Official Published Report

1. GGSB
Study
China
Residency
Report
2011
1

2. Table
of
Content
A.
MSc
Business
Development
Profiles
..................................................................................................................
5
1.
Class
Representatives
................................................................................................................................................
5
2.
Leadership
Team
.........................................................................................................................................................
6
3.
Project
Management
Team
....................................................................................................................................
8
4.
Event
Management
team
........................................................................................................................................
9
5.
MSc
Community
Team
...........................................................................................................................................
10
I.
Current
Issues
in
Chinese
Economy
.............................................................................
12
B.
Foreign
Direct
Investments
in
China
..............................................................................................................
14
C.
China’s
Outward
Foreign
Direct
Investment
...............................................................................................
14
II.
Business
and
Politics
.................................................................................................
16
A.
Overview
.....................................................................................................................................................................
17
B.
Business
aspect
........................................................................................................................................................
18
III.
Future
Trends
in
China
.............................................................................................
20
A.
Future
Trends
in
China
.........................................................................................................................................
21
B.
Trends
in
Transports
Infrastructure
in
China
............................................................................................
21
C.
The
Future
of
Energy
Consumption
in
China
..............................................................................................
22
D.
China’s
Future
Human
Resource
......................................................................................................................
22
IV.
Chinese
Business
Environment
.................................................................................
24
A.
General
Government
factors:
.............................................................................................................................
25
B.
Government
influence
in
companies:
.............................................................................................................
25
C.
New
environment
policy
in
China
....................................................................................................................
26
D.
New
requirements
for
FDI
in
China
................................................................................................................
26
V.
Chinese
Business
Practices
........................................................................................
27
A.
Overview
.....................................................................................................................................................................
28
B.
China
Business
Style
..............................................................................................................................................
28
C.
Guanxi
business
ethic
code
.................................................................................................................................
29
D.
Conclusion
..................................................................................................................................................................
30
VI.
Cultural
Issues
in
China
............................................................................................
31
A.
Overview
.....................................................................................................................................................................
32
B.
Cultural
Influences
in
Chinese
Business
.......................................................................................................
32
C.
Negotiating
in
China
...............................................................................................................................................
33
D.
Intercultural
Management
..................................................................................................................................
34
VII.
Company
Visits
.......................................................................................................
36
A.
Michelin
.......................................................................................................................................................................
37
1.
Overview
......................................................................................................................................................................
37
2.
Key
Findings
...............................................................................................................................................................
37
3.
Conclusion
...................................................................................................................................................................
38
B.
Decathlon
....................................................................................................................................................................
39
1.
Overview
......................................................................................................................................................................
39
2.
Key
Findings
...............................................................................................................................................................
39

3. GGSB
Study
China
Residency
Report
2011
C.
Sansi
..............................................................................................................................................................................
41
1.
Overview
.........................................................................................................
Error!
Bookmark
not
defined.
2.
Key
findings
................................................................................................................................................................
41
D.
Asobio
..........................................................................................................................................................................
42
1.
overview
.......................................................................................................................................................................
42
2.
Key
Findings
...............................................................................................................................................................
42
3.
Marketing:
...................................................................................................................................................................
42
4.
Business
Model:
.........................................................................................................................................................
43
5.
Future
Possibilities:
.................................................................................................................................................
43
6.
Current
Situation
&
Issues
for
Asobio
:
...........................................................................................................
43
7.
Customer
Loyalty:
....................................................................................................................................................
44
8.
Conclusion
...................................................................................................................................................................
44
E.
Aon
Hewitt
.................................................................................................................................................................
45
1.
Overview
......................................................................................................................................................................
45
2.
Arrival
of
the
Lewis
turning
point
....................................................................................................................
45
3.
Government’s
Policy
................................................................................................................................................
45
4.
Adjustment
of
Industrial
Structure
..................................................................................................................
45
5.
Conclusion
...................................................................................................................................................................
46
F.
Airbus
...........................................................................................................................................................................
47
1.
Overview
......................................................................................................................................................................
47
2.
China
Entry
.................................................................................................................................................................
47
Current
Situation
and
Industry
Issues
for
Airbus
in
China
.............................................................................
47
3.
Rising
Yuan
against
the
US
dollar
....................................................................................................................
47
4.
Sharing
Technology
................................................................................................................................................
48
5.
Competition
................................................................................................................................................................
48
6.
Government
Infrastructure
Investment
.........................................................................................................
48
G.
EDF
................................................................................................................................................................................
49
1.
Overview
......................................................................................................................................................................
49
2.
Key
Findings
...............................................................................................................................................................
49
VIII.
Strengths
and
opportunities
...................................................................................
51
A.
Overview
.....................................................................................................................................................................
52
B.
Tourism
industry
....................................................................................................................................................
53
1.
Strengths:
....................................................................................................................................................................
53
2.
Opportunity:
...............................................................................................................................................................
53
C.
Real
Estate
&Construction
industry
................................................................................................................
54
1.
Strengths:
....................................................................................................................................................................
54
2.
Opportunities:
............................................................................................................................................................
54
D.
IT
industry
.................................................................................................................................................................
55
1.
Strengths:
....................................................................................................................................................................
55
2.
Opportunities:
............................................................................................................................................................
55
E.
Human
resources
....................................................................................................................................................
55
1.
Strengths:
....................................................................................................................................................................
55
2.
Opportunities:
............................................................................................................................................................
56
G.
Key
learning
and
suggestions
............................................................................................................................
56
3

4. GGSB
Study
China
Residency
Report
2011
1.
...................................................................................................................................................................
56
IT
Industry
2.
Tourism
........................................................................................................................................................................
57
3.
Construction
...............................................................................................................................................................
57
4.
Professional
Services
..............................................................................................................................................
57
IX.
Weaknesses
and
Threats
for
Business
Development
in
China
...................................
58
A.
General
Challenges
.................................................................................................................................................
58
1.
Cultural
Implications
.............................................................................................................................................
58
2.
Increase
in
Union
Power
.......................................................................................................................................
58
3.
Employee
turnover
..................................................................................................................................................
58
4.
Environmental
Concerns
......................................................................................................................................
59
B.
General
Weaknesses
..............................................................................................................................................
59
1.
Management
..............................................................................................................................................................
59
2.
Credit
.............................................................................................................................................................................
59
3.
Quality
Control
..........................................................................................................................................................
59
4.
Inflation
........................................................................................................................................................................
60
5.
Government
Protectionism
..................................................................................................................................
60
6.
Regional
Diversity
....................................................................................................................................................
60
X.
Key
Industries
Analysis
..............................................................................................
60
A.
IT
....................................................................................................................................................................................
60
1.
Weaknesses
.................................................................................................................................................................
60
2.
Challenges
...................................................................................................................................................................
60
B.
Construction
..............................................................................................................................................................
61
1.
Weaknesses
.................................................................................................................................................................
61
2.
Challenges
...................................................................................................................................................................
61
3.
Weaknesses
.................................................................................................................................................................
61
4.
Challenges
...................................................................................................................................................................
62
C.
Tourism
.......................................................................................................................................................................
62
1.
Weaknesses
.................................................................................................................................................................
62
2.
Challenges
...................................................................................................................................................................
63
D.
Key
Learning’s
and
Suggestions
.......................................................................................................................
63
E.
Credit
Issues
..............................................................................................................................................................
63
1.
Human
Resource
Issues
.........................................................................................................................................
63
XI.
References
...............................................................................................................
65
4

