General Motors (GM) Joint Venture in China
General Motors (GM) Joint Venture in China
International marketing involves all business performance activities that directs the flow of business operations of a specific company. In this case, General Motor’s entry into China’s market would result in the use of consumer goods such as cars by people living not just the United States, but also in China for profit. Typically, a company like General Motors is expected to carefully plan and execute the commencement, promotions, pricing as well as the distribution of goods, ideas and services, which are all aimed at creating business exchanges that have the capacity of satisfying organizational or individual goals. It is important to note that the uniqueness of foreign marketing normally comes from a broad spectrum of unfamiliar challenges, risks or problems as well as various strategies that have the capacity of coping with differing levels of uncertainty that a company such as General Motors would likely encounter in China’s market. This paper will critically analyze the risks and challenges that a company such as General Motors would face when doing business in China. This paper will be able to access such risks and challenges by focusing on the Motor Industry as well as the opportunities that are available for foreign businesses.
Critical evaluation of the benefits, costs and risks associated with doing business in China
Before any company achieves success in China market, it is important for it to clearly understand its organizational mission and goal, including the function that marketing activities play in the process of achieving such missions and goals. Additionally, the company is also expected to establish its marketing objectives, gather, and access, evaluate and interpret important information about its distinct situation. This also includes available strengths, weaknesses, threats and opportunities that exists in China’s environment. This is critical data that will offer foreign businesses an overview of the doing businesses in China or of China’s market. Besides, it is worthy to note that foreign businesses are forced to critically access specific potential and growth as far as its product services are concerned in China including the segmentation of foreign market.
In addition, any company or business wishing to start its operations in China needs to evaluate the characteristics of potential consumers of their specific products and services. This is by evaluating who they are and how they are particularly established in China. It is however; very crucial for businesses hoping to trade in China to find out how much such consumers are willing to spend. Such kind of information or data is critical during planning that involves establishing marketing strategies of knowing the exact wants that the business organization will be willing to try and satisfy. This is activity is normally referred to as the establishment of target market strategy, which involves the development of various marketing mix, all aimed at satisfying the target market’s needs or desires. In this case, marketing mix joins product, promotion, distribution as well as pricing strategy in a manner that is capable of establishing specific exchanges that seek to satisfy organizational and individual objectives.
Foreign business risk to encounter political challenges in China considering the fact that China has been under a communist party for many years. In this respect, the communist party typically exercises absolute power in regards to economic, legislative as well as cultural constitutions. It is important to note that such kind of activities are not common in countries such as the United States, whereby the government is tasked with the responsibility of promoting transparency when it comes to engaging in business activities. Rules and regulations are not usually absolute or transparent in China, meaning that big businesses such as General Motors risk the possibility of succumbing to a variety of bureaucracies and regulations. A social network referred to as guanxiwang is typically promoted in China, in which case quanxi represents the established relationship between the entities of the network and the individual. This means that lack of corruption and transparency leads to avoidance of bureaucracy and red tape by the Western businesses with the help of the communist party and the existing social networks.
The process of establishing relationships is not normally emphasized in countries such as the United States due to strict cultures and laws that seek to promote contractual obligations. However, in china small and large businesses are forced to rely on the existing guanxiwang, as it is practically impossible to conduct businesses without these social networks. This presents a great challenge to foreign businesses seeking to do business in China as one is forced to fully understand how such social networks function. Moreover, this process consumes a great deal of time, meaning that it would be prudent to work with the right individuals according to specific guanxiwang. This will highly enable foreign companies to overcome such problems.
In addition, foreign companies seeking to conduct businesses in China risk the possibility of facing legal challenges. This is mainly due to the fact that China’s legal system is loosely defined leading to a variety of loopholes in the overall legal system. This is contrasted in countries such as the United States where strict laws and regulations including patents in economies are normally aimed at protecting both foreign and domestic businesses. The accession of China to WTO has led to the establishment of patent rights amendments and inclusion of international business laws. However, it is a common scenario to encounter instances where a thing such as technology is stolen by the outsourcing company’s employees or by specific competitors in China.
Moreover, the copycat culture or Shanzai is usually an integral part of the Chinese society and mainly how they conduct their business. In fact, it is important to understand that due to the fact that China’s society is predominantly Confucian, most people are forced to share what they create in order to promote harmony, as is what is demanded by the Confucian tradition. This is the reason why virtually every product in the market is copied and then sold in the open markets existing in major cities or towns in China. This type of culture has consequently made China to be the largest producer and promoter of most counterfeit products. The counterfeiting activities are further promoted by China’s laws which are considered by many to be mostly vague and can hence, be interpreted in various ways.
These laws include important business practices such as of intellectual property rights and trade laws that are mainly refined, thus resulting in complexities in the process of interpreting them. Furthermore, it is possible that some individuals or organizations may be tempted to manipulate such laws so as to weaken business activities of foreign businesses for the purposes of gaining competitive advantage. This is despite the fact that there are stated laws against the businesses infringing existing Chinese laws. Typically in China, specific provincial governments have the power of blocking any such laws, resulting to big challenges for foreign businesses.
General Motor’s decision to venture into China’s markets
General Motor’s decision to venture into China’s market was a prudent one as it ensured that the company was able to survive amid great financial depression that was happening in the United States. The most important reason why the company was able to thrive despite the existing economic challenges was the fact that China’s internet and telecommunications infrastructures had already grown and impro