“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines, sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” ~ Mark Twain
Thursday, February 24, 2011
Week 6 posts due March 11
Keep up the good work everyone, but enjoy your time away from school and from posting this next week. Feel free to blog ahead if you wish, but your next post won't be due until after break!
In reading about the economy of Dongyang County, I have come to realize that when the Communist ideals (also known as the Stalinist/Maoist position) were enforced, especially in the economy, not everyone thought this was a good idea. If one went along with the imposed ideals, then production would be stifled. After World War 2, China was a poor country. In my opinion, socialism is never a good choice for any economy. In order for any economy to thoroughly flourish, one would need to be able to freely buy and sell. Recently China has grown more lax on their economy and as a result, it has grown leaps and bounds and according to current trends, could soon eclipse our own economy.
Reading about chinas way of dealing with potential customers is very interesting. In my reading he tells about a story of how he was riding in a taxi on his way back home from doing business with a client. In his journey he spots a run down building in a remote area with a guard in the front. He asks the driver to stop, to investigate why there was a guard standing in front of a run down building , he soon finds out that not everything is what it seems. Many people arrive with the mentality that china is filled with factories like Charlie and the Chocolate Factory, but when people arrive they are surprised. I learned that when mixed with business, Chinese hospitality may be suffocating. Chinese industrialist are nothing but optimistic. Since many importers visit china they give out samples of their product like messages in a bottle, hoping that some how their product will fall in the right hands and bring them fortune. Importers come to China in huge numbers for three main reasons. Not only is labor really cheap, but speed and convenience are two other important factors that China is particularly well at.
@josh Its always exciting when a country that was very strict becomes more lax on their people. Not only does it bring peace, but as you can see prosperity as well. Hopefully our economy goes back to normal as qickly as china's is rising.
This chapter in my book was very interesting because it was about Chinese customs regarding food, behavior, and beliefs. I thought the dining etiquette was interesting. Eating is a social function, and not a time for business – thus no business should be discussed at the table. Usually people are invited to restaurants and not private homes, but if you do get invited to a home it is important to bring a gift and remove your shoes when entering their home. When you give or receive a gift or business card, you should give/accept it with both hands as a show of respect. Also, Chinese like karaoke and making toasts, so be prepared to deal with both.
In the Chinese culture, people are very formal. You are expected to look professional all the time (unless told otherwise) during business trips. White is a color of mourning and red is a color of celebration, so they usually advise to avoid wearing bright colors. They are very superstitious; colors, numbers, feng shui, and the zodiac all have significant meanings to them. Holidays are very important because they are the time that people go back home to visit their families – so often they are given additional days to travel on top of the holiday days.
There are many other things that I could mention from the chapter, but that would be very long. I am glad they had all this important and useful information in this chapter because these are little things that we should be aware of so that we don’t offend our hosts and the other Chinese people we come in contact with. It is important that we all make an effort to be respectful and abide by their customs while we visit their country. Of course, it will be easy for us to forget all the little details, but they know we are visitors, and they will probably be a bit more forgiving if we make little mistakes. However, if you are planning on doing business in China later, and you will be required to travel there frequently, then I suggest that you learn their customs in more details so that you will be successful there.
@ Josh: It's so weird to even think of China as once being poor. They have done so well for themselves in the recent past! I agree with Julien about the benefits of a country becoming more lax - it really does more peace and prosperity. I think the efforts that the Chinese government have made concerning the privatization of businesses and organizations has really benefited their economy. It's sad to think that the US has been like this for a very long time, yet the economy here is struggling so much.
So this chapter focused more on China's involvement in its Eastern Asia neighborhood. One practical thing that I can write about is that the authors listed 5 reasons why China's neighbors are happy, despite China's past of repressive communism, about China's increased involvement in that region.
1. China's growth in the area by Free Trade Agreements creates interdependency between the countries. This interdependency promotes trust and security, and raises the cost of war. This shields China's neighbors from military interventions.
2. The authors said that Asian countries believe they are competing with China for investment money and are losing. So, since they can't beat the huge giant next door, they are trying to grab onto China's coattails and ride the wave to prosperity.
3. The Asian countries affected by the Asian financial crisis in 1997-1998 are appreciated of the help that China offered, and are now in favor of China becoming more powerful in the region.
4. Asian countries are frustrated by the slow pace taken by America and the WTO on economic integration in East Asia. By now they've kind of expected to be more integrated with America and the rest of the world. But the WTO is being slow to show its efficacy in producing this. So now they are turning to China.
5. Asian countries feel like they need China's cooperation to combat nonmilitary threats in the region such as terrorism, piracy, drug smuggling and the like. And then they need China to combat other threats like water depletion and treatment of contagious diseases. Without China's support in these areas, any other Asian initiative to combat them will be ineffective.
It seems like when communism started in China it was very strict, but then it has trended towards being more and more open and free. In contrast, the U.S. started the 20th century relatively unregulated, but now it has become increasingly more and more regulated. Are these regulations the problem today? Or has it been the trend towards more deficit spending that has us in this rut? Or are those two things related? But all the same, Americans are still very very rich compared to much of the world.
The title of chapter four is “Cash Shortages and Risky Financial Maneuvers.” In this chapter, one aspect the book is talked about that Martin was facing lag of money and high cost situation. Because inflation was on going, investments and price rose. At the beginning, the Chinese did not want to accept the high cost. But at the end, the Chinese actively covered the difference in costs caused by the inflation just because they took Volkswagen project seriously. The other aspect is talked about holding a bond in the Chinese market. That sounds a very risky idea to me when I read it. I know bond is one of the best ways to generate asset, to increase profit, and to extend the market. Therefore, China was a very poor country back to 1988, which cars were not even common. In that situation, a guy dared to open a bond idea which I think he is brave and brilliance. Without surprised China hold the first bond in Chinese history. I am proud of my country.
