Marketing Strategies to Compete in Mainland China

There is no doubt that mainland China is now the world's single largest marketing opportunity. No wonder that China has now been given "Most Favored Nation" status by the U.S., despite its continuing human rights violations and its less-than-democratic government. Dollar profits speak louder than workers' agonies. Of course, China itself is now producing entrepreneurs and offering assistance in building plants, finding adequate labor forces and distribution points for world-wide export.

Most analysts as well as human resource specialists now view China as not merely a profitable market to enter, but also are less concerned about government interference in Western businesses established there. One has to look at the long-range picture, not merely past indignities. "In the past 20 years, the Chinese economy has increasingly become highly export oriented, and since the mind-1990s the country has been the second largest recipient of FDI world wide (second to the USA). This is largely due to two factors- investment incentives offered by the Chinese government and the country's abundance of cheap labor" (Cooke 2004 35). The fact that the government is interfering less and less with overseas-owned companies setting up shop on Mainland China is also encouraging. But, extreme caution is urged. "One cannot simply walk into China and set up shop overnight. It requires a careful analysis of the country's cultural values and political and economic systems" (Swaak 2005 1).

China has now passed legislation which will give far greater opportunities for foreign investments. Previously, "foreign companies seeking to enter China's retail market were required to have Chinese partners to set up stores anywhere in the country" (Anon 2005 1). Now there will be no sales requirements or partnerships necessary. However, pricing strategies may backfire. Wal-Mart caused some agitation among Chinese shopkeepers who "lobbied heavily for protection from the new competition in price and service" (Anon 2005 1). The potential business for international corporations also exists in the telecommunications business. Many companies, such as AOL Warner, have already jumped into the Chinese market. AOL, for example, "claimed the title of first foreign television broadcaster in Chinas. In exchange for carrying the Chinese state television's English-language channel on U.S. cable systems, it will gain access to a market in which hundreds of millions of households already own televisions" (Daugherty 2004 3). As television grows, the Internet is sure to follow. "The internet, computers and the telecommunications sectors are going to gain, since growth in the United States and Europe are much flatter" (Daugherty 2004 5).

The Chinese, historically, believe in work groups "and their benefits are governed by policies set for the unit" (Swaak 2005 3). Swaak (2005) contends that China's current pool of management and technical experts is very small, and that some people will change jobs for just a few dollars more a month. So, staffing may benefit by means of a joint venture, when "the local partner will provide the labor force and access to sources of technical and managerial talent" (Swaak 2005 3). He also recommends, based on his interviews, that some people can be recruited off-shore, that is, Hong Kong, Singapore, Taiwan, the United States and Canada. One key to success in China may be encouraging some foreigners with experience to spend some time in China to train and monitor Chinese. Since for Chinese employees (according to Swaak) learning a new skill is almost as powerful as earning money, training is easy to set up. The challenge is to make it meaningful and not haphazard. It is unfortunate, however, that for decades, Chinese were unable to receive a proper education, if any education at all. So, illiteracy is still a major problem. 15% of the population, down considerably, is still illiterate. What this all adds up to is that, merely from a human resources point of view, international corporations need to take small steps, not giant leaps, in dealing with different customs, traditions, goals, earning abilities and skills, and a resentment of foreigners coming to take over their local businesses and interests. Just because the market potentials are enormous does not mean a company can jump in without very careful and extensive planning in terms of distribution, location, and human resources.

WORKS CITED:

Cooke, F.L. "Foreign Firms in China: modeling HRM in a toy manufacturing corporation" Human Resource ManagementJournal Vol. 14, no.3 2004 pp 31-52 Daugherty, C.: "Enter the Dragon With China's Entry into the World Trade Organization, Local Companies Are Carving out New Opportunities in Formerly Forbidden Cities" Business Forward Online, April 20, 2005 www.bizforward.com/wdc/issues/2002-03/china/ Swaak, R. A.(2005): "The Role of Human Resources in China" Frank Allen % Associateswww.fallen.com/chinahr.htm

No author listed: "China in Major Change: Opens Retail, Distribution Sectors to Foreign Businesses"

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