Harvard Business Review on Doing Business in China

Book Overview
Merging the thoughts and experiences of various authors, the Harvard Business Review on Doing Business in China is a compiled guide to developing a successful globalized organization. While the general empahsis is based on China’s vast emerging and growing economy, much can be learned and applied as general attributes of an efficacious business. Each review is a separate assessment and perspective on doing business in China. The only connection between the individual units is the underlining theme of extracting a business’ potential within China’s borders.

The Harvard Business Review on Doing Business in China begins with Kenneth Lieberthal and Geoffrey Lieberthal’s 2003 Review, “The Great Transition”. Lieberthal and Lieberthal discuss the impressive economical shift China is undertaking in relations to available resources, social safety systems, environmental issues, and local governments. Furthermore, the authors reflect on the admission requirements China must meet in accordance to the countries admission into the WTO. Observing the political and social status of China’s economy, the authors proceed to depict the obtainable competitive advantages multinationals, with appropriately aimed business scopes, may yield from the flourishing economy.

The second review is John L. Graham and N. Mark Lam’s brief entiteled “The Chinese Negotiation.” Together Graham and Lam outline the cultural differences between the Chinese and Western negotiation styles. In doing so, the authors review basic cultural values, approaches to thinking, and respective negotiation processes. Moreover, the authors elaborate on what they proclaim to be the eight elements most important to successful Chinese negotiations. These elements include social networks and connections, intermediaries, social statuses, amicability and agreement between business partners, holistic thinking, pricing, saving face, and lastly endurance. This goulash of insightful tips set the stage for a successful and advantageous business relation for any multinational.

Ming Zeng and Peter J. Williamson’s “The Hidden Dragons” uncovers the growing competition multinationals face emerging out of China. Various business contenders are defined and global strategies are identified in order to unmask the lurking hidden dragons. Zeng and Williamson identify four potential threats including national champions, dedicated exporters, competitive networks, and technology upstarts. The awareness of these growing businesses within the competitive global playing field will allow multinationals to better understand the game. Understanding the hidden competition is an important strategic competitive advantage.

A business’ potential future profitability may be unearthed by Rick Yan’s “Short-Term Results: The Litmus Test for Success in China.” In his review, Yan illustrates that being an early mover into China’s market is not enough to insure future profits within the vast market. A successful business requires managerial capability, critical mass scale and an efficient product portfolio in addition to patience and longevity. While many multinationals anticipate short-term loses entering China this may be an ill-guided assumption. Continuous learning and adaptation are critical in a market whose economy is in the midst of redefining itself. Yan’s litmus test is based on observing a company’s understanding of China’s changing environment along with the company’s ability to effectively implement astute strategies.

A greater number of multinationals are realizing the advantage and feasibility of entering China as a wholly foreign-owned enterprise (WFOE). This strategic stride, as described by Wilfried Vanhonacker in his review “Entering China: An unconventional approach,” veers away from the more common equity joint ventures (EJV). Vanhonacker’s 1997 review suggests that the fluctuating nature of China’s economy coupled by a varying cultural setting make the success of EJV a difficult and inherently un-advantageous launching pad. The sheer complexity of aligning the scopes and objectives of two varying businesses make EJV a challenging endeavor. The addition of respectively complicated cultural, political, and economical views make EJV between foreign and domestic businesses in China an undesirable initial corporate structure. On the contrary, the independence and simplified corporate structure of a WFOE produces a stable platform from which a multinational in China may grow to succeed.

Rick Yan’s insight on China originated prior to the development of his litmus test for success in China. His earlier works included his 1994 review “To Reach China’s Consumers, Adapt to Guo Qing.” Through the understanding of Chinese characteristics and the “special situation” in China, referred to as Guo Qing, a foreign business in China may better capture a piece of China’s massive market. Yan walks through the growth of China’s market, behaviors of consumers, marketer’s strategies, and importance of capturing focused geographical market segments. Logically, the increased knowledge about a desired market segment in addition to an aligned marketing strategy will ensure market share sustainability and growth.

