INDIVIDUAL ASSIGNMENT

“Guanxi in Jeopardy”

570 - Global Leadership and Cultural Intelligence

Rebeca Orozco 61102115

 The case study on which this analysis is based recounts the failed Joint Venture
project, which started when the United States based automotive electronic equipment
company Electrowide, decided to invest in an overseas expansion partnership with
Motosuzhou, a Chinese based company which would be in charge of distributing their
products. The present assignment will thus present an overview on this case study titled
“Guanxi in Jeopardy” which focuses on the topic of the complexities of international
negotiations, by answering the following key questions with arguments based on concepts
reviewed in class:

1. Why did the negotiations breakdown?

The easiest answer is that the 'Electrowide' and ‘Motosuzhou' teams working together
lacked the proper insight on managing cultural and operational differences by tailoring their
business strategies in order to suit the situation at hand; however I believe that the failure of
this joint-venture project can be explained by other factors that played an important role at
that time, which contributed to a lack of integration between the two companies.
One clear mistake from Eletrowide was that they failed to take into account the cultural and
political environment in China, as well as hierarchical and patriarchal values which would
have caused a poor impression on the Chinese representatives. The company’s entrance
strategy basically lacked proper research of the cultural variables at play whenever doing
business in China, and this was reflected in the poor quality of preparation for negotiations
with the Chinese teams, since the composition of Electrowide’s teams was poorly chosen
from the start. One clear clash from the start between teams was due to the US member’s
characteristics, because they were much younger than the Chinese executives and lacked
the experience these senior players had, and there was also the fact that Tom (the main
representative) chose to include a woman in his team, which clearly didn’t help the situation.
As we have previously discussed in class, the lack of foresight on studying cultural customs,
especially in Asian countries, is a grave mistake since details as age hierarchy and gender
issues have a huge importance whenever engaging in casual interactions, never mind
business negotiations!
Another factor that probably played a big part in the project’s failure was the lack of
consideration for differences in the time needed for completing the negotiations:
Electrowide’s team kept pushing for a short 8 weeks deadline which clashed harshly with
the Chinese preferred way to conduct lengthy negotiations before closing a deal. I believe
that this was an impending factor that caused negative interactions between teams, since
the US representatives’ agressive way of pressuring for closure and lack of interest in the
Chinese activities (such as tours or dinners) planned by the Motosuzhou team was seen as
a huge disrespect, and thus created mistrust and anger for the Chinese representatives.
Finally, the last factor that I believed played a big part in the failure of this project was the
pressure that Electrowide was facing at the moment of the negotiations, the timing was
overall very bad since they were at that point in time already facing many constraints in
terms of resources allocation and deadline pressures. I think that it was this combination of
the company’s massive structural overhaul, and the pressure on quickly securing an
international joint venture simultaneously which contributed to the failure of the stressful
negotiations on the part from the US team. Not only that, but I believe that Tom’s team would
have felt even more pressured due to the unrealistic time deadline stipulated, as well as the
lack of proper between the team and the higher corporate levels of the parent company,

2. What should Tom do now?

The best way for Tom to solve the conflicted negotiations, would be to obviously reconsider
the previously mentioned mistakes from the last question, and readjust their strategy
properly in order to address the time constraints, and cultural requirements that would
ensure proper communication between the US and Chinese teams. His team’s physical
composition would have to change a lot, in terms of finding representatives with more age
and experience in international negotiations, and avoid placing a woman as well as to avoid
negative interactions from the part of the Chinese executives.
Perhaps another good idea would be to have a domestic (US) team that would deal with
improving the communication and flow of information between Tom’s team and the parent
company at homeland; this way if the negotiations hit a rough patch, the team would have
a way to ask for more resources or time reacquired, and it would in turn help decrease the
pressure and perhaps relax the overall tone of negotiations.