CASE 3: GUANXI IN JEOPARDY

JOINT VENTURE NEGOTIATIONS IN CHINA
2/18/2010 HANU SANDEEP P 0920816

They are flexible.  They are more open.  There do not stick to particular time for meeting in business.  Relationship comes first for Chinese.  They are Direct in dealing business counter parts.S culture? How do these differences relate to the negotiation process? Characteristics of Chinese culture:  They are centered around relationships.  They don¶t give much preference to women in business matters. 2 .  They have long memory for both favors and humiliations.  They are strong in making immediate decisions. The differences in these characteristics also effect the negotiation process between them in business.  For them memory for conflict is superseded by business objective  Business & economic matters comes first.  They are Indirect in dealing business counter parts.  They are weak in ability of making immediate responses.  They are courteous & take things personally.  They treat men and women equally in business.HANU SANDEEP P 0920816 1) What are the main characteristics of Chinese culture ? How do they differ from the predominant characteristics of U.  As American are direct and to the point but Chinese are indirect so problem arises when they negotiate . Characteristics of U.  They are not flexible in timings for meetings.S culture:  They are individualistic.

 Giving leeway for international contingencies and environment  Having Comprehensive Joint Venture Agreements which lays down a road map of duties and obligations of all the parties involved  Involving lawyers from all the jurisdictions early on  Having a workable and efficient Dispute Resolution Mechanism  Termination Terms and Conditions. 2) What are the criteria that should be used in selecting a joint venture partner ? Have those criteria met in this situation? Why or why not? A joint venture is a strategic alliance where two or more parties.  Understanding cultural backgrounds of all the countries involved  Understanding legal and regulatory regime of all the jurisdictions involved  Negotiating win-win contract.  They did not involve lawyers early on discussions.  The objective of this strategic alliance. intellectual property. and. assets. knowledge. 3 . In the current case I feel that most of the criteria for success of the JV are not met because  They don¶t have proper understanding in their cultural backgrounds.HANU SANDEEP P 0920816  Language is a main concern for both as Chinese are not good in English and Americans are not good in Chinese language.  Create an action plan and implement it.  Chinese think of the relationships in business but the Americans do not.  They don¶t have proper negotiation between them. of course. Criteria that should be used in selecting a joint venture are:  The critical aspect of a joint venture does not lie in the process itself but in its execution. usually businesses. form a partnership to share markets. profits.

 They don¶t like the working style of each other.  He was leading the team and not familiar with Chinese culture and language.  He failed in convincing the Chinese to accept the terms of JV.  He is a business analyst.  He was 55 year old with only one international experience was participating in a technology transfer symposium in Canada two years ago. Barb Morgan:  She was 42 year old and working Electrowide for three years. 3) Evaluate the composition of Electrowide¶s team and of Motosuzhou¶s team.  She can speak conversational Chinese & fluent in French.  They have not taken proper decision on who should control what 7 and how the profit generated should be used. 4 . Did each of the companies make appropriate choices for this negotiation? Give reasons for your answer? Electrowide¶s team: Tom :  He was assigned with two person team to visit china and negotiate the JV.  She stood as a supporter for tom but did not actively participate in the discussions because the Chinese involve her.HANU SANDEEP P 0920816  They did not come to understanding between them what actually their objective is about.  Their termination terms are not yet finalized.  Came to china to negotiate the JV between the two companies. Mark Porter:  He is 31 years old with MBA degree & employed with the company for 6 years.

he is deputy director of supply chain & distribution.  He is very poor in English and need a translator to understand.  He speaks very poor English.HANU SANDEEP P 0920816  Mark was very much troubled with the behavior of the Chinese team behavior. Coming to Motosuzhou¶s team they are very poor in English & do not know the business culture aspects of U.  Involved in the JV for decision making.S people. Motosuzhou team: Ai Hwa Chew:  He is 55 year old . Only one among them is educated properly. I feel that each of the companies did not make appropriate choices for this negotiation. All them are new to this kind of negotiation. Because the team from Electrowide is not familiar with the Chinese business culture and the main lead does not know Chinese language. 5 . Deng Zang :  He is 62 year old & is the factory director. None of among them has proper experience in these kind of JV discussions. Wang Yoo:  He is 65 year old & the minister of finance.  He is relatively fluent in English & cousin of Deng Zang. They are very indirect in nature & did not how to negotiate in the joint venture.

The negative aspects of her being in the negotiation team are:  The Chinese are not comfortable with women in dealing Business matters as they feel women are inferior. 6 .  She took this overseas assignment as a means f coping up with her recent divorce.HANU SANDEEP P 0920816 4) Should Barb Morgan have been on the negotiating team? Evaluate & give your reasons? The positive aspects of her being in the negotiation team are:  I think the aspect that supports Barb to be in the negotiation team is that she can speak Chinese.  He should take help of Barb as she can speak in Chinese & she had already involved in acquisition project and also has psychology background. 5) What does Tom Sherman do?  Tom Sherman being an employee of Electrowide for 32 years knows about the company strengths and core competencies.  She was a student of psychology so she can know what others are thinking.  She has prior experience in acquisition venture in Sweden.  Barb is working with Electrowide only from the last 3 years so she does not know much about the company.  He should also learn about the Chinese business cultures & should get some help from the government of china as the company is mainly linked with government.  He should ask their company management to send someone who is familiar with Chinese culture into the team.

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