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!