Economy and Business of China and Belgium - Assignment Example

Table of Contents Overview Of Proposed Joint Venture Between China And Belgium 4 2.1Business Etiquette and culture of Belgium 4 2.2Business Etiquette and culture of China 5 Conclusion 9 3.1Patching up the cultural difference to proceed with R&D collaboration 9 Chapter 1 Introduction The enormous commitments numerous European MNCs have finalized in China, present a gigantic test for conventional suppliers in their home countries (Zheng, N/A). European automobile industry has been trying to control production rate and inventories. Toyota, Ford, GM and a few European giants have been striving to set the tempo throughout but many of such giants could not come up any more (Kelly, 2009). Due to a few changes, complexities, the Opel Europe industry is said to be questioned for the materialization of new GM. Development of the brand portfolios will dramatically be noticed. The most recent and modern achievement of the brand Hummer through a Chinese competitor is the live instance of this ongoing corrosion. These days, percentage of outsource to China is accelerating. China players must tackle important demand expansion in China and the obstacles intrinsic in contending alongside European companies (Knowledge@Wharton, 2008). China has been an export market (BusinessWire, 2009). Table 1: Structure of the Chinese automobile market, 1993-1997 (Zhang, 1997) The automotive industry is extremely perceptive to profitable developments (Barnes, 2009). The industry of automobile has been interacting with a few major risks and threats (Gang, 2004). Collaboration analyzes the major instruments of interaction in the framework of sovereign innovations in the automobile industry of China (Xi, 2009) China has been recorded as the largest and the leading automobile marketplace in the world by the November 2009. A faster growth has been observed since the year 1999. The annual automobile manufacture competency in the year 1992 increased by a million. This number exceeded by hundred percent in the year 2000 when production capacity of China increased and Chinese produced more than two millions of auto vehicles. In the year 2001, after the incident of entering World Trade Organization, the automobile industry grew rapidly and the national automobile market of China reached an average growth of twenty one percent, in other words, growth of almost a million in automobiles has been noticed on annual basis. By the year 2007, China succeeded to produce around eight millions vehicles. While in the year 2009, more than thirteen millions vehicles were produced by China. That shows that China will surely become the world’s largest auto manufacturer very soon. Chapter 2 Overview Of Proposed Joint Venture Between China And Belgium Some people support the argument that cultural and language differences are the valid points to reconsider the collaborations and joint ventures. Referring to available interviews and information, it has been revealed and proved that a wide technological gap may incur negative impact over a joint venture but as far as cultural and language differences are concerned, these are not the valid points to reconsider such opportunities. 2.1 Business Etiquette and culture of Belgium French, Dutch and German are the official languages of Belgium. However, they mostly conduct meetings in English and speak fluent English. Belgians do not wait for third party to introduce them; they are easy to deal with and are polite and organized. One should be well mannered while dealing with them. Belgians do not trust people very soon. So one should take time and explain things in detail to gradually gain their trust. Business commitments and affairs should be bureaucratic and well documented. As compare to other cultures, Belgians do go in details and critical review before finalizing any deal but are straight forward and direct, logical and simple in communicating. Belgians consider meeting etiquette at high level. They formally take appointments and discourage surprise visits. Belgians also dislike official meetings during vacations such in the month of Christmas and New Year and they also avoid meetings in the month of July and August. Belgians may take some time to deal with outsiders. Outsiders must be very formal and logical in order to proceed further. A small example of formality could be not removing jacket anytime during the meeting, not getting late in any case, etc. When it comes to dress etiquette, men should go for dark and conservative official suits with preferably light colored and silk ties. Ladies can wear normal official suits. Shoes must be well polished and professional. When one looks forward to deal with Belgians, it is advisable to get one side of card to be translated in Dutch or French. This would play an important role in seeking their interest and concern. 2.2 Business Etiquette and culture of China Before paying visit to china or attending Chinese delegation, it is very important to learn a few fundamental points as the business culture of China is quite different from western business etiquette. Chinese mostly consider new business dealings on the basis of any existing dealing. They offer attractive rates to their existing relationships or someone recommended by any of their relationships. Chinese are very competitive and energetic. Their working style is quite fast pace. They reply fast to strangers also over the internet or local info email addresses. Their investment committee can easily be contacted. Chinese are not very much in to formalities. However, they know all aspects to deal with different cultures but they are not very rigid. Discussing personal information with Chinese and getting friendly with them might strengthen one’s business relationship too. When it come to seniority, it is advisable to address them with their designations. Exchanging cards is the initial step while dealing with Chinese after receiving and greeting them. It is better to start with the top designation and then should move on accordingly. Visiting cards should be directed in such a way that the recipient receives it in readable and correct order. If Chinese are greeted in their own language then they are more pleased to proceed further. Chinese should be given due respect as they take it very seriously. In first meeting, presenting something may help in having a good start. However, giving similar gifts to people with different designations is not recommended in any case. Chinese are also very good in offering gifts to people they deal with. Chinese normally avoid business talks in dinners or trips. However, they are somewhat specific with the seat arrangements for the guest and the host. 2.3 Discussion over the possibility of the JV between China and Belgium