Hello everybody,
Check out our course blog. This will be our primary means of communications as well as a source for posting information researched for this class as well as other coursework.
This is a work-in-progress and would required some learning by all of us (specially me).
To start with I would like you to review the youtube videos posted on this site. Once you have watched the videos, you are required to post your feedback on the blog. Your feedback should address the following: your automatic thoughts as you were watching the videos, your opinions about the political, cultural, economic, and social issues in China based on the video, some key take-away points specifically related to the visit to China that is planned. This is a graded assignment. I will provide the details on grades and the syllabus by this weekend. I wanted to post this assignment so everybody has a chance to view and review it.
Feel to email me via the blog or email at anjalichaudhry@sbcglobal.net
Thanks
Anjali Chaudhry
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Does the 21st Century Belong to China?
ReplyDeleteBy George Landon
St. Xavier
International Management China Program
01/09/10
Part i
China today is a place like no other. Three decades after lifting restrictions to it entrepreneurs it is close to becoming the number two world economic power. Business opportunities seem endless in China as it continues to create new cities to support new factories. Seemingly overnight a rural based economy has transformed into a world class economy. Business opportunities are not just found in China’s ability to become the largest exporter the world has ever seen; it also has the largest consumer market with a population of 1.3 billion people.
This new frontier attracts businessmen from all over the world and drives them to unreasonable lengths to “Get Rich” quick.
Like the “Wild West” this isn’t a “controlled environment”. The video speaks to Chinese business entrepreneurs studying war strategy in preparation to conduct business with foreigners. My take from the video is that doing business in China is akin to going to war. Business ethics or establishing creditability does not appear to be high on the priority list for the Chinese entrepreneur.
It seems to me that the odds of a foreigner succeeding in business in China are slight; the advantage is clearly to the Chinese. Although the storyline begins to point to a successful ending for the three entrepreneurs, it also implies that most foreigners fail than succeed. For example, Vance’s success in the Kitchen parts business was largely built on the failure of other foreigners as he was able to purchase manufacturing equipment for pennies on the dollar; equipment abandoned by others who had failed.
Influence is more powerful than contracts in China, even for large multinational corporations. In 1994, McDonald’s was told by the city government to move its two year old flagship restaurant in Beijing to another location. It didn’t matter that McDonalds had a twenty year lease and had invested heavily into this location. The city wanted to give the location to a developer that had more “guanxi” (influence / connections) than McDonald’s had. Not unlike the British business men in the video, McDonald’s learned that person power and connections govern business in China not contractual law as in the West.
Does the 21st Century Belong to China?
ReplyDeleteBy George Landon
St. Xavier
International Management China Program
01/09/10
Part 2
To have a chance of success in the Chinese business world a Westerner must submit to totally different way of doing business from what they are familiar with. It’s a world where one must be willing to take a leap of faith by accepting a Chinese business partner to help sort through overwhelming complexities. In this relationship the Westerner has no way of protecting against corruption, such as theft of products or designs. Many times the Western must cope with nepotism, low performance standards and a work force skill sets that aren’t up to western expectations. To survive one must be shrewd, strong, hands on and street smart. These are the qualities that Vance exhibited in the video that enabled him to succeed.
As a country, China’s long-term economic success will be dependent upon its ability to adapt to change on all fronts. On the foreign front, given time, the world community will not accept China’s political position on the trade imbalance with the West and their undervalued currency. China also has the responsibility to address its pollution issues as it impacts the global environment. Linfen and Beijing are considered by some as the most polluted cities in the world.
On the home front China has many issues starting with ensuring safe food and water sources for its population and addressing human rights issues. The Chinese people have left a rural life and are gaining an understanding of the world. They have a growing appetite for anything Western. Eventually the Communist government will not be able to suppress its people’s desire for more freedom and a higher standard of living.
The 20th Century belonged to the U.S. On March 20th we will be better prepared to answer the question – Does the 21st Century Belong to China?
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ReplyDeleteI found the videos to be very interesting from a business standpoint. It was fascinating watching all three men try to break into the business world and be successful in a place like China. China has many opportunities for entrepreneurs to get rich if they know how to manipulate the Chinese culture. China is becoming a business haven, with low worker wages, access to billions of consumers and cheap products.
ReplyDeleteTo be successful in China, you will need connections, clout, cash and culture. As a foreigner, you would need a good Chinese business partner. Someone that could better guide you through Chinese customs, helping you get familiar with the working culture and someone that could translate. Perhaps someone that has political clout that could get you connections within China. China also doesn’t have the copyright laws that are currently enforced in the United States so if you make something (cushions), your product could easily be ripped off and sold for less by any competitor in China. The government has yet to start protecting business owners from copyright infringement.
Chinese products are cheaper than other countries. When buying from China, you still must be careful that you will not be ripped off, like one of the men in the video found. When you are buying from a country such as China you must be able to trust your business partner to be able to handle problems as they arise. Example: Vance was receiving damaged Granite and had to make a personal trip to China because he lacked a business partner.
Though China may be a big risk, there are also big rewards as long as you know what you’re doing. Cheaper Chinese products means competitors in other countries are now able to undercut their competition. When you have a factory in China making your goods, the material is cheap and the labor is cheap. However, when doing business in China you must be able to speak the dialect in each region or you may offend some customers. You need to be able to get through to your target market and be able to understand them. In the video is was said doing business in China is like the Wild Wild West, meaning, things are constantly changing and you need someone to teach you.