@ Vanessa I think "no business on the table" is not anymore. Today, dinner is one of the plaforms to negotiate or to start a business. Therefore, if you have a dinner with a group of friends, there is no one willing to hear any businesses.
@Stefan China becomes more powerful, so the Asia neighborhood will more need China's help. "Chinese believe that a strong personal relationship cannot easily be ruined ore broken; it is more reliable than contracts or law” (Wang, Zhang, Goodfellow 65). So China create more processes to make neighborhood feel happy.
My recommendation is to read my last paragraph. It may be chaotic, but it is useful when you buy things in China. Chapter four is talking about Chinese Negotiating Style, and negotiating is a crucial aspect of any business culture. It gave three stages: “1) roles and relationships, 2) patience and compromise, and 3) the win-win ending.” To know the actual decision-maker and to create the interpersonal relationship is important because “Chinese believe that a strong personal relationship cannot easily be ruined or broken; it is more reliable than contracts or law” (65). There are four ways to identify the actual decision-maker in the negotiating: 1. Chinese people record their names in hierarchical order, whose name at the top will be the most important person in the hierarchy. 2. The person who first introduced is always the most powerful member of the team. 3. The person who sits at the centre of the negotiating table. 4. Scrutinizing the personal name cards to see the title and qualifications. In the Compromise part, I found some interesting thing: Chinese like to bargain in business. If you go to an individual store, the price of the goods usually much higher than the buying price because the shopkeeper knows customers will bargain. So customer should think the value of the goods carefully. If you don’t bargain, you will pay too much. If you bargain very litter, you still pay too much. So the best way is to call your price as low as you can and prepare to a psychological warfare. When the shopkeepers think your call is too low, they will raise the price but lower than the selling price. At this time you better not feel satisfied because you still have chance to reduce the price. If they really want to sell, finally you will buy the goods in a desired price. Bargaining is a useful skill except in the mall or restaurants.
hello guys I had a change in my book i am now reading the Luxury China Market opportunities and Potential. I have really enjoying this read. in the first it was talking about the size of the market place. and to fully understand the size of the China market you have to understand the size of the Global market. The global market is worth somewhere around 265 billion dollars in 2008. the chinese luxury market is worth around a total of 15 billion. that pulls china in at around the 4th largest behind japan, united states and Europe. China is has also been growing very fast. for the past five years China along with russia has been the fastest growing market in the world. fun facts is what that is.
@Josh dude i think it is awesome how much china has grown and worked threw problems they have had to deal with coming out of WW11. And i completely agree with you about the economy. hopefully it will grow faster in CHina. i am interested in your read
This chapter the author focuses on the Chinese legal and business environment. It describes the legal and administrative infrastructure which is divided in 5 different branches which I will mention them, but won't give you a very detail description of each one, because it would be too long.
The first branch is the Legislative called the People’s Congresses which then is divided in to many committees. The second branch is the Judicial known as the People’s courts which are judicial organs of the state. The third branch is the legal supervisory organ known as the people’s procuratorates which exercise legal supervision like the U.S. Justice Department. The fourth one is the executive branch known as the state council which is the highest administrative organ of the state. The last branch is the local governments which are state administrative organs at the local level. China’s government is very complex for me to explain, but I do advise to everyone to at least get inform about their laws, regulations legal and administrative infrastructure, so that you can have successful business.
In my next post i will give examples which that author gave in the book to illustrate the way how foreign businesses, operating in China are affected by the government and the law and regulations in China.
This chapter talks about the factory girls’ lives in the Yue Yuen plant. The Yue Yuen plant is the biggest factory in Guangdong Province, and one-third of the world’s shoes are made in Guangdong Province. The Yue Yuen plant is huge, because they have their own hospital, movie theater, performance troupe, English classes, and even has its own power plant and fire department. Most of the migrants who work in Yue Yuen plant, may never work anywhere else, and some of the workers family all worked in this factory. Moreover, almost all of the managers in the Yue Yuen plant are rural migrants who started out on the assembly line. It also talks about many people were stealing other people’s money during the payday, or the shoes from the factory. Many factory girls got pregnant without knowing who the father of the baby was. Also, it tells a story that I think it is really scary. One gave birth for a girl in the dorm bathroom, and the girl threw the baby into the toilet. Basically, It talked many detail things about factory girls’ lives, and how the places look like around the Yue Yuen plant.
After I read your post, I felt so complex already. However, since I am planning to do business in China, I have to know a little bit of the legal and administrative infrastructure. I think in China, business is related with government. Also, I think you can focus in one of them which you are interesting with, and to tell us more details or examples.
Before China's economic reformation, all economic decisions were made by government leaders. From the 1950s to 1970s, the Chinese government failed to establish a successful working order of delegation. By December of 1978, China saw its first glimpse of real economic reform with a goal towards a market-driven economy. In 1979 China confirmed General Motors as a foreign trade partner. From this partnership, China developed and implemented the Law on Sino-foreign Joint Ventures. By 1990, the total export volume had reached over $40 billion. In late 2001, China joined the World Trade Organization and increased their foreign investments and exports. In a matter of the next five years, China's exports grew from $266 billion to $969 billion.
I would be curious to know what kind of current conditions that China's Foreign Direct Investments and Exports have aspired to.