5. GGSB
Study
China
Residency
Report
2011
A. MS C
B U S IN E S S
D E V E L O P M E N T
P R O F IL E S
1. Class
Representatives
The
class
representatives
for
the
2011
MSc
Business
Development
class
for
our
trip
to
Shanghai
and
Beijing
were
responsible
for
coordinating
the
group
and
helping
to
organize
activities
among
other
things.
With
a
large
group
of
34
students,
there
were
many
different
interests
and
personalities
that
needed
to
be
considered
in
all
that
we
did
from
our
trip
to
the
Great
Wall
of
China
to
the
food
we
ate
on
a
daily
basis.
While
there
were
no
major
problems
for
the
group,
the
Class
Reps
ensured
that
all
members
of
the
program
were
well
looked
after
and
sufficiently
involved
in
all
the
class’s
activities
throughout
the
trip.
The
group’s
cohesion
certainly
grew
over
the
length
of
the
trip
to
China
as
all
of
us
became
more
involved
in
each
other’s
lives
and
formed
friendships
that
we
know
will
last
forever.
The
Class
Reps
worked
to
organize
group
outings
while
in
China
to
various
restaurants,
markets
and
other
important
cultural
areas
and
made
sure
that
as
many
students
of
the
class
participated
as
possible.
Our
collective
experiences
with
the
various
presentations
that
we
saw
during
the
trip
were
highly
intriguing
and
served
to
promote
the
group’s
understanding
of
the
business
and
political
realities
of
China-­‐
something
with
which
not
many
of
the
students
were
familiar
with
prior
to
our
experience
in
China.
The
Class
Reps
trip
to
lead
the
way
in
asking
pointed
questions
to
the
presenters
at
the
companies
we
visited
during
the
trip
and
tried
to
represent
the
interesting
and
diverse
mix
of
students
in
the
class
as
well
as
possible.
In
summation,
the
trip
was
an
experience
of
a
lifetime
and
in
our
roles
as
Class
Representatives
we
were
thrilled
to
be
able
to
work
with
our
classmates
in
order
to
gain
a
better
understanding
of
China
and
of
one
another
during
our
time
in
the
Middle
Kingdom.
Class
Representative:
Yehya
El
Oueini
Deputy
Class
Rep:
Sandy
White
5

6. GGSB
Study
China
Residency
Report
2011
2. Leadership
Team
China
Residency
Program:
Students
Expectations
Survey
The
student’s
expectations
survey
was
conducted
on
the
flight
to
China
to
understand
the
participants’
individual
objectives
and
learning
expectations
beyond
just
visiting
a
new
country
and
adapting
to
a
different
working
environment.
To
put
it
in
one
word,
a
great
majority
of
participants
described
their
feelings
about
the
China
Residency
Programas
being
“Excited”.
Students
generally
stated
that
being
directly
involved
and
asking
questions
would
be
essential
to
improving
self-­‐confidence
and
leadership
skills
in
an
unfamiliar
environment.
Being
open
minded,
as
well
as
listening
and
observing
are
crucial
to
comprehend
Chinese
culture
and
business
practices.
It
is
also
a
vital
tool
in
understanding
the
differences
and
similarities
between
the
participants
‘respective
home
countries
and
Chinese
society.
In
terms
of
the
integrated
Live
Business
Cases
that
students
were
working
on,
the
majority
was
expecting
to
receive
significant
creative
input
during
the
China
Residency
Program.
All
students
stated
that
extensive
preparation
was
necessary
to
ask
relevant
questions
during
business
meetings
and
alumni
events.In
addition
it
was
crucial
to
develop
an
improved
analytical
approach
for
each
team’s
respective
content
of
this
report
and
the
Live
Business
Cases.
This
clearly
shows
that
students
were
well
aware
and
prepared
not
only
for
the
individual
business
meetings
in
China,
but
also
to
develop
the
content
of
their
Live
Business
Cases
and
this
report.
As
a
response
to
what
skills
students
are
expecting
to
improve,
the
vast
majority
stated
that
networking
and
building
strong
business
relationships
was
the
key
area
they
wished
to
work
on
(“engaging
with
business
people
in
a
new
cultural
environment”).
Testing
ones’
cultural
flexibility,
building
up
practical
intercultural
management
abilities,
and
strengthening
self-­‐confidence
were
the
key
skills
that
students
were
expecting
to
attain
during
the
China
Residency
Program.
6

