Intercultural Problems Within Joint Ventures In China

Diploma Thesis , 2004 , 117 Pages , Grade: 1,0 (VG+)

Business economics - Business Management, Corporate Governance

Since the reforms of 1979, the People`s Republic of China`s (PRC) economy has
experienced significant growth. There is no doubt that this economic expansion has
been a direct result of the opening up of Chinese companies to foreign investors. The
number of sino-foreign joint-ventures, which are by the way a privileged form of
investment granted by the Chinese government, has been increasing rapidly.
According to Chinese statistics, at the end of 1998, Chinese-foreign joint-ventures
represented approximately two thirds of about 300 000 foreign investment projects
that were approved by Chinese authorities. In fact, among the developing countries,
China is currently the one which attracts the most western investments. Joining the
World Trade Organization (WTO) in 2001, China pushed this development even
further and while other countries were fighting a recession at the same time, it was
able to sustain a growth of 7.8% regarding the Gross Domestic Product (GDP),
14.1% with respect to exports and 10.4% regarding imports.1
Consequently there is steady interest of foreign companies to form joint-ventures in
the People's Republic of China. But whereas in the 1980ies mostly the huge
corporations where entering this market, nowadays more and more midsized
companies, for instance from Germany, are forming joint-ventures too. From the
region “Mittelfranken” for example 320 businesses have developed ties with the
People’s Republic – a plus of 60% from 1996.2 Many foreign firms are considering
entering joint-ventures in China because this seems to offer the most attractive
method for gaining access to the huge potential of the labour pool and market of
China. Nonetheless, there are many warnings about the problems that have to be
faced in order to establish a joint-venture in China. Chief among these is the problem
of differing management styles between Foreign and Chinese partners.
Very little accurate information is available about Sino-Foreign joint-ventures.3 An
example is the wide disparity in the reports of the numbers of Sino-German jointventures.
[...]
1 http://www.ihk-nuenberg.de/ihk_primnav/wir_ueber_uns/kammergespraeche/canrong.jsp
2 http://www.ihk-nuenberg.de/ihk_primnav/wir_ueber_uns/kammergespraeche/canrong.jsp
3 Markterfolg in China; Physica Verlag; Michael Nippa; P. 6

Inhaltsverzeichnis (Table of Contents)

