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YOU ARE WELL ADJUSTED IN CHINA(1)

AVDS -1-. YOU ARE WELL ADJUSTED IN CHINA(1). INSTEAD OF ASKING SOMEONE’S AGE YOU ASK WHAT ANIMAL THEY ARE YOU PREFER TO EAT SPAGHETTI WITH CHOPSTICKS YOU CALL OTHER FOREIGNERS “LAO WAI” YOU THINK KARAOKE ON A SATURDAY NIGHT IS FUN OTHER FOREIGNERS SEEM STRANGE TO YOU. AVDS -2-.

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YOU ARE WELL ADJUSTED IN CHINA(1)

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  1. AVDS -1- YOU ARE WELL ADJUSTED IN CHINA(1) • INSTEAD OF ASKING SOMEONE’S AGE YOU ASK WHAT ANIMAL THEY ARE • YOU PREFER TO EAT SPAGHETTI WITH CHOPSTICKS • YOU CALL OTHER FOREIGNERS “LAO WAI” • YOU THINK KARAOKE ON A SATURDAY NIGHT IS FUN • OTHER FOREIGNERS SEEM STRANGE TO YOU

  2. AVDS -2- YOU ARE WELL ADJUSTED IN CHINA(2) • YOU BRING YOUR OWN TEA IN A USED NESCAFE JAR TO THE OFFICE • YOUR BODY NO LONGER ACCEPTS DAIRY PRODUCTS • YOU THINK NOTHING OF TAKING THE HIGHWAY –ON A BIKE • YOU ASK FOR A DISCOUNT ON EVERYTHING • THE LAST TIME YOU VISITED YOUR FAMILY YOU GAVE THEM YOUR BUSINESS CARD

  3. AVDS –1- CHINESE CULTURE (1) CULTURE IS THE COLLECTIVE PROGRAMMING OF THE MIND WHICH DISTINGUISHES THE MEMBERS OF ONE GROUP OF PEOPLE FROM ANOTHER THE DIFFERENCES WITHIN THE NATIONS ARE MUCH LARGER THAN BETWEEN THE NATIONS ---Gerard Hofstede AMERICANS (EUROPEANS) AND JAPANESE (CHINESE) ARE 95% THE SAME AND DIFFERENT IN ALL IMPORTANT ASPECTS --- Fujisawa • POWER DISTANCE - HIERARCHY VS CHAOS • tend to be comfortable with being told what to do • reluctance to accept responsibility and make decisions…… • often defer decisions to a higher level of authority

  4. CHINESE CULTURE (2) INDIVIDUALISM vs COLLECTIVISM minimally integrated limited trust RISK VS UNCERTAINTY AVOIDANCE guanxi group and relationship conscious - care more about what others think harmony and stability are essential communicate indirectly - avoid conflict by pretending to change their mind when they have not done so AVDS –2-

  5. CHINESE CULTURE (3) AVDS -4- • ACHIEVEMENT vs ASCRIPTION • age and education • respect for tradition and knowledge • moral example • maintaining the dignity and respect of others and oneself • awareness of face... giving and maintaining face • avoiding someone to lose face - responding with humility • when given recognition • demonstrating an interest in and recognition of each • others culture • CONFUCIANISM • universalism vs particularism • long deliberations vs simple mindedness • belief in the existence of a correct answer [or one truth]

  6. ORGANISATION CHARACTERISTICS AVDS - 5-

  7. ORGANIZATION W vs C AVDS - 6-

  8. LOCAL ORGANISATION AVDS -7- FIT WITH PRODUCT AND CHINESE MARKET ADAPT AND TRAIN ORGANISATION IF NEED A PARTNER LOOK FOR A STRATEGIC FIT FUNCTIONAL ensure capacity utilisation respect local contributions DIVISIONAL remain within area of expertise avoid forced interventions to global efficiencies MATRIX local empowerment

  9. MANAGEMENT STYLES TRADITIONAL HUMAN RELATIONS HUMAN RESOURCES DIRECTION BELONGING SELF FULFILMENT CONTROL RECOGNITION CREATIVITY SUPERVISION USEFULNESS DEVELOP POTENTIAL SIMPLE TASKS CONSULTATION CHALLENGE LIMITS ENFORCEMENT SOME SELF-CONTROL RAISE TARGETS FAIRNESS SHARING SELF-DIRECTION OBEDIENCY CO-OPERATION WORK SATISFACTION DIRECTIVE- DIRECTIVE- PERMISSIVE - AUTOCRATIC DEMOCRATIC DEMOCRATIC AVDS –8-

  10. AVDS -9- MANAGEMENT STYLE C vs W • CHINESEWESTERN _ • INTENSELY PERSONAL SUPERFICIALLY PERSONAL • LOYAL TO LEADER LOYAL TO COMPANY • STRATEGY FLEXIBLE STRATEGY IS DOGMA • ORGANISATION ADAPTS TO LEADER ORGANISATION IS FIXED • REPORTING TO LEADER REPORTING TO SUPERIOR • VERTICAL COMMUNICATION (SILO) LATERAL COMMUNICATION • LEADER DECIDES ON MAJOR AND DECISION POWER DELEGATED • MINOR ISSUES • INTENSE NEED FOR STRENGTHENING TIME IS LIMITED • RELATIONS

