One super chapter- seven that were.... a mixed bag
Written: Feb 06 '07
Product Rating:
Pros: One fabulous chapter worth the whole book, plenty of nuggets in the other chapters.
Cons: Only 20% of the book was super worthwhile- some articles very outdated.
The Bottom Line: Read Chapter 2 of this book and you will be much, much smarter about doing business in China. Above average rating only pulled there by Chap 2.
shannon's Full Review: Harvard Business School Press - Harvard Business R...
First off, an overall take on the book- it is comprised of eight essay-style chapters all with different authors, some with co-authors. The shocker (after I bought the book) was that while the publish date is 2004, some of the articles are from the mid-90's. This blew me away - not necessarily that they weren't brand new, but upon reading, it became apparent that a few major business events had occurred since then..... like.... the INTERNET!?! (Yes, I know that the Internet had been around longer, but it wasn't mainstream yet) I just have to believe that some more appropriate, cutting-edge and recent articles are either out there or begging to be written. I picked this up in an airport bookstore in 2006. HBS- PLEASE UPDATE this book- it's such an important and increasingly desired subject matter! OK, I'll stop ranting for the moment.
So, why am I interested in this book? I've been doing bits of business in China since 1994 and even went so far as to take Mandarin lessons for 6 months. Which means I can think I'm asking for a pair of chopsticks when in reality I may have asked to be hauled out back and pummelled with a mango.
I've had a number of Chinese companies as clients and business partners and have done some consulting as well. So, while I'm not super experienced, I'm not a newbie either. And I know that more knowledge and help doing business there is always needed. Thus the purchase of the book.
The chapters and mini-analysis are as follows:
Chapter 1- The Great Transition- by Kenneth Lieberthal and Geoffrey Lieberthal, October 2003. These authors basically make the point that China's economy is growing fast and that multinationals who pay attention have a great opportunity awaiting. Not terribly revealing. There is some good info such as the concept of making sure the chinese office of international companies isn't 'left out in the cold' and treated like a red-headed stepchild. With chapters like "The Politics of WTO Implementation", "Oversupply and Deflation", The constancy of Change", The structure of Political Power", etc packed into 30 pages, it is such weighty, high stuff that it feels like a crash course for multinational CEOs, economists-in-training or a journalist wanting the know the basics of the economic opportunities.
Chapter 2- The Chinese Negotiation- John Graham and Mark Lam, October 2003 THIS CHAPTER IS THE BEST in the book and worth the $19.95 price tag. This article is SO worth the read. In fact, I am loaning it to a friend and telling him to skip the rest of the chapters. If you do ANY business in China or even plan to do an extended vacation there, you WILL end up in a negotiation. This is your primer. It gives detailed information on how to successfully conduct a negotiation and goes so much deeper than most articles that give fairly shallow advice. The authors start with a quick analysis of the roots of Chinese culture to prepare the reader to understand the following "Eight Elements" of the negotiation:
1. Guanxi (Personal Connections)
2. Zhongjian Ren (The intermediary) This chapter fundamentally changed the way I do business in China now.
3. Shehui Dengji (Social Status)
4. Renji Hexie (Interpersonal Harmony)
5. Zhengti Guannian (Holistic Thinking)
6. Jiejian (Thrift)
7. Mianzi ("Face" or Social Capital)
8. Chiku Nialao (Endurance, Relentlessness or Eating Bitterness and Enduring Labor) I read this about 5 times and I still have trouble grasping it and putting it into action.
Get this book for this chapter alone. You'll be much smarter for it.
Chapter 3- The Hidden Dragons by Ming Zeng and Peter Williamson, October 2003 This chapter focuses on the 4 styles of hybrid Chinese companies emerging on the global market. The National Champions, the Dedicated Exporters, the Competitive Networks and the Technology Upstarts. The authors describe these new trends and how to work with and/or compete. This chapter will be handy for US and other multinational companies who compete on the global market. Outside of that group, this is a fairly esoteric read.
Chapter 4- Short-Term Results- The litmus Test for Success in China, by Rick Yan- October, 1998. I didn't read it. In the opening statement it said that "China may soon be one of the world's most important economies". Um, it has been for a while.
Chapter 5- Entering China, An Unconventional Approach- Wilfried Vanhonacker, April 1997. Again, very dated. It used to be that the only way you could have a business in China was through an EJV (Equity Joint Venture). But the rules changed in the 90's. Now the 'trend' is WFOE (Wholly Foreign-Owned Enterprises). It mentions that increasingly, Chinese/US JV's are not offering companies what they need to succeed. I was personally involved in a JV in Beijing in 1995-6 and it was a very difficult relationship and we ended up getting out of it. We could have used this article at that point, but it was wild and woolly time figuring it out. So- this is a very helpful article for people thinking of starting a business there and considering whether to partner or JV.
Chapter 6- To Reach China's Consumers, Adapt to Guo Qing, by Rick Yan (who wrote chapter 4) September 1994. People, this is 13 years old. No slam on Mr. Yan, it's just that this is an article on how to reach China's consumers pre-Internet. The concept of Guo Qing (gwar ching) is 'the country's special circumstances'. This means that if you are marketing consumer products to Chinese, it's worth reading. Otherwise, skip it. However, there is an interesting graph showing what foreign products have penetrated the market successfully. There are also sections on Targeting Key Cities and Strategies for Marketing in China that are worth the read.
Chapter 7- Trouble in Paradise- Katherine Xin and Vladimir Puck, August 2003. This is probably the most entertaining (if there's such a thing in a HBS book) chapter. It's a fictional case study about a guy who is GM of a US-based apparel company in a 50/50 JV with a Chinese manufacturer. The Chinese executives and local officials believe the JV is a success because it is employing people and doing a significant chunk of revenue. However, the US boss overseeing this guy is unhappy with 4% ROI and wants him to do major layoffs to increase profit. This gets VERY sticky in China, of course. So, there are 4 commentators who each do an analysis of the scenario. Eric Jugier, chairman of Michelin, China, Dieter Turowski, M&A from Morgan Stanley in London, David Xu, a principal at McKinsey in Shanghai, Paul Beamish, a director of the Asian Management Institute in Canada. This is a great and interesting read to get into the mind of people actually doing business in China who understand both the business and personal challenges that arise in a culture dramatically different from ours.
Chapter 8- The Forgotten Strategy by Pankaj Ghemawat, November 2003. I'll admit that this was the headiest chapter and for me the most difficult to see how to use the information. Not surprisingly, the author is a professor. I don't mean it as a slight, but it did feel like the teeter-totter was clearly on the academic side of the playground. The forgotten strategy is arbitrage- exploiting differences as opposed to similarities. How he boils it down- multinationals see globalization as replication of a standard template. The author talks about how to actually adapt to local differences and exploit those differences. He analyzes four areas to focus on in regards to arbitrage- cultural, administrative, economic and geographic. A well-written piece, but in my world, pretty arcane.
If you have ANY interest in working or doing business in China, buy this book, but save yourself some time and read Chapter 2. If you have a long plane ride, breeze through the other chapters.
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