Managing International Business in China

Cover......Page 1
Half-title......Page 3
Title......Page 5
Copyright......Page 6
Contents......Page 7
Figures......Page 10
Tables......Page 11
Boxes......Page 12
Preface......Page 15
The rise of China in the world economy......Page 19
Development of international business in China......Page 22
The challenge faced by transnational corporations in China......Page 31
The structure of the book......Page 35
Summary......Page 38
NOTES......Page 39
China’s foreign trade regime......Page 40
Tariffs......Page 42
Tariff rate quotas......Page 43
Technical barriers to trade......Page 44
Designated trading and state trading......Page 46
Entry mode......Page 47
Location entry......Page 48
Categorization of industry entry......Page 50
Opening up of service industries after WTO accession......Page 53
Telecommunications......Page 54
Insurance......Page 55
Distribution......Page 56
Tourism......Page 57
Transportation......Page 58
Professional services......Page 59
China’s foreign exchange regime......Page 60
A comment on gradualism......Page 63
Summary......Page 65
FURTHER READING......Page 66
NOTES......Page 67
Introduction......Page 68
General factors......Page 72
Industry-specific factors......Page 75
Organization-specific factors......Page 76
Formulation and implementation of guanxi-based strategies......Page 79
Evaluation and control of guanxi-based strategies......Page 83
Summary......Page 87
NOTES......Page 88
Introduction......Page 90
Entry modes in China......Page 95
Main considerations for entry mode selection......Page 103
Exporting versus investment......Page 104
Direct versus indirect investment......Page 105
Joint venture versus wholly foreign-owned enterprise......Page 106
Greenfield investment versus acquisition......Page 107
Licensing versus franchising......Page 108
Summary......Page 109
FURTHER READING......Page 110
NOTES......Page 111
International business alliances in China......Page 112
Partner selection......Page 117
Strategic fit......Page 118
Capacity fit......Page 119
Organization fit......Page 121
Control over alliances......Page 123
Host-country government regulations......Page 124
The relative strength of the partners in alliances......Page 125
Conflict management......Page 129
Summary......Page 135
FURTHER READING......Page 136
NOTES......Page 137
Introduction......Page 138
Cultural roots of the Chinese negotiation style......Page 141
Moral cultivation......Page 142
Respect for age and hierarchy......Page 143
Sun Tzu’s stratagems......Page 144
Agrarian mentalities......Page 146
Contemporary Chinese political culture......Page 147
Mao Zedong’s bureaucratic heritage......Page 148
Deng Xiaoping’s pragmatism......Page 149
Characteristics of the Chinese negotiation style......Page 150
The emphasis on interpersonal trust rather than legal contract......Page 151
Hospitality......Page 152
General principles first......Page 153
Government behind the scenes......Page 154
Having a large but indecisive negotiation team......Page 155
Sensitivity to price......Page 156
The use of tactics, tricks and ploys......Page 157
Tips for negotiating with Chinese partners......Page 158
Identify the meaning of a particular negotiating behaviour......Page 159
Adopt a people-oriented approach......Page 160
Set up an appropriate negotiating team......Page 161
Talk to top Party and government leaders whenever possible......Page 163
Employ tactics when necessary and appropriate......Page 164
Know the Chinese negotiation style but be yourself......Page 166
Summary......Page 167
NOTES......Page 168
The siting of manufacturing facilities......Page 170
Product attributes......Page 171
Technology attributes......Page 172
Coca-Cola and Motorola: a comparison......Page 174
The choice of location......Page 175
The localization of sourcing......Page 180
The trend towards R&D localization......Page 184
Key issues of managing R&D in China......Page 188
Summary......Page 192
FURTHER READING......Page 193
NOTES......Page 194
The Levitt debate......Page 195
Product......Page 199
Price wars in China......Page 204
Adjustment of pricing strategies......Page 205
Promotion......Page 208
Distribution......Page 214
Summary......Page 217
NOTES......Page 218
Staffing......Page 220
Staffing strategies from a theoretical perspective......Page 221
The trend towards staffing localization......Page 223
The search for local talents......Page 227
Retention through compensation and benefits......Page 228
Retention through training and career development......Page 231
Retention through intangibles......Page 235
Managing expatriates......Page 236
Expatriate failure......Page 237
Selecting expatriates......Page 238
Training expatriates......Page 242
FURTHER READING......Page 245
NOTES......Page 246
Widespread infringement of IPR in China......Page 247
Legislation on IPR......Page 251
Judicial enforcement of IPR......Page 253
Administrative enforcement of IPR......Page 255
Ambiguity in the legislation......Page 256
Weak judicial enforcement......Page 258
Protectionism and corruption......Page 260
Other problems......Page 261
Zero-tolerance policy......Page 262
Prevention first......Page 263
Selection of appropriate official enforcement route......Page 264
Cooperation with the government......Page 265
Independent action......Page 267
Summary......Page 268
NOTES......Page 269
Taxation......Page 271
Taxes applicable to foreign affiliates......Page 273
Preferential tax treatment......Page 275
Domestic banking institutions......Page 278
Foreign banking institutions......Page 279
Problems with the current Chinese banking system......Page 280
The securities market......Page 282
The reformed Chinese accounting system......Page 287
Problems with the institutional environment......Page 289
Summary......Page 293
NOTES......Page 294
References......Page 296
Index......Page 303