Behind the Open Door: Foreign Enterprises in the Chinese Marketplace

Introduction......Page 4
Why Study the Expatriates?......Page 6
A Methodology for Drawing upon Expatriates\' Insights......Page 7
How Compatible Is China\'s Present Investment Environment with International Expectations?......Page 11
Has China Really Turned a Corner, and Should Foreigners React Differently to Its New Leadership?......Page 12
Will the Chinese Economy Be More Open to Foreign Participation in the Future?......Page 13
Will World Trade Organization Accession Address the Commercial Priorities of China\'s Trading Partners?......Page 14
Do Economic Trends Augur for Cooperation between US and Chinese Authorities, or Confrontation?......Page 15
What Is the Prognosis for Foreign Firm Performance in China in the Coming Years?......Page 16
Results......Page 18
Introduction......Page 20
The Investment Regime......Page 24
Guidelines for Investment......Page 25
The Approval Process: Basic Requirements......Page 28
Why China Is Opaque......Page 33
Keeping Up with the Joneses and the Yamamotos......Page 36
Ignorance and Error......Page 37
Strategic Positioning Issues......Page 38
Locating Strategically......Page 39
Steering Investors: Industrial Policy......Page 42
Partners......Page 45
Conclusions on Strategic Issues......Page 48
The Negotiation Process......Page 49
Enterprise Type......Page 50
Ownership Share and Management Control......Page 53
Labor Structure......Page 54
Financial Structure......Page 55
Phasing......Page 56
Scope, Distribution Strategies, and Services......Page 62
Incentives......Page 64
Performance Requirements......Page 66
Export Performance......Page 68
Local Content Requirements......Page 72
Technology and Research and Development Requirements......Page 74
Analysis......Page 78
Transitional and Self-Imposed Problems......Page 80
Policy Variables......Page 81
Market Structure......Page 85
Introduction......Page 88
Table 3.1 Employment of Chinese by foreigners, 1980-96......Page 90
Human Resources and Establishment: Pressures Shaping the Labor Contract......Page 92
Table 3.2 Unemployment estimates......Page 93
Nontransparent Approval......Page 94
Pressure to Overstaff......Page 95
The Right Staff......Page 96
Securing Managerial Control......Page 97
Box 3.1 The importance of localizing management......Page 98
After the Contract: Just the Beginning......Page 99
Table 3.3 Overtime at a southern China FIE, 1997......Page 100
Availability, Wage Pressures, and Changing Labor Patterns......Page 101
Table 3.4 Local managers’ salary increases, 1996-2000......Page 102
Figure 3.1 Managers\' salary increase, 1996-2000......Page 103
Mobility and the Dang An and Hukuo Systems......Page 104
Table 3.7 Per capita GDP by province, 1996......Page 106
Figure 3.2 Per capita GDP by province, 1996......Page 107
Nonwage Costs......Page 108
Table 3.8 Personnel overhead expenses: contribution of an FIE in Shanghai......Page 109
Training and Quality......Page 111
Retention......Page 113
Insulation......Page 114
In the Background: Human Rights......Page 116
Analysis......Page 118
Transitional and Self-Imposed Factors......Page 119
Policy Issues......Page 120
Market Structure......Page 122
A Concluding Note......Page 123
Introduction......Page 124
What Is Productivity?......Page 125
Table 4.1 Total factor productivity growth in China\'s state and collective industries, 1980-92......Page 127
The Foreign Experience......Page 129
Table 4.2 China\'s imports, first quarter 1998: SOEs vs. FIEs......Page 130
Table 4.3 Exports of FIEs, 1985-96......Page 131
Human Resources Availability......Page 132
Table 4.4 China\'s trade: comparative advantage......Page 133
Training......Page 134
Deployment and Management of Staff......Page 135
Overstaffing......Page 136
Intermediate Goods Inputs......Page 137
Figure 4.1  FIEs in China\'s trade, 1980-96......Page 138
Technology Application......Page 139
Scale and Capacity......Page 141
Table 4.5 DCAC: one year’s forecast vs. actual demand, 1996......Page 142
Figure 4.2 DCAC: One year\'s forecast vs. actual demand, 1996......Page 143
Table 4.6 Overcapacity? The case of the auto sector in 1996......Page 145
Capital Factors......Page 146
Financial Efficiency within the Organization......Page 147
Institutional Factors......Page 148
Existing Culture and ÏResistance to ChangeÓ......Page 149
Corruption and Graft......Page 150
Discordant Organizational Structures......Page 151
Scope of Participation......Page 153
