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Strategies a Firm May Use to Overcome the Challenges in China

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Submitted By MaKaMaKa
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Strategies a Firm May Use to Overcome the Challenges in China

For successful interactions in the world’s oldest civilization expatriates in China need to be aware of the uniqueness of the culture by treating their counterparts with respect and adding value to their lives rather than just value enhancements on the firm level on way up the “value chain” ladder. This can be done by building up relationships to strengthen the “guanxi”.

It is evident that difficulties occur in a communist country where there is government interference, misallocation of resources and low freedom of doing business resulting in a high rate of corruption of 3.5 points in 2010 (Worldbank). There is not much to do about it but to be aware of it. It might seem like a paradox but Chinese consumers show increasing quality awareness. According to a report from Roland Berger Strategy Consultant (2010), the price of goods is no longer a “determining factor in a purchasing decision, [but it] is now just one of several factors alongside brand, quality and personal style.” Through offering an acceptable level of quality with perceived value a firm come overcome the challenges existent in the market.

With respect to quality of labour force there is much more to take into account. As already mentioned, there is a small proportion of dedicated employees. Nevertheless, this number is decreasing from 17% to 10% as employee’s age increases. It is about to motivate the young generation by offering them some form of continuing education, training and sufficient salary to get them more engaged in the company.

Prior entering the heterogeneous market and selecting an appropriate market strategy for each region the expatriate need to spend enough time on due diligence. Nevertheless, due diligence in China is not just about the western approach of “critical analysis that companies undertake...

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