China's recent entry into the WTO has increased business confidence and widened the opportunities for business ventures in China. Its huge market potential, based on over 1.3 billion people with rising income levels, has attracted large numbers of foreign business firms. China is presently one of the most interesting markets to multinational companies seeking investment opportunities. It was the fastest growing economy in the region from 1996-2001 and for 2002, the economic growth rate was expected to be around 8%, demonstrating the enormous business potential in China irrespective of the current global economic downturn.
In spite of their increasing numbers, foreign firms operating in China do face considerable difficulties. China offers a complex, unfamiliar and highly competitive environment which finns operating in China have to cater to. The specific environment makes strategic decisions and choices extremely difficult for multinational firms operating in China. Management decisions have to be made in relation to partners, staffing and business practices which are appropriate in the operating environment in China.
J. T. Li compiles a book of 19 articles that address issues of managing international business ventures in China. The book is divided into three parts: Joint Venture Management, Human Resource Management and Strategic Management.
2. Objective and Targeted Audience
As stated in the book, the objective is to address "key challenges in managing international business ventures in China" (p. 2). The editor aims at providing a compilation of the latest thinking on the management of international business ventures in the Chinese emerging economy and to offer a forum for discussion on important and current research issues on international business ventures in China. The editor also intents to stimulate further research on managerial issues in China by providing an overview of relevant management issues on business venturing in China through this compilation of scholarly articles covering the topic from different angles. The book is targeted at scholars doing research on managerial issues in China and seeks to offer a comprehensive source of knowledge to interested students and managers.
3. Structure and Content
In a well described and ambitious survey process, the editor selected 19 articles from three major journals: (Columbia) Journal of World Business, European Management Journal and International Business Review from a pool of a total of 123 articles published between 1981 and 2000 on international business issues related to China. The selected articles are divided into three sections to cover the areas of Joint Venture Management, Human Resource Management and Strategic Management.
The first part on Joint Venture Management comprises six chapters covering relevant aspects and areas of potential challenges in a joint venture project--focusing mainly on the frictions that may occur between Western and Chinese cultures.
In the first article, Child and Yan discuss the problems of investment and control as many foreign investors have reported disappointing results of their joint ventures in China. Based on interviews with 212 Chinese and expatriate managers involved in 67 international joint ventures, the authors concluded that there are two major actions which foreign firms took to maintain control over their investments: (1) to provide non-capital resources and (2) to acquire a large equity share. The second article by J. T. Li and colleagues, focuses on the topic of joint venture leadership. Based on literature on top management team demography, cross-cultural behaviour and international joint ventures as well as over 30 interviews with managers from a number of joint ventures working in China, the authors present a framework on how to improve leadership team effectiveness. In the third article, Walsh et al discuss the differences in interests and expectations between partners in Sino-American joint ventures based on interviews with 16 managers from ten different joint ventures. In the fourth article, Hoon-Halbauer discusses how to manage relationships within Sino-Foreign joint ventures based on the in-depth longitudinal study of two joint ventures. The main problem areas in the relationships are collaborative difficulties. In the fifth chapter, Luo presents a three-fold classification scheme on how to select a good joint venture partner. The contribution focuses predominantly on the traits that a local partner should have, and not so much on how to identify partners having these attributes. The sixth and final article in this first section discusses how successful Sino-Foreign equity joint ventures are established based on the experiences of Singaporean-China joint ventures. The authors, Wang and her colleagues, collected their data through 35 interviews in China and Singapore as well as through a questionnaire survey of 750 local managers and Singaporean expatriates in China. The article presents findings in four primary areas of interest: partner selection criteria; control and performance; inter-partner relationships; and strategies.