Environment and Productivity: A Note......Page 154
Analysis......Page 155
Transitional and Self-Imposed Variables......Page 156
Table 4.8 Roundup of issues: productivity......Page 157
Policy Variables......Page 158
Market Structure Variables......Page 160
Distribution Rules: A Domestic Trade Policy......Page 161
Communist Era......Page 165
Post-1979......Page 166
Foreign Investors and Distribution......Page 169
The Regulatory Environment......Page 170
FIE and Distribution in Practice......Page 172
Ambiguity......Page 174
Collecting......Page 175
Service Provision......Page 176
Physical Infrastructure......Page 177
Distribution and Local Authority......Page 179
Allocated Market Share......Page 183
Market Foreclosure......Page 184
Organizing to Distribute......Page 186
Failing to Plan for Distribution......Page 191
Internal FIE Problems......Page 193
External Pressures, Regional Disparities......Page 194
Transitional Factors......Page 195
Market Structure......Page 197
Introduction......Page 199
China\'s Legal Environment......Page 201
Predictability and Compliance......Page 205
Seeking Access to the Content of the Law......Page 206
Bridging Gaps in the Law......Page 207
Interpreting the Law to Advantage......Page 208
Building Bureaucratic Capacity......Page 209
Meeting Environmental and Labor Standards......Page 210
Structuring Contracts......Page 213
Conflict Resolution Prior to Litigation......Page 214
Litigation......Page 216
Intellectual Property Rights (IPR) Protection......Page 217
Corruption......Page 220
Superlegal Privileges......Page 223
Some Observations......Page 225
Transitional and Self-Imposed Factors in Legal Regimes......Page 228
Table 6.1 Roundup of issues: law......Page 229
Policy and Market Structure Factors......Page 230
7  Conclusions and Policy Recommendations......Page 233
Table 7.1 Roundup of FIE issues......Page 235
Why, Given Its Domestic Worries, Should China Care about the Concerns of Foreign Enterprises?......Page 238
Has China Really Turned a Corner, and What Should Be the Reaction to Its New Leadership?......Page 240
Will the Chinese Economy Be More Open to Foreign Participation in the Future?......Page 241
Are Foreign Corporations in China Influencing Social Trends in a Positive Way?......Page 243
Will WTO Accession Address the Commercial Priorities of ChinaÌs Trading Partners?......Page 245
Do Economic Trends Augur Cooperation between US and Chinese Authorities, or Confrontation?......Page 247
Will China\'s Central Government Remain the Conductor of Chinese Reforms?......Page 248
What Is the Prognosis for Foreign Firm Performance in China in the Coming Years?......Page 250
Is China a Source of Endless Excess Capacity That Will Threaten Other Economies?......Page 252
Recommendation 2: Consider the Limits of the WTO......Page 254
Table 7.2 High priority, policy-related issues......Page 255
Recommendation 3: Accommodate Impending Political Reform......Page 258
Recommendation 4: Hold Out a Helping Hand......Page 259
appbiie2636.pdf......Page 0
I. Agriculture, Forestry, Animal Husbandry, Fishery and Related Industries......Page 261
II. Light Industry......Page 262
IV. Communication and Transportation as well as Post & Telecommunications Services......Page 263
VII. Ferrous Metallurgical Industry......Page 264
IX. Petroleum, Petrochemical and Chemistry Industries......Page 265
X. Mechanical Industry......Page 266
XI. Electric Industry......Page 267
XII. Building Material, Equipment and Other NonMetal Mineral Product Industries......Page 268
XIV. Medical Equipment Industry......Page 269
XVII. Service Business......Page 270
IV. Machinery Industry......Page 271
I. Agriculture, Forestry, Animal Husbandry, Fishery and Related Industries......Page 272
IV. Communication and Transportation, Post and Telecommunications Industries......Page 273
VIII. Mechanical Industry......Page 274
IX. Electronic Industry......Page 275
XIII. Shipping Industry (the Chinese Party Will Be the Holding Party or Play a Leading Role)......Page 276
XV. Finance and Relevant Trades......Page 277
III. Power Industry and Urban Public Utility......Page 278
X. Journalism......Page 279
XIII. Other Industries Prohibited by the State or by International Treaties China Has Concluded or Taken Part In......Page 280
Appendix B Methodology......Page 281
Conducting the Research......Page 282
Processing the Information......Page 283
List of Sources......Page 284
Senior China Manager......Page 288
Legal Issues......Page 292
Matrix for Organizing Responses......Page 293