personal friendship is a prerequisite to do business. Friendship building takes time, which is another reason to avoid rushing into things. Besides numerous invitations to sporting and other events, a key element of trust is long dinners during which all but business is discussed. In these, alcohol plays an important role. Learn to drink intelligently. Experienced negotiators have alcohol in their glasses of water or wet towels in most good restaurants make available.
Chinese negotiatons are long !
Chinese negotiators sometimes grow beyond what their Western counterparts consider appropriate limits. For example, representatives of a large Western company negotiated the distribution rights for one of their products. Their Chinese counterparts have closed their initial height by threatening to use their political connections to prevent the distribution of their products if they do not get the rights. In another case, China has drunk their Western customers to prevent them from being effective in negotiating the next morning (which the Chinese side, involved a completely different set of people).
Be alert and prepare appropriate measures against. For example, the negotiating teams must learn to drink without getting drunk, include women (because they are not supposed to get drunk), and know that excessive drinking can be delegated to a member of the team.
Understand Chinese society (hierarchical)
The decisions of the Company are generally achieved so top-down, with only the top of the pyramid involved in decision making. Distrust puts limits on the delegation, and at each level surveillance monitoring is high. Middle managers generally have little power to make decisions accordingly, and their main role is to transmit orders from the top and ensuring compliance.
Long term Business
The overall results give a picture of a Western long-term and short-term orientation Chinese to do business in China, with the strengths and weaknesses of Western and Chinese organizations somehow complementary. Even when the two Chinese companies from the West and are considered a force in “innovation”, the nature of this “innovation” is different – Innovation West is considered and technical innovation China is thought to be about adapting flexibly to commercial and conditions.That market is an important consideration which may be underestimated. Everyone believes that their main task is to do business and earn money, but the nature of what they actually do is somewhat different. It seems to me that if the Chinese education system inculcates the qualities basic obedience and discipline in his students and when students enter the work force, practical necessities requires significant ‘on the job training “to adapt the most sophisticated technical processes and management procedures needed in today’s economy. So Western organizations have come to serve as a kind of “graduate school” to develop the knowledge and skills of managers and Chinese workers
Be Flexible and Agressive
While most Western organizations familiar to those who responded to the survey were multinationals of some sort (hence the perception of sophisticated large companies oriented technology ) Chinese organizations come in all sizes and shapes. They ranged from large state enterprises, heaviness, to smaller, high-technology start-ups more agile (hence the perception of poor governance and management, but also flexibility, aggressiveness, and low cost-).
Western Companies need to invest on their Brand
One has the impression that the image of our Chinese leaders of Western companies is something of an aircraft carrier – a large vessel sophisticated technologically innovative, flexible operating processes and systems and extensive global reach – all led by experienced management with a long-term vision. This is a “strategic” image of Western business. Perhaps unsurprisingly, the weaknesses are inversely proportional to the forces – a large aircraft carrier is difficult to maneuver in tactical situations and not to change rapidly adapt and respond to other types of tasks. So things are moving too slowly – decision making, response time, and the pace of tactical innovation – and are too rigid. So with a technical platform very sophisticated, we are stuck with a rigid structure that seems to take some time to adapt. source