Global Business Forum, BA 545

In her speech, I think she provided thoughtful insight about China.

I jotted down some comments and questions.

[economy&politics]
So far the world including Chinese people have been enjoying the economic rise of China, I think it’s good strategy for the world to promote and prioritize the economy in China.

On the other hand,
when Kristi referred to Airbus /Boeing case, she mentioned some political reason played a role.As we know, China has unique political position including one-party regime.

(I am wondering if how this political uniqueness will affect the business in China and relationship with other country in the long term.)

(If Kristi looks at this blog, I’d like to ask you how people in China see its government (policy))

[IP law]
She talked about Chinese government is trying to enforce IP law strictly recently though people wants further actions.
I am wondering if how big (painful) the cost for non-compliance with these laws is ? Is there any typical example or case for violation of IP?

[Environment]
According to research, approximately 26% of total global CO2 emissions are emissions from coal thermal power plants.Considering the fact China is still much dependent on coal, it’s true that China is a big potential renewable energy market. (Will it surely happen and when? Don’t count your chickens before they hatch?)

Also, when Kristi talked about steel lunch box and no disposable chopsticks, the life in China is changing toward wasting resources as they become rich.

(Can they make better environmental-friendly policy based on the lessons from other developed countries which had walked the same path in the past? or
Do people in developed countries have the right to stop Chinese people from wasting resources?)
(How do we persuade China to commit international obligation to reduce CO2 emissions other than technology transfer (Clean Development Mechanism)?)

China is engaging to the world business and political economy which is fascinating. As Kristi said, the rise of China can be fully perceived by what you have seen, how you feel and what you think about. I think, one thing needs to be mentioned here is that a country’s image is best represented by its people other than officially by its government. Thus, China’s rise is so impressive in the sense that Chinese people are getting more and more global-minded. For example, so many discussions about business opportunity, foreign market, world fashion, Olympics, and Wall Street Crisis recently. All there implies that Chinese are making themselves involved in the world market. In a broader sense, a member of global community. That’s really a big change

I was really interested in the social aspect of conducting business in China that Kristi spent some time detailing. For those that have spent time in China, or have been members of organizations or firms that regularly interact with Chinese firms, what are the differences in the way that we stress the need for relationships in business in the United States, and the way that it is necessary in the Chinese society?

Today’s speech was very interesting in my opinion and provided a pretty good insight in China.

First, I have some comments or questions concerning the environmental situation in China. Of course environmental issues and renewable energy are already important for china, especially if we think about the growing economy and the connected growth in energy demand. But I’m wondering if China is already willing to afford those expensive technologies (on a grand scale) instead of cheaper technolgies (e.g. coal). Are environmental issues really prevalent in the news and in politics or are the projects mentioned by Kristi (also look at the article) just a drop in a bucket? I would be interested in the relevance of environmental topics in China. Does the Chinese public notice these projects? What about the people’s opinion about a need for environmental protection and renewable energy? Do they care about these issues or are these issues much less relevant for them than other topics? Anyway, I’m convinced that environmental issues and renewables will become more and more important for China and thus companies in this field would be well advised to increase their effort and business in China.

Furthermore, I really enjoyed the report about Kristi’s experiences in China (that they all used bicycles instead of cars or the lunch boxes when she lived there in the nineties) and about the considerable change during the last years. But has this change only occured in the big cities in the east or also in other parts of China? Is life there still like it was 20 years ago, or do those parts also participate in the enormous change that can be observed in China? I suppose there’s a big difference, so how does the Chinese population handle these differences in their country and is this situation not dangerous if only parts of the population take part in the economic change? Are there any governmental plans / programs to improve the situation for the whole country?

Last, I’m really happy about the information and impressions that we can get about China through news, articles or discussions like in this forum thanks to the effort of journalists like Kristi and other persons who share their experiences with us. But what about the other way round? Is there much information in China about our countries, our issues and developments in our countries (for example in the news)? Does the Chinese government allow that people are informed about other parts of the world or are they still afraid of western influences on China? Would be interesting to get some opinions or experiences related to these questions.

Related to Kilian’s last point, regarding the censorship of the goverment (freedom of speech) Veena raised in the class today, I found related article below.

http://www.reuters.com/article/newsOne/idUSTRE49238X20081003?pageNumber=1&virtualBrandChannel=0&sp=true

I was very impressive by the argument that to be successful in Chinese market, you need to operate your business with love. Also, it seems that some companies set environment protection and social welfare improvement as their top priorities when they enter China market.
All of these are actually very nice ambitions. However, how it can be practiced in real life is still needed to be discussed.
Just as Heim said, the life standard in countryside and big city are very different. The people who live in Shanghai may pay a lot of attention to fashion news; they probably drink Starbucks, shop at Chanel, drive Mercedes Benz to purse high class life, while people who live in countries might still eager for food and clothing. You can easily promote the idea of self dignity to big cities’ people, but how can you promote the idea to the people who have to work hard in order to get some food. If to sell animal’s fur is the only way they know they can make money and live, will they care about how the animals will be?
On the other hand, the economic system is becoming stronger and stronger. People’s material life is becoming better than it was, their understandings of the importance of environment are growing. Even though cause related marketing might not work in these few years, it would be useful before long.

I’m very impressed by all the insights and the thoughtful questions! Let me try to answer them and give some additional resources.

Masahiro: The nature of China’s political system affects both business and relations with other nations.