There are several social, economic, and political factors affecting China’s ability to dominate the 21st century. I believe that investing in China will be profitable for individuals in the future. As mentioned in the documentary Brits Get Rich in China, China is currently the “factory of the world”. Cities are capable of specializing in one product and sustaining their population.
ReplyDeleteHowever, there is a huge disadvantage to this type of specialization. If the company can no longer sustain itself or the product is not profitable, an entire community will lose their livelihood and hurt the overall Chinese economy. Despite the risks that Chinese citizens face through specialization, towns are able to develop their infrastructure and bring education into their regions. Even Vance Miller recognized the consequences of removing his business from China. Miller could ultimately lose his business if negative publicity got out about him firing hundreds of Chinese citizens that relied on his organization.
In addition, millions of individuals are moving away from rural areas into cities. I believe that this migration will weaken entrepreneurs’ ability to purchase the cheapest products, thus making China an undesirably place to acquire commodities from in the distant future. Individuals moving into cities will likely work for wholesalers or in service oriented industries. I also believe that current overdeveloped nations will eventually replace China as the “factory of the world” as their prices continue to increase. Furthermore, their copyright laws and communication issues will deter individuals from investing in China if other nations began giving entrepreneurs more incentives to do business in their countries.
The biggest issue that presented itself throughout the documentary is: How do you market to One billion individuals with different cultures, dialects, social and economic issues, etc? Due to their lack of infrastructure in some areas, it will be remarkably difficult to complete mass marketing campaigns throughout China. However, reach 1% of their population can prove to be profitable. Other concerns I have about China being the powerhouse of the 21st century include: overpopulation, disproportion of males to females, political climate (mainly the resistance to communism), etc.
ReplyDeleteI believe that China is still too reliant on American and European. They must begin designing more innovative products. They must also enforce copy right laws and design legislation that will protect foreign investors.
Individuals that would like to go into business with China should do their research on the country or hire individuals that are familiar with their culture. The gentlemen in the documentary seemed almost clueless about the culture, which led them to have a lot of difficulties. Nevertheless, they were able to complete their business in China. However, I began wondering if they would have been more profitable had they known more about China.
There are still 89 years and 350 days left before we can determine how successful China has been this century. It is my hope that the United States will continue to prosper, but only time will tell.
I found the videos to be highly entertaining and had several thoughts relating to the business environments depicted, however one thought nagged at me throughout. It seemed as though the Brits were undermining themselves by exposing their business ideas to the Chinese businessmen with no strict copyright and trademark laws to protect them. Without these laws in place, the Brits are taking an enormous risk by sharing their business ideas with the Chinese businessmen who could easily steal these ideas so they can sell these products on their own for a larger profit. While this is a risk of doing business in that environment, I find it shocking that so many people would think it is worth the risk to acquire the cheaper labor/materials.
ReplyDeleteAnother interesting element of the business culture that I noticed was that there was very little said by either Vance or Tony about the quality of the goods and labor they were securing by outsourcing all of their production to China. In recent years with the scare over lead paint on toys and other health and hazard issues coming out of China, it seems as though the world is forfeiting quality for accessibility with regards to outsourcing manufacturing. It stands to reason that as China becomes even more of a world power and faces issues created by its own rising middle class, the quality of goods produced there will come under scrutiny from within as well. In such an environment I am certain we will see labor and material costs rising in China.
It was interesting how Peter was forced to adapt his approach and take on Cecil, a relatively unknown quantity, as his business partner. Peter's story was drastically different from the other two in that he was focused not on securing labor and materials FROM the Chinese, rather he was actively selling TO the Chinese. His attempt to do so raised some issues that foreign companies will no doubt continue to face as they attempt to take advantage of China's growing consumer population. One of these issues was the need to tweak their business approach to fit the environment from a language standpoint. The need to incorporate the many Chinese dialects one encounters if one is to sell TO the Chinese is quite an obstacle that will require companies to hire many Chinese workers simply to account for language differences withing China itself. As a marketing major, the thing that interested me the most was Peter's story. Looking toward the future, the Chinese middle class will continue to grow and with that growth will come expectations for their quality of life. They will then likely look to luxury items produced overseas as a mark of prestige (as most cultures do as they enter the first world). There is already a huge market opportunity for the companies that are willing to take the risk, and social trends will likely only increase that opportunity in the short term. Overall, the experiences of the British businessmen in this film are great examples of the drawbacks of the international supply chain as well as how successful it can be.
Based on this video, I think it will be interesting to see first hand how companies are positioning themselves to sell to the Chinese.
ReplyDeleteWow, these videos truly show some of the risks associated with doing business in China.
ReplyDeleteI believe Peter had a lot of disadvantages, not only did he not know the language but he didn’t seem to understand the culture. I believe if you are investing that much money in a business abroad, one must take the time to learn the culture as well as the language. It seemed to me that all three business man were making risky decisions without the basic knowledge of doing business in China and just hoping for the best.
One thing that I found very interesting was the way Vaughn interacted with the business people in China. I don’t think that language and attitude gets anyone anywhere in China or in any other place in the world. I’m surprised he was able to get away with talking to those people the way he did.
In my opinion it is in the best interest for both countries to work with each other since China’s economic growth is due to Americans, among other countries moving their businesses into China. The advantage for other countries to do business in China are the low wages, cheap products and billions of potential customers, as mentioned in the video.
I’m sure that for every success story, there are many more stories with not such good endings due to corruption. Due to the economy many people in China are willing to behave unethical in order to create wealth.
In summary cultural awareness is essential.