Cultural differences and linguistic problems may easily be overcome but as far as mental gap is concerned, then there is a serious problem. Joint ventures are, most of the times, done for the purpose of mutual benefits. In 90% of the cases, in joint ventures, each party is brilliant in a technology that the other party needs and vice versa. Let suppose, in case of joint venture between a Chinese company and a company of Belgium. Both parties may be experts of two different technologies of the same product. This way, when they work together, they come across knowledge sharing. Knowledge sharing is a great source of sharing technical skills with each other that may be helpful for both the companies. This way, innovations and advancements take place and finally, end users enjoy the innovative inventions and better products. Countries who mostly strive to get engaged in joint ventures with different countries, by coming out of their shell, are not only trusted but are also respected and are said to be more ethical than number of other countries who avoid such collaborations due to cultural differences. There are several benefits associated to joint ventures. It also resolves capital issues, up to some level and with the productive collaborative research, positive results are obtained. Joint venture ensures bright and secure future. It accelerates the performance of any industry. But companies should think a thousand times and consider almost all the aspects and should pay all required visits before taking this step. If a venture is not carefully investigated then it may bring negative results. Possibly, it may also cause loss in billions of capital invested. It has been observed as a risk but if prerequisite research and investigations are all properly and well conducted then the chances to fail are lesser and the growth chances are at higher side. The revolution is enormous as per the viewpoint of a comprehensive industry, mainly ensuing in the United States automobile market trailing comparative credence. However, this eventually illustrates the accurate dimension of the major markets. The automobile industry is obsessed by the wellbeing of the international market, although is moreover formed by implicit power of European markets and the China players. Number of international companies from different corners of world decide to settle their institutions for the purposes of development and research in china for the promotion of technical innovations by recruiting technical Chinese staff at lower salaries, hence, ascertain it’s rate advantage in marketplace, uphold firm’s aggressive benefit. The automobile industry of China is presently facing remarkable growth. The standard yearly growth rate throughout is 15 %. With the production units of almost 1.8 M, in the year 1999, the overall productivity of automobiles graded 9th globally. China is the second in the Asia region, China has been the second leading most automobile manufacturer (Wang, N/A). Chapter 3 Conclusion Multi-national corporations (MNCs) integrate the trade of China at government level, venture and engineering strategies into their countries and manufacturing judgments. A Chinese company should look in to all aspects in order to proceed with international joint venture with a European MNC. Variance between the European MNC and Chinese firm may lead Chinese towards more easy-to-go system. China's regulation regarding automobile may perhaps weaken the long-term capability of Chinese players. An active automobile industry encourages other factors of the economy, consisting the plastics, rubber, steel, glass and rubber industries (ACRC, 2005). 3.1 Patching up the cultural difference to proceed with R&D collaboration Most of the procedures involved in business, concerns relating security side of information and risks are certainly huge in R&D collaboration. To handle and control such concerns, both the Belgians and the Chinese firms should go systematically and should have an advanced, flexible and modeled move towards the R&D collaboration. The administration and execution to go on correctly, such concerns should be resource-demanding, so that to maintain the standards and to manage the risks and to bring efficiency in collaboration. At present, firms from identical countries should pay extra attention to conduct critical affairs systematically and efficiently in order to secure R&D collaboration. Due to the blessings of Information Technology, isolation aspect has been eliminated and synchronization has become possible to accomplish all R&D work. 3.2 JV between Chinese and Belgian firms The combined influent of early circumstances that impact the occurrence of R&D movement between joint ventures created in the industry of global biotechnology. In a Joint venture, Analysis is determined by early conditions and the transaction costs. Particularly, observation if the business similarities, cultural aspects, national risk, and previous JV incidents are linked to R&D activity in JVs. It has been concluded that in biotechnology JVs, risk involved and cultural relatedness impact in the case of R&D activity. While these are not as such important as one might expect. From the two main partnership kinds in R & D, JV between Chinese and Belgians may go for the one that is centered on dealings between businesses as the other major type is between the industry and academic world. A Chinese company should look in to all aspects in order to proceed with international joint venture with a European MNC should be logically privileged in sales and distribution in the long-standing, because of their familiarity with the marketplace and the consumer behavior and market trend of China. The bureaucracy and old trend influenced foreign investment up to almost 50% of the overall principal investment of the joint venture. Nevertheless, this practice could not prevent energetic producers of automobile industries from collaborating and executing joint ventures. Volkswagen and Chrysler are the examples of the same. For global market of automobiles, the Chinese market has modernized into a capable, but moreover dangerous target. However, Europeans very well know that market competition has been increasing dramatically and exaggeratedly. By means of extensive investment in the highly dynamic market of automobile, for the purpose of developing the mounting strength and upward trend of market as well as to participate in the long lasting effectiveness. For the sake of getting familiar with the marketplace, it is very important to come out of the shell and strengthen strategic management to promote effective collaborations in the automobile industry. 