7. GGSB
Study
China
Residency
Report
2011
A
majority
of
the
students
were
not
able
to
state
whether
or
not
they
would
like
to
live
and
work
in
China
in
the
future.
In
this
aspect,
the
program
provided
an
excellent
starting
point
to
assess
one’s
personal
preferenceon
location
for
the
future.
China
Study
Residency:
Student
Feedback
Survey
The
feedback
survey
conducted
by
the
‘Leadership
Mentors
Team’
aimed
at
deriving
a
general
feedback
from
participants
on
what
they
liked
and
disliked,
as
well
as
comprehend
what
actions
should
be
taken
to
improve
the
integrated
Study
Residency
in
future.
How
do
you
rate
the
China
Study
Residency
overall?
The
China
Residency
Program
was
truly
rewarding
for
all
participants,
which
is
reflected
in
the
overall
feedback
the
students
gave
and
insinuates
that
most
expectations
were
fulfilled.
The
key
findings
of
the
feedback
survey
show
that
students
were
particularly
satisfied
with
the
destinations
chosen
within
China
(Shanghai,
Beijing,
and
Tianjin)
and
the
organization.
Most
of
the
company
visits,
especially
Airbus
China
Limited
in
Tianjin,
and
the
intercultural
component
regarding
business,
as
well
as
leisure
were
very
satisfying.
The
program
provided
students
with
exceptional
knowledge
on
current
issues
surrounding
the
politico-­‐economic,
socio-­‐cultural,
and
business
environments,
which
helped
all
teams
in
terms
of
their
Live
Business
Cases.
The
challenges
faced
during
such
an
intensive
study
abroad
week
are
addressed
hereafter
with
clear
focus
on
what
the
participants
suggested
as
thethree
key
improvements
for
future
intakes
of
the
MSc
in
Business
Development
program.
First
of
all,
participants
felt
that
the
schedule
of
the
Residency
Program
was
significantly
compacted
due
to
the
transfers
between
company
visits
and
other
events,
stating
that
the
number
of
visits
should
be
decreased,
however
the
duration
of
each
should
be
increased
and
the
level
of
interaction
intensified
(e.g.
more
relevant
lectures,
business
cases,
team
assignments,
etc.).
Secondly,
participants
suggested
to
brief
companies
in
greater
detail
on
the
background
of
the
Business
Development
curriculum,
so
company
visits
can
provide
more
relevant
information
tailored
to
the
students
needs.
Finally,
several
participants
suggested
implementing
a
student
day
that
is
to
be
fully
7

8. GGSB
Study
China
Residency
Report
2011
organized
by
the
group
leaders
(Project
Manager,
Leadership
Mentor,
Event
Management,
Community
Manager,
and
Time
Keepers)
before
leaving
Grenoble.
Oliver
Bruehl
(Manager),
Julien
Picard,
Mantas
Butkus,
Olga
Belmares,
Erick
Villeda,
Michal
Christa
3. Project
Management
Team
To
accomplish
good
team
communication
within
the
members
of
an
organization
it
is
important
that
the
whole
organization
is
aware
of
the
philosophies,
ideologies
and
aspirations
that
prevail
in
the
collective
mind.
It
is
also
vital
to
understand
how
these
forces
affect
any
attempt
at
change.
This
year,
the
Business
Development
program’s
team
spirit
and
team
building
was
affected
a
lot
in
part
because
philosophies,
ideologies
and
aspirations
were
not
as
clear
from
the
beginning
of
the
year
as
they
were
at
the
end
of
the
year.
The
team
building
mission
was
not
as
clear
in
the
past
as
it
is
now,
which
led
to
identity
and
cultural
barriers
that
did
not
allow
the
students
to
feel
like
they
were
a
part
of
a
unit.
Thus,
the
PM
team
struggled
a
lot
to
drive
strategic
changes
that
allowed
for
improvement.
This
demonization
generated
a
vicious
cycle,
in
which
neither
the
PM
team
nor
the
class
wanted
to
be
involved
in
the
team
building
process.
The
PM
team
started
evaluating
on
an
ongoing
basis
the
beliefs,
policies
and
ideologies
established
within
the
class,
in
order
to
separate
the
beneficial
points
from
the
harmful
ones.
This
was
done
for
the
creation
and
implementation
of
strategic
change.
This
would
allow
for
positive
elements
to
be
used
to
build
future
teams,
but
this
can
only
be
accomplished
with
the
participation
of
every
individual
working
together
as
an
organization.
Another
important
element
appeared
second
semester.
The
element
worked
as
the
driver
of
value
systems,
beliefs
and
organizational
standards.
This
element
was
called
"ambition".
The
China
Business
trip
reflected
this
new
found
ambition,
which
gave
the
direction
and
possibilities
of
a
major
change
within
the
group.
The
individual
and
collective
aspirations
of
the
entire
group
within
the
new
organization
and
sub
organizations,
created
in
most
part
by
the
Class
Representative
demonstrated
the
desire
to
meet
the
goals
and
objectives
of
this
trip.
All
of
these
expectations
were
combined
into
a
strong
and
positive
set
of
values,
which
then
received
enthusiastic
support
from
the
members.
However
compromises
needed
to
be
made,
which
is
essential
for
the
8

9. GGSB
Study
China
Residency
Report
2011
effective
implementation
of
any
strategic
change.
The
China
business
case
was
the
instrument
through
which
we
could
all
fulfill
our
aspirations
as
team
members
of
a
single
community:
MSc
Business
Development
2010
-­‐
2011.
Each
team
created
plans
that
are
still
in
compliance.
The
PM
team
has
developed
an
important
and
clear
new
vision
on
how
team
building
works.
From
the
very
beginning
this
would
have
been
an
effective
strategy
to
follow:
To
develop
an
efficient
organization,
that
has
taken
into
account
both
the
aspirations
to
be
achieved
and
the
strategies
to
be
undertaken
by
setting
goals,
objectives,
sub
objectives,
etc.
Yazmin
Figueroa
(Manager),
Vasily
Sokolov,
Chandan
Mehta
4. Event
Management
team
The
MSc
Business
Development
Event
Team’s
responsibilities
include
establishing,
growing
and
strengthening
the
sense
of
community
within
the
class
through
festive
social
and
cultural
events
throughout
the
year.
Striving
to
actively
and
creatively
bring
our
community
closer
together
through
these
events
and
to
teach
one
another
about
our
cultural
and
social
traditions
is
also
part
of
the
mission
established.
The
months
preceding
the
international
residency
trip
to
China
served
as
a
preparation
period
for
exploring
and
understanding
what
we
as
a
community
wanted
to
gain,
socially,
culturally
and
personally,
from
this
extraordinary
and
once
in
a
lifetime
experience
abroad.
A
community
meeting
of
a
Chinese
language
and
culture
introduction,
kindly
lead
by
our
classmates
from
China,
was
organized
by
the
Event
Team.
This
was
done
in
order
to
be
able
to
arrive
in
China
with
a
more
developed
idea
of
what
to
expect
upon
arrival.
This
was
extremely
helpful
for
those
who
had
never
been
to
China
before
and
who
knew
nothing
or
very
little
of
the
traditions,
culture
and
language
beforehand.
This
event
brought
the
entire
community
closer
together
and
aided
the
Event
Team
in
defining
the
overall
needs
for
the
upcoming
trip.
Once
we
arrivedin
China,
the
Event
Team
came
together
to
decide
upon
class
outings
and
extracurricular
activities.
The
goal
was
to
include
everyone
who
was
interested
in
exploring
China
in
our
free
time
and
to
make
them
aware
of
all
of
the
social
and
cultural
options
available.
9

