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When the western side of the world meets the eastern side of the world- things are different. It is very important for the business executives to adapt to the eastern side of the world. The book 'Business Guide to China: 15 Fallacies of Investing' in china by Frankie Chan, talks about the 15 things that the management executives should look at in order to be successful in doing business in China. The book covers topics like matrix management, cultural barriers, labor costs, competition and other management techniques that the foreign businessmen should consider before conducting business in China.

China is a big country with about 13 billion people. The foreign investors see a lot of opportunities in doing business in China. There is a general misunderstanding among the foreign investors that when they enter the market they will effortlessly squeeze in the mass market and beat the local competition in no time. This is not true. The foreign investors need to have a specific and clear objective in order to enter the market. The foreign investor's positioning strategy in the market should be very strong for the the first few years as these years are very critical in order to survive in the long run. The rule of thumb would be to squeeze in the mass market and attian a firm toe hold among some top local brands before they plot  more specific medium term starters in order to first beat the other foreign in investors in the  Chinese market. A solid presence in the mas smarket in the early years will give power to the company and products and help them earn the deserved share of market as early as possible. this will help improve their competitiveness in the market year by year and free them from possible pressures of interferences from headquarters and weakening financial position.  The author also tells us about how competition is very fierce in the Chinese economy and it is very important for a foreign investor to be clear about who their competitors are. The Chinese people see a transparent borderline between the local companies and the foreign investors. Although, they are always aware about the possible threats that could come from the other side of the border, they have more head on competition with the local companies in China.

One of the most interesting fact that I learned from this book is that Chinese people not well trained to evaluate and control financial risks, a far as credit control is concerned. Chinese way of accounting receivables must be its absence of any concept of bad debts or doubtful debts. Therefore, we will never find an item called "bad debt provision" in their financial reports, as required by the state. Also, foreign investors should pay attention to the level of account receivables and intensive financial analysis should be conducted from the management whenever the business is reviewed, other than its performance on sales achievement and profitability.

Frankie Chan recognizes language as the biggest barrier while conducting business in China. The fact that people do not understand English and keep interpreters while conducting business meetings can get difficult at times. The foreign investors also should keep an in house interpreter in order to overcome part of the problem. However, the foreign investors need to be open minded and be willing to learn an d adapt to the new culture  and cultivate mutual understanding between two partners. There are few other barriers that foreign investors can come across.  For instance, as opposed to the western cultures where we have many supervisors, Chinese workers are used to taking orders from only one boss. It is also difficult to receive feedback from the Chinese subordinates as they tend to be shy and keep to themselves. They choose their words very carefully when they talk about their opinions.

Overall, the author has done a good job in discussing the points that needs to be taken in consideration in order to be successful in conducting business in china. He has laid out what problems the foreign investors could face in their business venture which could have negative effects on their business. However, with the problems they could face, the author has also explained carefully examined solutions needed to overcome those problems being faced while conducting business in China

My China Book

China's Environment and the Challenge of Sustainable Development

Kristen A. Day

 

                The book that I chose to read for a China was rather dry and focused mostly on the way that China has been developed in the past and the way that it is going for the future.  This is an issue that can claim a spot that is close to many of our hearts.  With the recent green technology revolution the pressure on the world's leading countries is enormous to get clean and stay that way.

                The book I read focused on how the Chinese point of view has allowed their country to become one of the most industrialized in the world.  The view that the State is the only thing that needs to prosper and be preserved has contributed a lot to China's economic and industrial past. 

                China has a poorly run environmental protection governmental arm, relying mostly on the regional and local officers to enforce the protection policies.  These are usually underpaid or not paid at all and this causes the factory owners and politicians to build whatever they want, with no regard to the environment. 

                This directly causes other problems, many of which are worse than the pollution.  China has a severe shortage of rural drinking water due in a large part to the pollution caused by its lack of environmental protection.  The people are taking a notice and are demanding a change.

                Major change has began to take place where gross grievances have been discovered.  For example in 2003 47 farmers in Jiaxing, in Zhejiang Province were awarded around one million dollars for the Chinese Governments destruction of their fisheries due to factory run off.  If more things like this happen in China, then hopefully the Government can adopt a more forward policy on the environment.

                This book made me realize that there are many of the same issues in China that the U.S. has.  Their people just want simple laws in place to protect the environment, where many traditional Chinese still make their living.  Nearly 60% of China's 1.3 billion people live in rural areas of the country.  The rural areas are the ones that need to be protected the most. 

                China has shown that it wants to work on these problems.  There are many pro green projects in the country that will greatly reduce the emissions of heavy industry.  With more reliable and better policies in place China will soon be on a level with the rest of the worlds developed countries as far as pollution control goes.

