Guanxi

Case analysis of

“ Guanxi in Jeopardy”

1.0 Introduction

According to Chinese economy rapidly increase over the last decade, China provides an attractive platform with massive opportunities for foreign firms who are eager to enter Chinese markets. However, many cross-border businesses encounter problems due to the immensely different in cultural issues. Therefore, it is necessary for firms to have an insightful understanding before cooperation.

In the case, Electrowide is a $5 billion manufacturer of automotive electronics products from U.S. It was expecting to build a JV agreement with Motosuzhou through negotiations, which is a firm of the Beijing municipal government. The purpose of this report is to analysis and discusses the negotiation process between Electrowide and Motosuzhou. Firstly, there are identification and compare the diverse cultures between China and U.S and how these differences can refer to the negotiation process. Next, evaluating four main factors of a JV partner were not met with case study. Furthermore, the structure of Electrowide’s team will be examined. Finally is to suggest some reasonable strategies to Tom in order to master a better negotiation process by Electrowide in further international business.

2.0 Culture differences between China and U.S and how it impacts the negotiation process.

The term culture consists of values, norms, believes which were pervasively met in people’s life. If mangers did not master the characteristics of cross-culture, there would be failed in negotiations and interactions. (Deresky, 2011)

In regards to guanxi, a part of the significant fabric in Chinese culture that refers to personal connections. As Meiling (2007) characterized guanxi bases, in China, guanxi networks acted as one crucial aspect considered in business because people do interns only with whom they give a treatment. Guanxi can benefit of business to achieve successful with long-term oriented...