Airplane orders in China are approved by the central government as part of long-term planning, so decisions are subject to political factors. For Boeing, those factors include U.S. visa policy, export controls and overall bilateral ties, including policy toward Taiwan. As we see in the Airbus case, another factor may be putting more manufacturing in China. http://blog.seattlepi.nwsource.com/aerospace/archives/149910.asp

China typically announces airplane deals during official state visits or high-level government meetings.

Many people I have met in China are not as concerned with ideology as with the effectiveness and accountability of government, including the level of corruption.

(One could argue that if people had a more direct say in government, they would be able to hold officials more accountable. Instead, anger reaches the boiling point and mass protests erupt, especially in the countryside.)

But for the most part, it seems that the majority of people see their opportunities expanding, individual freedoms growing and the standard of living rising. Yue Zhang makes a good point about how ordinary people are connecting as part of the global community.

Rather than political struggles between two parties or among multiple parties, in China the tension is often between the central government and provincial or local governments.
For example, central government policy has strengthened intellectual property rights and environmental protection in recent years, but often these policies are not carried down and enforced at the local level.

I think the best way to persuade any country to improve environmental policy is to show how doing so is in its own best interest. The best evidence for China to reform its environmental policy is the dangerously poor quality of its water, air and soil and the damaged health of its own citizens. The country can’t continue on its path without serious and permanent consequences, which would jeopardize further economic development and require more expensive and painful mitigation later.

Here is a great resource on environmental issues in China:

http://www.wilsoncenter.org/index.cfm?topic_id=1421&fuseaction=topics.home

I’m looking for some information to answer the questions on IP compliance. In the meantime, here is a resource on law in China: http://www.chinalawblog.com/

For Scott,

Relationships are important for business in both societies, but I think in China the concept of guanxi means something like “rights and obligations based on mutual trust,” a definition offered by Joe Borich that I thought was really accurate. I see business people in China spending a lot of time (and money) to build relationships (long conversations over the banquet table, years invested to get to know someone), which give them both a right to be helped and an obligation to extend help, as well as a kind of trust that is somehow deeper than a legal contract.

Here in the U.S., relationships like those formed in college or promoted on social networking sites, for example, are useful for making introductions or hearing about jobs, but I see them somehow as more casual and non-binding than the kind of guanxi networks prevalent in China.

Maybe others have thoughts on that…

On the intellectual property front, two interesting developments to ponder:

One is that the US has mixed results in its WTO case against China: http://www.reuters.com/article/politicsNews/idUSTRE4986W720081009

The other is that President Bush just signed the PRO-IP Act into law, elevating IP protection to a cabinet level position.
http://news.cnet.com/8301-13578_3-10064527-38.html

I wonder if frustration at the lack of traction in getting IP rights enforced in China contributed to this move. The film and recording industries do not seem to have had much success there, whereas software companies seem to be faring better.
http://www.bsa.org/country/News%20and%20Events/News%20Archives/en/2008/en-09172008-chinamtg.aspx

Kilian, I think environmental issues are becoming more prominent in the news, especially with the growing feeling that air and water pollution are making people sick (literally). In Xiamen, citizens staged a huge protest against a proposed chemical plant in their city.
http://www.danwei.org/environmental_problems/citizens_opinions_on_the_xiame.php

But environmentalists would acknowledge that they have a long way to go. Civil society groups are getting more involved. In one event this summer called the Green Long March, 1,000 students marched across 22 provinces in a youth conservation movement. http://www.futuregenerations.org.cn/en/

I’m fascinated by the concept of guanxi. I see the definition above by Joe Borich that Kristi posted but I still can’t quite grasp the ramifications.

I’d really appreciate some examples from anyone who can help me out here!

Thanks!
Veena

Guanxi and Chinese Business Style

Veena and Scott and Everyone –

I am posting two good articles on guanxi and Chinese business style on Blackboard – check them out at the top of the readings section. BTW, this might be a great topic for your final paper, if it interests you.

A video of Kristi Heim’s talk has now been posted on Blackboard as well – under the category of Speaker Slides/Info/Videos.

Veena, I would suggest that for practical purposes, business in China thrives on guanxi, and guanxi requires an investment of time and effort on a personal level. One small example: when meeting prospective partners here, you might talk with them formally in an conference room or in a cafe, and get right to the point. When meeting partners in China, it would be appropriate to get to know them socially over dinner in a restaurant or in the homes of mutual friends, and invest more time to build trust. I remember one such meeting with aerospace officials in Beijing and the cultural difference I had to overcome to for the sake of guanxi: sharing a meal with their favorite delicacy — duck tongues!

I noticed that Joe Borich is coming to speak to the class, so I bet he can give some more examples.

Kristi, Cate,

Thank you for the information on guanxi! I think I will choose this topic for my paper.

Best regards
-Veena

Veena,

Just call or email any time if you need further help.

Kristi

kheim@seattletimes.com
464-2718

From my experience during my previous work, Chinese people like red color and love to exchage gift with each other. I am thinking of that to connect my future business in China. Currently, the company which I have worked for is considering to build new factories in China, employing a lot of people. More difficult things are on how to manage the employees and motivate them to work hard. I have thought the point as a manager in my company. The speech inspire me to come up with some ideas on that issue. But I am still curious about what are the best benefit which Chinese employee like other than direct payoff. Long-time break? Incentives or stock options? Or what about giving them a chance to go abroad to study or travel? No preference?