The more I have read my book it is all about how the internet and computers have emerged in China. My book is more of a story book. The book has two main people Bo and Edward. Bo has been working in California for Robertson Stephens, this is an investment bank in California. Edward has been working hard in China to develop internet. Edward has started a company, AsiaInfo, with some other partners. They have a huge vision of how all of China would be connected and able to use computers together. AsiaInfo is out looking for capital to help them expand their business. What they have going for them is that they are from China. There was a bid to build something for the government and AsiaInfo and Sprint bid on the project. In the end AsiaInfo got the bid. the company also build the software and computer systems for the stock exchange over in China. Also created a program That allowed Windows to be able to transferred into Chinese. They are still looking for capital and this is where Edward and Bo meet. Then Robertson Stephens invests in AsiaInfo and this is where the book is right now.
It is really interesting to see how these companies had a vision for China and are going out on a large scale and making it happen.
It is fascinating to see how those trade exports had increased so extremely. It becomes easier to realize that China has just been waiting to come into the world as a superpower. Once the government has started to let a little more freedom on things like exports they are just increasing at an amazing pace. It will be interesting to see if this can continue over time. Will they be able to continue to grow? Also if the government keeps allowing more things to happen, is there more power in China that is just waiting to be realized? Maybe China has only just begun to grow huge and is just taking time for the government to actually let them do things.
Now that I have gotten past all of the introduction and historical information in my book "China Streetsmart," the author is taking me through the main "action steps" to being profitable and successful in the constantly changing Chinese business market.
Action step 1: Management Consistency
Chan asserts that almost all business people in China, whether foreign or local workers, agree that the people in the business are what determines success—not products. He also talks about the importance of maintaining the same management team from the initial venture into China for as long as possible in order to maintain consistency. When there are constant changes in executives and management, people often lose sight of long term goals and plans to attain those goals. Chan says that if anyone brings up a now bankrupt or diminished foreign company that was in China, ask how long of a term the senior management was there and the same.
Action step 2: Be Flexible and Adaptable
Chan cites many different companies in this section—primarily beer companies—that came into China with two different mentalities: 1) Those who are willing to change their product in order to best succor the needs of the local market, and 2) those who think, "Because it (the product) worked in England or America, that it is needs no change and is obviously perfect for China too." He says the companies who are willing to adapt and change for the consumer are the ones who will be most successful.
Action step 3: Be Patient and Thorough
He starts of by saying in a joking manner that the three keys to success in China are patience, patience, and patience. If that doesn't work, be patient. Now what he means by patient is, first, study to understand the market, and, second, take time to plan when to strike. Do not go in blindly to the China market with out any reliable, as Chan would say, "due diligence" in market information.
His steps seem to be very easy to follow and not only interesting, but helpful in giving incite into the Chinese market from the perceptive of a foreign company looking to tap into the market.
I find it interesting how we as the United State have so many similarities to China. We are a large nation that has enormous buying and selling power, and, also, we have such influence on not only the countries around us, but also the world as a whole. If only we had a little better relation with China, we could possibly have an incredibly strong alliance (monopoly would be a better word, but for the sake of it sounding overpowering I chose alliance) in the trade and marketing industry. Very thought provoking points.
The next part of my book started off with a metaphor about the United States. It said that you should look at the United States as a large and old oak tree. It has many branches which would represent the political, geographical, and economical diversity of our country. The tree is huge and has been around for years; if one branch breaks off or dies, it is quickly replaced by another one. The continued life has been due to the fact that during the good times, the tree has received much fertilizer and watering therefore making its roots strong. In the past couple of years though, like the book said America's tree hasn't gotten much water recently, and our leaves are starting to fall off. Not only that but we have termites and caterpillars eating away at the stable foundation that we've relied on for so long. This section of my book being devoted mainly to America's debt problems, the tree is an excellent example of how if we do not begin to properly address the situation of debt, it will only continue to be battered and eventually the tree is going to die.
It something interesting to keep in mind as I go through the rest of the book.
I did read the last paragraph and that is good to know. I guess there's no being lazy when it comes to buying things in China. Now we know all about how we need to go about purchasing things and that apparently you should always try to get them to go lower. If only you could bargain like that at mall..
This week my book discussed a new theory of leadership in China that came about during the Han dynasty and radically changed the way things where done from that point on. It mixed the existing ideals of Confucianism with something very different (the analogy of spring and autumn was used in the book). The theory of Legalistic approach was very popular with those in rule to defend their power and potion as well as control people. We see lasting effects of this in China today. The book said after the Han dynasty there were no true Confucian followers or true Legalistic but they both became so intertwined the were all a hybrid now. In times of turmoil and civil unrest these issues often came up according to the book. Hanfie;s theory of Leadership (the mix discussed above) is strongly shaped by a belief held by Hanfie that all human behaviors are motivated by a ruthless pursuit of self-interest, not by moral values. There are 3 core concepts in his theory; shih (power), fa (law), and shu (management technique). This chapter was very enlightening because it is evident there is lasting effects in China from this time period and movement.
Week 6 - My book is talking about the pharmaceutical industry. The goal is to turn the industry into one of the world's pharmaceutical giants by the middle of the twenty-first century, but the pharmaceutical industry shares many similar problems as the automotive industry. It is a very old industry that has a lot of problems. It has low manufacturing standard and doesn't have a lot of human capital, and many other problems. Even though there is opportunity for massive growth, certain problems keeping the pharmaceutical firms from becoming national business's, such as having different local illnesses and local government protectionism. Foreign business's have been competing with pharmaceutical company's in China, and it has helped local pharmaceutical companies. China has made a lot of progress in the last two decades the pressure to reform is coming from the government now, and from the market forces, but they still have a long ways to go, but they should be able to compete in the Western world some day.