International Brand Management of Chinese Companies by Sandra Bell is an extensive collection of numerous case studies on the Chinese household appliances and the consumer electronics industry.  Bell goes on to distinguish these industries that are entering the United States and Western European Markets. 

 

Obviously, China is on the very forefront of development and global integration and will continue booming in many economic achievements.  Today, China has the fastest growing economy and will continue to dominate in the world market if they can continue to integrate "Chinese players in their value chains and global operations". 

 

Bell's study mainly focuses on the new concept of "branding " and "marketing" which have been recent transitions to China's economy.  In addition to the acclamation of branding and marketing, China has also ventured out to conquer the global market and plans to grow into a whole new class of becoming the new international branding elite. 

 

All in all, this book provides a lot of useful information, and demonstrates just how tough it is to expand into a new business environment such as China and become the main ringleader.  The main idea behind the study is basically the customs and traditions that need to be adapted for China to become fully successful in the global market of branding.

How China Grows

Book Summary: Chinese Etiquette & Ethics in Business

Chinese Etiquette & Ethics in Business is a book written by Boye De Mente concerning the morals and values that shape the Chinese business personality.  The book did a really nice job of giving background on the Chinese culture and looking back at the history of China and how it shaped where it is at today.  The parts of the book that I found most interesting were about Chinese family life, the way foreigners are viewed, and how involved the government is with businesses.  There were also some interesting facts relating to Chinese cuisine and the concept of the yin and the yang.

            It is an official policy in China for each Chinese married couple to only have one child.  However, some couples deliberately have a second child, which happens mainly when their firstborn was a girl.  If this happens, they are required to pay a fine of 1000 yuan each year for five years.  This is a very expensive amount of money for most Chinese families.  If couples do follow the one child rule, they receive various benefits, which range from pay raises and education to private garden plots.  I learned for the first time about China's "black children", which refers to the children whose births are not registered.  This results in the children officially "not existing".  They are ineligible to attend school, get a job, or join the military.  There are over one million "children without identities" in China.

            In relation to learning about Chinese family life, I learned about the college entrance examinations that are held each year in July.  The entrance examination lasts three days and is referred to as "Black July".  It is not uncommon for teachers to stop covering regular class material six months prior to when the exams take place, allowing students enough time to study for the upcoming tests.  Not surprisingly, parents put a tremendous amount of pressure on their kids to study and prepare as much as they can for the entrance exams.  I was surprised to learn that 75% of students actually fail the exam, and subsequently are not allowed to enter any college. 

            Traditionally, the Chinese image of foreigners was that they were "barbarians"; which to them meant that foreigners were simply not as civilized or as advanced as they were.  Today, foreigners are not viewed as "barbarians".  However, don't be surprised if you find yourself being stared at while on the train or walking down the street, because some Chinese have never had a chance to see a foreigner up close. 

            There is a lot to learn when it comes to business in China, which is very exciting.  When reading about the organizational structure, I found out that there are two separate administrative bodies, one on the business side and one on the political side.  The political representative is known as the party secretary in the organization, and actually has as much power as the president of the organization.  I also learned that businessmen, as well as government bureaucrats, are subject to certain rankings.  Referred to as "grades", there are 18 grades on the business side, 18 being the lowest ranking and 1 being the highest.  For the government officials, there is a 24-grade scale.  I thought it was funny to learn that you could tell the rank of someone by the chair they were using.  The lowest ranked person would have a wooden chair at their desk, while the highest ranked people would use a leather swivel chair. 

            I also learned about the importance of Chinese cuisine.  Food is so important that you will often hear "have you eaten?" instead of "how are you?"  One of the best ways a foreign businessman can effectively express appreciation and knowledge of the Chinese culture is through understanding of Chinese food.  When it comes to eating rice, it was surprising for me to learn that it is typically served at the end of a meal.  There is also proper etiquette when it comes to using chopsticks.  You are not supposed to lay your chopsticks across the top of the bowl, and it is also considered rude to leave them sticking in a bowl.  This applies more so to eating in a Chinese home, as opposed to a restaurant. 

           One of the things that I found to be important to the Chinese is the concept of the yin and the yang.  Essentially, the concept gives a long-range view of things, and allows for people to accept the good with the bad.  This is a theory that still holds true today.  With that said, I though this book was filled with interesting information, however, it was written in 1989, which makes it quite dated.  I would be interested in learning about any changes made to the information that I learned about, and if anything is completely different from how things were when the book was written.  

Book Summary: China and Globalization

China and Globalization: By Doug Guthrie

This book dissects the history of China beginning on October 1, 1949 when Mao Zedong established a communist nation by weaving together political ideology, economic production and social control. The book goes into great detail and covers the various social, economic and political transformations that have occurred over the past six decades and explains the profound ways in which these reforms have shaped the development of China. According to Guthrie, one of the main reasons for China's ascent towards becoming a world power is because of the gradual reforms that have been taking place. He argues that a slow transition from a command to market economy, rather than a rapid transformation, has allowed the Chinese to create a solid foundation for future growth.