  11. AVDS -10- MANAGEMENT STYLE - HYBRID • LOYALTY TO COMPANY • STRATEGY ADAPTED TO CHINA •  ORGANISATION CLEAR (TARGETS) AND EMPOWERED NO AMBIGUITY •  EXTENSIVE REPORTING (INTRANET) – CONTROLS •  MORE PERSONAL TIME THAN IN THE WEST • NEGOTIATION ON PRINCIPLES • LEADERSHIP DIRECTIVE – DEMOCRATIC

  12. STRATEGIES DEFENDER PROSPECTOR ANALYZER PRODUCT- LIMITED BROAD, CHANGING STABLE AND CHANGING MARKET COST EFFICIENCY INNOVATIVE ADAPTIVE STRATEGY ECONOMY OF SCALE RESPONSIVE to MARKET PLANNED INNOVATION SECOND IN MARKET WITH IMPROVED PRODUCT R&D PROCESS / PRODUCT PRODUCT DESIGN PROCESS / PRODUCT IMPROVEMENT MARKET RESEARCH ADAPTATION PRODUCTION HIGH-VOLUME FLEXIBLE, ADAPTIVE DEVELOPMENT TO LOW COST SPECIALISED PROCESS EQUIPMENT /PROCESS PRODUCTION ORGANISATION FUNCTIONAL DIVISIONAL MIXEDPROJECT/FUNCTIONAL STRUCTURE CONTROL CENTRALISED DECENTRALISED STABLE UNITS PROCESS PLAN PERFORMANCE PROJECTS BY PERFORMANCE AVDS -11-

  13. AVDS -12- INVESTMENT STRATEGY COOPERATION WITH CHINESE PARTNER CHALLENGING BECAUSE OF DIFFERENCE IN CULTURES GOVERNMENT, PARTY AND LAW ON THE CHINESE SIDE • DISILLUSION WITH LOCAL PROBLEMS: • ABSENCE OF STRATEGIC LONG TERM VISION • FAILURE TO EVALUATE THE INTENTIONS AND • CAPABILITIES OF THE PARTNER SOLUTION • FIRM APPROACH TO SHARED STRATEGY • STAGED COMMITMENT • CAPABLE LOCAL STAFF ESSENTIAL

  14. AVDS –13- SALES STRATEGY • CREATE AWARENESS ESTABLISH RELATIONSHIPS  PROVIDE TECHNICAL SEMINAR  INVITE POTENTIAL CUSTOMERS START NEGOTIATIONS CONCLUDE AGREEMENT • STREAMLINING OF CHANNELS IS SLOW DUE TO GUANXI • GUANXI INVOLVES FRIENDS AND FAMILY AND IS NOT CORRUPTION • INFORMATION IS CAREFULLY GUARDED AS CAPITAL • FOCUS ON COSTS AND QUALITY / SERVICE • ESTABLISH LONG TERM CUSTOMER RELATIONS • STABLE ORGANISATION

  15. AVDS -6- PROCESS OF NEGOTIATION

  16. AVDS -9- MINDSET TO VENTURE NEGOTIATIONS • PREPARATION INCLUDES ANALYSIS OF STRATEGIC FIT AND STRATEGIC MOTIVES • TAKE TIME TO UNDERSTAND THE PARTNER AND • DISCONTINUE IF THERE IS NO FIT IN MOTIVES • THE NEGOTIATORS YOU SEE OFTEN ARE NOT THE DECISION • MAKERS • RESPECT THE INTERNAL NECESSITY TO CLEAR ISSUES AND • CONSENSUS BUILDING • TO SET WESTERN DEADLINES WORKS AGAINST SUCCESS AND • WILL FORCE UNNECESSARY CONCESSIONS - AVOID DEADLINES

  17. AVDS -11- FOREIGN MANAGEMENT COMMITTED ADAPTABLE PROACTIVE, FORESEE CHANGES & ACT ON IT WILLING TO SPEND MANY DAYS / NIGHTS TO STRENGTHEN RELATIONS LONG TERM DEVELOP LOCALSTRATEGY ABLE TO COMMUNICATE THE LOCAL REQUIREMENTS TO THE H/O HAVE TRUST AND BACKING OF THE H /O

  18. AVDS -18- LOCAL MANAGEMENT • HIGHLY ABLE IN CHINESE CONTEXT • BICULTURAL SMALL POND  • NOT EASILY TRANSFERABLE: BEIJING POLITICAL - IMPROVE EFFICIENCY SHANGHAI EFFICIENT - STRONG LOCAL GUANGZHOU - INDEPENDENT • GOOD LOCAL STAFF IS A DISTINCTIVE COMPETENCE • LOST GENERATION

