Module 02 Written Assignment – Partnering in China
Section 01 International Business – 2014 Summer Mid-Quarter
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Understanding cultural difference is the key in building lasting relationships with your business partners abroad. China has a long and rich history and culture that has built a business environment that is markedly different than U.S. business culture. Relationships come before economics in China whereas in the U.S. economics generally take a front row seat to relationships. Chinese people do business with people they know and trust. Rather than getting into business discussion immediately once you meet, you should take time and get to know your potential partners abroad; invest now for payoff later. Once trust has been built, Chinese business people will gladly share their thoughts with you and will give you honest feedback. China businesses are also very family oriented. Which is not a surprise due to them wanting to trust who they work with, who better to hold accountable than your family. I don’t think the U.S. is as family oriented with businesses because we have a different mentality on relationships. The article states that if you must form a joint venture (JV) in China, the challenge is to discover the perfect partner; selecting an active, value-added partner that brings to the venture valuable government-relations, industry knowledge, and business connections, as well as financial strength. The potential highest risk of friction in a JV or between MNCs and Chinese firms is in reconciling differing concepts of ethics and standards. For most global companies, the MNCs must find means to guarantee that the local partner adopts corporate procedures and practices. The first decision for MNCs in China is to decide whether to seek joint ventures or to operate as a wholly foreign-owned enterprise. Regulations currently permit international enterprises to invest in more sectors. The first step is to be clear on current regulations. JV is able to offer significant benefits, particularly in providing expertise in negotiating with government offer established operations, and market knowledge. I think it would be better for U.S. companies to partner with a company in China that will provide tangible assets and other services for the US-based MNC even though there are some risks. You would need to be positive that both sides have the same ethics and morals and gain trust through visiting and spending a lot of time in China with them. I think this would be a better choice than “go it alone” because this could bring potential business by having a relationship with a company already there and knowing some of the people there (Pranee, 2009). There are many stumbling blocks that might arise when partnering with a company in China. Finding decision makers, creating trust, understanding business culture differences, reward compensation and systems, and beating language barriers, cooperation mind, lowly unpretentious, and so on. I think the most important things to worry about is culture barriers and how competitive China is. China is the most competitive market in the world. There are many global enterprises here: European firms, Japanese firms, plus local firms. They all compete in China. China has local companies that are internationalizing more and more, and more global players locate in China. There are the new Chinese firms with advances in products and global competitiveness. Chinese firms are trying