INB 311

Chinese enterprises - Hidden Dragons

Why are there few national brands in China?

What are some of the special characteristics of some Chinese enterprises that make them hard to understand in Western terms?
Who owns Haier?

Qingdao municipal government, local investors, and company managers

Describe the strategies of the following Chinese firms:

Haier - compact refrigerators, wine coolers - low end niche markets as a springboard

Huawei - routers - competes with Cisco

Lenovo - PCs - competes with Dell

Knowledge @ Wharton, The IBM/Lenovo Deal: Victory For China?

dedicated exporters

Pearl River Piano - entry-level pianos
CIMC - specialized shipping containers
Galanz - microwave ovens

competitive networks - what are these? flexible manufacturing

Wenzhou - cigarette lighters - 700 companies
Shengzhou - neckties

technology upstarts

state-owned labs
Legend/Lenovo - PCs
Shanghai HealthDigit - biochips
Beijing Founder Electronics - Chinese characters/high resolution electronic publishing systems
Alibaba.com - B2Bb portal/Chinese global network

role of Chinese government

Describe some of the effects of WTO accession by China.

Lieberthal and Lieberthal, The Great Transition

What is the major weakness holding back Chinese firms?

management

Good at following orders
Poor at the effort to take action to deal with system optimization
Good individually; poor in groups
Wait for orders; avoid initiative in groups
Small scale entrepreneurship is very good
Domestic Chinese firms are uncompeitive
Advantages lie with TNCs operating in China

What prediction do they make about the consequences
of WTO rules in China?

Removal/reduce most non-tariff barriers and tariff barriers
TNCs; current exporters will be able to sell in China
Now able to go after the domestic market
Distribution and business services now open to TNCs

What are some of the major problems and issues as firms try to sell in China?

• Inadequate legal protections
• Weak intellectual propety rights/ massive IPR violations
• Government interference at micro-level of society
• Price and political competition from subsidized SOEs
• Inconsistent application of WTO rules - relate to National - Local governemnt divide
• Potential crisis in SOEs/banks as foreign banks enter China - savings and SOEs in China = Growth? Now savings may go to foreign banks

The L&L article suggests TNCs enter China in stages:

1. Establish a presence; start to build a brand
2. Developed operations; expand brand
3. Integrate China operations into global firm

What kinds of managers are needed for these three stages?