Winston - That is very interesting. I agree that is crazy to see how these companies had a vision for China and are going out on a large scale and making it happen.
This past week I have been reading about the differences in the Chinese law system. As most of us know, China is a socialist country, and therefore their whole judicial system is different than ours, especially when it comes to certain individual rights. The first know legal system of Chin was from the Qin dynasty, and they instituted "the law of the 5 punishments" but since then that system has disappeared. Today they have seperate court systems for international businesses that only deal with those type of suits. The peoples court is very prominent, however fairness isn't a big issue. Hoepuflly one day China will have a court system that more or less ressembles ours.
Grant, what you said about the pharmecutical industry is very interesting. I thought that by know they would already have a medical industry more like ours. Does China have free medical care like other socialist countries?
@BRANDON I think I would like your book because I plan to go to law school.I think it is interesting that their whole judicial system system is different than ours
In this weeks reading, i found alot of interesting tidbits. One thing I found was that even though China is one of the worlds largest FDI reciepient countries in the world, the majority of their mergers happen within their borders.
The Kinh, are a group of people who live in the southwest part of China. A lot of them only speak Vietnamese and they come to China to be fishermen because they can make more money.
One thing I found interesting (and has nothing to do with fishing), is that the authors visited a Catholic Church in Jiangping. The services are held at night as to avoid the heat during the day. The men sit on one side of the church and the women on the other. They sang one hymn, then chanted the rosary for forty five minutes, and then the service was over. The interesting thing is, the church hasn't had a priest for over forty years. It is because when the Cultural Revolution started, the Red Guards started causing trouble, telling people that what they believed in was wrong. After that the church had been closed for a long time, until the Reform and Opening gave the people the choice to worship again. But ever since they haven't had a permanent priest, the custodian of the church tries to put a service together weekly.
I like the custom of no business talk at the dinner table. I like that they draw the line between business and personal time. Also, getting a gift is always a plus. We should be aware of all their customs, wouldn't want to offend anyone while we are there.
Thank you so much for the important advice given as to how to bargain. I'm definitely looking forward to utilizing those skills once we are in China. I'm always for bargains and getting products at a cheaper price, so I think China is my kind of place :) also it was interesting to read how there is different ways to see how is the "top" man. I'll look for those when I'm in China :)
Myth 4 "China is Westernizing": "Take a walk around Beijing or Shanghai and you are in a Western environment. This is the future of China!"
The reality is that China is modernizing rather than Westernizing. Underneath it all, there is still a strong and deep-rooted culture based on Chinese values.
Now to anyone that is looking to do business with China, they need to understand both Chinese culture and the communist influences. China's culture is still predominantly based on the ideas of Kong Fuzi (Confucius). Confucian ethics remain the bedrock of thought and behavior in mainland China, and perhaps even more so in Taiwan and Singapore. Confucius based his teachings on the importance of hierarchical relationships these being: 1. Ruler-subject 2. Father-son 3. Husband-wife 4. Elder-younger 5. Friend-friend
Overall there is four key Confucian values that anyone who is seeking to "deal" with China must understand: relationships, face, harmony and the person of quality. I'll talk about these on my next blog.
So it would seem that Chinas prosperity and wealth has the potential to benefit the whole region, but that is only if it is a rising tide that will lift all ships rather than a wave that will destroy the smaller ships. I was just thinking of Mexico and the US, Mexico has been right next to the worlds superpower all along but it has received next to no benefit from us. I don't know if the story will be the same in Asia but its something to think about.
@ Tyler Wow i had no idea there was a large luxury market in China but it makes total since if we are buying everything from them someone has to be getting rich!
"No country has ever before made a better run at climbing every step of economic development all at once." I love this quote about China. Another thing that astounded me was that China has between 100 and 160 cities with populations of 1 million or more, whereas America has 9 and Eastern & Western Europe combined has 36. According to this book, China's workers cost $0.25/hour, which is actually more expensive than the poorer countries of Southeast Asia or Africa. Another super interesting fact is that, since the government has recently allowed peasants to leave the countryside, there are massive amounts of people migrating to the cities to find work. The book calls this the largest migration in human history, ranging from 90 million to 300 million (the low end of that estimate matches the entire workforce of the U.S.). china's work force is arguably the greatest natural resource on the planet.
@Josh: I think that the government loosening their grip on the economy is a really good thing and they have obviously prospered because of it. However, things can become just as bad (and just as poor) with a super lax government. If I were a Chinese official, I would be worried that the economy would rocket back the other way.
China is a must win market for any business trying to go international. Their market has the laissez-faire philosophy, which says let it be. The government leaves the market alone to allow competition to fight it out. Therefore the competition is arguably the most in the world. A single business competes against Asian, European, American, and local business.
@ Toruno That's pretty facinating to know. It really explains why Chinese people are so position driven. I need to read more about the ideas of Kong Fuzi. It will probably help me understand my book better.
In reading about the economy of Dongyang County, I have come to realize that when the Communist ideals (also known as the Stalinist/Maoist position) were enforced, especially in the economy, not everyone thought this was a good idea. If one went along with the imposed ideals, then production would be stifled. After World War 2, China was a poor country. In my opinion, socialism is never a good choice for any economy. In order for any economy to thoroughly flourish, one would need to be able to freely buy and sell. Recently China has grown more lax on their economy and as a result, it has grown leaps and bounds and according to current trends, could soon eclipse our own economy.
