Doing Business In China Case Study

In China, they don’t believe time is a barrier and don’t put much into deadlines like the Americans. Chinese see the relationship building as their driver of time, rather then getting tasks accomplished in a short period of time. The Chinese people generally believe that a considerable amount of time should be invested in establishing a general climate of understanding, trust, and willingness to help, in matters quite apart from the specific business issues brought to the table. Producing a satisfactory agreement in as short a time as possible may be one of their least concerns. Therefore, the non-task sounding stage of negotiation often witnesses much time spending in establishing rapport and getting to know their partners. The Americans grew frustrated with this approach at the start of the negotiation as well as when Mr. Brickley

The legal system is another issue to be considered when doing business in China because it is still viewed as being in a developing stage. Contracts, for example, are highly influenced by this difference. In the Chinese culture, contracts describe how relationships will be developed whereas in the United States, the contract is a binding agreement that spells out the specific terms, conditions and expectations from each party involved. As Company X pursues the possibility of expanding business to China, it must understand that the Chinese business culture does not place as much emphasis on the binding force of a written contract.

First of all, every little detail is necessary for a job applicant. The interviewer has to select specific questions in order to find the best applicant for the job.

This process has more significance in most countries except the Unites States. The approach in the U.S. is to get down to business straight away without wasting too much time on people. This is in stark contrast to the process in China where the focus is on building “Guanxi”, that is, the intricate and omnipresent network of personal relations. The U.S. approach can be a huge problem when doing business with China. The American efficiency interferes with the patient development of a mutually trusting relationship – the very basis of an Asian business agreement. This is what happened in the case study. Mr. Smith had done his research and was aware about the Chinese business methodology, but he did not think it was important to implement it. He was well advised by Mr. Tang. Mr. Tang, even though pointed out the significant features of the “American” and the “Chinese” way of doing business, did not stress enough to make Mr. Smith understand its significance. Mr. Tang also jeopardized his relationship with Mrs. Ming whom he had known for many years by not disclosing that the supplier was not a direct supplier.

The Chinese were reproachful about the discrepancies, as if the Canadians had been caught out. At lunch the Canadians quickly faxed Canada for specifications and explanations. The afternoon session was uncomfortable, although everyone was polite. Burton and Raines were a bit unsettled when a middle-aged woman suddenly burst into the negotiating room and whispered in the ear of one of the key Chinese speakers, who immediately got up and left the room. The Canadians received some of the documentation they needed by fax, and discussions resumed with the same questions being asked yet again. It all went very slowly. The Chinese appreciated the high quality of the Canadian product but worried they wouldn’t be able to fix the equipment if it broke down. They suggested – delicately, to avoid implying that they expected breakdown – that perhaps the Canadians could give them some help with maintenance training. The Canadians pointed out the expense and difficulty of keeping someone in their city for several weeks or months and expressed confidence that there wouldn’t be any problems the manual didn’t cover. The Chinese would be able to look after the equipment just fine.

Coming to the United States for college from China was already quite eye-opening to me. The study abroad program to Italy opened up my horizon even more – I designed a memorial hall dedicated to the Nanking Massacre during WWII, and the moment that a dozen architects coming from Chinese, American, Italian, and other European backgrounds got together and shared their intelligent thoughts on the project really struck me. There were so many cultural and intellectual sparks colliding, and I felt substantial potential there. This is why I decided to take a summer off and travel around China to see different architectures and educate myself. Being a resident of three diverse environments has enabled me to integrate into other cultures, discover how they understand buildings, and imagine the greater potential for our built environment.

