My Views and Observations on China Essay

The class trip to China was very enlightening, and I learnt many interesting things about International businesses and relations in China during my visit. Some of these surprised me, as they were issues that I hadn’t really considered before my visit. When I left for China, I knew that the Chinese market was one of the fastest growing economies in the world along with India, but I had no idea that it would be so difficult for International companies to get involved in doing business in China. This is something that I only learnt during my trip. However, despite the delays and possible problems that an International Company may have to face, I was still very impressed with the country and I believe that the potential for growth would still outweigh the issues involved. Therefore I would be very interested in doing business in China, and in fact, I have already started looking into doing just that. The first thing that stood out the most in every talk and site visit we made, was just how much the Chinese Government influences businesses in Mainland China. As a communist government, they are very influential, and have a say in almost every business practice that goes on, so much so that the economy is directly related to the government. Dr. Jian Yuan and Dr. Sun were both very outspoken on this matter during their presentations. They both mentioned that this much influence by the government could be the source of problems like labor laws, policy problems and an unfair distribution of wealth. Labor Laws in China are very strict and it is difficult to lay people off. However, the cheap cost of labor in China could also be seen as an advantage for foreigners, who can therefore lower their production costs much more than if they were using labor from their own country. These low labor costs are a direct result of the huge population and the sheer numbers on available unskilled workers. Another problem that can affect foreign businesses due to the influence of the government is that, as a communist government, they have complete control of information sources. This means they control not only the media, but also the internet, and companies are unable to do business via websites etc. However, this is only a problem for some businesses, and your chosen business would have to take this into account before you made your decision. In Hong Kong however, there is complete transparency and therefore this is no longer a problem if you decide to work there. Dr. Sun said that he realized that the government was omnipresent and that Nationalism is the key to understanding the Chinese mentality, but hopes that in the future there will be a change to a multi party system as there is in Taiwan. He also said that since 1979 there have been radical changes in China, and that it is getting better every day. Chinese people have also started to look toward the government to change its policies, and therefore I think that if you are able to get started in China, despite the current problems, you may be able to expand in the future if the changes continue the way they have been going and China becomes a more free country. Currently, it is quite difficult for an international company to become involved in the Chinese economy. From my interview with Mr. Jonathan Siboni, the CEO of DEAL (Developing Euro-Asian Links), I learned that there are only three ways that foreigners can set up a company in China. The first being that you only set up a representative office in China, and do not actually do any business such as retail in China. The second possibility has only been available since 2006, and that is to set up a WOFE (Wholly Owned Foreign Enterprise). This is advantageous for foreigners, but there are limitations set by the government. The final possibility is to set up a Joint-Venture, which is when a foreign company and a Chinese company join together to set up a company and then split the profits between themselves. In some sectors, this is still the only form of company that foreigners can set up, and in my opinion it is the best option. The principle of Guanxi, or relations, was discussed often by many speakers. This is the theory that it is vitally important to form good relations with other people in order to be successful at business in China. Another topic that was often discussed, was that the culture is very important to the Chinese and that you would have to fully understand it if you ever wanted to succeed in the Chinese Market. By forming a join-venture with a pre-existing company, Chinese members of the joint-venture would be available to explain the cultural intricacies that are vital to the business, and they would also already have formed many valuable guanxi (relations), that would help your company immensely. The Chinese people themselves were another factor that influenced my decision to do business in China. The huge population is larger than that on America and the EU combined and this means there are a high number of unskilled laborers out there that are looking for jobs and training. They are very hard working people and they take pride in their work and want to do a good job. At the shoe and textile factories, we saw that the average working hours were from 8am to 8pm, and all this hard work would definitely increase production. The visit to Ground Floor Engineering also showed that they are also very fast workers, which would also positively influence production. The huge population also means that there is the possibility of an enormous target market and a huge demand for your product. The Wal Mart that we visited, catered for a market of 7 million people per week, and because of this, had sales figures in 2006 of US $ 747 Billion. This large number of consumers is a definite draw card for anyone wishing to invest in China. There are also problems with the people. One of which is the huge language barrier, as only a very small population understands English, or any language other than Mandarin, and even fewer are able to read it. This could be another area, where having a Chinese business partner who understands the language would be very helpful. However, with training and careful selection of workers, this is not enough of a problem to put me off doing business in China. If you were doing business in Hong Kong, it also becomes less of a problem, as people here are more highly skilled and many are fluent in English as a second language. This is in part due to the fact the Hong Kong used to be a British Colony. Question 2: The Chinese Culture is very different from any other culture that I have ever experienced before, and although I did notice a few similarities with my home country of Morocco, I mainly realized