10. GGSB
Study
China
Residency
Report
2011
As
Event
Team
Manager,
I
actively
tried
to
include
everyone
in
the
community
for
the
leisure
events.
I
made
sure
that
no
one
got
left
behind,
everyone
had
the
destination
written
properly
in
Chinese
and
that
everyone’s
opinion
was
taken
into
consideration
as
plans
were
being
made.
I
felt
that
after
this
trip
our
sense
of
community
was
stronger
than
ever
and
that
the
Event
Team
did
a
great
job
of
bringing
everyone
together
to
explore
China’s
traditions,
entertainment
and
way
of
life
collectively.
Brittney
Hale
(Manager),
Joanna
Jamilly,
Lina
Rangel,
AndreyKostin,
AyoubMohebbi,
Jean
Sabounji,
Juan
Veliz,
Sergio
Padilla,
SuhasShubhakaran,TarekItani,
Vijay
Arikupurathu
5. MSc
Community
Team
The
Community
team’s
purpose
was
to
create
a
link
between
all
Business
Development
students
within
GGSB,
in
order
to
build
a
professional
network
based
on
the
common
interest
of
acquiring
business
development
expertise
andleadership
skills.
This
was
done
in
order
to
become
successful
professionals.
The
aim
is
to
integrate
the
community
in
a
sustainable
network
that
will
facilitate
knowledge
exchange
and
building
relevant
business
connections
for
its
members.
The
team
focused
on
the
implementation
of
tools
that
would
support
communication
between
members,
ensured
the
availability
of
content
and
the
liveliness
of
the
community.
In
concrete
terms:
a
Facebook
page
was
implemented
to
gather
all
the
Business
Developers
of
GGSB
and
provide
an
easy-­‐to-­‐use
communication
platform
Several
events
were
organized
in
collaboration
with
the
Events
Team,
such
as
the
Teambuilding
event
in
les
Alpes.
The
skiers/snowboarders
of
the
community
taught
the
other
members
how
to
ski/snowboard;
the
objective
was
to
strengthen
the
links
between
the
Community
members
to
improve
the
team
performance
The
residency
trip
in
China
was
an
essential
milestone
for
the
Community
team,
since
it
was
the
best
time
to
create
a
strong
links
between
the
Community
members,
through
group
activities
taking
place
beyond
the
academic
agenda
Further
events
are
about
to
be
planned
in
order
to
ensure
the
liveliness
of
the
Community
long
after
the
end
of
the
academic
year
10

11. GGSB
Study
China
Residency
Report
2011
The
Community
Manager
will
keep
in
touch
with
the
future
Community
team,
in
order
to
make
the
network
grow
and
to
develop
new
activities
The
Community
team
managed
to
start
a
network
for
all
the
Business
Developers
at
GGSB.
However,
the
most
important
part
is
yet
to
come:
the
mission
will
be
to
ensure
improvement,
development
and
liveliness
of
the
community.
Team
members:
Caroline
DELMAS
(Manager),
Peter
KRETSCHMAR,
Katherine
HUSHOVD,
Puneet
MALIK,
Wai-­‐Shan
YEUNG,
Flavia
CORTEZ,
Alejandro
CORDERO
11

12. GGSB
Study
China
Residency
Report
2011
I. C URRENT
I SSUES
IN
C HINESE
E CONOMY
Not
even
three
decades
ago
China
was
considered
an
underperforming
agricultural
economy.
As
of
today,
China
has
hosted
the
Olympic
Games
of
2008
in
Beijing
and
the
world
EXPO
exhibition
in
Shanghai.
It
has
become
a
major
manufacturing
superpower
and
it
would
be
false
to
think
it
wants
to
remain
only
that.
Chinese
companies
are
already
entering
high
margin
sectors,
not
only
achieving
increasing
added
value,
but
developing
to
become
a
brand
and
technology
superpower.
12

13. GGSB
Study
China
Residency
Report
2011
Since
initiating
economic
reforms
and
an
opening
policy,
China
has
achieved
an
average
GDP
growth
of
about
9.7
percent
per
annum
since
the
late
1970s,
with
exceptionally
strong
growth
between
2003
till
2007
averaging
about
11%
per
year.
China’s
outward-­‐
oriented
economic
policy
has
helped
to
transform
the
country
and
it
has
become
the
world’s
second
largest
economy,
the
world’s
largest
exporter,
and
second
largest
importer
(WorldBank,
2011).
Figure
1:
Source:
IMF,
2011
China’s
growth
has
been
investment-­‐oriented
and
industry-­‐led.
So
far,
the
investment
rate
has
been
higher
in
China
than
in
almost
any
other
country,
and
the
production
structure
is
geared
heavily
towards
industry
(Hansson
&
Kuijs,
2011,
p.
1).
FDI
in
China
has
been
the
catalyst
for
China’s
rapid
growth
and
rapid
increase
in
its
ability
to
expand
its
export
sector.
Among
the
developing
nations,
China
has
ranked
number
one
in
terms
of
FDI
made
abroad
(Mantzopoulos
&
Shen,
2011,
p.
5).
From
1994
until
2010,
the
average
inflation
rate
in
China
was
4.25
percent
reaching
a
historical
high
of
27.7
%
in
October
of
1994
and
a
record
low
of
-­‐2.2%
in
March
of
1999.The
last
reported
inflation
rate
was
5.4%
in
March
of
2011.
High
food
prices
were
the
main
driver
of
price,
largely
because
of
problematic
weather
domestically,
but
with
additional
impact
from
increased
international
food
prices.
China
is
still
a
lower
middle
income
country
with
complex
developmental
needs.
The
country
has
the
second
largest
number
ofpoverty
consumption
in
the
world
after
India,
but
the
economic
growth
has
helped
several
hundred
million
people
out
of
absolute
poverty,
accounting
for
over
75
percent
of
poverty
reduction
in
the
developing
world
over
the
past
20
years.
13

