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    International Trade & Manufacturing With China

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    You represent a large U.S. corporation that manufactures rubber tires, and you want to begin manufacturing and distribution in China.

    Discuss the macro environment of the country.
    What is the company strategy there?
    How will you be socially and economically responsible?
    What would be the role of management?
    What is the mode of entry you are going to use, and why?
    You are also thinking of how you are going to implement the rewards program.
    What do you think would motivate the workers?
    How would you design the right culturally appropriate program?
    What kind of leadership would work in this country?

    What are the political, cultural, environmental, and economic risks of doing business there?
    If you do decide to do business there, how would you staff the operation?
    What type of concerns would you have?
    What do you need to consider when you recruit, evaluate, train, and deal with labor relations issues?
    How would you select the manager?
    What are some of the issues to consider regarding the expatriate?
    What if it does not work out?

    What are some of the legal issues you would have to deal with as a company if you decide to expand there?
    What sort of international orientation would you consider?
    What are some of the opportunities and strengths of doing business there?
    What are some of the cross-cultural issues you are going to have to deal with?
    What are some of the protocols and etiquette issues you must incorporate into your business behavior?
    How are you going to deal with management issues such as assertiveness, conflict resolution, and team building?

    What are some of the foreign trade issues you will have to deal with?
    What are the determinants to foreign entry there, and how would you enter there?
    You will be embarking on the international negotiation.
    What are the 5 stages of negotiation, and how are you going to prepare for them?
    What cultural differences do you need to be sensitive to in the process?
    What would be some of the political, legal, economic, and ideological issues that may come up?
    How would you manage conflict if it should come up in the negotiations?
    What decision-making process would work better with the different cultures?

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    Solution Preview



    Discuss the macro environment of the country.

    The macro environment in the Communist country of China is represented by a socialist system with Capitalistic characteristics unique to China. Despite having many similarities to an authentic Capitalistic system, China is placated upon a macro environment wherein the Communist party and its policies deeply impact all aspects of the economy and economic development. Different industry are present within the country including the Shareholder System Enterprise, the State Owned and Control Enterprise, and Foreign investment enterprise, which is what (your) company would attempt to enter into. China has experienced substantial growth as well as rapid economic development over the last two decades, which has witnessed both the GDP and consumer demand grow fast within the country. Despite this substantial growth, the macro environment is unevenly distributed as varying degrees of living standards are present throughout the country with those in major metropolitan cities and those in the countryside experiencing vastly different levels of upward mobility as well as differences existing between eastern coastal areas and central and western areas.

    What is the company strategy there?

    The company strategy is to produce the highest amount of productivity with the least amount of expenditures and labor required. This is the strategy in any country, and China is no different.

    How will you be socially and economically responsible?

    Being socially responsible would entail ensuring that policies are in place to prevent exploitation of workers, such as the policies that Apple attempts to ensure third-party contractors adhere to when using them for contracts to assemble their products. The organization must prevent against labor abuses by inspecting their plants often and requiring documentation about how employees are treated. Being economically responsible would entail the use of fair and equal salary policies that don't attempt to provide less compensation to workers because of their geographic location within China.

    What would be the role of management?

    Management is based upon hierarchical tenets wherein the most senior level officials are responsible for handling day-to-day activities. In China, employees defer to their senior management as respect is a major facet of life in China. Therefore, management is placated upon a strict hierarchy that must be strictly followed.

    What is the mode of entry you are going to use, and why?

    The mode of entry that could be chosen entails entering through one of China's emerging Tier 2 cities, which is better suited for businesses' that are new to China. China has deliberately provided incentives to make these markets, which consist of lesser known cities that offer strong commercial opportunities for foreign companies across a large swath of sectors. Tier 2 cities offer foreign companies the ability to lessen set-up and operating costs, and with the increase in consumer spending power in these areas, there is a rapidly growing demand for foreign manufactured goods and products. An opportunity exists for a new ...

    Solution Summary

    The expert represents a large U.S. corporation that manufactures rubber tires as they begin to manufacture and distribute in China. The macro environment of the country is discussed.