  19. AVDS -17- HR MANAGEMENT OF THE VENTURE • PITFALLS: CONFLICT IN CULTURE - CONFLICT IN HISTORY   CONFLICT IN WHAT IS IMPORTANT - CONFLICT IN POWER  • TRAINING: • TEAM BUILDING - CHALLENGE OF CHANGE •   PROJECT MANAGEMENT - COMMUNICATION , CHANGE PROCESS • HR CONCEPTS •   JOB ANALYSIS  ORGANISATION • PERFORMANCE APPRAISALS •   BONUS / TARGETS •   EMPLOYEE RELATIONS •   RECRUITMENT •   TRAINING ANALYSIS

  20. THIRD ASIAN PARTNER • MOTIVATION: COST REDUCTION, RISK REDUCTION • NEGATIVE: DIFFERENCES IN CULTURE, HISTORY • RELATIONS – MAIN COMPETENCE • KNOW HOW - CAREFULLY GUARDED • CAPITAL / FINANCE - ORIENTATION AVDS -8-

  21. AVDS -20- PRINCIPAL CAUSES OF FAILURE • LACK OF COMMITMENT TO THE JV ON EITHER SIDE • LACK OF STRATEGIC VISION - PURELY DEFENSIVE OR OPPORTUNISTIC SHORT TERM REASONS • LACK OF UNDERSTANDING OF THE STRATEGIC LOGIC OF THE • CHINESE PARTNER • HIDDEN AGENDA’S • SETTLING FOR LESS • HASTE IN NEGOTIATION - EMPHASIS ON LEGAL, TECHNOLOGY • AND OPERATIONAND LACK OF DEFINITION OF OBJECTIVES AND • STRATEGIES OF THE ENTERPRISE • LACK OF SUITABLE STAFF - EXPATRIATE AND LOCAL • COMPLEX STRUCTURES AND ORGANISATIONS • LACK OF SUPPORT OF H/O

  22. AVDS -14- CHANGE • RAPID IMPROVEMENTS IN ALL AREAS • LARGE NUMBER OF FOREIGN ENTRANTS • LOCAL COMPANIES LEARNING FAST • LOCAL MANAGERS LEARNING FAST • RAPID IMPROVEMENT IN INFRA STRUCTURE • ENTREPRENEURS VERSUS STATE COMPANIES • SEARCH FOR JV PARTNER OFTEN DISAPPOINTING THE GOOD COMPANIES MAY NOT NEED FOREIGN PARTNERS • FOREIGN COMPANIES PREFER WHOFE, OUTNUMBER (60%)

  23. PARADIGMATIC TRANSFORMATION • SHIFTING , FAST PACED AND INTENSE COMPETITIVE CLIMATE • HIGHLY FLEXIBLE STRATEGIC DECISION MAKING IS A DISTINCTIVE COMPETENCE • PREVAILING RULES IN WEST ARE ILL-SUITED TO ASIA PACIFIC • TRANSFORMATION OF MANAGEMENT PRACTICES AVDS -15-

  24. AVDS –16 - CHALLENGE TO CHANGE   EARLY RESPONSE TO CHANGES IN BUSINESS ENVIRONMENT REQUIRES LOCAL DECISION MAKING AND LITTLE REMOTE CENTRAL CONTROL SUFFICIENT LOCAL RESOURCES – AVOID IMPOSITION OF CENTRAL ORGANISATION MODEL LOCAL MANAGEMENT NEEDS HIGH LEVEL TRUST OF HEAD OFFICE

  25. AVDS -22- CHINA AN ENIGMA(1) A PLANE TOOK OFF FROM SHANTOU IN 1992. AFTER 20 MINUTES THE PILOT ANNOUNCED: L&G, WE HAVE FORGOTTEN TO TAKE ON FUEL AND HAVE TO RETURN AFTER 20 MIN: L&G, WE WILL TRY TO MAKE HEFEI AIRPORT FOR LANDING AFTER 1 HOUR: L&G, BECAUSE OF TAILWIND WE THINK WE CAN REACH BEIJING. ALL PASSENGERS SMILED QUESTIONS: UNEARTHLY SENSE OF HUMOR? DUBIOUS PROCEDURES? DO CHINESE SMILE WHEN NERVOUS?

  26. AVDS -23- CHINA AN ENIGMA (2) 8 YEARS LATER DURING A RECEPTION OF THAT AIRLINE SWAPPED SOME STRONG STORIES WITH A FEW PILOTS ONE OF THE PILOTS REMEMBERED , HE WAS ON THAT PLANE HE HAD BEEN PRACTISING ENGLISH BECAUSE THEY HAD BEEN ABLE TO ONLY JUST GET ENOUGH FUEL HE DID NOT KNOW THERE WAS A FOREIGNER ON THE PLANE CONCLUSIONS: A. GOOD SENSE OF HUMOR B. DUBIOUS PROCEDURES C. CHINESE SMILE WHEN NERVOUS D. CHINA IS A SMALL COUNTRY

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