14. GGSB
Study
China
Residency
Report
2011
Currently,
the
government
vows
to
continue
reforming
the
economy
and
emphasizes
the
need
to
increase
domestic
consumption
in
order
to
make
the
economy
less
dependent
on
exports
for
GDP
growth
in
the
future,
but
China
likely
will
make
only
marginal
progress
toward
these
rebalancing
goals
in
2011.
Two
economic
problems
China
currently
faces
are
inflation
and
local
government
debt,
which
swelled
as
a
result
of
stimulus
policies,
and
is
largely
off-­‐the-­‐books
and
potentially
low-­‐quality
(CIA,
2011).
B. F O R E IG N
D IR E C T
I N V E S T M E N T S
IN
C H IN A
Since
the
1990s,
China
has
grown
to
become
one
of
the
largest
recipients
of
inward
foreign
direct
investment
flow.
As
the
major
manufacturing
hub
of
the
world,
it
has
achieved
to
aggregate
large
investment
sums
in
the
industrialised
sectors
of
its
economy.
Among
the
different
types
of
FDI
allowed
in
China,
the
main
three
types
are
Equity
Joint
Venture,
Contractual
Joint
Venture,
and
Wholly
Foreign
Owned
Enterprises.
Initially
Contractual
Joint
Venture
was
the
most
popular
channel
of
investment
into
China,
however,
in
recent
years;
Wholly
Foreign
Owned
Enterprises
have
increased
in
popularity
(Randall,
Bernard,
&
Minyuan,
2008).
In
2010
alone,
foreign
investment
in
China
increased
by
17.44%,year
on
year
reaching
105.735
billion
USD.
Asia,
U.S.,
and
EU
were
the
main
drivers
of
this
increase.
The
ten
countries/region
that
invested
the
most
are:
Hong
Kong
(USD
67.474
billions),
Taiwan
(USD
6.701
billions),
Singapore
(USD
5.657
billions),
Japan
(USD
4.242
billions),
USA
(USD
4.052
billions),
ROK
(USD
2.693
billions),
UK
(USD
1.642
billions),
France
(USD
1.239
billions),
Netherlands
(USD
952
millions),
and
Germany
(USD
933
millions).
This
shows
that
the
Chinese
economy
is
highly
dependent
on
foreign
trade
(MOFCOM,
2011).
C. C H IN A ’ S
O U T W A R D
F O R E IG N
D IR E C T
I N V E S T M E N T
Successful
or
not,
the
surge
of
China’s
foreign
direct
investment
overseas
has
attracted
the
attention
of
politicians,
business
leaders
and
academic
scholars
alike.
Lenovo,
TCL,
and
Haier
are
only
a
few
of
the
notable
headlines
in
recent
years.
As
mentioned
earlier,
14

15. GGSB
Study
China
Residency
Report
2011
China
has
become
one
of
the
largest
recipients
of
inward
FDI
since
the
1990s.
It
has
achieved
to
comprehensive
large
scale
investments
in
the
manufacturing
and
industrialised
sectors
of
its
economy.
However,
on-­‐going
development
of
outward
FDI
(OFDI)
flows
has
picked
up
surprisingly
slow
–
until
recently
(Randall,
Bernard,
&
Minyuan,
2008).
Yan,
Hong,
and
Ren
(2010)
stated
that
the
level
of
Chinese
FDI
is
determined
on
three
major
factors:
firstly,
the
level
of
state
ownership
in
organisations,
secondly
the
host
country’
ethnic
Chinese
population,
and
thirdly,
investor’s
financing
capacity.
In
total,
state-­‐owned
companies
account
for
more
than
half
of
China’s
total
outflow
of
direct
investments.
However,
several
new
policies
attempt
to
counter-­‐act
this
imbalance.
An
international
campaign
was
launched
by
the
Chinese
governments
with
the
slogan
“Made
in
China”,
made
with
the
world
(Ip,
2009).”
Since
the
2002
Chinese
Communist
Party’s
16th
Congress,
a
‘go
global’
strategy
was
announced
to
improve
the
overall
level
of
opening
up
the
economy.
Since
then,
OFDI
received
a
great
boost
from
creating
incentive
policies,
streamlining
administrative
procedures,
easing
capital
controls,
providing
information
and
guidance
and
reducing
investment
risks
(Gattai,
2010).
With
the
Chinese
Ministry
of
Commerce
introducing
major
support
programmes
for
Chinese
companies,
it
is
expected
that
the
hindering
factors
of
the
past
will
disappear
gradually
(Ebbers
&
Zhang,
2010,
p.
187).
Regarding
the
EU’s
27
countries,
Germany,
France,
Italy,
and
the
UK
are
the
main
targets
accumulating
the
largest
part
of
Chinese
OFDI
(Fontagne
&
Py,
2010).
Cai
(1999)
listed
four
motives
of
Chinese
OFDI:
natural
resources
(1),
market
access
(2),
technology
and
skills
(3),
and
access
to
financial
capital
(4).
Deng
(2004)
identified
two
further
motives
that
were
not
considered
at
that
time:
acquisition
of
strategic
assets
(5)
and
diversification
(6).
Both
points
are
valid
and
evident
in
recent
Chinese
acquisitions
of
e.g.
IBM’s
personal
computer
business
unit
through
Lenovo
(technology
related
acquisition)
or
the
Nanjing
Automobile
Group’s
acquisition
of
the
British
MG
Rover
Group
(brand
related
acquisition).
15

16. GGSB
Study
China
Residency
Report
2011
II. B USINESS
AND
P OLITICS
Inevitably
there
is
a
great
deal
of
political
issues
in
China
and
as
the
country
opens
up
more
to
the
rest
of
the
world
there
is
only
so
much
the
government
can
control.
Interestingly,
the
average
Chinese
youth
is
just
as
technologically
savvy,
if
not
more
so,
than
the
average
Westerner
and
this
has
played
an
important
role
in
the
dissemination
of
free
information
throughout
the
country.
16

