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From research I learnt that China is not just one big country with the same features. This country has several different regions with many languages and each region has its own sub-culture, which makes them as different as the United States and Canada or South American countries. Chinese culture and history plays a big part in how the people think and act in their everyday lives. Due to a sour history about foreig�ers, China has learnt that not all foreigners are to be trusted. They also learnt that contact with foreigners could have huge consequences even it is with the best intentions.
The Chinese people generally do not like chaos. As we know Western countries can be close associated with the word chaos than China itself and might seem to be incompatible with China's way of thinking. There are currently ongoing conflicts among China and the western world on issues such as; human rights, trade, weapons and Taiwan.
It is not wrong to presume that in the long run China and the west will be competing for economic supremacy. Therefore there is likely to be continuing conflicts between the two parties in the foreseeable future. Whether or not these rumblings will get in the way of China's overall economic progress is yet to see. One will doubt it however this has continued over the past fifty years and China is just recently starting to progress.
First Obstacle that Western companies might face when entering China are;
Finding partners
Prior to entering China, a western company may encounter an initial problem of finding partners. They would think whether they should research in their own country first or go to China themselves to find potential joint partners. Successful business in China will depend on relationships whether it is with joint business partners, suppliers or even government officials. A small company will find it very difficult to go to china and find a joint partner straight away, as they would not be taken seriously. On the other hand Western companies have an opportunity to make use of bodies such as the China -Britain Business Council who has first hand knowledge and good reputation to help the company get noticed. Whereas if he company did I by themselves they would not be treated with the utmost respect. The key to find good business partners is to build on relationships is a 'pyramid' kind of way. A few contacts will lead to more contacts, which will help them to build better relationships all the way to the top.
Recruitment opportunities
In the rural areas of the country inhabitants cultivate food for themselves, which means there are mostly farmers outside the major cities like Beijing the capital, which is increasingly becoming more westernised. As a result 150 million migrant workers are therefore moving from rural areas to the cities looking for employment mainly to work in factories. This venture or change in the Chinese people attitudes to work can only help the Chinese market to be the biggest in the world. As a result there is mass unemployment in Beijing as millions of people are now looking for work in the capital. This could be beneficial to any Western company setting up in the country, as the locals could be willing to work for low wages, which will save on human resources costs. There are also many university graduates who generally will not work in mediocre jobs for mediocre wages. However due to their unavailability to find better jobs they will settle for low wages. At the same time Western companies can also enjoy great expertise for little money.
The Chinese 'Labour law' allows western companies to decide for themselves the timing and means of recruiting staff. These companies can hire staff by using;
Employment Agencies
The majority of recruitment in China is through employment agencies. These are completely legal and are run under the social security department as well as the personnel department. The opportunity of this for a western companies is that they are almost guaranteed qualified workers as these employment agencies are run by organisations. Head hunting firms have also emerged in China, as there is a constant need for good workers by western companies to improve production. A company can require these agencies to provide proof of its legal status and an approval certificate issued by the labour department. This is mainly to ensure high quality agencies workers.
Western Companies planning to hire staff through fairs and agencies should consider various factors such as whether these events are well organised and the reputation of the organiser.
Recruitment problems for Western companies in China
Currently there is an 80% annual turnover of employees in the country while a 25% staff turnover is ordinary. This is mainly due to the following factors; Chinese employees may feel some sort of loyalty to Chinese companies and no to Western companies. Therefore they might find it hard to leave their local company to work for a western company. There are more western companies setting up on china thus providing higher salaries, which are encouraging Chinese managers to become more mobile i.e. Change their jobs if the price is right. Another reason why there is such a high turnover of employees is because Chinese values are breaking down and society is becoming more fluid or westernised which the employees have to adapt to. However China on a whole is currently reforming its laws to encourage foreign investment, which will help both the companies and the people of China.
Multinationals are now employing western trained Chinese because they are bilingual and have first had experience and knowledge of both cultures. This change in the labour market is giving rise to higher salaries, which the Western educated Chinese is demanding. Due to this Chinese educated managers are not given a chance to prove themselves as people who studied in mostly in the USA or in Britain take these jobs.
China's Infrastructure
The infrastructure of China remains generally poor with exceptions in designated cities such as Shanghai where it is becoming more westernised. On a whole China's poor infrastructure could cost dearly and could discourage any western companies from doing business in China. The quality of transport in China remains poor and is not up to scratch to western standards. Poor infrastructure could easily hamper the distribution process, which will eventually mean loss of sales. Western companies can solve this problem by getting a joint business partner such as a reliable supplier to provide raw materials in several towns, which will prevent the company from transporting in long distances.
Political Opportunities and Threats in China
Although China is vastly moving to a free market economy, beaurocrats and government officials still hold tremendous sway over economic development. To succeed in this market companies often establish close ties with government officials. As a result these companies gain tax breaks and gain access to the best university graduates. If Western companies ignore the government they could face delays and legal barriers. This is similar to unions, which often requires firms to get a lot of handshakes and an instinctive feel to make things happen. In this market success mainly depends on who you know rather than the nature of the firms business and whether or not there is demand for their product or service. Sisto�s Phoenix learnt this and use it to their advantage by plotting a route to the political level by being in the company of government officials. By establishing close relationships with the Nanjing province the company now receives rent subsidies, pay no income tax as well as having access to some of the brightest computer graduates from Nanjing University. Furthermore the government installed railways, telephone lines which helped the company to develop in this area of China. In the end Sisto�s Phoenix gain access to hardworking people as well as promising new customers.
China is one of the of the world's few growth markets for technology products such as PC's, even though the market is down from 2000 when consumer shipments of PC's rose to 82 percent. Due to this fact, shipments of desktops, notebooks and servers are expected to rise substantially.
Many Western companies often gave up on the opportunities in the Chinese market due to the difficulties they face. These hardships often arrive through the lack of understanding about the Chinese people, the language, and traditions and how bureaucracy works.
There is also a lack of safety Legislation in the workplace, which result in a dangerous working environment for workers. Workers are often working without the right equipments and end up with missing limbs due to the dangerous working environment. Western companies will be faced with the burden of making the production process a safer place for workers in China. Another problem that Western companies face is that the Chinese government heavily regulates the sectors that foreign companies can enter and the forms of investment they can make.
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