3.3 Summary This study assesses and explores how an automobile company in China would possibly go for the International joint venture with a European MNC. By using European R&D technology & subsidiaries in US, eco-car (hybrid) would be produced in China and will be shipped to distribute into a European country. A HEV (hybrid electric vehicle) joins ICE (internal combustion engine) thrust system with EPS (electric propulsion system). Chinese company provides cheaper lightweight imports. Policy regulation has been closely associated with the performance of foreign investors in the changing Chinese automotive industry. Commencement of open-up policy and the automotive industrial policy in China (section I) and the FDI command to shape the current industry of automobile is explained in section II. Section III illustrates the coordination between the foreign investors and the Chinese authorities as the motivating tool of the policy. Not including the trade hurdle, the jeopardy of being out by the Multi National Corporations is at maximum. Therefore, Chinese automobile firm could serve as assembly plants of foreign-part. However, with economical and political aspects, this model of industrialization does not seem to be practical. The European MNCs have been paying attention on the automobile industry. The automobile industry of China has been suffering from a few consequences. From 1980 to 1995, recorded number of imported cars was around 2.13 million, out of which, number of imported passenger cars was around 1.05 million. The spending was around $7.48 billion. In terms of percentage, the spending was around 65.4% of the overall national automotive investment. The transaction is between the large local industrial groups transact with the advanced technology transfer. The foremost is decisive both cost-effectively for the legislator. The joint ventures prerequisite assurance that local companies should have 50% of the market shares and the outsider company should eradicate the local counterparts. Therefore, transference of technology is considered as secondary element. The automobile industry of Belgium has remained one of the noticeable contributors in the national economy. An outward-looking sector, it exports a good number at international level. Thanks to this new package of projects, R&D cooperation with all innovative projects continues to contribute and is highly beneficial. If a Chinese company goes for joint venture with Belgian firm, both the countries may share the benefits at extreme level. For Belgium and China, such projects can be a source of transferring technology that might help in promoting the relation and bond between the two countries. This may also be a great opportunity for end users. They also cover the system for long-term collaboration in a European framework. Such joint ventures are also a source to connect with global R&D plans. Numerous innovative contracts at government level were also proofs of appreciating such positive step. The forthcoming meeting of the Chinese Prime Minister to Belgium may further promote the booming R&D cooperation. Technical Collaborations play vital roles to encourage inventions and excellent terms between the two countries. The cultural and institutional diversification of China and Belgium towards the confined substantial prerequisite can also cause a change in the performance of joint ventures. The Chinese see it as an opportunity and a gateway to enter Europe. China and Belgium have two identical business cultures. Belgium firms cater the investments for the sake of innovations and similarly, by facilitating customers legally as well as financially. It is very important for Belgians to get familiar with Chinese culture and languages in order to proceed. Chinese have been working hard to prove themselves as world’s local factory and are tending to practice collaborations with foreigners in order to attain investments while Belgium is ideally located in Europe and its interactive climate for such investments has remained an attractive focus for energetic countries like China. However, there is a cultural and language gap. Nevertheless, technical expertise, enthusiasm, Chinese professional approach have been tending to meet the gap. Such joint ventures can assist to execute cross-border venture strategies and may navigate the business risks. Majority strongly believes that a wider strategic management, in case of automobile industry that encourages globalization, has always been a source of bright future. Ventures promote active competition and innovations. So, it has been found out that any traditional, geographical, cultural or linguistic differences cannot, in any case, influence the production of automobiles. Such boundaries should not be considered as the main objective can be achieved by overcoming differences. High-tech vehicles can be made to the equivalent standard anyplace in any corner of the world. The Chinese market customs, norm and its exact benefits as a locality are certainly demanding the participation of the global industry of automobile. Collaboration and joint ventures between Belgium and Chinese companies with their identical expertise can encourage collaborative environment, joint development, efficient production and effective marketing. Exchange of mechanisms, gears and technologies also encourage international co-operation and it ensures globalization. Such decentralization is productive to come up with innovations by forgetting boundaries. A successful strategic management ensures proceeding on the basis of technologies on the ground of quick efficient, effective realization of procedures and products that will finally bring innovations and developments to the participating countries. The current overflow consequence is inadequate to the assimilation of imported technology, as a replacement for encouraging competence of autonomous R&D works. Numerous local component and suppliers trust on importing more and more technologies to the market. The domestic and institutional aspects are not quite strong that they may obstruct the formation of native technology aptitude. The Chinese automotive industry has been brilliantly performing. Its approach towards collaborations ensures secure future. The business, venture and engineering strategies are going through amendments. The development from the prior version to the final replicates the failure of the regulation. China and Belgium both may look forward to receive mutual benefits by promoting collaboration that may bring enhancement in technologies and can expedite growth of automobile industry. Though, the outcome of such strategies convey with reference to have frequently not coordinated what the leaders forecasted. References ACRC. (2005). China’s Automotive Industry. Available: http://www.acrc.org.hk/misc/doc/2005_winter.pdf. Last accessed 23 Jan 2009. Aimee Barnes. 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