17. GGSB
Study
China
Residency
Report
2011
A. O V E R V IE W
On
a
daily
basis,
Chinese
people
who
seek
open
access
to
information
on
the
internet
have
to
deal
with
censorship
quite
often.
However,
it
is
not
uncommon
that
as
soon
as
one
site
is
blocked
by
the
government,
another
one
appears
in
its
place,
and
thus
allows
for
an
almost
free
flow
of
information.
This
situation
creates
a
continual
game
of
cat
and
mouse
for
the
government;
where
the
government
often
comes
out
on
top.
With
this
in
mind,
many
observers
see
China
heading
not
in
the
direction
of
the
U.S.S.R.,
in
the
final
years
under
Gorbachev,
but
more
like
a
hybrid
of
America
and
North
Korea.
Since
the
1970’s,
the
country
has
begun
to
embrace
capitalism
more
than
anyone
could
have
ever
anticipated.
What
this
has
led
to
is
a
situation
where
China
is
no
longer
a
communist
country
in
any
real
sense.
Rather,
China
has
become
the
world’s
first
successful
free-­‐market
dictatorship.
Whether
or
not
it
can
withstand
the
growing
pressures
from
the
outside
world
and
from
its
own
people
in
the
coming
years
will
be
fascinating
to
watch
and
no
one
knows
how
it
will
play
out.
Corruption
is
a
major
issue
in
China.
Since
it
is
next
to
impossible
to
do
business
in
the
country
without
experiencing
a
great
deal
of
bureaucratic
red
tape,
many
secondary
methods
have
been
developed
to
circumvent
the
normal
business
process.
What
this
generally
entails,
by
most
accounts,
is
coaxing
state
officials
by
‘taking
care’
of
them
financially,
normally
in
the
form
of
bribes.
It
is
an
unfortunate
reality,
but
corruption
is
a
large
part
of
the
Chinese
way
of
business.
However,
this
is
not
to
say
that
these
crimes
go
unpunished.
By
all
accounts,
justice
is
swift
and
brutal
in
China,
where
people
are
often
made
examples
of.
A
common
practice
for
people
who
are
convicted
of
corruption
or
caught
taking
bribes,
are
short
sentences
of
around
one
month,
yet
are
occasionally
executed.
It
is
a
very
harsh
form
of
punishment
and
very
hypocritical
in
fact
when
it
is
well
know
that
corruption
is
so
rampant.
But
it
is
something
that
the
leaders
of
the
country
have
been
chosen
to
be
strict
about,
even
if
they
are
often
involved
in
the
corruption
themselves.
Although
millions
of
Chinese
continue
to
insist
for
more
openness
on
the
part
of
the
government,
the
chances
of
another
revolution
in
China
are
slim
to
none.
China
is
not
17

18. GGSB
Study
China
Residency
Report
2011
the
same
country
it
was
in
the
1920’s
or
1940’s
when
peasant
uprisings
overwhelmed
the
central
leadership
who
was
unable
to
counteract
them.
The
current
Chinese
government
is
now
one
of
the
most
powerful
in
the
world,
and
it
has
an
overwhelming
capability
to
monitor
its
citizens
to
ensure
that
the
central
government
maintains
control
over
every
aspect
of
the
country.
As
for
the
Chinese
people,
while
they
are
definitely
not
happy
about
being
governed
under
such
a
harsh
dictatorship,
as
long
as
the
nation
maintains
its
formidable
economic
growth
the
Chinese
people
will
put
up
with
it.
But
as
growth
starts
to
slow
down,which
inevitably
will
at
a
certain
time,
the
numerous
issues
under
the
surface
are
going
to
boil
up,
and
the
Communist
Party
will
have
to
address
them.
While
the
Chinese
government
is
aware
that
military
conflict,
particularly
over
Taiwan
and
North
Korea
is
possible,
the
Chinese
leadership
is
smart
enough
to
know
that
war
would
be
bad
for
business.
This
is
why
the
Chinese
are
charting
a
course
of
economic,
rather
than
military,
imperialism.
This
is
already
starting
to
happen
through
Chinese
firms
investing
abroad,
as
well
as
the
massive
amount
of
U.S.
treasuries
that
the
country
owns.
B. B U S IN E S S
A S P E C T
China’s
strong
economic
growth
in
recent
years
is
a
complicated
issue.
On
the
one
hand,
the
country
has
seen
astronomical
growth
in
the
past
decade,
but
whether
or
not
this
will
continue,
and
how
the
country
will
be
affected
politically,
is
still
uncertain.
The
Yuan
is
a
very
weak
currency
globally.
Even
though,
many
China
observers
would
argue
that
the
Yuan’s
weakness
is
largely
artificial,
having
been
pushed
down
by
Chinese
central
bank
policies.
If
at
some
point,
the
Chinese
government
either
decides,
or
is
somehow
forced,
to
value
their
currency
at
a
higher
price,
it
would
make
a
significant
impact
on
the
nation’s
economy.
In
the
West,
we
are
concerned
with
intergenerational
growth,
meaning
that
children
generally
expect
to
be
better
off
than
their
parents.
This
reality
in
China
is
very
different,
as
intergenerational
growth
is
a
thing
of
the
past.
What
is
important
now
is
intra-­‐
generational
growth,
meaning
that
people
have
to
do
better
than
they
themselves
did
18

19. GGSB
Study
China
Residency
Report
2011
merely
several
years
ago.
This
is
only
made
possible
through
the
rapid
expansion
of
China’s
economy.
Where
problems
may
lie
are,
the
fact
that
this
upward
mobility
is
not
possible
for
everyone,
and
that
may
cause
a
great
deal
of
inter-­‐class
hostility
as
well
as
a
huge
division
between
urban
and
rural
populations
in
the
future.
It
is
unlikely
that
China
will
experience
the
same
sort
of
financial
pressures
that
have
been
seen
in
the
West.
While
there
are
many
bubbles
in
the
country,
it
is
still
not
entirely
a
free
market
and
there
is
a
significant
amount
of
economic
regulation.
This
has
lead
to
the
government
not
being
as
loose
with
their
economic
policies
as
the
West
has,
and
this
has
been
an
important
backstop
for
any
Chinese
economic
crisis.
China
already
experiences
massive
growth,
so
has
never
been
a
need
to
loosen
lending
practices
to
an
extreme
degree
like
what
was
done
in
the
West.
But
beyond
that,
with
the
country’s
growth
rates
already
around
10%
annually,
China
is
attempting
to
‘cool
down’
their
economic
growth
so
as
to
avoid
any
sort
of
financial
collapse.
With
a
population
of
around
1.4
billion
people,
China
may
well
be
set
to
be
the
next
global
economic
powerhouse.
In
examining
the
past
50
years,
it
was
the
American
middle
class’
consumption
that
drove
the
global
economy.
The
American
and
European
middle
classes
were
very
large
consumers
and
spent
a
lot
of
money,
but
there
were
only
about
250
million
of
them.
Now
when
you
compare
that
number
to
China’s
middle
class
of
roughly
200
million
people,
and
it
is
growing
rapidly
every
day,
it
is
almost
certain
that
the
country’s
economic
power
will
eventually
come
to
surpass
the
West.
19

20. GGSB
Study
China
Residency
Report
2011
III. F UTURE
T RENDS
IN
C HINA
There
are
several
industries
and
technologies
that
have
been
bustling
in
recent
years
and
that
will
only
continue
to
escalate
in
thanks
to
the
rapid
growth
of
the
Chinese
population
and
theirdesire
to
improve
their
quality
of
life.
Industries
in
the
life
sciences,
such
as
medical,
IT
or
new
technologies
with
production
of
energy,
have
now
become
a
part
of
the
daily
thinking
of
Chinese
business
leaders
and
government.
20