ReplyDeleteReading about chinas way of dealing with potential customers is very interesting. In my reading he tells about a story of how he was riding in a taxi on his way back home from doing business with a client. In his journey he spots a run down building in a remote area with a guard in the front. He asks the driver to stop, to investigate why there was a guard standing in front of a run down building , he soon finds out that not everything is what it seems. Many people arrive with the mentality that china is filled with factories like Charlie and the Chocolate Factory, but when people arrive they are surprised. I learned that when mixed with business, Chinese hospitality may be suffocating. Chinese industrialist are nothing but optimistic. Since many importers visit china they give out samples of their product like messages in a bottle, hoping that some how their product will fall in the right hands and bring them fortune. Importers come to China in huge numbers for three main reasons. Not only is labor really cheap, but speed and convenience are two other important factors that China is particularly well at.
ReplyDelete@josh
ReplyDeleteIts always exciting when a country that was very strict becomes more lax on their people. Not only does it bring peace, but as you can see prosperity as well. Hopefully our economy goes back to normal as qickly as china's is rising.
Week 5 Post :: Vanessa Lézeau ::
ReplyDeleteThis chapter in my book was very interesting because it was about Chinese customs regarding food, behavior, and beliefs. I thought the dining etiquette was interesting. Eating is a social function, and not a time for business – thus no business should be discussed at the table. Usually people are invited to restaurants and not private homes, but if you do get invited to a home it is important to bring a gift and remove your shoes when entering their home. When you give or receive a gift or business card, you should give/accept it with both hands as a show of respect. Also, Chinese like karaoke and making toasts, so be prepared to deal with both.
In the Chinese culture, people are very formal. You are expected to look professional all the time (unless told otherwise) during business trips. White is a color of mourning and red is a color of celebration, so they usually advise to avoid wearing bright colors. They are very superstitious; colors, numbers, feng shui, and the zodiac all have significant meanings to them. Holidays are very important because they are the time that people go back home to visit their families – so often they are given additional days to travel on top of the holiday days.
There are many other things that I could mention from the chapter, but that would be very long. I am glad they had all this important and useful information in this chapter because these are little things that we should be aware of so that we don’t offend our hosts and the other Chinese people we come in contact with. It is important that we all make an effort to be respectful and abide by their customs while we visit their country. Of course, it will be easy for us to forget all the little details, but they know we are visitors, and they will probably be a bit more forgiving if we make little mistakes. However, if you are planning on doing business in China later, and you will be required to travel there frequently, then I suggest that you learn their customs in more details so that you will be successful there.
@ Josh: It's so weird to even think of China as once being poor. They have done so well for themselves in the recent past! I agree with Julien about the benefits of a country becoming more lax - it really does more peace and prosperity. I think the efforts that the Chinese government have made concerning the privatization of businesses and organizations has really benefited their economy. It's sad to think that the US has been like this for a very long time, yet the economy here is struggling so much.
ReplyDeleteSo this chapter focused more on China's involvement in its Eastern Asia neighborhood. One practical thing that I can write about is that the authors listed 5 reasons why China's neighbors are happy, despite China's past of repressive communism, about China's increased involvement in that region.
ReplyDelete1. China's growth in the area by Free Trade Agreements creates interdependency between the countries. This interdependency promotes trust and security, and raises the cost of war. This shields China's neighbors from military interventions.
2. The authors said that Asian countries believe they are competing with China for investment money and are losing. So, since they can't beat the huge giant next door, they are trying to grab onto China's coattails and ride the wave to prosperity.
3. The Asian countries affected by the Asian financial crisis in 1997-1998 are appreciated of the help that China offered, and are now in favor of China becoming more powerful in the region.
4. Asian countries are frustrated by the slow pace taken by America and the WTO on economic integration in East Asia. By now they've kind of expected to be more integrated with America and the rest of the world. But the WTO is being slow to show its efficacy in producing this. So now they are turning to China.
5. Asian countries feel like they need China's cooperation to combat nonmilitary threats in the region such as terrorism, piracy, drug smuggling and the like. And then they need China to combat other threats like water depletion and treatment of contagious diseases. Without China's support in these areas, any other Asian initiative to combat them will be ineffective.
@ Josh
ReplyDeleteIt seems like when communism started in China it was very strict, but then it has trended towards being more and more open and free. In contrast, the U.S. started the 20th century relatively unregulated, but now it has become increasingly more and more regulated. Are these regulations the problem today? Or has it been the trend towards more deficit spending that has us in this rut? Or are those two things related? But all the same, Americans are still very very rich compared to much of the world.
The title of chapter four is “Cash Shortages and Risky Financial Maneuvers.” In this chapter, one aspect the book is talked about that Martin was facing lag of money and high cost situation. Because inflation was on going, investments and price rose. At the beginning, the Chinese did not want to accept the high cost. But at the end, the Chinese actively covered the difference in costs caused by the inflation just because they took Volkswagen project seriously. The other aspect is talked about holding a bond in the Chinese market. That sounds a very risky idea to me when I read it. I know bond is one of the best ways to generate asset, to increase profit, and to extend the market. Therefore, China was a very poor country back to 1988, which cars were not even common. In that situation, a guy dared to open a bond idea which I think he is brave and brilliance. Without surprised China hold the first bond in Chinese history. I am proud of my country.
ReplyDelete@ Vanessa
ReplyDeleteI think "no business on the table" is not anymore. Today, dinner is one of the plaforms to negotiate or to start a business. Therefore, if you have a dinner with a group of friends, there is no one willing to hear any businesses.
