The China Venture

Realising opportunities
Participation in growing markets is realised within an organisational structure that is flexible
enough to allow more aggressive growth if needed, through the finding of more wholly owned
subsidiaries. On the other hand - especially in the view of the recent Asia crisis - the flexible
organisational structure keeps risks at a minimum by having only very few own resources tied
up in the region.
Avoiding of threats
Capital invested in foreign countries is kept minimal. Through the network of local contacts in
connection with a wholly owned subsidiary, gathering of relevant information has become
much more easy. Lastly, overall business risk is being reduced by spreading the activities over
a large variety of markets.
The example of SPSC shows how a detailed business self-examination can help to find a very
attractive market entry strategy. By carefully relating the organisation's strengths and
weaknesses to the market entry's opportunities and threats, the company could design a truly
tailor-made and innovative ma rket entry strategy. Analysing the target market alone would
not have been enough. Only the connection with the unique characteristics of the own
company helps to avoid mistakes in the very important early phases of strategic planning for
market entry.
After long months or even years of planning, many - often fruitless - negotiation rounds, and
finally the work intensive phase of building up or revamping Chinese production facilities,
many companies are inclined to lean back and turn their attention to new projects. In a
business environment that is both relatively new and alien to a European SME, as well as
rapidly changing and evolving, such an approach might well be very destructive. A
continuous process of re-evaluation and subsequent re-positioning is necessary in many
projects and often crucial in China.
As Paul started to reflect on his China business, he began to appreciate the extensiveness of
Mr. Zheng’s preparatory work in the positioning of his China Venture and in the choice of
partners in China. He can see the complimentary nature of his former business partners in
China which Mr. Zheng had chosen to work with. Indeed, his business partners have clear
60