Katherine Xin and Vladimir Pucik take an unconventional approach in piecing together their review “Trouble in Paradise.” A fictitious manager’s 50/50 joint venture dilemma between a U.S. apparel company and a Chinese manufacturer is analysed by four industry professionals. This synthetic predicament echoes the realities and common caviats inherent to joint ventures between foreign and domestic businesses in China. The industry professionals include the chairman of Michelin Investment in Shanghai, a managing director from Morgan Stanley in London, a principal at McKinsey in Shanghai, and a director of the Asian Management Institute at the Richard Ivey School of Business in Canada. Each perspecive yields varying solutions to the joint venture’s manager’s dilemma, based repectively on the commentadors personal knowledge base and business experiences.

The Harvard Business Review on Doing Business in China is concluded with Pankaj Ghemawat’s review “The Forgotten Strategy.” This brief gives a quick overview of using differences in cultures, administration, geography, and economies to gain a competitive advantage. Pankaj suggests a balance of standardization and adaptation of corporate structures based on the underlining strategic differences. An effective strategic analysis of these often forgoten essential differences, may be the key to a foreign company’s success in China.


Contribution to Knowledge
This compilation of insights and perspecives into doing business in China is a pocket medley of advice. Each review is written such that anyone lacking in business knowldege and an understanding of China’s growing economy may come to better understand the key factors necessary for a successful business. Readers with a strong business foundation may find the business reviews to be elementary and evident. Nonetheless, such readers may find the specific insights on China’s cultural, political, and social structure to be a helpful starting point to better understand how China’s economy should be approached. Conversly, readers with a strong understanding of China’s cultural, political, and social structure may find the specific insights on China elementary, evident, and at times outdated and no longer accurate. These readers may draw intelectual benefit from better understanding the differences between Western and Chinese business styles and structures presented within the reviews.

The segmented and speratic reading of the Harvard Business Review on Doing Business in China make it an ideal read for business travelers and students seeking to kill time during long fligths. It should be noted that the reviews offer only a broad insightful glimpse into the greater picture of doing business in China.


Strengths and Weaknesses
While the book is presented in a clear and easily read manner, the overall intelectual gain is minimal. As stated earlier, business travelers and students seeking to kill time during long fligths may find some enjoyment from this compilation. Nonetheless, the main objections arrising from this book include the outdated reviews and the lack of cohesion between the reviews.

Five of the eight reviews were originaly published in 2003. The remaining reviews have original publish dates ranging from 1994 to 1998. This spread in publishing dates weakens the cohesive strength of the advice within the pages of the book. Furthermore, various reviews (if not most) lacked the current perspective needed to validate their presented arguments. More directly, “The Great Transition,” “The Hidden Dragons,” “Short-Term Results: The Limtus Test for Success in China,” “Entering China: An Unconcentional Approach,” and “To Reach China’s Consumers, Adapt to Guo Qing” presented either outdated or seemingly obvisous insight in respect to common knowledge on China today.

The range in which the original reviews were published also deter from any cohesion between the reviews. A simple introductory chapter yielding a brief insight into China’s current economical and political status would have set the stage for the reviews. Furthermore, a concluding chapter tying in the overlaping concepts between the reviews and unifying the greater picture of doing business in China would have been much appriciated.

More specifically, “Trouble in paradise” offered very little insight into doing business in China. Instead the review’s feable attractiveness was in observing the varying perspectives of four knowledgable business fold on a single common dilemma encountered in China. Pankaj’s review “The Forgotten Strategy” was a great review of strategies for any business seeking to expand globaly. Nonetheless, the review was not China specific; granted China was mentioned in passing. Respectively the review yielded no intelectual takeaways on China’s business arena as a whole.


Objections and Factual Errors
The objections and factual errors imbeded within the pages of the Harvard Business Review on Doing Business in China are as discussed above in the Strengths and Weaknesses of the book. Given the lapse of time between today and the last original publishing date a new set of reviews should be compiled. In addition, greater efforts should be made to adhere a theme or general flow between the reviews, possibly in the form of an introductory, transitional, and/or conclusive paragraph.


Authors Interpretations
Given the dated perspective of the reviews it is difficult to deduce a comparison of interpretations with the author. Having stated this, the overall material seemed relevant and insightful at the time of publishing. Minor anticipations by the authors, in particular relating to China’s entry into the WTO and difficulties in conforming to regulations were slightly miss judged. Nonetheless, the conclusive advice and overall guidance given by each author stands true in helping to gain a competitive advantage in doing business in China.