21. GGSB
Study
China
Residency
Report
2011
A. F U T U R E
T R E N D S
IN
C H IN A
There
are
several
industries
and
technologies
that
have
been
bustling
in
recent
years
and
that
will
only
continue
to
escalate
in
thanks
to
the
rapid
growth
of
the
Chinese
population
and
their
desire
to
improve
their
quality
of
life.
Industries
in
the
life
sciences,
such
as
medical,
IT
or
new
technologies
with
production
of
energy
and
even
the
creativity
industry,
have
now
become
a
part
of
the
daily
thinking
of
Chinese
business
leaders
and
government.
In
the
following
pages
the
teamwill
concentrateon
three
major
challenges
that
the
Chinese
economy
will
face
in
the
coming
years:
Infrastructure,
Energy
consumption,
Human
Resources
and
finally
an
explanation
about
the
Creativity
industry.
B. T R E N D S
IN
T R A N S P O R T S
I N F R A S T R U C T U R E
IN
C H IN A
As
the
Chinese
economy
continues
its
growth
pattern,
many
industries
have
come
to
offer
great
opportunities
for
business
in
China.
One
industry
that
is
offering
high
levels
of
growth
combined
with
high
levels
of
capital
investment
is
the
Transport
Infrastructure
Industry,
because
the
long-­‐term
fundamentals
are
strong.
This
industry
offers
attractive
investment
opportunities
since
the
2009-­‐2010
Five-­‐year
plan
is
heavily
geared
towards
infrastructure
development,
ensuring
that
projects
in
the
pipeline
materialize.
Foreign
expertise
is
needed
in
niche
infrastructure
areas
such
as
maritime,
air
and
highway
infrastructure.
Another
example
is
the
airline
industry;
it
is
one
of
the
industries
that
shows
a
higher
short-­‐term
market
growth.
In
2014,
it
is
forecasted
its
market
volume
will
increase
70%
compared
to
2009,
representing
379.4
million
passengers.
This
represents
vast
opportunities
for
companies
that
focus
on
aeronautic
technology
and
material
suppliers,
services
etc.
The
transportation
industry
in
general
in
China
is
forecasted
to
grow
in
parallel
to
its
economy,
because
transportation
and
infrastructure
are
an
inherent
need
of
a
population
that
is
emerging
and
expanding
its
economy.
This
industry
comprises
thousands
of
direct
and
indirect
business
opportunities
to
invest
in
China,
offering
21

22. GGSB
Study
China
Residency
Report
2011
opportunities
for
diverse
companies
to
benefit
from
this
economical
and
industrial
context.
C. T H E
F U T U R E
O F
E N E R G Y
C O N S U M P T IO N
IN
C H IN A
The
Chinese
economy
will
have
a
dramatic
impact
on
energy
consumption.
This
will
lead
to
an
increase
in
the
demand
for
coal,
petroleum
products,
natural
gas
and
electricity.
Cleaner
energy
sources
such
as
natural
gas
are
sought
after,
due
to
green
initiatives
being
implemented
by
large
corporations.
This
in
turn
will
lead
to
natural
gas
as
being
the
fastest
growing
energy
sector.
In
2020,
it
is
expected
that
the
demand
for
natural
gas
will
increase
to
20
billion
cubic
meters.
The
estimated
growth
in
the
next
ten
years
is
expected
to
reach
9
to
10%
annually.
The
residential
and
power
generation
segments
will
be
the
largest
consumers
of
natural
gas.
By
2020,
China
is
expected
to
import
75
billion
cubic
meters
from
foreign
companies.
Coal
will
still
be
in
high
demand
because
it
is
the
cheapest
energy
source
available
in
the
Chinese
market.
According
to
the
International
Energy
Agency
the
demand
for
coal
will
rise
by
3.1%
every
year
for
the
next
ten
years.
The
projected
estimates
for
oil
and
electricity
are
minimal
in
comparison
with
the
former
sources.
The
IEA
predicts
that
oil
demand
will
increase
by
4
percent
and
energy
consumption
by
5
percent
in
the
next
decade.
Due
to
shortage
in
oil
supply
China
will
rely
heavily
on
foreign
markets
to
sustain
the
ever-­‐increasing
demand.
This
would
inevitably
drastically
increase
China’s
oil
imports
by
2020.
Several
estimates
indicate
that
the
figure
would
be
around
180
million
tons.
Due
to
the
pronounced
economic
and
population
growth
it
will
be
crucial
and
beneficial
for
China
to
explore
alternative
energy
sources.
D. C H IN A ’ S
F U T U R E
H U M A N
R E S O U R C E
There
is
an
abundance
of
human
resources
in
China,
and
labor
costs
in
China
are
much
lower
than
in
other
industrialized
countries.
China's
education
system
is
also
being
dramatically
developed,
thus
more
people
will
achieve
a
higher
level
of
education
than
in
the
past.
With
comparative
advantage
in
cheap
labor
cost
and
increase
of
human
capital
brought
about
by
education,
the
future
of
the
Chinese
economy
can
be
even
brighter
and
more
promising.
China’s
labor
force
will
increase
as
China
is
urbanizing
at
22

23. GGSB
Study
China
Residency
Report
2011
such
a
fast
pace,
changing
from
a
rural
and
agricultural
society
to
an
urban
and
industrialized
society.
Through
this
transition,
more
manpower
can
be
utilized.
Urban
infrastructure
will
be
further
enhanced
and
an
increase
in
urban
population
will
bring
about
higher
consumption
level,
thus
driving
the
economy
further.
The
presence
of
such
a
big
market,
coupled
by
the
increase
in
consumption
power
of
the
population
brought
about
by
urbanization,
will
create
greater
prospects
for
almost
every
industry.
The
market
will
become
more
efficient
and
industries
will
grow
even
faster
than
before.
Domestic
demand
for
goods
and
services
will
grow,
creating
better
opportunities
for
production
and
investment.
Now
we
will
conclude
with
a
briefexplanation
about
the
Creative
industry.
This
is
an
industry
that
has
caught
on
quite
quickly
with
the
masses.
This
field
has
seen
dramatic
growth
in
recent
years
and
is
continuingly
increasing.
A
major
factor
that
has
significantly
influenced
this
evolution
is
theencouragement
bythe
government
in
Chinese
Universities.In
addition,
the
government
has
allowed
and
supported
commercial
art
and
cultural
events
in
public
areas.
To
a
certain
extent,
the
change
in
values
has
also
influenced
cultural
characteristics.
For
example,
parents
are
now
starting
to
accept
alternate
forms
of
career
prospects
for
their
children.
More
and
more
youth
arepursuing
careers
in
creativity
and
are
achieving
an
acceptable
life
style
that
is
satisfactory
according
to
their
parents.
Finally,
through
firsthand
observation
and
experience
we
have
concluded
that
the
Chinese
culture
has
retained
a
sense
of
individual
identity,
while
exploring
modern
trends.
TheChinese
economy
and
society
will
continue
being
one
of
the
main
driving
forces
in
the
international
community.
Their
influence
and
reach
has
touched
every
facet
of
life.
“Beware
the
sleeping
dragon.
For
when
she
awakes,
the
earth
will
shake.”
(Winston
Churchill)
23

