China: Enter the Dragon
As China continues to make progress towards a market economy, businesses around the world are ramping up their efforts to tap into the country's huge marketplace of 1.3 billion consumers. Despite concerns over such issues as intellectual property protection, corruption, the banking system and overregulation, executives from a number of U.S. companies are pushing ahead to invest in the Chinese economy through alliances, joint ventures, the venture capital market and other initiatives. Last spring, Wharton held a China Business Forum in which participants from a range of companies offered their observations on doing business with the Chinese.
In this special section, Knowledge@Wharton provides coverage of that Forum. We also talk to Yasheng Huang, author of a new book entitled "Selling China: Foreign Direct Investment during the Reform Era," and to Wharton management professor Marshall Meyer, co-author of a recent research paper entitled "Managing Indefinite Boundaries: The Strategy and Structure of a Chinese Business Firm."
Two additional articles discuss the challenges that global companies face in China: Linda Lim, a professor at the University of Michigan, spoke recently at the Wharton Advanced Management Program about opportunities and risks in China. Jeff Bernstein, a consultant-turned-entrepreneur who set up shop in Shanghai three years ago, offers insights for small- and medium-sized companies eager to venture into China.
With Key Reforms, China's Capital Markets Will be Ready for Take-off
China's capital markets, including its banking and venture capital sectors and its stock exchanges, remain in the nascent stages. But financial professionals doing business in the country say those markets are developing fast and, once established, could succeed in avoiding some of the mistakes made by their counterparts in the U.S. China's fledgling financial markets were the topic of a panel discussion at Wharton's China Business Forum held earlier this spring.
Intellectual Property Concerns Aren't Keeping Firms Out of China
Protection of intellectual property remains the biggest challenge for foreign companies doing business in China, according to participants in Wharton's China Business Forum held earlier this spring. Executives from DuPont, Agilent Technologies and Delphi Automotive Systems, as well as Wharton faculty, noted the challenges caused by IP theft but also suggested that protection of patents and trademarks has improved recently under a more aggressive government crackdown.
State-owned Enterprises: 'Sick Patients' Waiting for a Cure?
As China modernizes its economy, it continues to struggle with the legacy of its bloated, inefficient state-owned enterprises - companies that once controlled entire industries and still play a significant role in China's economic and political life. China boosters say that SOEs are being swept aside as entrepreneurs flourish and Western companies pour money into Chinese plants and joint ventures. But critics suggest SOEs still have a chokehold on broad swaths of China's economy. Participants at Wharton's China Business Forum looked at the future of SOEs.
A Contrarian's View of What's Behind Foreign Direct Investment in China
An odd thing has happened to China on its journey toward economic modernity: Foreign direct investment (FDI) has soared in recent years. This is usually taken as a positive sign that China's economic policies and business practices are humming along nicely. But FDI has proven to be a mixed blessing, according to Yasheng Huang, formerly at Harvard and now a professor at the Massachusetts Institute of Technology's Sloan School of Management. In a recently published book, Selling China: Foreign Direct Investment during the Reform Era, Huang argues that the investment capital that has entered China since economic reform began in 1979 is actually a sign of economic weakness.
Managing Around the Complex Structure of Chinese Firms: The CIMC Story
As if doing business in China were not complicated enough, Chinese managers struggle with trying to run companies that have no clear cut boundaries, in part because the legal, listed and operating entities of each company are usually separate. Such a structure, says Wharton management professor Marshall Meyer, fosters operational inefficiencies and an inability to consolidate. Yet a recent paper by Meyer and Wharton PhD student Xiaohui Lu examines how one company, China International Marine Container (Group) Company, or CIMC, has been able to work around its fuzzy boundaries and dominate the world market for shipping containers.
In China, a Key Business Rule is to Watch Out for Politics
More than 20 years after opening its economy - and a year after its entry into the World Trade Organization - China continues to be a magnet attracting strong attention from international business. But as the recent political maneuvering over SARS showed, in China it is critical for companies to pay attention to the division of power between the central authority and local jurisdictions, says Linda Y.C. Lim, a professor at the University of Michigan Business School, who spoke recently at the Wharton Advanced Management Program in Philadelphia.
An American Entrepreneur in Shanghai
When Jeff Bernstein moved to China eight years ago as a consultant for McKinsey, he focused on the retail and distribution industries. In an economy where manufacturing was thriving, he figured, these industries offered promising opportunities. Bernstein soon discovered a gap between the manufacturing and retail sectors and, following an entrepreneurial urge to plug it, he launched Emerge Logistics in Shanghai. He recently spoke with Knowledge@Wharton about the challenges that small- and medium-sized companies face in trying to build a business in China.
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