Summary Statement
Having previously read James McGregor's One Billion Customers and Thomas L. Friedman's The World is Flat in addition to being near the completion of an MBA degree I found the Harvard Business Review on Doing Business in China an outdated review of knowledge I already had. While the book did offer some unique knowledge the overall gain was poor in respect to the compilation as a whole. Reading the summary paragraphs presented prior to each review will suffice. The review worth recommending to read in full based on the insight it did yield was “The Forgotten Strategy.” Although the review is not focused on China specifically it did contain usefull information not depicted within One Billion Customers or The World is Flat. Consequently, for a better understanding of China and globalization I recommend reading James McGregor's One Billion Customers and Thomas L. Friedman's The World is Flat!

Thomas L. Friedman's The World is Flat

Book Overview
Thomas L. Friedman’s chronicles of globalization, derived from advancements in technology and business infrastructures, amalgamate to establish that The World is Flat. The historical accounts go beyond facts, and depict the perspective needed to sustain a competitive advantage as a corporation and as an individual. The World is Flat is a guide to understanding the modern global economy and grasping new founded opportunities.

Friedman’s annotations emanate from his flat world perspective. The anomalous shape is accredited to ten forces. The abrogation of the Berlin Wall and the standardization of software platforms brought value to digitizing information. The emergence of networked computers and internet-based platforms bolstered the internet. Workflow software connected applications, while the computer and internet enable digital media manipulation. Open sourcing made software tools globally available for gratis. The global fiber optic network opened the door to India and outsourcing. China’s membership into the WTO contrived a global economic competition of innovative business models. In addition, global competition fostered innovative global supply chain symphonies, analogous to the masterpiece Wal-Mart composes. The demand for novel business models fostered the creation of UPS’s specialization in the synchronization of global supply chains, driving collaboration between businesses to new heights. Search engines fathered in-forming, and the empowerment of individuals. Lastly, the world was flattened by the empowerment of individuals’ to share information and communicate at high speeds, to anyone and from anywhere. This compilation of forces in conjunction with the redevelopment of doing business and the addition of several billion individuals, from China, India and the former Soviet Union, is defined by Friedman as the triple convergence. The flattening of the world has required communities, businesses and individuals to redefine themselves and their roles in society. This “great sorting-out” and the triple convergence have pounded their mallets to yield a flattened world.

Having depicted the architecture of the modern global economy, Friedman proceeds to explain America’s contribution to it all. This new structure promotes free trade for the greater good of all economies, including the United States’. As individuals, investments in education are critical to maintain a competitive edge within the global labor force pool. Furthermore, an investment must be made to increase America’s scientific and engineering base, to replace an aging population and to compete with well educated and enthusiastic workers abroad. Friedman urges that globalization today should be taken seriously, and respectively be promoted by politicians, that they may direct the general public to success. America is one of many countries realizing the new requirements to doing business. Developing countries, such as Mexico, are finding that they too must accommodate the flattened world or be flattened themselves.

In light of having the world as we know it reduced to two dimensions, Friedman imparts his wisdom on how companies should contend. A business looking to succeed should begin by looking inward to reinvent themselves as a global contender instead of hiding behind walls, waiting for failure. Small companies must act big by being quick to adapt technological advancements and modern business models. On the contrary, large businesses must act small embracing each customer with the needed attention to deliver a desirable product. Regardless of size, organizations must collaborate with one another to establish a greater competitive advantage. A business in today’s global economy must continuously re-examine itself to identify core competencies and to expunge weaknesses. Outsourcing by corporations should be used as a business strategy for growth and advancement, and not to simply save a few dollars by firing employees. Moreover, outsourcing can be used innovatively to create new businesses and lessen gaps between corporations.

Embracing the flattened world and cultivating the possibilities has undeniable adverse affects. As demonstrated by the September 11, 2001 attack, there will always be a group of people who use the modern global infrastructure against itself. In the interest of sustaining and growing global business collaboration, wars must be avoided. Global integration and trade are armaments against war. The imminent threat emerges from terrorist groups with no direct government affiliation, whose actions cannot be surveyed. Respectively, Friedman concludes that the flattened world fuels both creative and destructive imagination. It is the positive imagination which businesses must effectively cultivate to thrive in the flat world.