24. GGSB
Study
China
Residency
Report
2011
IV. C HINESE
B USINESS
E NVIRONMENT
This
section
of
the
report
is
going
to
present
the
factors
that
influence
the
way
China
behaves
in
the
business
environment
and
ethics.
Moreover,
this
information
is
sustained
by
the
experience
acquired
from
business
managers
from
different
corporations
during
our
residency
company
visits.
24

25. GGSB
Study
China
Residency
Report
2011
A. G E N E R A L
G O V E R N M E N T
F A C T O R S :
The
People’s
Republic
of
China
is
a
single-­‐party
state
governed
by
the
Communist
Party
of
China.
The
policy
of
future
developing
of
the
country
is
confirmed
by
five-­‐year
plans.
Therefore,
many
recommendations
were
made
for
developing
the
government
focus
of
China
for
the
next
five
years.
Main
Ideas:
• Orientation
of
economical
priorities
on
initial
demand
than
on
export
and
foreign
investment.
• In
the
national
twelfth
five-­‐year
plan,
for
environmental
protection
as
well
as
in
eleventh
government
giving
significant
attention
to
the
environmental
problems.
Explicitly
points
out
limits
of
CO2
emissions
• Stimulation
of
social
programs
in
both
cities
and
rural
areas.
• Reduce
gap
between
rich
and
poor
people.
• Change
the
model
of
developing.
• Stable
development
of
the
country,
this
way
the
economic
success
and
globalization
benefits
everyone
• Five-­‐year
plan
for
energy
industry
B. G O V E R N M E N T
IN F L U E N C E
IN
C O M P A N IE S :
China
is
still
mainly
focusing
on
eco
problems.
Moreover,
during
business
meetings
the
representatives
of
companies
declared
the
importance
of
having
a
personal
connection
and
relationship
with
the
government.
During
the
GGSB
alumni
meetings
at
the
hotel,
they
explained
how
the
government
has
changed
the
image
of
labor
from
cheap
manufacturing
to
high
tech
and
science
intensive
industries.
Therefore,
the
new
China
is
more
interested
in
gathering
technology
and
attracting
worldwide
companies
than
ever
before.
25

26. GGSB
Study
China
Residency
Report
2011
C. N E W
E N V IR O N M E N T
P O L IC Y
IN
C H IN A
• Raising
the
share
of
non-­‐fossil
fuels
in
primary
energy
consumption
to
11.4%;
• Reducing
energy
consumption
and
carbon
dioxide
intensities
by
16%
and
17%
respectively;
• Water
consumption
per
unit
of
value-­‐added
industrial
output
to
be
cut
by
30%;
• Cutting
the
discharge
of
main
pollutants
by
8-­‐10%;
• Increasing
forest
stock
by
600
million
cubic
meters
and
forest
coverage
to
21%.
D. N E W
R E Q U IR E M E N T S
F O R
FDI
IN
C H IN A
• No
polluting
• High-­‐tech
industries
• High-­‐end
manufacturing
• Environmentally
friendly
• No
energy
or
resources
consumption
• New
“green”
energy
26

27. GGSB
Study
China
Residency
Report
2011
V. C HINESE
B USINESS
P RACTICES
Chinese
business
practices
are
vastly
different
from
the
Western
methods
that
most
of
us
may
be
used
to.
But
with
the
Chinese
economy
opening
up,
joining
of
WTO
and
the
hosting
the
Olympics
in
2008,
many
Chinese
business
practicesare
now
beginning
to
align
with
more
conventional
methods.
27

28. GGSB
Study
China
Residency
Report
2011
A. O V E R V IE W
We
perceived
that
people
in
China
have
a
strong
national
and
culture
pride
thus
it
is
of
no
surprise
that
the
Chinese
tend
to
carry
out
their
business
according
to
their
beliefs
and
values.
For
example,
the
Chinese
places
a
high
importance
on
respect
in
society.
Hence,
at
the
workplace,
for
instance
Frank
T
Gallo
Consultant
of
AON
Hewitt,
provided
a
picture
of
how
the
Chinese
have
a
high
respect
for
their
superiors
and
their
co-­‐
workers.
Thus,
foreign
investors
would
need
to
recognize
that
that
they
need
to
be
respectful
when
talking
to
the
Chinese
during
business
meetings.
He
also
used
examples
in
the
workshops
of
Chinese
executives
that
are
prepared
to
become
managers.
On
the
other
hand,
Mr.
Gallo
inferred
that
if
the
Chinese
feel
that
the
foreigners
are
unknowingly
disrespectful,
the
foreign
company
might
not
be
able
to
strike
a
deal
with
the
locals.
On
the
other
side,
not
many
companies
understand
the
Chinese
business
environment.
In
China,
the
locals
are
very
concerned
about
building
up
good
relationships
with
their
partners
and
clients.
Therefore,
the
Chinese
will
put
in
a
lot
of
effort
and
time
to
socialize
with
their
clients
before
settling
on
a
deal.
Even
though
the
business
deal
might
not
be
successful,
the
Chinese
would
still
want
to
keep
that
relationship
strong
for
future
benefits.
B. C H IN A
B U S IN E S S
S T Y L E
An
example
of
Business
style
provided
by
the
manager
at
SANSI,
is
how
the
Chinese
prefer
to
work
with
someone
familiar
as
it
minimizes
any
disagreements
or
problems
that
might
occur.
Furthermore,
being
familiar
with
someone
would
allow
the
parties
involved
to
have
more
trust
with
one
another.
additionally,
as
foreign
investors
are
new
to
the
Chinese
market,
they
might
not
have
the
network
or
Guan
xi1,
to
gain
the
trust
of
the
Chinese
companies.
This
will
most
likely
create
complications
when
the
foreign
companies
are
trying
to
establish
their
enterprise
in
China.
1Establishing relationships with others is referred to as having “Guanxi” with people.
Guanxi (relationship)
28