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Management in China Essay

  • Submitted by: ninizhu
  • on March 25, 2014
  • Category: Miscellaneous
  • Length: 2,696 words

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Below is an essay on "Management in China" from Anti Essays, your source for research papers, essays, and term paper examples.

Why, despite the significant levels of market access given to foreign firms, have large global corporations such as Rio Tinto, Daimler Chrysler, Google and Coca Cola, experienced significant barriers to growth in China?

Three decades after the open-door policy, EU and US trade representatives continued to criticize the discriminatory treatment, bureaucratic processes and lack of access to China’s vast public procurement market. Despite China’s colossal economy in 2011, its chief concern following the global financial crisis was a return of protectionism in its major export markets. Therefore, this essay will discuss the significant barriers to growth foreign multinational companies face in the Chinese market, such as cultural disparities, government limitations and resource management problems.
Liabilities of foreignness (LOFs) are supplementary costs that MNCs operating in an overseas market experience above those incurred by local firms. Therefore, institutional and cultural discrepancies between two countries cause internationalization disadvantages – discrimination, relational, and unfamiliarity hazards. Unfamiliarity hazards reflect an MNC’s insufficient knowledge of the local business practices and the host market cultural environment – advantageous to well-established indigenous firms. In a 1997 Financial Times article, James Harding described the challenges in foreign auto ventures throughout China: ‘With an average wage in Shanghai of around $100 (£60) a month, most visitors could only dream of owning one of the shining models displayed by the world’s leading car companies’. By 1997, Daimler’s $1 billion joint venture ‘was at a virtual standstill’. Peugeot was forced to abandon its plant in Guangzhou, and both American and other European automakers suffered unanticipated slowdowns. Displeased venture partners, the difficulties in financing cars through Chinese banks, and the lack of desire by typical Chinese consumers for simple, subcompact passenger...

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