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vol. XVI no. 1 "It is easy for Americans to think that as long as they deliver a good product at a competitive price, then all will work out well. Not so in a culture that values long-term relationships like China," noted John Gunter, a Robinson College of Business student who is working on his Masters of International Business degree. When Gunter and Adam Phillips signed up for Robinson's study abroad trip to China, they knew that at the end of the two weeks they would earn six credit hours toward their degrees. What they didn't know was that these credits would represent their most valuable opportunity to truly understand the challenges facing today's global business marketplace. These six credit hours provided them with a firsthand look at a country that experts say will be the next world superpower. "One of the things that amazed me about the Chinese people was the incredible pride they have for their history, their culture and their country," said Phillips, a recent Robinson finance grad. "The sense of nationalism they feel for their country is every bit as strong if not stronger than what we feel here in the United States."
Gunter agrees and says that their sense of nationalism spills over into their careers. "People in China choose occupations based on what the country needs. They see this as a way of serving their country much the way people in America talk about joining the military." Gunter and Phillips are just two of the 13 students who signed up for Robinson's China experience. While the College offers several study abroad opportunities, this particular initiative is a joint offering between the management and accounting programs. The focus is on transitional markets and examination of the many macro and micro facets of a rapidly evolving country. Through the program, students have a chance to meet and talk with executives and officials from various business and government organizations. These meetings allow students to get a top-level perspective of the challenges businesses in China face. The experience has given them a greater understanding of what it takes to succeed in China. Based on their studies and various meetings, Gunter and Phillips both noted that while the people are the country's best asset, the old cliché - it's not what you know but who you know - is alive and well in China. Additionally, understanding the importance of "Guanxi" (loosely translated to mean a human network of connections) is the key to success. "During our visit to JWeb Technologies, the director really keyed in on the importance of trust and general integrity to his company's success. He told us of repeated times where JWeb had failed to get jobs because they just didn't understand the cultural aspects of the Chinese business environment," offered Gunter. Unfortunately, relationships can take a long time to cultivate, which, according to Phillips, can be an obstacle for American business executives. "We're very direct, especially in comparison to the Chinese. Everything for us is now, now, now, while they are very patient and take their time when making decisions." Gunter's advice to Americans interested in doing business in China is not only to be patient but to go into it understanding that this is a long-term process. This point was highlighted during the students' trip to the General Motors (GM) plant in Shanghai. GM entered China in 1997 through a joint venture with Shanghai Automotive International Corporation. According to Phillips and Gunter, executives at GM talked about having a "long-term mindset" in China and of "being a part of the community." GM's joint venture is just one of the three modes of entry by foreign firms into the Chinese market. The other two are wholly foreign owned enterprises and representative offices (which function to represent foreign corporations in China). Each has its own pros and cons. "When considering formal partnerships with Chinese firms such as joint ventures, it is difficult to find the right partner," said Gunter. "Getting the right partner can mean years of a win-win relationship, with profits and satisfaction. Getting the wrong partner could mean the total loss of your company as well as your competitive advantage." And while starting a wholly foreign owned enterprise allows for the highest level of autonomy from the government, Phillips warns that it too comes at a price. "The first basic requirement is money, and then there is a lot of paperwork to complete to get the company incorporated." As China relaxes restrictions on foreign-owned companies and makes its market more accessible to the West and other foreign investors, many of its state-owned enterprises (SOEs) are having to adjust to the transition while staying competitive both nationally and internationally. Gunter and Phillips point to their visit to the Xi'an Aircraft Corporation (XAC), a leader in the Chinese aeronautical industry and an SOE. "Based on what we heard during our visit, I would say that XAC is having a tough time coping with the transition," said Gunter. "The company currently has 21,000 employees and must cut way back in order to compete on an international level. Under the current system, there are no layoffs; that will have to change. XAC is heavily subsidized by the government, and under the market system that will have to change as well." Gunter says that this visit was a good example of a "pure" SOE trying to go private. "It really highlighted the challenges they face in these changing times." Gunter and Phillips believe that the people of China will ultimately be the driving force behind the country's success. "It's a country of very smart people who are very aggressive in their desire to be successful," said Phillips. "While Americans are incredibly creative and excellent managers, the Chinese are very focused and excellent at getting things done," added Gunter. "I think that the two countries actually complement each other quite well." Both Gunter and Phillips believe that there are a lot of opportunities in China. "I decided to participate in the China study abroad because I knew that China offered many opportunities that would expand my international network," said Phillips. "There's money to be made there if you know the right people, know how things work and have the right idea." "Even though I live here, this trip has definitely expanded my perspective of China," added Gunter. "The thought that now goes through my mind is "What will the next few years be like for an entrepreneurial expatriate?" In dynamic situations like this, there are always great opportunities, and China is no different. I look forward to being here during this process."
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Gunter's understanding of the region goes a bit deeper than his fellow students because for the past three years he has been living in Chengdu while pursing his studies through Robinson. Gunter works for a small start-up consulting firm that helps universities develop foreign-language programs and says that the people in China are "sponges for knowledge," especially when it comes to America and the English language. "By first grade, children are learning English, and every college student must pass an English proficiency test," relayed Gunter. "I've had company executives spend time with me just so they could improve their English."
Gunter's advice to Americans interested in doing business in China is not only to be patient but to go into it understanding that this is a long-term process. This point was highlighted during the students' trip to the General Motors (GM) plant in Shanghai. GM entered China in 1997 through a joint venture with Shanghai Automotive International Corporation. According to Phillips and Gunter, executives at GM talked about having a "long-term mindset" in China and of "being a part of the community."
