The China Venture

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Available Distribution Channels Market Knowledge Relationship (Guan Xi) Financial Power & Capital 10 9 8 7 6 5 4 3 2 1 0 Quality of Infrastructure Available Management Resources Suitability of Product & Services Portfolio Production Know-how FIGURE 3-7: Profile of a typical small or medium enterprise Chinese Partners for a Joint Venture Potential Chinese partners for a joint venture bring good relationship with customers, suppliers, authorities etc. with them but usually lack production know-how and/or the appropriate manufacturing equipment and machinery. Their infrastructure and technology have to be updated to reach acceptable standards. Additionally, their product portfolio may not meet the market demand any longer due to the recent changes in Chinese society. Being state -owned enterprises they not only lack financial power to restructure the company appropriately but also very unlikely have the necessary management resources for such a task. Except for financial power and management resources they are the ideal partners for SME’s. 88
Available Distribution Channels Market Knowledge Relationship (Guan Xi) Financial Power & Capital 10 9 8 7 6 5 4 3 2 1 0 Quality of Infrastructure FIGURE 3-8: Profile of a Chinese Joint Venture partner Banks and Government Institutions Available Management Resources Suitability of Product & Services Portfolio Production Know-how Foreign banks may act as lenders of capital for SME’s and their Chinese joint venture partners. However, the present practice of European banks is not to take fairly high risks with such an engagement in return of a comparatively low margin. Therefore, it is disappointingly difficult to raise capital through banks for this kind of projects. Alternatively, foreign governments run programs to support SME’s with venture capital to a certain extent. Once established in China, SME’s may use the banks’ connections to the industry to gain access to certain markets. Also Government institutions like the "Delegation of German Industry and Commerce“ or the Swiss Embassy based Beijing and Shanghai support SME’s with know-how and makes contact to various potential partners for joint ventures. They also assist with legal advice during the set-up phase of the new company. 89
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The China Venture: Business Environ
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Table of Contents List of Figures .
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3.2.3.2 Special Funds for Setting U
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3.4.1.1 National Culture ..........
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List of Tables TABLE 2-1: THE AREAS
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GBP Pounds Sterling GDB Guangdong D
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1. Introduction: The China Venture
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After a short discussion with the p
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co-operate with other firms, especi
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The Chinese operating legal system
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First of all, Britain’s predomina
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democratic centralism, all governme
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The courts are the state organs exe
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more than three hundred intermedia
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2.2.8 Company Law China’s first n
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Things seem have to become a lot cl
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2.3.1.1 Financial sector developmen
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securities, trading, initial public
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underdeveloped compared with market
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established in January 1996 by 59 p
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Chinese Banks Foreign Banks Financi
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system formulation has been put on
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The separation of production and co
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swap centres (see also above). From
Page 49 and 50: investors with little experience an
Page 51 and 52: them, while a branch with a shortag
Page 53 and 54: Loans, public offerings of shares,
Page 55 and 56: is often to acquire foreign capital
Page 57 and 58: 2.3.3.2 Debt financing As getting t
Page 59 and 60: the approval of special authorities
Page 61 and 62: control compared to national enterp
Page 63 and 64: usiness in China and related issues
Page 65 and 66: 3. Pre-Entry Strategic Consideratio
Page 67 and 68: While the testing for the general r
Page 69 and 70: of relevant contacts to suppliers a
Page 71 and 72: partner companies with free servici
Page 73 and 74: strengths which his own company lac
Page 75 and 76: Central Committee of the Communist
Page 77 and 78: environment for foreign investment
Page 79 and 80: legal and regulatory environment of
Page 81 and 82: 3.2.4.3 Legal Framework for Foreign
Page 83 and 84: • China’s entry into membership
Page 85 and 86: • stipulates that advanced techno
Page 87 and 88: Government approval. Foreign invest
Page 89 and 90: Co-operative Joint Venture Status P
Page 91 and 92: Reflecting on these points the foll
Page 93 and 94: Success Factors concerning Products
Page 95 and 96: Success Factors concerning Company
Page 97 and 98: high-technology are eligible for th
Page 99: Available Distribution Channels A m
Page 103 and 104: Available Distribution Channels Mar
Page 105 and 106: Illustrative Case Studies The follo
Page 107 and 108: Available Distribution Channels Mar
Page 109 and 110: Which Aspects should SME's Focus on
Page 111 and 112: Strategy No. 1: Have Cash A comfort
Page 113 and 114: expenses have a detrimental effect
Page 115 and 116: As a conclusion, network oriented m
Page 117 and 118: 3.2.13 Case Study: Swisstec, Lyss 3
Page 119 and 120: factor which makes the foreign firm
Page 121 and 122: developed within the SME, its impac
Page 123 and 124: 3.3.1.3 The Role of Technology Mana
Page 125 and 126: Indirect export and direct export a
Page 127 and 128: maintenance or the use of establish
Page 129 and 130: Government Central Exploiting Sales
Page 131 and 132: in the most advanced provinces and
Page 133 and 134: network through which the products
Page 135 and 136: Siemens or Motorola, they may have
Page 137 and 138: Chinese partners. He also began to
Page 139 and 140: orders. However, a country may also
Page 141 and 142: Germany/Switzerland China democrati
Page 143 and 144: 3.4.2.4 Conversation at the first m
Page 145 and 146: only after a certain time and even
Page 147 and 148: 3.4.3 Experiences of European Compa
Page 149 and 150: ones who atte nded a course. They s
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Another Chinese tactic is, as menti
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4. Post-Entry Strategic Considerati
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and the other one in China. The com
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experience in operating production
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In these two cases, the companies m
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5. References Aharoni, Y. (1966): T
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Dony, A. G. (1998): Market Entry St
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Islam, I. / Chowdhury, A. (1997): A
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Madura, J. (1993): International Fi
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Semkow, B. W. (ed.) (1995): China F
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6. Appendix 6.1 Fact Sheet People
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