     On the other hand, Chinese worker are centered on relationship. Chinese focus on relationship with others and live in the world of trust. Chinese trust people around them in their work place. Often, Chinese did not require signing contract in every agreement unlike American where all agreement must be in contract. By trusting others credibility, it helps create a friendly working environment and promotes intimate relationship among the workers. However, their main weakness is their business culture, where they are quiet and reserved which will reduce their credibility when dealing with American. They weakness also made them a weak immediate decision maker. As for interpersonal problem, Chinese are very concern about the good relationship, and hold it as their top priorities. Chinese would not do any agreement or trade that could harm their relationship with others. Lastly, Chinese are very polite and indirect. They try as hard to prevent the relationship from

Another value that is very important in Chinese culture is trust. Trust lies at the heart of successful long-term intercultural business relationships. Therefore, Oldtown employee must be prepared in gaining the Chinese Manager in China trust to deal with business. In China, the cross-cultural business relationships, trust plays an indispensable role since partners from different cultures don’t always have the same values or assumptions about how business works. When trust is developed, partners can navigate difficult issues over time by fostering a candid exchange of ideas, issues and agendas. Developing trust can significantly reduce what Westerners often complain of in their dealings with Chinese counterparts: unpredictable behavior and a lack of transparency. As a Chinese executive at Google put it, “In China, your success depends on how well a person trusts you.”

Hong Kong’s recent reinstatement as the world’s freest economy1 reconfirmed its claim as a central hub for international business travelers. Its exceptional shopping and fine dining opportunities also make it a major tourist Mecca. Hong Kong was especially a unique shopping experience for visitors from China mainland and the world. From glitzy malls to funky street markets, and trendy boutiques to traditional Chinese products stores and themed shopping districts, tourists could find everything to satisfy their shopping fantasies.

With China emerging as a global power in business within the last decade, knowing about doing business in China has become more important than ever. There are both many advantanges and challenges with doing business in China in this modern era, and understanding both sides of this coin is the key to being successful in China. Some aspects to keep in mind include the cultural barrier, the price of the work force in China compared to the United States, and have the “made in China” brand be accepted back in the United States.

China is becoming more westernised, particularly the ‘cosmopolitan’ city of Shanghai, where demand for Western products is increasing rapidly as disposable income rises in line with China’s strong economic growth. Michel’s wanted to establish a foothold in the market at an early stage to demonstrate a long-term commitment, which has been identified as essential to compete successfully in the Shanghai market (per Tim Harcourt, Austrade Chief Economist).

Risk is a core reason why other luxury goods companies, with an eye on a Hong Kong listing, have hesitated. Prada was bold in its listing strategy, and that has to be one of the biggest lessons. It is one thing to identify emerging Asia – and China in particular – as the sweet spot of luxury goods opportunity, it is another to act on it

LVMH’s brand portfolio is a catalogue of the finest things money can buy. Arnault said, “A Star brand is timeless, modern, fast growing and highly profitable.”[iii] LVMH has positioned its brands strongly in the luxury segment offering more than 50 different brands under their five core competencies. LVMH has been successful through all of their various brands in their portfolio giving them each their independence and creativity. “LVMH is well known for leaving much operational and marketing freedom to the various brands it owns.”[iv] “LVMH has done an excellent job of brand positioning, says Ben Cavender, senior analyst at China Market Research Group. It has succeeded in securing the particularly enviable position of gaining a following among the top percentage of China’s wealthy. As the financial crisis stretches on, LVMH customers in China still have money to spend.[v] “LVMH’s brand imaging, which relies heavily on pushing its European heritage, is so successful that it has benefited other brands by proxy, says Paul French, one of the founders of Access Asia, a group dedicated to tracking regional consumer and marketing trends. “Everyone hangs on the coattails of Louis Vuitton’s brand imaging in China.”[vi]

The last problem we highlighted concerns how to increase the number of customers in the mainland China market . First, we believe that the most relevant issue is a survey amongst customers on the Shanghai Tang brand perception and the 5 luxury brands in their top-of-mind, in order to analyze the competitors that the company has to face in the future.

On the other hand, the large market potential has drawn a host of luxury-goods companies to enter the China market, which makes the competition fiercer and fiercer. And it is troublesome for LV that there are plenty of fake goods imitating LV’s style prevailing in China, which are actually not likely to reduce LV’s high-end consumers, but would exert negative influences on consumers’ impression and awareness of LV.