E-Learning
Local Expert
Need advice or training
We will put you in touch with the leading Cultural Awareness Expert in ChinaChinese Business Structures
China
Probably the biggest benefit from the joint venture approach is that it helps the overseas entity to establish relations
Cultural Compatibility
How compatible are you?
Fill in this online test and we will generate your personalised report.
Under the Communist regime the most important structure to which an individual was linked was his or her work group or dan wei. In the past, the dan wei guaranteed workers security throughout their lives in a 'cradle to grave' arrangement and the dan wei mentality still lingers on in large measure. It can be extremely risky for a worker to leave the security of the dan wei as this means the automatic forfeit of the rights and privileges associated with membership - and these could mean such basics as food, accommodation and medical assistance. In order to maintain the security blanket afforded by the dan wei and at the same time take advantage of the new opportunities arising in the 'new order', many people take on two jobs until the new opportunities are viable enough to risk losing the traditional support mechanisms.
Most overseas companies who set up operations in the PRC do so in the form of a joint-venture with a Chinese organisation and there certainly seem to be manifold benefits to be accrued from doing so. Probably the biggest benefit from the joint-venture approach is that it helps the overseas entity to establish relations - via the Chinese part of the venture - into a complex network of Chinese relationships. Guanxi, or personal connections, are the all-important weapon in all business situations in the PRC. As has often been said, 'In China, if you don't have Guanxi, you don't have anything.' Forming a joint-venture company would seem to be the quickest and most effective way of developing good quality relationships in a country such as China.
As would be expected in a Confucian society, operational structures, chains of command, management style etc. tend to be hierarchical and the introduction of more matrix-oriented approaches are bound to lead to conflict with local expectations.
Most overseas companies who set up operations in the PRC do so in the form of a joint-venture with a Chinese organisation and there certainly seem to be manifold benefits to be accrued from doing so. Probably the biggest benefit from the joint-venture approach is that it helps the overseas entity to establish relations - via the Chinese part of the venture - into a complex network of Chinese relationships. Guanxi, or personal connections, are the all-important weapon in all business situations in the PRC. As has often been said, 'In China, if you don't have Guanxi, you don't have anything.' Forming a joint-venture company would seem to be the quickest and most effective way of developing good quality relationships in a country such as China.
As would be expected in a Confucian society, operational structures, chains of command, management style etc. tend to be hierarchical and the introduction of more matrix-oriented approaches are bound to lead to conflict with local expectations.