Contribution to Knowledge
Friedman’s interpretation of the global marketplace is a theoretical perspective and a historical guide of the twenty-first century. He draws from past events to explain the workings of modern businesses and globalization. Founded on deep knowledge of several successful modern organizations, this handbook is fundamental for individuals and businesses desiring success. Consequently, government officials and politicians seeking to foster economic growth will also benefit from Friedman’s clarification of the modern business era.

Each present and future member of any workforce is connected to Friedman’s flat world, and will benefit from understanding that world. Only through the comprehension of the big picture can the details be grasped. Similarly, only by understanding modern globalization, business infrastructures, and technology can an individual understand the importance of outsourcing, offshoring, trade, and global peace. Furthermore, an individual can understand their part in the modern world and the required steps to keeping up with an evolving labor force. The World is Flat provides this necessary knowledge in a concise and entertaining package.

Corporations seeking to maintain ground or to gain a competitive advantage must recognize and accept the global playing field before throwing out the first pitch. Organizations conducting business within national boarders are no exception. These players are still affected by global suppliers and competitors and must realize their part in the global economy. Consequently, all organizations, big or small, global or not, must be aware of their environments and the subsequent effects. Friedman’s work is a great starting point for obtaining the awareness of the big picture.

As Friedman explains in his work, it is crucial for government officials and politicians to go beyond understanding the architecture of the business world, and to disseminate that information to the general public. Through the alignment of the general public’s comprehension of the global marketplace, a stronger national economy can be cultivated. The World is Flat serves as an overall informational source, examples included, for leaders to educate their people.

Friedman’s personalized-writing escorts readers from understanding how the world came to be flat and America’s connection, to the position of companies in the flat world, the importance of global peace and cultivating positive imagination. The concrete examples amplify the author’s perspective while increasing the reader’s knowledge of the global marketplace. While catering to the information needs of individual workers, businesses, and politicians in America, The World is Flat offers valuable lessons to all who opens its covers.


Strengths and Weaknesses
Thomas L. Friedman’s experience as a writer and social connections are the rock on which The World is Flat is built on. The book as a whole presents great strengths. The author uses well know businesses to draw examples, going behind the scenes to uncover new facets foreign to the common reader. This deep knowledge and constant enlightenment makes the guide entertaining and educational. Moreover, Friedman draws from his own experiences, inviting the reader to discover the flat world as he did. Each individual story is linked, reinforcing the author’s perspective of an overall flat world. An additional strength of the book comes from Friedman’s ability to put his view of the flattened world into perspective for individuals, companies, and country officials. He takes his knowledge an extra step, guiding the reader towards success.

While Friedman’s work is entertaining and well organized the book does have a few drawbacks. The grandeur of historical accounts and overlapping concepts at times make the reading overwhelming and repetitive. The strong factual foundation for the first half of the book in contrast to the perspective saturated second half, divides the book into two distinct pieces. Additionally, the later half does not build upon itself. The inconsistency and sporadicalness make the book challenging to finish. Lastly, the continuous restatement that “the world is flat” is annoyingly redundant. Nonetheless, the overall strengths of the book far outweigh the weaknesses.


Objections and Factual Errors
Given the broad and mostly general accounts of historical events there leaves little room for inaccuracy and factual errors. Friedman’s work is primarily based on personal interpretations and understandings which consequently cannot be factually wrong. While they do leave room for apposition, no such a conclusion was drawn from this reader. Friedman’s ability to connect events and reinforce his views with a multitude of examples validates his arguments. In addition, the authors seemingly biased view of the world as flat (figuratively speaking of course) is diminished with his concluding acknowledgement and explanation that the world is not actually flat. Overall the book represented known historical events and argued effectively flattening of objections or factual errors.


Authors Interpretations
A majority of the historical accounts the author exemplifies I recalled from my past, and yet I was astonished to learn the true significance behind each instance. Friedman’s unification of ideas, illustrated in the vision of the flat world, harmonizes with the world as it is today and is validated through his examples and personal experiences. Friedman completes his theory as a legitimate perspective by including what I deemed the un-flatteners. The work encompasses a complete interpretation which is factually fortified.