• 1. Introduction
• 2. Structure of the Chinese industry
  • 2.1. Growth and Direct Investments
  • 2.2. Qualification and Training
  • 2.3. Definition IJV
• 3. Chinese Culture
  • 3.1. Language
  • 3.2. Religion
  • 3.3. School of thought
  • 3.4. Values
    • 3.4.1. Communism and Socialism
    • 3.4.2. Confucianism
    • 3.4.3. Collectivism and Buddhism
    • 3.4.4. Taoism
  • 3.5. Legal Culture
    • 3.5.1. Laws and contracts
      • 3.5.1.1. Possibilities to cope with the current system
    • 3.5.2. Socialist planned Economy
    • 3.5.3. Democratic centralism
• 4. Intercultural problems during certain stages of the JV process
  • 4.1. Partner Selection
    • 4.1.1. Cultural Traits
    • 4.1.2. Strategic Traits
      • 4.1.2.1. Absorptive Capability
      • 4.1.2.2. Market Power
      • 4.1.2.3. Product Relatedness
      • 4.1.2.4. Market Experience
    • 4.1.3. Organizational Traits
      • 4.1.3.1. Firm Size
      • 4.1.3.2. International Business Experience
      • 4.1.3.3. Previous Cooperative Experience
      • 4.1.3.4. Organizational Skills
  • 4.2. Negotiations
    • 4.2.1. Personal Connections (Guanxi)
    • 4.2.2. The Intermediary
    • 4.2.3. Social Status
    • 4.2.4. Interpersonal Harmony
    • 4.2.5. Holistic Thinking
    • 4.2.6. Thrift
    • 4.2.7. "Face" or Social Capital
    • 4.2.8. Patience, Endurance and Enduring Labour
• 5. Management Process
  • 5.1. Control
    • 5.1.2. Focus of control
    • 5.1.3. Extent of control
    • 5.1.4. Mechanisms of control
    • 5.1.5. Input Control
    • 5.1.6.. Process Control
    • 5.1.7. Output Control
  • 5.2. Decision Making
  • 5.3. Planning and scheduling
  • 5.4. Managerial Pragmatism
  • 5.5. Trust
    • 5.5.1. Definition of Trust
    • 5.5.2. Effects of Trust
    • 5.5.3. The significance of trust in China
      • 5.5.3.1. Power Distance
      • 5.5.3.2. Individualism
      • 5.5.3.3. Masculinity
      • 5.5.3.4. Uncertainty avoidance
      • 5.5.3.5. Long-term versus short – term orientation
  • 5.6. Communication
    • 5.6.1. Attitudes
    • 5.6.2. Social Organization
    • 5.6.3. Thought Patterns
    • 5.6.4. Language
    • 5.6.5. Nonverbal Communication
    • 5.6.6. Body language (kinesics)
    • 5.6.7. Body distance (Proxemics) and haptics
    • 5.6.8. Paralanguage
    • 5.6.9. Time
    • 5.6.10. Communication and its Consequences
  • 5.7. Human Resource Management
    • 5.7.1. Work attitude
      • 5.7.1.1. Motivation
    • 5.7.2. Quality and Care
    • 5.7.3. Conflict Management
    • 5.7.4. Lay Offs
• 6. Survey: Opinions and cultural values of Chinese students in Germany
  • 6.1. Findings
  • 6.2. Possible implementation strategies
    • 6.2.1. Redesigning the Hierarchy, work organization and communication
    • 6.2.2. Transforming the management
    • 6.2.3. How to address motivation and quality
    • 6.2.4. Improving intercultural competence
    • 6.2.5. Developing a common understanding of the firm

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This diploma thesis examines the cultural problems within International Joint-Ventures in China. It aims to analyze the specific cultural challenges encountered during various stages of the JV process, from partner selection to management and communication.

• Understanding the Structure and Dynamics of the Chinese Industry
• Exploring the Influence of Chinese Culture on Business Practices
• Identifying and Analyzing Intercultural Problems in JV Stages
• Investigating the Role of Trust and Communication in JV Success
• Developing Potential Implementation Strategies to Address Cultural Challenges

Zusammenfassung der Kapitel (Chapter Summaries)

The first chapter introduces the topic of cultural problems within International Joint-Ventures (IJVs) in China. It sets the stage for the subsequent analysis by providing an overview of the Chinese industry, its growth, and the role of direct investments. Chapter two delves into the complexities of Chinese culture, exploring its language, religion, schools of thought, values, and legal culture. Chapter three focuses on the specific intercultural problems that arise during partner selection and negotiations. The chapter highlights the importance of understanding cultural traits, strategic considerations, and organizational factors. Chapter four examines the management process within IJVs, focusing on key areas such as control, decision-making, planning, and communication. The chapter analyzes the role of trust and its significance within the Chinese context. The concluding chapter presents a survey of Chinese students in Germany, their opinions, and cultural values, as well as possible implementation strategies to address the cultural challenges identified throughout the thesis.

Schlüsselwörter (Keywords)

This thesis focuses on the following keywords and concepts: Chinese culture, International Joint-Ventures (IJVs), intercultural problems, partner selection, negotiations, management process, trust, communication, human resource management, implementation strategies.

• College: University of Applied Sciences Nuremberg
• Grade: 1,0 (VG+)
• Author: Michael Amtmann (Author)
• Publication Year: 2004
• Pages: 117
• Catalog Number: V32675
• ISBN (eBook): 9783638333375
• Language: English
• Tags: Intercultural, Problems, Within, Joint, Ventures, China