Some of the economic changes that have occurred involve the implementation of an export-oriented costal development strategy and the emergence of Special Economic Zones. These costal areas have helped to attract huge amounts of foreign investment though a combination of tax incentives and appealing geographic locations.

The social changes that have occurred in China over the last six decades have been enormous. Under Mao's rule, people were told where they would work, what specific job they would perform, and how much they would get paid. Now, as private enterprise has begun to emerge, Chinese citizens are learning to adopt western management practices and business strategies. These new business models have become more prevalent not because of a change in ideology per se, but because the Chinese have recognized that the best way to attract foreign investment  (from western nations specifically) is to present themselves as an ideal suitor by learning to adopt western practices.

The demand for, and amount of education in China has also been dramatically increasing. Before the reforms took place, education was not of great importance. What was important was where you worked and what job you performed. The role you had dictated your wage, where you lived, and the benefits you received for you and your family, jobs were also guaranteed for life. Education mattered very little, and many uneducated people who were good at their jobs lived comfortably in China for a long period of time. Now, after the reforms have occurred, the guaranteed jobs many people had were lost, and private enterprise has created a competition favoring education over factory skills. At no fault of their own, many Chinese citizens have had to experience this shock with little or no safety net.

To sum up the book, the author believes that China has had a "quiet rise to power" and that the country is taking baby steps towards becoming a capitalist nation. His views of the reforms that have taken place clash with many contemporary economists by stating that gradual change from a command to market economy, rather than a complete and swift transformation, is the key to remaining economically viable. He claims that capitalism in not instinctive, and that certain cultures, such as the Chinese, will have greater success by implementing a private economy slowly rather than all at once.

 

 

Book Summary

Branding in China:  the media platforms reaching 1.3 billion consumers

Written by the China Knowledge Press

 

In the late 70s to early 80s, advertising in China slowly started to increase.  Before that time, although it was never official banned, advertising tended to blend into the background.  There were three main factors that contributed to the advertising explosion:  The first factor was a shift in ideology.  Instead of viewing advertising as a western evil present only in a capitalistic market, the Chinese began to embrace the idea that advertising could increase sales.  The second factor was a shift in the economic system.  Before the early 80s, the majority of the buying for the country was centralized.  Once people were able to make purchases individually, new product demands increased.  The final factor was a shift in focus from China being a heavy industry producer to one of producing consumer products. 

 

Over the last 30 years, advertising in China has developed as producers seek the benefits in advertising to 1.3 billion consumers.  However, advertisers wishing to push their products in the country do face challenges from prohibited messages and restrictions.  For example, advertisements with the following are prohibited:  activities that are contrary to Chinese social and cultural beliefs, superlatives such as "highest level", "best", or "number one", and use of the national flags, emblems, or government entities.  These and other restrictions must be considered when advertisers embark on an ad campaign.  Sometimes, even if advertisers follow all of the Chinese restrictions, some western advertisers find themselves forced to pull advertisements and make a formal apology because the ads disgraced the Chinese people's strong cultural values.

 

Reaching 1.3 billion customers is seen mainly thru advertising in outdoor, print, television, and Internet mediums.  However one size does not fit all with advertising campaigns.  People in urban settings have different purchasing abilities than people in rural settings.  In addition, the most effective medias differ from one city to the next and some bigger cities have adapted more western preferences than others.  All of these factors and more contribute to the challenging advertising opportunities available in China.  But, with such a large consumer base, those that do have successful advertising campaigns can make millions.

 

 

 

The Coming China Wars

The Coming China Wars is a great book written by Peter Navarro. The book starts out with various situations that people have found themselves in.  They range from losing money in your bank account to your father almost dying because the prescription medicine lipitor is filled with fake ingredients.  It really puts you in the position and makes you feel helpless as a person.  The book is then broken down into 11 different chapters, which each focus on different environmental and social concerns.  They give a great summary of the different events and make it easy to follow, so someone who has limited knowledge can understand it clearly.  

One of the most interesting chapters to me was about piracy and counterfeit.  Before I read this book, I knew that counterfeit goods were a problem, but I thought they were only for consumer goods such as clothes, sunglasses, movies, etc.  The most disturbing thing to me is to find out that prescription medicine counterfeiting is a problem.  Thinking that you will be fine only to find out that the medicine you bought was fake and actually hurts you only more is the reality for a lot of the people who order their drugs from the internet.  