Summary Statement
The innovation of business models and the synchronization of global supply chains are indisputably setting the stage for the modern world. This shift may have taken place while we were sleeping, including Friedman, yet The World is Flat holds the explanation, waiting to be read. As an individual finishing graduate school, my direct connections to the global marketplace are unclear. Friedman’s flat world perspective brings together recent history and business developments to depict my role as an individual. Moreover, his perspective clarifies the state of the global economy to reveal a path to success for current and emerging businesses. Overall Friedman’s work was captivating and stimulating. The World is Flat is a unique and informative guide for individuals and businesses seeking success in today’s global marketplace.

James McGregor's One Billion Customers

Book Overview
James McGregor’s One Billion Customers is a guide to doing business in China. As the book notes, there is no single technique or formula to follow to yield a profitable and efficient foreign business. An organization’s success rather, is based on its ability to be flexible and creative within the context of respective situations. McGregor draws from that understanding to present the historical account of various foreign companies doing business in China. These lessons illustrate the obstacles and possibilities which lie ahead for any company entering China’s markets.

The compellation of past lessons caters to the old notion that history is to be learned from. Accordingly, McGregor’s accounts span across various political, economical, and historical perspectives, all contributing to China’s global emergence. Charlene Barshefsky’s “win-win” philosophy made way for China’s entry into the WTO. McGregor draws upon her business approach and China’s past to depict the Chinese business mentality and an effective approach to building a strong business foundation. The 1994 joint venture between China Construction Bank and Morgan Stanley created China International Capital Corporation, CICC, as well as a vast array of hurdles and complications. McGregor makes light of CICC’s struggles, pointing out the pathway towards making joint ventures a success. Lai Changxing’s kaleidoscopic reputations included that of an entrepreneur, a tycoon, a criminal, and a political refugee. Lai’s journey up and back down the mount of economical and political success has generated McGregor’s observations on Chinese corruption and anticorruption. McGregor’s personal experience with Xianhua news agency had a completely separate genre of difficulties. Consequently, McGregor teaches on the importance of having China’s interest at heart, a trump card against bureaucratic adversaries. McDonald Douglas’s entry into China, followed by Hughes, Loral, and other foreign satellite producers, brought American politics into the already complicated mix of doing business in China. Through the various past events tied into this aerospace saga, McGregor portrays the importance of lobbying as a crucial piece of the China business plan. The Chinese media gold rush, led in part by Rupert Murdoch and Liu Changle, was matched with Chinese resistance by the Communist Party. McGregor uses the political and corporate hurdles present in the expansion of China’s media industry to draw valuable observations and advice. His knowledge fuels a strategic plan for a successful business in China, including the structure of a company that exists harmoniously with China’s political parties. China’s telecommunication boom was equally impressive. This industry’s triumph is attributed to entrepreneurship and innovative thinking. McGregor uses this historical account to further illustrate China’s business mentality, government involvement, and views on intellectual property. The shift in education, and the up rise of SOHO China Ltd. and Hangzhou Wahaha Group Co, Ltd. concludes McGregor’s annotations. The final message echoes the purpose of One Billion Customers, to learn from the past to insure a successful business in China.

Each of McGregor’s chapters open with a glimpse of the story to come, followed by an overview. The journey then begins as McGregor describes the events leading to the successful, or unsuccessful, adventures of doing business in China. Each chronicle concludes with a passage of what the lessons learned mean to those seeking to do business in China. Furthermore, each chapter is summed up by “The Little Red Book of China,” a compilation of McGregor proverbs drawn from each chapter.


Contribution to Knowledge
McGregor’s chronicles are a source of historical, economical, and political knowledge. He infuses each account with the needed historical facts and cultural perspectives to paint a full picture. Although the lessons drawn focus on doing business in China, One Billion Customers serves as a guide to all who are influenced by China’s markets. The business seeking to expand its global boundaries to those of China will find the book’s price tag a moot expense in comparison to the high costs of a failed business. Corporations competing with companies emerging from China’s economical expansion will gain a competitive advantage in understanding their competition. Similarly, suppliers for companies who do business in China will gain a perspective of their future opportunities and hurdles by recognize the full business chain. Lobbyists, directly or indirectly involved in China’s markets, benefit from better understanding the evolving economy and business culture, which unarguably affects American economics and politics. McGregor’s work offers a vision of direction and hope to former communists seeking economic growth. Moreover, officials and executives related to any of the WTO’s members may seek better understanding of, and yield better communication with China by grasping the struggles and successes of the country as illustrated in One Billion Customers. Students seeking careers in business (international or not), politics, or law can use McGregor’s book as a glimpse of the vast economical future and opportunities which lay ahead. Engineers can better grasp their role in an outsourcing economy by understanding China’s role and emergence as a global player. The contribution to knowledge One Billion Customers offers is comprehensive and goes beyond the CEO seeking to expand corporate borders.