The second part of the book includes six contributions on Human Resources Management (HRM). As the Chinese market becomes more important to multinational organizations, it is argued that "the management of human resources tends to be the single biggest challenge for Western companies in China" (p. 181). The seventh article in the book, written by Bjorkman and Lu, describes the roles of human resources departments in multinational corporations in China. Based on interviews with human resources specialists in more than 30 multinational corporations as well as a mail survey of Western multinational companies in China, the article discusses the staffing of the HR department of MNCs in China, the services they provide, the challenges they face and the promotion of learning across corporate operations. The next article--written by Wong and Law--presents how multinational corporations manage to develop job-related skills within the local population and the delegation of decision-making authority to local managers. The authors develop their model based on in-depth interviews with CEOs or human resources directors from six multinational companies in the process of turning over responsibilities to local managers. The ninth article, also written by Bjorkman and Lu, examines how local managers and staff are handled within Western organizations. Based on interviews with expatriate and Chinese managers in 65 joint ventures, the authors suggest how to best recruit, select, train, develop, appraise, promote, compensate and retain local professionals. Sergeant and Frenkel, in the tenth article, present some key HR management issues faced by expatriate managers working in China, Indonesia and Vietnam through interviews with 27 managers with experience in managing Chinese employees. The eleventh article written by Selmer discusses the effects of 'coping strategies' on socio-cultural and psychological adjustment of Western expatriates in China. The aim of the article is to help Westerners working in China to better and more quickly adjust to the difficult and unfamiliar environment. Zhu and Warner examine in the twelfth article, an emerging model of employment relations in China as compared to the Japanese model. The context of the model is the cultural, social and political environment and how Western and Japanese practices have influenced employment relations in China.
The section on Strategic Management, as the third and last part of the book, contains seven contributions which focus on various strategic aspects of conducting business in China. The 13th article in the book, written by Osland and Bjorkman, describes the interaction between multinational corporations and government agencies and the pressure that the government asserts on the organizations. This is followed by Sanyal and Guvenli who also discuss the relations between American multinational corporations and the Chinese host government in the 14th article. In the 15th article, Bosworth and Yang thoroughly document how the intellectual property law, the technology flow and licensing opportunities in China have changed and developed over time. In the subsequent article McGaughey, Liesch and Poulson present an unconventional approach to intellectual property protection using the case of an Australian shipbuilding firm. Using a qualitative case-study method, the authors provide new insights into specific issues concerning the management of intellectual property dissipation. Thereafter, Standifird and Marshall discuss the transaction cost advantage of guanxi--based business practices. The paper provides a theoretical explanation of the endurance and importance of guanxi in China. The 18th article, written by Zhao and Zhu, investigates the determinants of foreign equity share of international joint ventures in the Chinese manufacturing sector. The empirical analysis identifies influential factors on ownership structures, adding contextual factors which are peculiar to China. The last article written by Weldon and Vanhonacker discusses four important challenges that expatriate managers face in China. These are: developing the local work force, resolving business disputes, protecting intellectual property and working with the government bureaucracy. This last article provides a good ending point, since some of the issues discussed throughout the book are reflected in this article.
4. Recommendation and Critique
The articles comprising the book are generally good stand alone articles. However, they have not been edited to reduce repetition or to increase their synergistic value of being compiled in one volume. The compilation, therefore, provides multiple perspectives to the reader.
The sectional headings of the first and second part of the book Joint Venture Management and Human Resources Management are appropriate given the content of the articles in their respective sections. However, the third heading which proposes a collection of articles on Strategic Management is somewhat misleading. The chosen articles in the last part do nevertheless discuss important issues in the field of international business venturing in China. A heading reflecting this broader scope of the last section would, however, have better managed the expectations of the reader.
The editor's efforts to provide the readers with a transparent and informative overview of the selection process of the articles in the introduction to Managing International Business Ventures in China, is very much appreciated. In addition, the list of the 123 articles with China-related content, from which the editor has chosen the articles for the book, provides a good starting point for further reading. The editor's aim to compile the latest thinking on important and current research issues on managing international ventures in China is well met, even though such attempts are likely to be outdated very quickly.
Overall, the editor J. T. Li has put together an interesting and well balanced book on the topic of managing international business ventures in China.
Prof. Dr. Li-Choy Chong, Alexander Kock and Helena Glamheden, Asia Research Centre, Research Institute for International Management, University of St. Gallen, Switzerland.
Li, J. T. (ed.): Managing International Business Ventures in China, Amsterdam et al.: Pergamon 2001.