Each chapter is broken down into different sections and there are many quotes from different publications.  These quotes help to clarify many points and are very interesting to read the sources of them.  The contents of this book range from the need for coal (and the harmful side effects), the need for oil, the counterfeiting, the war on drugs, issues with water, and issues within the country.  It is a very good book for a basic understanding, but it fails to go into depth in any of the sections. 

This book is a summary of the major issues within China and it's goal is to show us that it is capable of being a "dangerous situation."  It comes to the conclusion that "If all the major stakeholders in the coming China wars come to understand the high stakes involved, appropriate steps can be taken, all of which are difficult."

Book Report China and the New World Order

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China and the New World Order

                This book by George Zhibin Gu was a very interesting book because it gave a lot of information about how China has changed from the old world to the new world.  This change has helped to open China to the world and benefits everyone that they interact with.  Before the switch to bureaucracy China was so shut off that the citizens within China had fees they had to pay to visit other cities. 

                China has begun its industrial development and has benefited greatly from these new businesses in China.  According to this book many foreign organizations have set up factories and new businesses in China which has come with great success.  These new businesses have helped bring more money into the country of China and have given people more jobs to work in.  European businesses have been one of the biggest success stories.  Some of the businesses that have been brought over from Europe are; Nokia, Nestle, Bayer, Volkswagen, Philips, and Siemens.  These companies are making massive profits in China because employment is so cheap compared to many other countries.

                George Gu talked about how this country only shortly ago had very little manufacturing to being in the present one of the biggest powerhouses in the world.  In 2005 China produced 80 million television sets, 300 million mobile handsets, and 70 million air-conditioning units.  Nearly 60% of the exports from China came from foreign-funded businesses which is a massive amount.  Recently China has thought about raising the value of the Yuan which could be a great for China and other countries but it could also have some drawbacks.  China could become a more competitive country than it was in the past.  This increase in the Yuan value may also have advantages for other countries with businesses inside of it.  With this new economy in China it has become the world's largest consumer of mobile phones with over 400 million users in the country.

                The book talked about how China would be one of the best places to invest money in for the next 10 years.  It was discussed that with this growing economy and such large population they are having very rapid development.  The consumer products and service sectors are believed to be the areas with the largest growth potential in the near future for China because citizens are increasing their demand for consumer goods and services.  The book discussed that because there are still drawbacks with the government and many things that limit what citizens can and cannot do, they are pushing for changes to be made.  Peoples rights are coming out as an important issue that the country needs to change and the citizens are fighting to have their voices heard.

                China and the New World Order was overall a great book.  This book taught me about the many transformations that China has taken in the past few decades and how it will be the new powerhouse once the issues with the government are changed.  It is amazing what advances have been made so far and I think it will be interesting seeing how the country is doing now after this book was written.

Book Summary - The New Silk Road

The New Silk Road: Secrets of Business Success in China Today, is a well organized and carefully planned out book written by John Stuttard.  Essentially the "tell all" for experience in China, this book mainly focuses on foreign companies looking to establish a foothold within the Chinese economy. It provides excellent facts and explains what to look out for (assuming the person reading it is an entrepreneur or already in top management).  Using various techniques such as knowing how the Chinese culture deals with agreement/confrontation to setting up proper team management, the book assembles a step by step process in order to create a solid business strategy in China.

The first half of the book goes into great detail about the history of People's Republic of China.  Mostly in the last 30 years or so, foreign capital has poured into the economy and with the help of modern technology, the PRC has really transformed and boomed again. Up until reading this book I had no idea that prior to 1981, China was closed off to outsiders. I found this hard to comprehend because of the tremendous growth we've all taken note of.  It was also very interesting to read that China gave western civilizations both pasta and mandarin oranges!

The book's name originates from the structure of the book as a whole.  Each chapter consists of a 'business secret' with the aid of numerous interviews in which these secrets are defined.  The chapter I found the most interesting was about leading change through partnership.  This chapter described the ideas of Dr. Randolph Tzu-Yu Yeh, Chairman of Lucent Technologies China Co, and his extreme emphasis on localization.  He believed in getting the local Chinese population involved as much as possible. 

The Chinese word 'guanxi' plays a huge part in the Chinese culture and is oftentimes the first word a foreigner learns.  This word means connections or relationships.  It basically is process by which each side seeks to establish who the other is, who the other knows, and whether they are able to deliver what they promise. Apparently this is one of the biggest secrets and it should be realized that the Chinese are intensively preoccupied with building relationships; it's said to almost be a consuming aspect of Chinese life.

All in all, the author has incredible experience in China and the executives he interviews are definitely the kind of people worth listening to. The book provides a detailed overview of the business aspect in China with the collective perspective of Fortune 500 company executives. Given the easy readability, I would recommend any business student to pick up this book and give it flip through.

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