Three Weapons:
1. Policy
- Always move ahead of the policy, see the domestic market
- If you don't follow the policy of the government, then you can move into trouble.
- Government policy affects Corporate Strategy
2. Corporate Strategy
- Move into the domestic markets in order to gain traction
3. Relationship (Guan Xi)
- Overseas companies have heavy emphasis on Guan Xi, so that you can be more mobile in China.
- In the 80s and early 90s, relationships helped you enter markets.
- Now, since opening the WTO in 2002, the Chinese government has to be fair to companies. The relationship helps you understand detail about the policy but it's not the only thing now.
- If you don't know how to play the relationship card, then it will get you in trouble.
In the old day when you invest in China you bring money, technician and technique, but from now on if you invest in China I advice you to bring along with you a lawyer, an accountant and an economist
- Mr. Zhu Rong Ji, Former Prime Minister of China
Central Government Policy = Company Law, Tax Ordinance, Economic Law, Foreign Affair
Local Government Policy = Tax Incentive, Investment Incentive
Case 1: The implementation of New Labor Ordinance
Case 2: the Change of Policy Towards the Sub-Contracting Factory in Southern China
Case 3: The Real Estate Policy
Corporate Strategy:
- Type of Investment
- Localization
- Location of market
- Consumer Behaviors
- Competition
- Pricing
Reasons why Shanghai is so important to China:
1. End of the Yangzte River
2. The buildings on the Bund have been there for over 100 years
3. Shainghainese is the most of all the Chinese that are willing to spend
Case 1: Gucci Watches vs. Swatch
Case 2: Movie Business (theater)
- If you want to have a Hollywood movie in the China market, you can only have about 25 foreign movies a year. If the production houses want to share the movie, they have to JV (joint venture) with a local production house. Relationship important.
Case 3: Ernst & Young (CPA firm)
Case 4: Zara, H&M, Next
- Purchasing power of the market, inventory turn over 7 days.
Relationship: Guan Xi
- Building up good business relationships, trust, time&money spent on business
- Makes all the difference in ensuring that business will be successful, minimizes rusks, frustrations, disappointments
"How to Build Guan Xi"
- First, it is not only based on money. Based on heart.
- Being dependable and reliable
- Guan Xi with high rank official is important but never use it wrongly"
I know it was a bit dry of a presentation...Catherine