@Stefan
ReplyDeleteChina becomes more powerful, so the Asia neighborhood will more need China's help. "Chinese believe that a strong personal relationship cannot easily be ruined ore broken; it is more reliable than contracts or law” (Wang, Zhang, Goodfellow 65). So China create more processes to make neighborhood feel happy.
This comment has been removed by the author.
ReplyDeleteMy recommendation is to read my last paragraph. It may be chaotic, but it is useful when you buy things in China.
ReplyDeleteChapter four is talking about Chinese Negotiating Style, and negotiating is a crucial aspect of any business culture. It gave three stages: “1) roles and relationships, 2) patience and compromise, and 3) the win-win ending.”
To know the actual decision-maker and to create the interpersonal relationship is important because “Chinese believe that a strong personal relationship cannot easily be ruined or broken; it is more reliable than contracts or law” (65). There are four ways to identify the actual decision-maker in the negotiating:
1. Chinese people record their names in hierarchical order, whose name at the top will be the most important person in the hierarchy.
2. The person who first introduced is always the most powerful member of the team.
3. The person who sits at the centre of the negotiating table.
4. Scrutinizing the personal name cards to see the title and qualifications.
In the Compromise part, I found some interesting thing: Chinese like to bargain in business. If you go to an individual store, the price of the goods usually much higher than the buying price because the shopkeeper knows customers will bargain. So customer should think the value of the goods carefully. If you don’t bargain, you will pay too much. If you bargain very litter, you still pay too much. So the best way is to call your price as low as you can and prepare to a psychological warfare. When the shopkeepers think your call is too low, they will raise the price but lower than the selling price. At this time you better not feel satisfied because you still have chance to reduce the price. If they really want to sell, finally you will buy the goods in a desired price. Bargaining is a useful skill except in the mall or restaurants.
hello guys
ReplyDeleteI had a change in my book i am now reading the Luxury China Market opportunities and Potential. I have really enjoying this read. in the first it was talking about the size of the market place. and to fully understand the size of the China market you have to understand the size of the Global market. The global market is worth somewhere around 265 billion dollars in 2008. the chinese luxury market is worth around a total of 15 billion. that pulls china in at around the 4th largest behind japan, united states and Europe. China is has also been growing very fast. for the past five years China along with russia has been the fastest growing market in the world. fun facts is what that is.
@Josh
ReplyDeletedude i think it is awesome how much china has grown and worked threw problems they have had to deal with coming out of WW11. And i completely agree with you about the economy. hopefully it will grow faster in CHina. i am interested in your read
This chapter the author focuses on the Chinese legal and business environment. It describes the legal and administrative infrastructure which is divided in 5 different branches which I will mention them, but won't give you a very detail description of each one, because it would be too long.
ReplyDeleteThe first branch is the Legislative called the People’s Congresses which then is divided in to many committees. The second branch is the Judicial known as the People’s courts which are judicial organs of the state. The third branch is the legal supervisory organ known as the people’s procuratorates which exercise legal supervision like the U.S. Justice Department. The fourth one is the executive branch known as the state council which is the highest administrative organ of the state. The last branch is the local governments which are state administrative organs at the local level.
China’s government is very complex for me to explain, but I do advise to everyone to at least get inform about their laws, regulations legal and administrative infrastructure, so that you can have successful business.
In my next post i will give examples which that author gave in the book to illustrate the way how foreign businesses, operating in China are affected by the government and the law and regulations in China.
This chapter talks about the factory girls’ lives in the Yue Yuen plant. The Yue Yuen plant is the biggest factory in Guangdong Province, and one-third of the world’s shoes are made in Guangdong Province. The Yue Yuen plant is huge, because they have their own hospital, movie theater, performance troupe, English classes, and even has its own power plant and fire department. Most of the migrants who work in Yue Yuen plant, may never work anywhere else, and some of the workers family all worked in this factory.
ReplyDeleteMoreover, almost all of the managers in the Yue Yuen plant are rural migrants who started out on the assembly line. It also talks about many people were stealing other people’s money during the payday, or the shoes from the factory. Many factory girls got pregnant without knowing who the father of the baby was. Also, it tells a story that I think it is really scary. One gave birth for a girl in the dorm bathroom, and the girl threw the baby into the toilet.
Basically, It talked many detail things about factory girls’ lives, and how the places look like around the Yue Yuen plant.
@Diana @Diana @Diana
ReplyDeleteAfter I read your post, I felt so complex already. However, since I am planning to do business in China, I have to know a little bit of the legal and administrative infrastructure. I think in China, business is related with government. Also, I think you can focus in one of them which you are interesting with, and to tell us more details or examples.
Chapter 5: China's socialist market economy.
ReplyDeleteBefore China's economic reformation, all economic decisions were made by government leaders. From the 1950s to 1970s, the Chinese government failed to establish a successful working order of delegation. By December of 1978, China saw its first glimpse of real economic reform with a goal towards a market-driven economy. In 1979 China confirmed General Motors as a foreign trade partner. From this partnership, China developed and implemented the Law on Sino-foreign Joint Ventures. By 1990, the total export volume had reached over $40 billion. In late 2001, China joined the World Trade Organization and increased their foreign investments and exports. In a matter of the next five years, China's exports grew from $266 billion to $969 billion.
I would be curious to know what kind of current conditions that China's Foreign Direct Investments and Exports have aspired to.