The guide’s easy reading style and organized structure coupled with valuable lessons learned caters to an audience ranging from high school students to corporate CEOs and everything in between. China’s influence on the global economy is undisputable. Similar to the benefit news journals bring to the doorsteps of millions every morning, McGregor’s One Billion Customers is a documentary of China politically, economically, and socially.


Strengths and Weaknesses
James McGregor’s business, political, and media background are the foundation of his works and account for many of his book's strengths. The author uses his expertise and experiences to create an intriguing and entertaining guide. Each lesson learned is directly derived from real past accounts. Cultural differences are put into perspective through the historical journey China has embarked on. McGregor is a strong and knowledgeable writer. The various tales at times overlap politically and/or economically. The book includes a list and descriptive “Cast of Characters,” which helps organize the multitude of contributors to China’s growth as mentioned by McGregor. In addition, McGregor's compilation of advice in his "Little Red Book of China" serves as a useful quick reference. The historical perspectives and invaluable advice compiles into the wonder of One Billion Customers.

The weaknesses of McGregor’s guide lay only in the relative shortness of his accounts. In his works, a significant yet small fraction of China’s vast expansion and emergence are covered. Although more then adequate to support its claims, the book left a residue of desire for more knowledge and understanding on how to do business in China. A possible second weakness arises from One Billion Customers single author. Although seemingly unbiased, the account from McGregor may have some factual inconsistencies to that of factual events. Research on the corporations involved yielded no great contradictions. Nonetheless, minor facts and variations in perspectives cannot always be fully accounted for.


Objections and Factual Errors
As an American making accounts of business in China’s there is an evident possibility for a bias report. Even so, McGregor justified cultural beliefs with historical support and explanations. Given the corporate and cultural backgrounds illustrated, coupled with McGregor’s experiences, the level of biasness was reduced to a minimum. In consideration to the nominal partiality, there are no great objections to this guide. In regards to factual errors, historical accounts by various corporations, made available on the World Wide Web, overall coincided with the author's tales. Factual errors if present, as addressed earlier were minute and seemingly irrelevant.


Authors Interpretations
In reading current economical events occurring in China, McGregor’s tales and advice quickly comes to mind. The Wall Street Journal’s recent story “Low Costs, Plentiful Talent Make China a Global Magnet for R&D,” echoed McGregor’s findings. The article touched upon China’s current patent protection and intellectual-property rights obstacles, and went on to illustrate China’s R&D push forward in the global economy. Much like McGregor’s accounts, these investments most often are part of a compromise between Chinese and foreign companies, all dancing to the tune of China’s politics. As illustrated by this article, the consistency in past and current events relating to China and McGregor's guide reinforces the validity of his interpretations.

The author’s invariable style in concluding lessons learned from factual historical accounts further justifies his opinions and interpretations. Additionally, McGregor’s business, political, and media background support his role as a mentor to other’s seeking to do business in China. His extensive accomplishments legitimizes his perspectives and admonitions.


Summary Statement
Each of McGregor’s stories are intriguing and admirably written. McGregor infuses his knowledge, experience, and China’s history into each chapter. Every lesson learned is applicable to each of McGregor’s tales. He has laid a foundation of knowledge for those seeking to do business in China, and those searching for a picture of today’s global economy. Furthermore, he has composed the comprehension needed to see beyond the daily news headlines, to the core of what is going on in China. There is truly no single technique or formula to insure a successful business in China. An organization's success rather, is based on its ability to be flexible and creative. A business' proficiency to adapt is directly related to its ability to capitalize on the existing knowledge base of past experiences. McGregor provides that needed knowledge base in his book One Billion Customers. His guide is a necessary read for executives, politicians, engineers, and business students irregardless of future intensions of doing business in China.