The China Venture

More documents

Recommendations

Info

from within China to assess local market conditions. It was in particularly necessary to find out which level of sophistication the Chinese labelling market had reached, which trend could be expected in future, how the company's European clients met their labelling needs in Asia, and whether they were satisfied by the product variety and quality currently existing in China. The result of this investigation was the finding that LLSC's target market, sophisticated self- adhesive labelling syste ms, was growing quickly, albeit from a relatively small basis. The majority of labels used in China were still based on older techniques. The competitive environment was of particular interest for the company. There were clear indications that international competitors had started to enter the self -adhesive labelling market recently. Judging from the development of European and US markets, as well as from the interest of the company's - mainly Japanese - competitors, the market potentials seemed very promising. General Readiness Taken alone, the findings of the specific fit investigation would have suggested to pursue the goal of market entry into China vigorously. This conclusion was not drawn however, as a general readiness analysis lead to different recommendations. LLSC is a relatively conservative company with firm control and leadership methods, which were well proven in Switzerland's stable environment. It does not boost large reserves in capital and management resources. Knowledge of foreign markets, especially the Chinese one, is also very rudimentary. This background led the company to pursue a prudent expansion strategy in Europe and the US. Each of its subsidiaries was founded in co-operation with a local entrepreneur who contributed local market familiarity and a significant share of capital to LLSC's mainly technical know -how. A similar strategy of co-operation with sophisticated local entrepreneurs was not found feasible for China. Most co-operation strategies in China between foreign and Chinese businesses are joint ventures between the foreign firm and usually a state owned or state affiliated company or organisation. While these organisations or companies may contribute a lot of market knowledge, experience of other foreign companies in the Chinese market has shown that operating a joint venture successfully demands a lot of skills from the foreign party. In particular, the generation of a sound understanding of the Chinese market and the Chinese way of business must not be neglected. While local partners generally offer a variety 56
of relevant contacts to suppliers and customers, their technical and management skills are much more limited than those of LLSC's typical western co-operation partners. Therefore, it was concluded that LLSC did not have the relevant skills to pursue market entry speedily in China. This was true especially as China would have been the company's first major venture into an Asian market. It was therefore recommended that LLSC should follow a more moderate approach, acquiring relevant market knowledge, as well as know -how of joint venture management with Chinese characteristics. At the same time the company was advised to step up its marketing efforts in China through agents or similar distribution channels to gain first hand market experience without any significant investment in the region. This preparation phase would also allow some time for the top management to familiarise itself with the different market conditions and requirements it would meet in the Chinese market. With a sufficient preparation phase, management capacity can be built up, and financing secured. All planning steps should be pursued with the background knowledge that the specific fit investigation showed that China was a promising market. As soon as the company's general readiness is assured, market entry will be very promising for LLSC. 3.1.3.2 Case Study 2: Swiss printing systems company (SPSC) SPSC is a SME with nearly 500 employees and a turnover of some 150m CHF. It has 2 production facilities and 9 subs idiaries world wide. It focuses on labelling printing machines, which it partly produces itself and partly trades. One of its strengths is a sophisticated service system which assures reliable and fast after sales service. Until the 1980s SPSC was a local company, selling to an international market through independent agents. This strategy was modified in 1982 with the founding of a subsidiary in the United States, to which more subsidiaries were added throughout the early 1990s. In 1994, the company realised, that it has to grow quickly to become a global player in its market niche. For this reason it re-examined its business, resulting in a reformulation of its strategy. The company's leadership believed that quick and profitable growth was necessary to survive in an increasingly global and increasingly competitive market environment. 57
Page 1 and 2:
The China Venture: Business Environ
Page 3 and 4:
Table of Contents List of Figures .
Page 5 and 6:
3.2.3.2 Special Funds for Setting U
Page 7 and 8:
3.4.1.1 National Culture ..........
Page 9 and 10:
List of Tables TABLE 2-1: THE AREAS
Page 11 and 12:
GBP Pounds Sterling GDB Guangdong D
Page 13 and 14:
1. Introduction: The China Venture
Page 15 and 16:
After a short discussion with the p
Page 17 and 18: co-operate with other firms, especi
Page 19 and 20: The Chinese operating legal system
Page 21 and 22: First of all, Britain’s predomina
Page 23 and 24: democratic centralism, all governme
Page 25 and 26: The courts are the state organs exe
Page 27 and 28: more than three hundred intermedia
Page 29 and 30: 2.2.8 Company Law China’s first n
Page 31 and 32: Things seem have to become a lot cl
Page 33 and 34: 2.3.1.1 Financial sector developmen
Page 35 and 36: securities, trading, initial public
Page 37 and 38: underdeveloped compared with market
Page 39 and 40: established in January 1996 by 59 p
Page 41 and 42: Chinese Banks Foreign Banks Financi
Page 43 and 44: system formulation has been put on
Page 45 and 46: The separation of production and co
Page 47 and 48: 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: While the testing for the general r
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 and 100: Available Distribution Channels A m
Page 101 and 102: Available Distribution Channels Mar
Page 105 and 106: Illustrative Case Studies The follo
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
Page 151 and 152:
Another Chinese tactic is, as menti
Page 153 and 154:
4. Post-Entry Strategic Considerati
Page 155 and 156:
and the other one in China. The com
Page 157 and 158:
experience in operating production
Page 159 and 160:
In these two cases, the companies m
Page 161 and 162:
5. References Aharoni, Y. (1966): T
Page 163 and 164:
Dony, A. G. (1998): Market Entry St
Page 165 and 166:
Islam, I. / Chowdhury, A. (1997): A
Page 167 and 168:
Madura, J. (1993): International Fi
Page 169 and 170:
Semkow, B. W. (ed.) (1995): China F
Page 171 and 172:
6. Appendix 6.1 Fact Sheet People
show all

The China Venture

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?