The more I have read my book it is all about how the internet and computers have emerged in China. My book is more of a story book. The book has two main people Bo and Edward. Bo has been working in California for Robertson Stephens, this is an investment bank in California. Edward has been working hard in China to develop internet. Edward has started a company, AsiaInfo, with some other partners. They have a huge vision of how all of China would be connected and able to use computers together. AsiaInfo is out looking for capital to help them expand their business. What they have going for them is that they are from China. There was a bid to build something for the government and AsiaInfo and Sprint bid on the project. In the end AsiaInfo got the bid. the company also build the software and computer systems for the stock exchange over in China. Also created a program That allowed Windows to be able to transferred into Chinese. They are still looking for capital and this is where Edward and Bo meet. Then Robertson Stephens invests in AsiaInfo and this is where the book is right now.
ReplyDeleteIt is really interesting to see how these companies had a vision for China and are going out on a large scale and making it happen.
Brian:
ReplyDeleteIt is fascinating to see how those trade exports had increased so extremely. It becomes easier to realize that China has just been waiting to come into the world as a superpower. Once the government has started to let a little more freedom on things like exports they are just increasing at an amazing pace. It will be interesting to see if this can continue over time. Will they be able to continue to grow? Also if the government keeps allowing more things to happen, is there more power in China that is just waiting to be realized? Maybe China has only just begun to grow huge and is just taking time for the government to actually let them do things.
Now that I have gotten past all of the introduction and historical information in my book "China Streetsmart," the author is taking me through the main "action steps" to being profitable and successful in the constantly changing Chinese business market.
ReplyDeleteAction step 1: Management Consistency
Chan asserts that almost all business people in China, whether foreign or local workers, agree that the people in the business are what determines success—not products. He also talks about the importance of maintaining the same management team from the initial venture into China for as long as possible in order to maintain consistency. When there are constant changes in executives and management, people often lose sight of long term goals and plans to attain those goals. Chan says that if anyone brings up a now bankrupt or diminished foreign company that was in China, ask how long of a term the senior management was there and the same.
Action step 2: Be Flexible and Adaptable
Chan cites many different companies in this section—primarily beer companies—that came into China with two different mentalities: 1) Those who are willing to change their product in order to best succor the needs of the local market, and 2) those who think, "Because it (the product) worked in England or America, that it is needs no change and is obviously perfect for China too." He says the companies who are willing to adapt and change for the consumer are the ones who will be most successful.
Action step 3: Be Patient and Thorough
He starts of by saying in a joking manner that the three keys to success in China are patience, patience, and patience. If that doesn't work, be patient. Now what he means by patient is, first, study to understand the market, and, second, take time to plan when to strike. Do not go in blindly to the China market with out any reliable, as Chan would say, "due diligence" in market information.
His steps seem to be very easy to follow and not only interesting, but helpful in giving incite into the Chinese market from the perceptive of a foreign company looking to tap into the market.
Stefan:
ReplyDeleteI find it interesting how we as the United State have so many similarities to China. We are a large nation that has enormous buying and selling power, and, also, we have such influence on not only the countries around us, but also the world as a whole. If only we had a little better relation with China, we could possibly have an incredibly strong alliance (monopoly would be a better word, but for the sake of it sounding overpowering I chose alliance) in the trade and marketing industry. Very thought provoking points.
The next part of my book started off with a metaphor about the United States. It said that you should look at the United States as a large and old oak tree. It has many branches which would represent the political, geographical, and economical diversity of our country. The tree is huge and has been around for years; if one branch breaks off or dies, it is quickly replaced by another one. The continued life has been due to the fact that during the good times, the tree has received much fertilizer and watering therefore making its roots strong. In the past couple of years though, like the book said America's tree hasn't gotten much water recently, and our leaves are starting to fall off. Not only that but we have termites and caterpillars eating away at the stable foundation that we've relied on for so long.
ReplyDeleteThis section of my book being devoted mainly to America's debt problems, the tree is an excellent example of how if we do not begin to properly address the situation of debt, it will only continue to be battered and eventually the tree is going to die.
It something interesting to keep in mind as I go through the rest of the book.
@ Kevin,
ReplyDeleteI did read the last paragraph and that is good to know. I guess there's no being lazy when it comes to buying things in China. Now we know all about how we need to go about purchasing things and that apparently you should always try to get them to go lower. If only you could bargain like that at mall..
This week my book discussed a new theory of leadership in China that came about during the Han dynasty and radically changed the way things where done from that point on. It mixed the existing ideals of Confucianism with something very different (the analogy of spring and autumn was used in the book). The theory of Legalistic approach was very popular with those in rule to defend their power and potion as well as control people. We see lasting effects of this in China today. The book said after the Han dynasty there were no true Confucian followers or true Legalistic but they both became so intertwined the were all a hybrid now. In times of turmoil and civil unrest these issues often came up according to the book. Hanfie;s theory of Leadership (the mix discussed above) is strongly shaped by a belief held by Hanfie that all human behaviors are motivated by a ruthless pursuit of self-interest, not by moral values. There are 3 core concepts in his theory; shih (power), fa (law), and shu (management technique). This chapter was very enlightening because it is evident there is lasting effects in China from this time period and movement.
ReplyDeleteWeek 6 - My book is talking about the pharmaceutical industry. The goal is to turn the industry into one of the world's pharmaceutical giants by the middle of the twenty-first century, but the pharmaceutical industry shares many similar problems as the automotive industry. It is a very old industry that has a lot of problems. It has low manufacturing standard and doesn't have a lot of human capital, and many other problems. Even though there is opportunity for massive growth, certain problems keeping the pharmaceutical firms from becoming national business's, such as having different local illnesses and local government protectionism. Foreign business's have been competing with pharmaceutical company's in China, and it has helped local pharmaceutical companies. China has made a lot of progress in the last two decades the pressure to reform is coming from the government now, and from the market forces, but they still have a long ways to go, but they should be able to compete in the Western world some day.