just how different the cultures of both America and Morocco are to that of China. This was something that I had not been expecting to such a large degree. Firstly, I noticed that the Chinese people are very proud of themselves, their country and their history, and this influences not only everything that they do, but also their relations with foreigners. They are also very sensitive to the actions of others and easily offended by small things that you wouldn’t have thought they would be. For example, when sharing a meal with a Chinese person, it is considered polite to always leave something on your plate uneaten, as this indicates to them that you have eaten enough. If you eat all the food that you have been served, they take it to mean that you are still hungry, and this could be insulting to them. This is in direct contrast to all other countries I have been in, where it is considered polite to eat all that you have been served. They also never forget their history, and still think about being defeated by the European Countries and by Japan. This may affect the way that they deal with people from other countries and culture. Another thing that I noticed is that structure and hierarchy is very important to the Chinese. The CEO of Days Inn told us that in a company or business, everyone knows exactly who is ranked above them in the business hierarchy, and insubordination is not tolerated. In meetings, it is polite and expected that people enter the boardroom in order of Hierarchy, with the most senior and important people entering fist. Seats at the table are also according to hierarchy, with the boss or host sitting in the middle of the table, facing the door. This is very different from American culture, where they try to promote a sense of equality and camaraderie between members of the company. For instance, while you know who you report to and who you are supposed to being taking direction from, there is a sense that you are both equally important to the company and that you would be able to speak freely and openly with your boss. The importance of Gianxi (relations) in China was surprising to me. In all countries, it is important to have good working relations with those around you and with your suppliers and clients, but in China, it is impossible to do business without them. The CEO of Days Inn told us that he needed 50 licenses from the government in order to start the hotel, and that if he didn’t have good Gianxi relationships with influential people, this process would have taken much longer, and may never have gotten through. This seems to follow the old saying â€Å"It’s not what you know, It’s who you know† whereby in American culture, people believe that it’s more important that you are good at your job, and if you are it shouldn’t matter who you know, or what important contacts you have. Rather, there should be equality and you should succeed because of your skill. The idea of â€Å"Face,† or Mianzi, being important to a business or individual was also very new to me. The CEO of Days Inn told us that giving face is a mark of personal pride and is the basis of an individual’s reputation and social status. Losing face is very embarrassing and it is vital not to lose face in the business world if you want to succeed. A public insult or chastisement is a way of losing face, and even something as small as contradicting someone in front of someone else, or declining an invitation on a weak pretext can lead to a loss of face. This idea goes hand in hand with the idea of Gianxi, as a person who has lost face and has a bad reputation, would have a very hard time forming relationships with people that could help there business. Another cultural difference between the East and West is that Westerners are much more straight forward and frank with you, whilst the Chinese are much more conservative and it is difficult to know what they are really thinking. A Chinese person will never tell you â€Å"No† as they think it is rude, and this makes it very difficult to determine whether someone you are working with really agrees with you or just doesn’t want to offend you. Saying â€Å"No† to someone can lead to a loss of Mianzi (face) and therefore someone will often say â€Å"inconvenient† or â€Å"difficult† rather than saying â€Å"No. † This is very different from the West, where people are told to say what they think. Another aspect of Chinese culture is that they hate confrontation, and will generally go out of their way to avoid it, even just in a business setting. They also dislike doing business with strangers and formal introductions are necessary before they will do business with you. This is again where Gianxi become necessary, and is very different from American culture, where they will do business with anyone, as long as it will benefit their companies. At the silk market, evening market and ladies market, I was surprised to find a similarity in culture between China and my home country of Morocco. In both countries, bargaining is an important part of the culture. It is a tradition, and people enjoy it and are not really happy to shop without it. They like to feel that they are working to get the best price, and take it as a sign that they are using their skills to get the best price. It is almost like a game to them, and if someone doesn’t bargain, they get disappointed. This is the same in Morocco, where markets or â€Å"souks† are a place where people come together to shop and bargain for good deals. The biggest difference in the cultures between China and other countries that I noticed was when we went on a visit to a local village. Here, the people were mostly isolated, and had little to no contact with the outside world, and very little knowledge of westerners. They were also poorly educated, and had mainly spent the majority of their lives living in the Village, involved in local farming. They were very poor and sometimes only had gas and water twice a week. They also ate and behaved very differently from the more civilized and educated people in Beijing. When we arrived, they looked at us like they had never seen people like us, and wanted to touch and feel us to see what the differences there were between us and them. The visit to the village also brought into light the class issue that is part of the Chinese Culture, and how people are treated differently according to level of education, class and their jobs (Master/Servant relationships). They don’t seem to think that there is anything wrong with differentiating between people in this way, and see rural people as being below city people. This is different from the West, where people try to think in terms of equality and equal opportunities no matter your race, station in life, gender or class.