ReplyDeleteWinston - That is very interesting. I agree that is crazy to see how these companies had a vision for China and are going out on a large scale and making it happen.
ReplyDeleteThis past week I have been reading about the differences in the Chinese law system. As most of us know, China is a socialist country, and therefore their whole judicial system is different than ours, especially when it comes to certain individual rights. The first know legal system of Chin was from the Qin dynasty, and they instituted "the law of the 5 punishments" but since then that system has disappeared. Today they have seperate court systems for international businesses that only deal with those type of suits. The peoples court is very prominent, however fairness isn't a big issue. Hoepuflly one day China will have a court system that more or less ressembles ours.
ReplyDeleteGrant, what you said about the pharmecutical industry is very interesting. I thought that by know they would already have a medical industry more like ours. Does China have free medical care like other socialist countries?
ReplyDelete@BRANDON
ReplyDeleteI think I would like your book because I plan to go to law school.I think it is interesting that their whole judicial system system is different than ours
In this weeks reading, i found alot of interesting tidbits. One thing I found was that even though China is one of the worlds largest FDI reciepient countries in the world, the majority of their mergers happen within their borders.
ReplyDeleteChapter 4
ReplyDeleteFisherman of the South Sea- The Kinh
The Kinh, are a group of people who live in the southwest part of China. A lot of them only speak Vietnamese and they come to China to be fishermen because they can make more money.
One thing I found interesting (and has nothing to do with fishing), is that the authors visited a Catholic Church in Jiangping. The services are held at night as to avoid the heat during the day. The men sit on one side of the church and the women on the other. They sang one hymn, then chanted the rosary for forty five minutes, and then the service was over. The interesting thing is, the church hasn't had a priest for over forty years. It is because when the Cultural Revolution started, the Red Guards started causing trouble, telling people that what they believed in was wrong. After that the church had been closed for a long time, until the Reform and Opening gave the people the choice to worship again.
But ever since they haven't had a permanent priest, the custodian of the church tries to put a service together weekly.
Vanessa,
ReplyDeleteI like the custom of no business talk at the dinner table. I like that they draw the line between business and personal time. Also, getting a gift is always a plus.
We should be aware of all their customs, wouldn't want to offend anyone while we are there.
Kevin,
ReplyDeleteThank you so much for the important advice given as to how to bargain. I'm definitely looking forward to utilizing those skills once we are in China. I'm always for bargains and getting products at a cheaper price, so I think China is my kind of place :) also it was interesting to read how there is different ways to see how is the "top" man. I'll look for those when I'm in China :)
Myth 4 "China is Westernizing": "Take a walk around Beijing or Shanghai and you are in a Western environment. This is the future of China!"
ReplyDeleteThe reality is that China is modernizing rather than Westernizing. Underneath it all, there is still a strong and deep-rooted culture based on Chinese values.
Now to anyone that is looking to do business with China, they need to understand both Chinese culture and the communist influences. China's culture is still predominantly based on the ideas of Kong Fuzi (Confucius). Confucian ethics remain the bedrock of thought and behavior in mainland China, and perhaps even more so in Taiwan and Singapore. Confucius based his teachings on the importance of hierarchical relationships these being:
1. Ruler-subject
2. Father-son
3. Husband-wife
4. Elder-younger
5. Friend-friend
Overall there is four key Confucian values that anyone who is seeking to "deal" with China must understand: relationships, face, harmony and the person of quality. I'll talk about these on my next blog.
@ Stefan:
ReplyDeleteSo it would seem that Chinas prosperity and wealth has the potential to benefit the whole region, but that is only if it is a rising tide that will lift all ships rather than a wave that will destroy the smaller ships. I was just thinking of Mexico and the US, Mexico has been right next to the worlds superpower all along but it has received next to no benefit from us. I don't know if the story will be the same in Asia but its something to think about.
@ Tyler
ReplyDeleteWow i had no idea there was a large luxury market in China but it makes total since if we are buying everything from them someone has to be getting rich!
"No country has ever before made a better run at climbing every step of economic development all at once." I love this quote about China. Another thing that astounded me was that China has between 100 and 160 cities with populations of 1 million or more, whereas America has 9 and Eastern & Western Europe combined has 36. According to this book, China's workers cost $0.25/hour, which is actually more expensive than the poorer countries of Southeast Asia or Africa. Another super interesting fact is that, since the government has recently allowed peasants to leave the countryside, there are massive amounts of people migrating to the cities to find work. The book calls this the largest migration in human history, ranging from 90 million to 300 million (the low end of that estimate matches the entire workforce of the U.S.). china's work force is arguably the greatest natural resource on the planet.
ReplyDelete@Josh: I think that the government loosening their grip on the economy is a really good thing and they have obviously prospered because of it. However, things can become just as bad (and just as poor) with a super lax government. If I were a Chinese official, I would be worried that the economy would rocket back the other way.
ReplyDeleteChina is a must win market for any business trying to go international. Their market has the laissez-faire philosophy, which says let it be. The government leaves the market alone to allow competition to fight it out. Therefore the competition is arguably the most in the world. A single business competes against Asian, European, American, and local business.
ReplyDelete@ Toruno
ReplyDeleteThat's pretty facinating to know. It really explains why Chinese people are so position driven. I need to read more about the ideas of Kong Fuzi. It will probably help me understand my book better.